Texas United Bancshares (NASDAQ:TXUI)
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Highlights of second quarter performance include:
LA GRANGE, Texas, Aug. 2 /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, reported net income for the second quarter of 2005 of $2.6 million, an increase of 74.7 percent compared with $1.5 million for the second quarter of 2004 and a decline of 6.8 percent compared with the $2.8 million reported for the first quarter of 2005. The second quarter year-over-year increase was primarily due to the acquisition of the two Central Bank branches on July 30, 2004, and GNB Bancshares, Inc. on October 1, 2004, as well as improvement in the net interest margin.
Diluted earnings per share for the second quarter of 2005 were $0.33 compared with $0.36 for the second quarter of 2004 and $0.35 for the first quarter of 2005. Per share results 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. Weighted average diluted shares outstanding for the second quarter of 2005 were 7,964,000, compared with 4,200,000 for prior year quarter and 7,968,000 for the first quarter of this year.
For the first six months of 2005, the Company reported net income of $5.4 million, an increase of 77.0 percent compared with $3.1 million for the first six months of 2004. The increase reflects the acquisitions of GNB Bancshares, the Central Bank branches and Community Home Loan, Inc. Diluted earnings per share for the first six months of 2005 were $0.68 compared with $0.73 for the same period in 2004. Per share results were affected by the above-mentioned issuance of stock; weighted average diluted shares outstanding for the first six months of 2005 were 7,966,000 compared with 4,197,000 weighted average diluted shares outstanding for the same period in 2004.
Don Stricklin, President and CEO of Texas United, commented, "Our expansion initiatives continue. Through a combination of acquisitions and organic growth, we have selectively increased our presence in targeted suburban metro markets with some of the strongest demographics in Texas: Dallas, Houston, Austin and San Antonio.
"Our pending acquisition of Gateway Holding Company, Inc. is progressing well. Gateway's six banking locations in the Dallas market will complement GNB's seven full-service banking offices in the Dallas/Fort Worth metroplex and substantially expand our presence in this attractive market. The transaction is expected to be completed during the fourth quarter of 2005."
Net interest income for the second quarter of 2005 was $14.3 million compared with $7.1 million for the same quarter in 2004 and $12.5 million for the first quarter of 2005. This represents increases of 101.4 percent and 14.4 percent, respectively. The previous quarter comparison reflects a 5.8 percent increase in average earning assets combined with a 34 basis point improvement in the net interest margin to 5.39 percent.
Much of the improvement in the linked quarter net interest income is the result of the merger of Community Home Loan into State Bank as of April 30, 2005. Prior to the merger, gains on the sale of loans originated by Community were recorded as noninterest income. Subsequent to the merger, these fees have been recorded as loan fee income, and will continue to be recorded as loan fee income going forward. The impact of this change for the current quarter was $864,000.
Noninterest income for the second quarter of 2005 was $3.9 million compared with $5.9 million for the first quarter of 2005 and $4.7 million for the second quarter of 2004. The previous quarter difference reflects lower service charges on deposit accounts coupled with the aforementioned impact on income generated on the sale of loans associated with the merger of Community Home Loan into State Bank.
Overall, noninterest expense has been stable since the acquisition of GNB Bancshares was consummated, despite the addition of 73 FTE employees since the beginning of the year. Noninterest expense for the current quarter was $13.2 million, a decline of $0.2 million from the $13.4 million reported for the first quarter of 2005.
Compared with the year-ago quarter, noninterest expense rose by $4.0 million or 43.5 percent, reflecting the impact of Texas United's expansion activities over the past four quarters, including: (i) Construction of three full-service banking centers, two in Bryan-College Station, Texas and one in Magnolia, Texas (part of the Houston metropolitan area), which are all scheduled for completion during the third quarter of 2005; (ii) expanded mortgage banking activities and the conversion of ten mortgage offices to limited service branches of State Bank; (iii) the acquisition of GNB Bancshares and (iv) the acquisition of two Central Bank branches. For the second quarter of 2005, the efficiency ratio improved to 73.02 percent compared with 73.42 percent for the first quarter of 2005 and 78.01 percent for the second quarter of 2004.
Asset quality remains strong, despite an increase in nonperforming assets. Net charge-offs were $589,000 for the second quarter of 2005, or an annualized 0.31 percent of average loans, compared with $476,000 for the first quarter of 2005, or an annualized 0.27 percent of average loans and $271,000, or an annualized 0.26 percent of average loans for the second quarter of 2004. Nonperforming assets were 0.46 percent of total assets at June 30, 2005, compared with 0.33 percent of total assets at March 31, 2005, and 0.35 percent at June 30, 2004. The loan loss allowance was 0.94 percent of total loans at June 30, 2005.
Total assets were $1.2 billion at June 30, 2005, up $101.0 million or 8.9 percent from year-end 2004. Since December 31, 2004, loans have grown $93.1 million or 13.4 percent, with growth notably strong in the residential real estate sector (up $45.7 million or 23.7 percent) and the commercial real estate sector (up $26.4 million or 11.8 percent). Deposits increased $22.3 million, or 2.5 percent, from December 31, 2004 to $902.4 million. In particular, noninterest bearing deposits rose $24.9 million or 13.3 percent during that six-month time period, and now comprise 23.6 percent of total deposits. The remainder of loan growth was funded by increased borrowings.
Shareholders' equity at June 30, 2005 was $107.4 million, an increase of $3.3 million or 3.1 percent from $104.2 million at March 31, 2005. The risk- based capital ratio was a strong 10.48 percent. Shares outstanding at period- end were 7,805,372.
About the Company
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 27 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 through State Bank and Community Home Loan.
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 FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
Quarterly
2005 2004
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
EARNINGS
Net interest
income $14,291 $12,505 $11,571 $8,191 $7,148
Provision for loan
losses 1,041 722 700 700 300
NonInterest income 3,897 5,851 4,616 5,008 4,667
NonInterest
expense 13,197 13,439 13,426 10,289 9,196
Net income 2,612 2,802 1,429 1,561 1,495
Basic earnings per
share 0.33 0.36 0.18 0.30 0.37
Diluted earnings
per share 0.33 0.35 0.18 0.29 0.36
Weighted average
basic shares
outstanding (in
000's) 7,805 7,798 7,776 5,249 4,020
Weighted average
diluted shares
outstanding (in
000's) 7,964 7,968 7,953 5,421 4,200
PERFORMANCE RATIOS
Return on average
assets 0.86% 0.97% 0.50% 0.76% 0.83%
Return on average
equity 9.88% 10.66% 5.40% 10.35% 15.75%
Net interest
margin 5.39% 5.05% 4.70% 4.42% 4.46%
Efficiency ratio 73.02% 73.42% 82.94% 77.95% 78.01%
Full-time
equivalent
employees 595 557 522 409 377
CAPITAL
Average equity to
average assets 8.75% 9.08% 9.34% 7.39% 5.30%
Tier 1 leverage
capital ratio 6.97% 7.10% 7.08% 9.07% 6.04%
Tier 1 risk-based
capital ratio 9.61% 9.96% 10.40% 13.53% 8.88%
Total risk-based
capital ratio 10.48% 10.83% 11.31% 14.39% 9.74%
Book value per
share $13.75 $13.35 $13.44 $12.43 $9.34
Cash dividend per
share 0.08 0.08 0.07 0.07 0.07
ASSET QUALITY
Gross charge-offs $857 $684 $621 $449 $392
Net charge-offs 589 476 456 287 271
Net charge-offs to
average loans 0.31% 0.27% 0.27% 0.24% 0.26%
Allowance for loan
losses $7,383 $6,931 $6,685 $4,535 $4,122
Allowance for loan
losses to total
loans 0.94% 0.96% 0.96% 0.91% 0.95%
Nonperforming
loans $4,765 $3,208 $2,970 $1,978 $976
Other real estate
and repossessed
assets 896 641 843 586 1,672
Nonperforming
assets to total
assets 0.46% 0.33% 0.33% 0.31% 0.35%
END OF PERIOD
BALANCES
Loans $786,675 $725,724 $693,548 $498,632 $435,128
Total earning
assets (before
allowance) 1,084,723 1,035,947 999,194 754,385 676,414
Total assets 1,242,003 1,180,166 1,141,366 839,327 751,631
Deposits 902,356 880,306 880,075 688,899 567,440
Shareholders'
equity 107,445 104,177 104,812 78,653 37,570
AVERAGE BALANCES
Loans $754,879 $699,763 $679,149 $476,826 $424,805
Total earning
assets (before
allowance) 1,063,221 1,004,551 980,258 736,516 645,214
Total assets 1,212,045 1,157,872 1,128,209 811,834 716,168
Deposits 895,889 884,117 890,913 664,560 561,454
Shareholders'
equity 106,065 105,190 105,320 59,999 37,960
Year ended December 31,
2004 2003
EARNINGS
Net interest income $33,574 $26,223
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 000's) 5,264 3,984
Weighted average diluted shares
outstanding (in 000's) 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 4.56% 4.81%
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) 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) 735,847 544,778
Total assets 816,705 611,645
Deposits 639,850 486,441
Shareholders' equity 60,663 37,112
Texas United Bancshares
Second Quarter 2005 Results
TEXAS UNITED BANCSHARES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands)
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
June 30, June 30, June 30, June 30, December 31,
2005 2004 2005 2004 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST
INCOME
Loans $16,189 $7,991 $30,294 $15,508 $37,710
Investment
securities 2,907 1,922 5,771 3,607 8,597
Federal
funds
sold 31 3 39 7 30
Total
interest
income 19,127 9,916 36,104 19,122 46,337
INTEREST
EXPENSE
Deposits 3,376 2,035 6,473 3,824 9,223
Federal
funds
purchased 331 48 507 62 194
Junior
subordinated
deferrable
interest
debentures 391 266 781 532 1,189
Borrowings 738 419 1,547 892 2,157
Total
interest
expense 4,836 2,768 9,308 5,310 12,763
Net
interest
income 14,291 7,148 26,796 13,812 33,574
Provision
for loan
losses 1,041 300 1,763 450 1,850
Net
interest
income
after
provision
for loan
losses 13,250 6,848 25,033 13,362 31,724
NONINTEREST INCOME
Service
charges on
deposit
accounts 1,978 2,228 3,812 3,825 6,931
Mortgage
servicing
revenue 263 290 559 498 888
Net (loss)
gain on sales
of securities (84) 71 (122) 148 114
Net gain on
sale of
loans 1,036 1,238 3,180 3,142 7,452
Other
noninterest
income 704 840 2,319 958 2,810
Total
noninterest
income 3,897 4,667 9,748 8,571 18,195
NONINTEREST EXPENSE
Salaries and
benefits 8,180 5,722 15,241 9,996 23,798
Occupancy 1,970 1,117 3,775 2,205 5,596
Other
noninterest
expense 3,047 2,357 7,620 5,145 11,667
Total
noninterest
expense 13,197 9,196 26,636 17,346 41,061
Earnings
before
provision
for income
tax
expense 3,950 2,319 8,145 4,587 8,858
Provision for
income tax
expense 1,338 824 2,731 1,527 2,808
Net
earnings $2,612 $1,495 $5,414 $3,060 $6,050
Texas United Bancshares
Second Quarter 2005 Results
TEXAS UNITED BANCSHARES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, June 30, December 31,
2005 2004 2004
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $36,927 $18,501 $36,752
Federal funds sold 4,085 --- 4,015
Total cash and cash
equivalents 41,012 18,501 40,767
Securities available for sale, at
fair value 291,631 241,286 301,631
Securities held to maturity, at
cost 12,825 --- ---
Total loans, including loans held
for sale 786,675 435,128 693,548
Allowance for loan losses (7,383) (4,122) (6,685)
Total loans, net 779,292 431,006 686,863
Premises and equipment, net 42,288 28,005 39,730
Accrued interest receivable 6,114 3,489 5,214
Goodwill 40,117 9,573 40,117
Core deposit intangibles, net 4,969 341 5,341
Mortgage servicing rights, net 4,738 4,790 4,698
Other assets 19,017 14,640 17,005
Total assets $1,242,003 $751,631 $1,141,366
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $212,516 $107,597 $187,454
Interest-bearing 689,840 459,843 692,621
Total deposits 902,356 567,440 880,075
Securities sold under agreement
to repurchase 6,367 7,957 6,291
Federal funds purchased 31,921 33,037 15,125
Junior subordinated deferrable
interest debentures 17,520 12,365 17,520
Borrowings 164,529 87,330 105,940
Other liabilities 11,865 5,932 11,603
Total liabilities 1,134,558 714,061 1,036,554
SHAREHOLDERS' EQUITY
Common stock 7,811 4,031 7,802
Additional paid-in capital 75,978 17,155 75,935
Retained earnings 26,087 19,919 21,921
Accumulated other comprehensive
(loss) income (2,314) (3,418) (729)
Less treasury stock, at cost (117) (117) (117)
Total shareholders' equity 107,445 37,570 104,812
Total liabilities and
shareholders' equity $1,242,003 $751,631 $1,141,366
DATASOURCE: Texas United Bancshares, Inc.
CONTACT: Jeff Wilkinson of Texas United Bancshares, Inc.,
+1-979-968-7230