UNITED STATES
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 000-49928
TEXAS UNITED BANCSHARES, INC.
| Texas | 75-2768656 | |
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
| Incorporation or organization) |
202 W. COLORADO
LA GRANGE, TEXAS 78945
(Address of principal executive offices including zip code)
(979) 968-8451
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x.
As of October 31, 2003, the number of outstanding shares of Common Stock, par value $1.00 per share was 4,002,097.
PART I
FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
| September, 30, | December 31, | ||||||||||
| 2003 | 2002 | ||||||||||
| (Unaudited) | |||||||||||
ASSETS |
|||||||||||
Cash and cash equivalents: |
|||||||||||
Cash and due from banks |
$ | 15,037 | $ | 20,574 | |||||||
Federal funds sold and other temporary investments |
— | — | |||||||||
Total cash and cash equivalents |
15,037 | 20,574 | |||||||||
Investment securities available-for-sale, at fair value |
190,616 | 132,140 | |||||||||
Loans, net |
367,323 | 349,345 | |||||||||
Loans held for sale |
2,219 | 33,674 | |||||||||
Premises and equipment, net |
24,081 | 23,363 | |||||||||
Accrued interest receivable |
2,945 | 3,006 | |||||||||
Goodwill |
9,432 | 9,432 | |||||||||
Deposit premiums |
423 | 512 | |||||||||
Mortgage servicing rights |
4,404 | 2,877 | |||||||||
Other assets |
13,662 | 12,139 | |||||||||
Total assets |
$ | 630,142 | $ | 587,062 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||
Deposits: |
|||||||||||
Noninterest-bearing |
$ | 97,615 | $ | 82,294 | |||||||
Interest-bearing |
406,091 | 370,625 | |||||||||
Total deposits |
503,706 | 452,919 | |||||||||
Federal funds purchased |
48 | 19,732 | |||||||||
Other liabilities |
5,223 | 5,807 | |||||||||
Borrowings |
77,769 | 62,945 | |||||||||
Company obligated mandatorily redeemable capital securities
of subsidiary trust |
7,000 | 7,000 | |||||||||
Subordinated notes and debentures |
— | 3,241 | |||||||||
Total liabilities |
593,746 | 551,644 | |||||||||
Commitments and contingencies |
— | — | |||||||||
Shareholders’ equity: |
|||||||||||
Preferred stock, $1.00 par value, 500,000 shares
authorized, none of which are issued and outstanding |
— | — | |||||||||
Common stock, $1.00 par value, 20,000,000 shares
authorized; 2,669,639 shares issued and 2,663,544
outstanding as of September 30, 2003 and 2,646,139 shares
issued and 2,640,044 outstanding as of December 31, 2002 |
2,670 | 2,646 | |||||||||
Additional paid-in capital |
16,881 | 16,683 | |||||||||
Retained earnings |
17,848 | 14,594 | |||||||||
Accumulated other comprehensive income |
(886 | ) | 1,612 | ||||||||
Less treasury stock, at cost |
(117 | ) | (117 | ) | |||||||
Total shareholders’ equity |
36,396 | 35,418 | |||||||||
Total liabilities and shareholders’ equity |
$ | 630,142 | $ | 587,062 | |||||||
See accompanying notes to condensed consolidated financial statements
1
TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
| For the three months | For the nine months | ||||||||||||||||||
| ended September 30, | ended September 30, | ||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
Interest income: |
|||||||||||||||||||
Loans |
$ | 7,966 | $ | 7,004 | $ | 23,730 | $ | 18,718 | |||||||||||
Investment securities: |
|||||||||||||||||||
Taxable |
1,513 | 1,248 | 4,143 | 3,752 | |||||||||||||||
Tax-exempt |
126 | 161 | 424 | 698 | |||||||||||||||
Federal funds sold and other temporary investments |
17 | 39 | 70 | 92 | |||||||||||||||
Total interest income |
9,622 | 8,452 | 28,367 | 23,260 | |||||||||||||||
Interest expense: |
|||||||||||||||||||
Deposits |
1,854 | 1,988 | 5,743 | 6,042 | |||||||||||||||
Federal funds purchased |
30 | 118 | 115 | 287 | |||||||||||||||
Borrowings |
518 | 216 | 1,542 | 582 | |||||||||||||||
Subordinated notes and debentures |
— | 77 | 87 | 77 | |||||||||||||||
Company obligated mandatorily redeemable capital
securities of subsidiary trust |
185 | 194 | 554 | 577 | |||||||||||||||
Total interest expense |
2,587 | 2,593 | 8,041 | 7,565 | |||||||||||||||
Net interest income |
7,035 | 5,859 | 20,326 | 15,695 | |||||||||||||||
Provision for loan losses |
800 | 500 | 2,100 | 1,350 | |||||||||||||||
Net interest income after provision for loan losses |
6,235 | 5,359 | 18,226 | 14,345 | |||||||||||||||
Non-interest income: |
|||||||||||||||||||
Service charges on deposit accounts |
1,718 | 1,518 | 5,016 | 3,927 | |||||||||||||||
Net servicing fees |
1,401 | (263 | ) | 1,551 | 1,139 | ||||||||||||||
Gain on sale of investment securities, net |
376 | 397 | 1,291 | 949 | |||||||||||||||
Other non-interest income |
654 | 546 | 2,259 | 1,789 | |||||||||||||||
Total non-interest income |
4,149 | 2,198 | 10,117 | 7,804 | |||||||||||||||
Non-interest expense: |
|||||||||||||||||||
Employee compensation and benefits |
4,509 | 3,206 | 12,314 | 9,140 | |||||||||||||||
Occupancy |
1,214 | 1,336 | 3,479 | 2,879 | |||||||||||||||
Other non-interest expense |
2,465 | 2,235 | 6,770 | 5,436 | |||||||||||||||
Total non-interest expense |
8,188 | 6,777 | 22,563 | 17,455 | |||||||||||||||
Income before provision for income taxes |
2,196 | 780 | 5,780 | 4,694 | |||||||||||||||
Provision for income taxes |
667 | 189 | 1,728 | 1,278 | |||||||||||||||
Net income |
$ | 1,529 | $ | 591 | $ | 4,052 | $ | 3,416 | |||||||||||
Earnings per common share: |
|||||||||||||||||||
Basic |
$ | 0.57 | $ | 0.23 | $ | 1.53 | $ | 1.35 | |||||||||||
Diluted |
$ | 0.55 | $ | 0.22 | $ | 1.47 | $ | 1.30 | |||||||||||
Weighted average shares outstanding: |
|||||||||||||||||||
Basic |
2,663 | 2,589 | 2,653 | 2,523 | |||||||||||||||
Diluted |
2,775 | 2,703 | 2,760 | 2,637 | |||||||||||||||
See accompanying notes to condensed consolidated financial statements
2
TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
| For the three months | For the nine months | ||||||||||||||||
| ended September 30, | ended September 30, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
Net income |
$ | 1,529 | $ | 591 | $ | 4,052 | $ | 3,416 | |||||||||
Other comprehensive income (loss), net of tax: |
|||||||||||||||||
Unrealized holding gains (losses) on investment securities arising during
the period |
(3,277 | ) | 1,196 | (1,646 | ) | 2,291 | |||||||||||
Less: reclassification adjustment for gains included in net income |
248 | 262 | 852 | 626 | |||||||||||||
Other comprehensive income (loss) |
(3,525 | ) | 934 | (2,498 | ) | 1,665 | |||||||||||
Total comprehensive income (loss) |
$ | (1,996 | ) | $ | 1,525 | $ | 1,554 | $ | 5,081 | ||||||||
See accompanying notes to condensed consolidated financial statements
3
TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity
Year Ended December 31, 2002 and
Nine Months Ended September 30, 2003
(In thousands, except share amounts)
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Treasury | ||||||||||||||||||||||||||
| Common Stock | Paid-in | Retained | Comprehensive | Stock | ||||||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Income (loss) | at Cost | Total | ||||||||||||||||||||||
Balance at January 1, 2002 |
2,502,145 | $ | 2,502 | $ | 14,136 | $ | 11,342 | $ | (275 | ) | $ | (333 | ) | $ | 27,372 | |||||||||||||
Net income |
— | — | — | 4,278 | — | — | 4,278 | |||||||||||||||||||||
Other comprehensive income |
— | — | — | — | 1,887 | — | 1,887 | |||||||||||||||||||||
Issuance of common stock upon exercise of employee stock
options |
6,291 | 6 | 47 | — | — | — | 53 | |||||||||||||||||||||
Issuance of common stock related to the acquisition of
The Bryan-College Station Financial Holding
Company |
137,703 | 138 | 2,477 | — | — | — | 2,615 | |||||||||||||||||||||
Compensation related to grant of treasury stock to employees |
— | — | 5 | — | — | 45 | 50 | |||||||||||||||||||||
Sale of treasury stock |
— | — | 18 | — | — | 171 | 189 | |||||||||||||||||||||
Dividends |
— | — | — | (1,026 | ) | — | — | (1,026 | ) | |||||||||||||||||||
Balance at December 31, 2002 |
2,646,139 | $ | 2,646 | $ | 16,683 | $ | 14,594 | $ | 1,612 | $ | (117 | ) | $ | 35,418 | ||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Treasury | ||||||||||||||||||||||||||
| Common Stock | Paid-in | Retained | Comprehensive | Stock | ||||||||||||||||||||||||
| Unaudited | Shares | Amount | Capital | Earnings | Income (loss) | at Cost | Total | |||||||||||||||||||||
Balance at January 1, 2003 |
2,646,139 | $ | 2,646 | $ | 16,683 | $ | 14,594 | $ | 1,612 | $ | (117 | ) | $ | 35,418 | ||||||||||||||
Net income |
— | — | — | 4,052 | — | — | 4,052 | |||||||||||||||||||||
Other comprehensive income (loss) |
— | — | — | — | (2,498 | ) | — | (2,498 | ) | |||||||||||||||||||
Issuance of common stock upon exercise of employee
stock options |
23,500 | 24 | 198 | — | — | — | 222 | |||||||||||||||||||||
Dividends |
— | — | ||||||||||||||||||||||||||