SNBT Snb Bancshares (Texas) (MM)

- Announcement of Merger with Prosperity Bancshares, Inc. SUGAR LAND, Texas, Jan. 20 /PRNewswire-FirstCall/ -- SNB Bancshares, Inc. (NASDAQ:SNBT) (the "Company"), a Sugar Land bank holding company and the parent company of Southern National Bank of Texas, a community-oriented, independent bank with offices in both Harris and Fort Bend Counties, today reported its results of operations for the quarter and year ended December 31, 2005. As previously announced on November 16, 2005, Prosperity Bancshares, Inc. (NASDAQ:PRSP) ("Prosperity") and the Company have signed a definitive agreement for Prosperity to acquire SNB Bancshares, Inc. and Southern National Bank of Texas. The Company's results included the impact of two plans implemented during the fourth quarter of 2005. The Board of Directors approved these plans which are being implemented in connection with the Company's pending merger with Prosperity. The first plan was the previously announced strategy to reposition the Company's balance sheet by selling approximately $205.0 million of low-yielding investment securities and using the proceeds to de-leverage its borrowing position. This fourth quarter bond restructuring plan follows a similar plan initiated during the first quarter of 2005 in which approximately $169.0 million of low-yielding investment securities were sold and a portion of the proceeds was used to de-leverage the Company's borrowing position. The second plan was a strategy to classify approximately $47.5 million in loans held as investments as loans held for sale as discussed more fully below. During December 2005, the Company identified for sale approximately $205.0 million of low-yielding investment securities, with a weighted average yield of 3.45%, resulting in an impairment charge on securities of approximately $7.6 million before tax, and used the proceeds to de-leverage its borrowing position by paying off borrowings with an average rate of 4.29%. As of December 31, 2005 the Company's other borrowed funds were $15.5 million, down $235.0 million, or 93.8%, compared with $250.5 million at September 30, 2005. The Board of Directors approved the securities restructuring and borrowings de-leveraging plan in an effort to reduce the Company's liability sensitive position and to improve its net interest margin. Prosperity has approved this plan in accordance with the provisions of the definitive agreement between Prosperity and the Company. In January 2006, the Company's Board of Directors approved the sale of approximately $47.5 million of loans. These loans were classified as loans held for sale and have been adjusted to the lower of cost or estimated fair value, resulting in approximately $7.3 million in charge-offs. Management determined that the allowance for loan losses account, following the related charge-offs, should be increased by approximately $4.7 million or approximately $3.0 million net of tax, resulting in a provision for loan losses for the fourth quarter of 2005 of approximately $5.3 million before tax. As a result of these two plans, the Company recorded a net loss of $7.3 million for the fourth quarter of 2005, or $0.58 per diluted share, principally as a result of the impairment writedown charge on securities and a prepayment penalty on long-term borrowings totaling approximately $5.3 million net of tax, combined with the additional provision for loan losses of approximately $3.0 million net of tax. Net earnings for the quarter ended December 31, 2005, excluding the impairment writedown charge on securities, the prepayment penalty on long-term borrowings and the increased provision for loan losses related to the loans held for sale would have been approximately $1.0 million, or $0.08 per diluted share, a decrease in net earnings of $433 thousand or 29.8% compared with $1.5 million or $0.11 per diluted share for the fourth quarter of 2004. For the year ended December 31, 2005, the Company recorded a net loss of $5.0 million, a decrease of $10.9 million, or 183.6%, compared with $5.9 million net earnings for the year ended December 31, 2004. This net loss for the year ended December 31, 2005 compared with net earnings for the year ended December 31, 2004 is primarily the result of the previously mentioned plans initiated during the year. The securities restructuring and borrowings de- leveraging plans, initiated during March and December 2005, resulted in total impairment writedown charges of approximately $13.8 million before tax, or approximately $9.1 million net of tax, and a prepayment penalty of approximately $345 thousand before tax, or approximately $228 thousand net of tax, incurred in connection with the paydown of certain long-term borrowings. The classification of approximately $47.5 million in loans as loans held for sale, initiated effective December 31, 2005, resulted in an additional provision for loan losses of approximately $4.7 million before tax, or approximately $3.0 million after tax. These charges, combined with a decrease in gains on sales of securities of $572 thousand and a $2.4 million increase in noninterest expenses, were partially offset by a $4.1 million increase in net interest income and a $5.6 million decrease in the provision for Federal income taxes. Diluted loss per share for the year ended December 31, 2005, was $0.39 on 12.6 million shares compared with diluted earnings per share of $0.65 on 9.2 million shares for the same period of 2004. The increased number of shares outstanding during 2005 is due principally to the impact of the 5.4 million shares of common stock issued in connection with our initial public offering in August 2004. "Previously issued earnings releases and other documents filed with the Securities and Exchange Commission discussed more fully the March and December 2005 plans for restructuring and de-leveraging of our balance sheet and the associated impairment charges," said R. Darrell Brewer, Treasurer and Chief Financial Officer. Net earnings for the year ended December 31, 2005, excluding the after-tax impairment writedown charges on securities and a prepayment penalty on long- term borrowings of $9.3 million or $0.74 per diluted share and the $3.0 million net of tax or $0.24 per diluted share in additional provision for loan losses, necessitated principally as a result of the charge-offs related to the loans held for sale plan, would have been approximately $7.4 million, a 24.7% increase compared with $5.9 million for the year ended December 31, 2004. Diluted earnings per share, excluding the impairment writedown charges on securities, the prepayment penalty on long-term borrowings and the additional provision for loan losses necessitated principally as a result of the charge- offs related to the loans held for sale plan, would have been $0.59 on 12.6 million shares for the year ended December 31, 2005 compared with $0.65 per share on 9.2 million shares for the year ended December 31, 2004. Net earnings excluding the impairment writedown charges on securities, the prepayment penalty on long-term borrowings and the additional provision for loan losses necessitated principally as a result of the charge-offs related to the loans held for sale plan and diluted earnings per share excluding these transactions are considered non-GAAP financial measures as defined under the rules and regulations of the Securities and Exchange Commission. Management believes that this presentation of net earnings and diluted earnings per share excluding such expenses should clarify investors' understanding of the Company's earnings performance during the fourth quarter of 2005 compared with the same quarter in 2004 and the year ended December 31, 2005 compared with the year ended December 31, 2004. FOURTH QUARTER RESULTS Net loss for the fourth quarter 2005 of $7.3 million or $0.58 per diluted share, represented a decrease in net earnings of $8.8 million or 603.4% compared with net earnings of $1.5 million or $0.11 per diluted share for the fourth quarter of 2004. This $8.8 million decrease in net earnings was principally the result of the Company's $7.6 million impairment write-down charge on securities, combined with a $4.6 million increase in the provision for loan losses, a $1.0 million increase in total noninterest expenses and a $166 thousand decrease in net interest income, partially offset by a $4.5 million decrease in the Company's provision for Federal income taxes. During the fourth quarter 2005, strong loan growth and improving yields from the loan portfolio partially offset higher cost of funds. Since June 2004, the Fed funds rate increased from 1.00% to 2.25% by year-end 2004, and to 4.25% at December 31, 2005. The Wall Street Journal prime rate has followed suit, its rate increasing from 4.00% to 5.25% by year-end 2004, and to 7.25% at December 31, 2005. Because of this significant increase in short- term interest rates over the past eighteen months, the Company's net interest margin on a tax equivalent basis in the fourth quarter of 2005 decreased 18 basis points to 2.96% compared with 3.14% for the linked third quarter of 2005. Management believes that the Company's securities restructuring and borrowings de-leveraging plan has lessened the Company's liability sensitive interest rate risk position as of December 31, 2005; however, rising interest rates have caused its net interest margin to remain flat at 2.96% for the fourth quarter of 2005, the same as for the fourth quarter of 2004. Net Interest Income Net interest income for the fourth quarter of 2005 decreased by $166 thousand or 2.1% to $7.8 million compared with $8.0 million for the same period in 2004. Total interest expense increased by $2.9 million to $8.2 million for the fourth quarter of 2005 compared with $5.3 million for the same quarter of 2004, partially offset by a $2.7 million increase in total interest income to $16.0 million for the fourth quarter of 2005 compared with $13.3 million for the same quarter of 2004. The $2.9 million increase in total interest expense was principally the result of a 140 basis point increase in average rates on interest-bearing liabilities to 3.68% in the fourth quarter of 2005 compared with 2.28% in the same quarter of 2004. The average balance of interest-bearing liabilities decreased $38.2 million in the fourth quarter of 2005 compared with the same quarter of 2004. The $2.7 million increase in total interest income was primarily due to a $2.8 million increase in loan interest income, resulting from a 15.1% increase in volume of average loans outstanding combined with an 84 basis point increase in the average yield on loans. The average balance of loans in the fourth quarter of 2005 increased $87.4 million to $666.9 million compared with $579.5 million for the same period in 2004, while the average yield on loans increased to 7.02% from 6.18%. The Company's net interest margin on a tax equivalent basis was 2.96% for the year ended December 31, 2005, the same as for the year ended December 31, 2004. The provision for loan losses in the fourth quarter of 2005 was $5.3 million, a $4.6 million increase compared with $675 thousand in the fourth quarter of 2004, principally as a result of the $4.7 million additional provision for loan losses related to the classification of certain loans as held for sale. Net interest income after provision for loan losses decreased $4.7 million or 64.9% to $2.6 million for the fourth quarter of 2005 compared with $7.3 million in the same period in 2004. Noninterest Income Noninterest income decreased during the fourth quarter of 2005 compared with the same period in 2004 primarily due to the $7.6 million impairment writedown charge on securities. Noninterest income totaled a loss of $7.2 million in the fourth quarter of 2005 compared with income of $345 thousand in the fourth quarter of 2004. Noninterest Expense Noninterest expense in the fourth quarter of 2005 increased $1.0 million or 18.4% to $6.5 million compared with $5.5 million in the fourth quarter of 2004, primarily due to increases in net occupancy expenses of $330 thousand, and higher legal and professional fees of $241 thousand, including approximately $100 thousand associated with the pending merger and other costs associated with being a publicly traded company, including Sarbanes-Oxley compliance costs, and $270 thousand increase in other expenses. The $270 thousand increase in other expenses was primarily the result of a $137 thousand increase in franchise taxes as a result of a tax refund during 2004 and a $400 thousand expense for settlement of a lawsuit, partially offset by a $225 thousand decrease in other real estate expenses and a $97 thousand decrease in marketing expenses. RESULTS FOR THE YEAR ENDED DECEMBER 31, 2005 For the year ended December 31, 2005, the Company recorded a net loss of $5.0 million, a decrease of $10.9 million, or 183.6%, compared with $5.9 million net earnings for the same period in 2004. This net loss compared with net earnings for the year ended December 31, 2004 is primarily due to the Company's impairment writedown charges on securities of approximately $13.8 million before tax, or approximately $9.1 million net of tax, on approximately $374.0 million of securities identified for sale from our available-for-sale securities portfolio, a prepayment penalty of approximately $345 thousand before tax, or approximately $228 thousand after tax, incurred in connection with the paydown of certain long-term borrowings and an additional $4.7 million in provision for loan losses, or $3.0 million after tax, related to the classification of certain loans as held for sale. The $13.8 million of impairment writedown charges, the prepayment penalty of approximately $345 thousand and the $4.7 million in additional provision for loan losses necessitated principally as a result of the charge-offs related to the loans held for sale plan, combined with a decrease in gains on sales of securities of $572 thousand and a $2.4 million increase in noninterest expenses, were partially offset by a $4.1 million increase in net interest income and a $5.6 million decrease in the provision for Federal income taxes. Net Interest Income For the year ended December 31, 2005, net interest income increased by $4.1 million or 14.4% to $32.8 million compared with $28.7 million for the same period in 2004. This increase is primarily due to a 26.8% increase in average loans outstanding, along with an 81 basis point increase in the average yield on loans outstanding, partially offset by an 100 basis point increase in weighted average rates on total interest-bearing liabilities. Total interest income increased by $13.5 million to $60.1 million for the year ended December 31, 2005 compared with $46.7 million for the same period in 2004, partially offset by a $9.4 million increase in total interest expense to $27.4 million for the year ended December 31, 2005 compared with $18.0 million for the same period in 2004. The $13.5 million increase in total interest income was primarily due to a $13.4 million increase in loan interest income, resulting from a 26.8% increase in volume of average loans outstanding combined with an 81 basis point increase in the average yield on loans. The average balance of loans for the year ended December 31, 2005 increased $136.2 million to $645.3 million compared with $509.1 million for the same period in 2004, while the average yield on loans increased to 6.75% from 5.94%. The $9.4 million increase in total interest expense for the year ended December 31, 2005 was principally the result of a 100 basis point increase in weighted average rates on total interest-bearing liabilities. The weighted average rate on total interest bearing liabilities increased to 3.04% for the year ended December 31, 2005 compared with 2.04% for 2004, while the average balance of interest-bearing liabilities increased $15.7 million to $899.3 million for the year ended December 31, 2005 compared with $883.6 million for the year ended December 31, 2004. The Company's net interest margin on a tax equivalent basis increased 26 basis points to 3.11% for the year ended December 31, 2005 compared with 2.85% for the same period in 2004. Noninterest Income For the year ended December 31, 2005, noninterest income decreased by $14.1 million to a negative $12.0 million compared with noninterest income of $2.1 million for the year ended December 31, 2004, principally as a result of the $13.8 million impairment writedown losses in connection with the balance sheet restructuring plan and a decrease of $572 thousand in gains on sales of securities. Noninterest Expense Noninterest expense for the year ended December 31, 2005 was $21.2 million compared with $18.8 million for 2004, an increase of $2.4 million or 12.7%, primarily due to an $830 thousand increase in legal and professional fees, a $521 thousand increase in data processing expenses and a $485 thousand increase in salaries and employee benefits. BALANCE SHEET REVIEW Assets at December 31, 2005 were $1.0 billion, down 8.3% from September 30, 2005 and down 9.1% from December 31, 2004, principally as a result of the balance sheet restructuring plan. As of December 31, 2005, total loans, including loans held for sale, were down $1.9 million or 0.3% to $656.1 million compared with $658.0 million as of September 30, 2005 and up 9.7% from $598.3 million at December 31, 2004. Investment securities decreased $222.0 million or 45.4% to $266.5 million at December 31, 2005 compared with $488.5 million at December 31, 2004, principally as a result of the securities restructuring plans. The weighted average yield on the bond portion of the investment securities portfolio of approximately $260.3 million was approximately 4.60% at December 31, 2005 compared with approximately 4.10% on approximately $396.3 million at September 30, 2005. Commented Harvey Zinn, President and Chief Executive Officer, "Although our loans were down slightly from the end of the third quarter, our average loan growth continues. For the three months ended December 31, 2005, our loans averaged $666.9 million, up from $658.8 million for the linked third quarter of 2005 and up $87.4 million or 15.1% from the $579.5 million in average loans for the three months ended December 31, 2004. For the year ended December 31, 2005, our loans averaged $644.7 million, up $135.3 million or 26.6% compared with average loans of $509.1 million for the year ended December 31, 2004." Commercial mortgage loans accounted for 43.3% of the loan portfolio compared with 44.7% at December 31, 2004, and construction and land development loans accounted for 20.9% of the loan portfolio compared with 20.7% at December 31, 2004. Average deposits for the year ended December 31, 2005 increased $4.7 million or 0.6% to $812.3 million compared with $807.6 million for 2004. Noninterest-bearing demand deposits increased 13.0% and lower cost NOW, savings and money market accounts increased 4.6%, more than offsetting the 6.6% decline in higher cost time deposits. Shareholders' equity at December 31, 2005 was $84.9 million compared with $86.4 million at December 31, 2004. Book value per share was $6.82 at December 31, 2005, compared with $6.95 at December 31, 2004. ASSET QUALITY Nonperforming assets as of December 31, 2005 were $13.0 million, an increase of $1.2 million compared with $11.8 million as of September 30, 2005. The increase was principally a result of an increase in other real estate owned of $1.1 million to $1.6 million at December 31, 2005 compared with $490 thousand at September 30, 2005, combined with an increase of $394 thousand in nonaccrual loans to $9.9 million at December 31, 2005 compared with $9.5 million as of September 30, 2005, partially offset by a decrease of $285 thousand in restructured loans to $1.6 million at December 31, 2005 compared with $1.8 million at September 30, 2005. The $1.1 million increase in other real estate owned was principally the result of a $1.0 million investment in land held for future expansion being transferred to other real estate owned due to a change in management's intention for the land's future use. At December 31, 2005, nonperforming assets of $13.0 million are up $8.2 million over $4.8 million as of December 31, 2004. This $8.2 million increase was primarily the result of three real estate loans and one business and industrial loan placed on nonaccrual status during 2005. The business and industrial loan, collateralized by furniture, fixtures and equipment and by accounts receivable, in the amount of approximately $3.9 million was placed on nonaccrual status during June 2005. Although this loan was performing in accordance with its terms, management was concerned about its future performance and therefore placed it on nonaccrual status. Two real estate loans, both related to the same guarantor and placed on nonaccrual status in February 2005, consisted of one loan in the amount of $2.4 million collateralized by multi-family real estate and another loan in the amount of $711 thousand secured by commercial real estate. Although these two loans were performing in accordance with their terms, management was concerned about the cash flow of the related properties and the financial status of the related guarantor. The third real estate loan, in the approximate amount of $3.7 million, collateralized by a multi-unit condominium project under construction, was placed on nonaccrual status in December 2005 because management was concerned about the financial status of the project and the related guarantor. As a percentage of total loans and other real estate owned, nonperforming assets were 1.98% as of December 31, 2005, compared with 1.79% at September 30, 2005 and 0.80% at December 31, 2004. Approximately $11.1 million of the $11.4 million in nonaccrual and restructured loans as of December 31, 2005 are carried in loans held for sale. For the year ended December 31, 2005, the Company recorded a provision for loan losses of $7.1 million compared with $2.9 million for the year ended December 31, 2004. Principally as a result of the loans held for sale plan, total net charge-offs for the year 2005 were $8.3 million. The Company's allowance for loan losses as a percentage of total loans at December 31, 2005 decreased to 1.06% compared with 1.40% at September 30, 2005 and 1.36% at December 31, 2004. THE COMPANY SNB Bancshares, Inc. is a bank holding company headquartered approximately 15 miles southwest of downtown Houston in Sugar Land, Texas, the largest city in fast growing Fort Bend County. The Company, with total assets of $1.0 billion, total loans of $656.1 million, total deposits of $891.9 million and total shareholders' equity of $84.9 million, as of December 31, 2005, has five full-service branches and two drive-through locations in Harris and Fort Bend Counties. Notice under the Private Securities Litigation Reform Act of 1995 Except for historical information contained herein, this press release may constitute forward-looking statements for the purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such, may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from the results, performance or achievements expressed or implied by such forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Act of 1995, and is including this statement for purposes of said safe harbor provisions. The Company's actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, the following: (a) the effects of future economic and business conditions on the Company and our customers; (b) changes in governmental legislation and regulations; (c) the risks of changes in interest rates; (d) competition from other banks and financial institutions for customer deposits and loans; (e) the failure of assumptions underlying the establishment of reserves for loan losses; (f) changes in the levels of loan prepayments and the resulting effects on the value of the Company's loan portfolio; (g) the failure of assumptions underlying the establishment of and provisions made to the allowance for loan losses; (h) the effect of changes in accounting policies and practices which may be adopted by regulatory agencies and/or the Financial Accounting Standards Board; (i) technological changes; (j) acquisition and integration of acquired businesses; (k) the loss of senior management or operating personnel and the potential inability to hire qualified personnel at reasonable compensation levels; (l) acts of terrorism; and (m) other risks and uncertainties listed from time to time in the Company's reports and other documents filed with the Securities and Exchange Commission. Contacts: R. Darrell Brewer, CFO (281) 269-7271 Whitney Rowe, Investor Relations & Corporate Secretary (281) 269-7220 SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands, except outstanding shares and per share data) (Unaudited) For the Three Months For the Years Ended December 31, Ended December 31, 2005 2004 % chg 2005 2004 % chg EARNINGS SUMMARY: Net earnings $(7,315) $1,453 (603.4)% $(4,972) $5,947 (183.6)% Basic earnings (loss) per share $(0.59) $0.12 (603.3) $(0.40) $0.67 (159.8) Diluted earnings (loss) per share (0.58) 0.11 (627.3) (0.39) 0.65 (160.0) Weighted average shares outstanding: Common stock 9,783,438 9,752,284 0.3 9,771,793 5,999,150 62.9 Class B stock 2,652,029 2,679,498 (1.0) 2,663,221 2,900,315 (8.2) Total 12,435,467 12,431,782 0.0 12,435,014 8,899,465 39.7 Shares outstanding at end of period: Common stock 9,784,378 9,753,612 0.3 9,784,378 9,753,612 0.3 Class B stock 2,651,475 2,679,041 (1.0) 2,651,475 2,679,041 (1.0) Total 12,435,853 12,432,653 0.0 12,435,853 12,432,653 0.0 EARNINGS STATEMENT DATA: Interest income: Loans $11,967 $9,153 30.7% $44,134 $30,770 43.4% Securities: Taxable 3,706 3,992 (7.2) 15,070 15,527 (2.9) Nontaxable 225 111 102.7 714 202 253.5 Federal funds sold and earning deposits 122 19 542.1 224 154 45.5 Total interest income 16,020 13,275 20.7 60,142 46,653 28.9 Interest expense: Demand deposits 2,355 1,323 78.0 7,709 4,514 70.8 Certificates and other time deposits 2,709 2,333 16.1 11,044 9,041 22.2 Junior subordinated debentures 710 592 19.9 2,706 2,195 23.3 Other borrowings 2,432 1,047 132.3 5,911 2,256 162.0 Total interest expense 8,206 5,295 55.0 27,370 18,006 52.0 Net interest income 7,814 7,980 (2.1) 32,772 28,647 14.4 Provision for loan losses 5,250 675 677.8 7,100 2,950 140.7 Net interest income after provision 2,564 7,305 (64.9) 25,672 25,697 (0.1) Noninterest income: Service charges on deposit accounts 242 163 48.5 889 786 13.1 Gain on sale of securities-net --- --- --- 128 700 (81.7) Impairment write- down of securities (7,633) --- --- (13,777) --- --- Other 198 182 8.8 769 634 21.3 Total noninterest income (7,193) 345 (2,184.9) (11,991) 2,120 (665.6) Noninterest expense: Salaries and employee benefits 3,071 2,980 3.1 11,850 11,365 4.3 Net occupancy expense 810 480 68.8 2,132 1,862 14.5 Data processing 455 377 20.7 1,739 1,218 42.7 Legal and professional fees 446 205 117.6 1,483 653 127.1 FDIC deposit insurance premium 27 31 (12.9) 116 115 0.9 Other 1,658 1,388 19.5 3,893 3,607 7.9 Total noninterest expense 6,467 5,461 18.4 21,213 18,821 12.7 Earnings (loss) before income taxes (11,096) 2,189 (606.9) (7,532) 8,996 (183.7) Provision (benefit) for income taxes (3,781) 736 (613.7) (2,560) 3,049 (184.0) Net earnings (loss) $(7,315) $1,453 (603.4)% $(4,972) $5,947 (183.6)% SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands, except outstanding shares and per share data) (Unaudited) Q4 Q3 Q2 Q1 Q4 2005 2005 2005 2005 2004 EARNINGS STATEMENT DATA: Interest income: Loans $11,967 $11,551 $10,819 $9,797 $9,153 Securities: Taxable 3,706 3,845 3,593 3,926 3,992 Nontaxable 225 197 159 133 111 Federal funds sold and earning deposits 122 41 47 14 19 Total interest income 16,020 15,634 14,618 13,870 13,275 Interest expense: Demand deposits 2,355 1,860 1,708 1,786 1,323 Certificates and other time deposits 2,709 2,899 2,768 2,668 2,333 Junior subordinated debentures 710 701 671 624 592 Other borrowings 2,432 1,711 885 883 1,047 Total interest expense 8,206 7,171 6,032 5,961 5,295 Net interest income 7,814 8,463 8,586 7,909 7,980 Provision for loan losses 5,250 600 650 600 675 Net interest income after provision 2,564 7,863 7,936 7,309 7,305 Noninterest income: Service charges on deposit accounts 242 195 228 223 163 Gain on sale of securities-net --- --- 128 --- --- Impairment write- down of securities (7,633) --- --- (6,144) --- Other 198 196 189 187 182 Total noninterest income (7,193) 391 545 (5,734) 345 Noninterest expense: Salaries and employee benefits 3,071 2,912 2,934 2,933 2,980 Net occupancy expense 810 477 440 405 480 Data processing 455 457 414 413 377 Legal and professional fees 446 295 353 389 205 FDIC deposit insurance premium 27 29 31 29 31 Other 1,658 777 732 726 1,388 Total noninterest expense 6,467 4,947 4,904 4,895 5,461 Earnings (loss) before income taxes (11,096) 3,307 3,577 (3,320) 2,189 Provision (benefit) for income taxes (3,781) 1,133 1,222 (1,134) 736 Net earnings (loss) $(7,315) $2,174 $2,355 $(2,186) $1,453 Basic earnings (loss) per share $(0.59) $0.17 $0.19 $(0.18) $0.12 Diluted earnings (loss) per share (0.58) 0.17 0.19 (0.17) 0.11 Weighted average shares outstanding: Common stock 9,783,438 9,782,761 9,764,858 9,755,689 9,752,284 Class B stock 2,652,029 2,652,475 2,670,095 2,678,696 2,679,498 Total 12,435,467 12,435,236 12,434,953 12,434,385 12,431,782 SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) Q4 Q4 YTD YTD 2005 2004 % chg 2005 2004 % chg BALANCE SHEET AVERAGES: Loans held for investment $664,449 $579,459 14.7% $644,738 $509,142 26.6% Loans held for sale 2,426 --- --- 611 --- --- Total loans 666,875 579,459 15.1 645,349 509,142 26.8 Allowance for loan losses (9,280) (7,748) 19.8 (9,029) (6,868) 31.5 Loans, net 657,595 571,711 15.0 636,320 502,274 26.7 Investment securities 382,440 496,204 (22.9) 415,353 482,626 (13.9) Federal funds sold 5,416 1,496 262.0 2,782 8,945 (68.9) Interest-earning deposits in other financial institutions 6,492 1,849 251.1 3,413 5,830 (41.5) Cash and due from banks 22,158 16,316 35.8 18,574 15,533 19.6 Premises and equipment 22,605 15,453 46.3 19,643 13,466 45.9 Accrued interest receivable and other assets 13,758 14,328 (4.0) 13,810 13,275 4.0 Total assets $1,110,464 $1,117,357 (0.6)% $1,109,895 $1,041,949 6.5% Demand deposits $132,270 $103,502 27.8% $118,317 $104,725 13.0% NOW, savings, and money market accounts 359,909 325,857 10.4 350,177 334,865 4.6 Time deposits 277,130 351,178 (21.1) 343,774 368,015 (6.6) Total deposits 769,309 780,537 (1.4) 812,268 807,605 0.6 Other borrowed funds 211,476 207,593 1.9 167,664 142,498 17.7 Junior subordinated debentures 36,181 38,250 (5.4) 37,729 38,250 (1.4) Accrued interest payable and other liabilities 5,960 3,977 49.9 4,942 3,440 43.7 Total liabilities 1,022,926 1,030,357 (0.7) 1,022,603 991,793 3.1 Shareholders' equity 87,538 87,000 0.6 87,292 50,156 74.0 Total liabilities and shareholders' equity $1,110,464 $1,117,357 (0.6)% $1,109,895 $1,041,949 6.5% December 31, 2005 2004 PERIOD END BALANCES: Loans held for investment $622,272 $598,292 4.0% Loans held for sale 33,796 --- --- Total loans $656,068 $598,292 9.7 Allowance for loan losses (6,965) (8,121) (14.2) Loans, net 649,103 590,171 10.0 Investment securities 266,511 488,523 (45.4) Federal funds sold 17,495 --- 0.0 Interest-earning deposits in other financial institutions 18,376 441 4066.9 Cash and due from banks 39,697 20,794 90.9 Premises and equipment 22,138 16,137 37.2 Accrued interest receivable and other assets 14,260 14,022 1.7 Total assets $1,027,580 $1,130,088 (9.1)% Demand deposits $152,629 $110,858 37.7% NOW, savings, and money market accounts 464,511 398,051 16.7 Time deposits 274,714 359,477 (23.6) Total deposits 891,854 868,386 2.7 Other borrowed funds 15,500 132,900 (88.3) Junior subordinated debentures 30,930 38,250 (19.1) Accrued interest payable and other liabilities 4,445 4,151 7.1 Total liabilities 942,729 1,043,687 (9.7) Shareholders' equity 84,851 86,401 (1.8) Total liabilities and shareholders' equity $1,027,580 $1,130,088 (9.1)% SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) Q4 Q3 Q2 Q1 Q4 2005 2005 2005 2005 2004 QUARTERLY AVERAGE BALANCE SHEET HISTORY: Loans held for investment $664,449 $658,760 $641,650 $613,375 $579,459 Loans held for sale 2,426 --- --- --- --- Total loans 666,875 658,760 641,650 613,375 579,459 Allowance for loan losses (9,280) (9,414) (9,013) (8,396) (7,748) Loans, net 657,595 649,346 632,637 604,979 571,711 Investment securities 382,440 406,438 386,894 486,885 496,204 Federal funds sold 5,416 3,449 1,366 838 1,496 Interest-earning deposits in other financial institutions 6,492 1,106 5,032 986 1,849 Cash and due from banks 22,158 19,831 14,907 17,333 16,316 Premises and equipment 22,605 20,702 18,810 16,375 15,453 Accrued interest receivable and other assets 13,758 13,330 13,150 15,024 14,328 Total assets $1,110,464 $1,114,202 $1,072,796 $1,142,420 $1,117,357 Demand deposits $132,270 $117,312 $118,122 $105,280 $103,502 NOW, savings, and money market accounts 359,909 327,733 337,496 375,990 325,857 Time deposits 277,130 339,671 369,909 389,669 351,178 Total deposits 769,309 784,716 825,527 870,939 780,537 Other borrowed funds 211,476 197,209 118,715 142,167 207,593 Junior subordinated debentures 36,181 38,250 38,250 38,250 38,250 Accrued interest payable and other liabilities 5,960 5,449 4,127 4,209 3,977 Total liabilities 1,022,926 1,025,624 986,619 1,055,565 1,030,357 Shareholders' equity 87,538 88,578 86,177 86,855 87,000 Total liabilities and shareholders' equity $1,110,464 $1,114,202 $1,072,796 $1,142,420 $1,117,357 PERIOD END BALANCES HISTORY: Loans held for investment $622,272 $658,003 $664,899 $630,048 $598,292 Loans held for sale 33,796 --- --- --- --- Total loans 656,068 658,003 664,899 630,048 598,292 Allowance for loan losses (6,965) (9,185) (9,387) (8,738) (8,121) Loans, net 649,103 648,818 655,512 621,310 590,171 Investment securities 266,511 408,473 399,523 371,684 488,523 Federal funds sold 17,495 1,450 1,150 1,210 --- Interest-earning deposits in other financial institutions 18,376 7,267 642 25,773 441 Cash and due from banks 39,697 19,472 20,793 15,950 20,794 Premises and equipment 22,138 21,835 19,615 17,769 16,137 Accrued interest receivable and other assets 14,260 13,432 12,063 14,282 14,022 Total assets $1,027,580 $1,120,747 $1,109,298 $1,067,978 $1,130,088 Demand deposits $152,629 $128,090 $118,165 $111,408 $110,858 NOW, savings, and money market accounts 464,511 330,463 327,181 368,949 398,051 Time deposits 274,714 279,766 360,413 387,012 359,477 Total deposits 891,854 738,319 805,759 867,369 868,386 Other borrowed funds 15,500 250,500 173,100 75,500 132,900 Junior subordinated debentures 30,930 38,250 38,250 38,250 38,250 Accrued interest payable and other liabilities 4,445 5,341 4,570 3,489 4,151 Total liabilities 942,729 1,032,410 1,021,679 984,608 1,043,687 Shareholders' equity 84,851 88,337 87,619 83,370 86,401 Total liabilities and shareholders' equity $1,027,580 $1,120,747 $1,109,298 $1,067,978 $1,130,088 SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) YIELD ANALYSIS: For the Three Months Ended December 31, 2005 2004 Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate Assets: Interest-earning assets: Loans $666,875 $11,967 7.02% $579,459 $9,153 6.18% Investment securities 382,440 3,931 4.23 496,204 4,103 3.35 Federal funds sold 5,416 55 3.99 1,496 7 1.94 Interest- earning deposits in other financial institutions 6,492 67 4.03 1,849 12 2.60 Total interest- earning assets 1,061,223 16,020 5.98% 1,079,008 13,275 4.87% Less allowance for loan losses (9,280) (7,748) Total interest- earning assets, net of allowance 1,051,943 1,071,260 Non-earning assets: Cash and due from banks 22,158 16,316 Premises and equipment 22,605 15,453 Accrued interest receivable and other assets 13,758 14,328 Total noninterest- earning assets 58,521 46,097 Total assets $1,110,464 $1,117,357 Liabilities and Shareholders' Equity: Interest- bearing liabilities: NOW, savings, and money market accounts $359,909 $2,355 2.60% $325,857 $1,323 1.61% Time deposits 277,130 2,709 3.88 351,178 2,333 2.64 Other borrowed funds 211,476 2,432 4.50 207,593 1,047 1.97 Junior subordinated debentures 36,181 710 7.68 38,250 592 6.05 Total interest- bearing liabilities 884,696 8,206 3.68% 922,878 5,295 2.28% Noninterest- bearing liabilities: Demand deposits 132,270 103,502 Accrued interest payable and other liabilities 5,960 3,977 Total noninterest- bearing liabilities 138,230 107,479 Total liabilities 1,022,926 1,030,357 Shareholders' equity 87,538 87,000 Total liabilities and shareholders' equity $1,110,464 $1,117,357 Net interest income $7,814 $7,980 Net interest spread 2.30% 2.59% Net interest margin 2.96% 2.96% SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) RATE VOLUME ANALYSIS: For the Three Months Ended December 31, 2005 Compared with the Same Period in 2004 Increase (Decrease) Due to Q4 Q4 Increase Change in 2005 2004 (Decrease) Volume Rate Total Interest-earning assets: Loans $11,967 $9,153 $2,814 $1,362 $1,452 $2,814 Investment securities 3,931 4,103 (172) (961) 789 (172) Federal funds sold 55 7 48 19 29 48 Interest-earning deposits in other financial institutions 67 12 55 30 25 55 Total interest income 16,020 13,275 2,745 450 2,295 2,745 Interest-bearing liabilities: NOW, savings and money market accounts 2,355 1,323 1,032 139 893 1,032 Time deposits 2,709 2,333 376 (493) 869 376 Other borrowed funds 2,432 1,047 1,385 19 1,366 1,385 Junior subordinated debentures 710 592 118 (32) 150 118 Total interest expense 8,206 5,295 2,911 (367) 3,278 2,911 Net interest income $7,814 $7,980 $(166) $817 $(983) $(166) SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) YIELD ANALYSIS: For the Years Ended December 31, 2005 2004 Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate Assets: Interest-earning assets: Loans $645,349 $44,134 6.75% $509,142 $30,770 5.94% Investment securities 415,353 15,784 3.89 482,626 15,729 3.28 Federal funds sold 2,782 101 3.59 8,945 87 0.96 Interest-earning deposits in other financial institutions 3,413 123 3.56 5,830 67 1.13 Total interest- earning assets 1,066,897 60,142 5.61% 1,006,543 46,653 4.56% Less allowance for loan losses (9,029) (6,868) Total interest- earning assets, net of allowance 1,057,867 999,675 Non-earning assets: Cash and due from banks 18,574 15,533 Premises and equipment 19,643 13,466 Accrued interest receivable and other assets 13,810 13,275 Total noninterest- earning assets 52,028 42,274 Total assets $1,109,895 $1,041,949 Liabilities and Shareholders' Equity: Interest-bearing liabilities: NOW, savings, and money market accounts $350,177 $7,709 2.20% $334,865 $4,514 1.35% Time deposits 343,774 11,044 3.21 368,015 9,041 2.46 Other borrowed funds 167,664 5,911 3.48 142,498 2,256 1.56 Junior subordinated debentures 37,729 2,706 7.07 38,250 2,195 5.64 Total interest- bearing liabilities 899,344 27,370 3.04% 883,628 18,006 2.04% Noninterest- bearing liabilities: Demand deposits 118,317 104,725 Accrued interest payable and other liabilities 4,942 3,440 Total noninterest- bearing liabilities 123,259 108,165 Total liabilities 1,022,603 991,793 Shareholders' equity 87,292 50,156 Total liabilities and shareholders' equity $1,109,895 $1,041,949 Net interest income $32,772 $28,647 Net interest spread 2.57% 2.52% Net interest margin 3.11% 2.85% SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) RATE VOLUME ANALYSIS: For the Years Ended December 31, 2005 and 2004 Increase (Decrease) Due to Increase Change in 2005 2004 (Decrease) Volume Rate Total Interest-earning assets: Loans $44,134 $30,770 $13,364 8,097 5,267 $13,364 Investment securities 15,784 15,729 55 (2,207) 2,262 55 Federal funds sold 101 87 14 (59) 73 14 Interest-earning deposits in other financial institutions 123 67 56 (27) 83 56 Total interest income 60,142 46,653 13,489 5,804 7,685 13,489 Interest-bearing liabilities: NOW, savings and money market accounts 7,709 4,514 3,195 206 2,989 3,195 Time deposits 11,044 9,041 2,003 (596) 2,599 2,003 Other borrowed funds 5,911 2,256 3,655 392 3,263 3,655 Junior subordinated debentures 2,706 2,195 511 (29) 540 511 Total interest expense 27,370 18,006 9,364 (27) 9,391 9,364 Net interest income $32,772 $28,647 $4,125 $5,831 $(1,706) $4,125 SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars in thousands) (Unaudited) LOAN PORTFOLIO: As of December 31, As of December 31, 2005 2004 Amount Percent Amount Percent Business and industrial $74,326 11.3 % $70,101 11.7 % Real estate: Construction and land development 137,403 20.9 123,655 20.7 Residential 113,838 17.4 126,200 21.1 Commercial mortgages 284,521 43.3 267,158 44.7 Consumer 13,579 2.1 12,592 2.1 Held for sale, at fair value 33,796 5.2 --- 0.0 Other 229 0.0 227 0.0 Gross loans 657,692 100.2 599,933 100.3 Less unearned discounts and fees (1,624) (0.2) (1,641) (0.3) Total loans $ 656,068 100.0 % $ 598,292 100.0 % NONPERFORMING ASSETS: As of As of As of December 31, September 30, December 31, 2005 2005 2004 Nonaccrual loans $9,866 $9,472 $ 1,489 Accruing loans past due 90 days or more --- --- 62 Restructured loans 1,554 1,839 1,917 Other real estate and repossessed assets 1,569 490 1,320 Total nonperforming assets $12,989 $11,801 $ 4,788 Nonperforming assets to total loans and other real estate 1.98 % 1.79 % 0.80 % ALLOWANCE FOR LOAN LOSSES: As of and for the Year Ended December 31, December 31, 2005 2004 Allowance for loan losses at beginning of period $ 8,121 $ 5,650 Provision for loan losses 7,100 2,950 Charge-Offs: Business and industrial (902) (242) Real estate (33) (262) Consumer (114) (110) Held for sale (7,333) --- Total charge-offs (8,382) (614) Recoveries: Business and industrial 76 50 Real estate 34 63 Consumer 16 22 Total recoveries 126 135 Net recoveries (charge-offs) (8,256) (479) Allowance for loan losses at end of period $ 6,965 $ 8,121 Allowance for loan losses to end of period loans 1.06 % 1.36 % Net charge-offs to average loans 1.28 0.09 Allowance for loans losses to end of period nonperforming loans 60.99 234.17 SNB BANCSHARES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED FINANCIAL DATA (Unaudited) SELECTED RATIOS AND OTHER DATA: Q4 Q4 YTD YTD 2005 2004 2005 2004 Return on average assets (2.61)% 0.52 % (0.45)% 0.57% Return on average equity (33.15) 6.64 (5.70) 11.86 Average equity to average total assets 7.88 7.79 7.86 4.81 Tax equivalent yield on earning assets 5.98 4.87 5.61 4.59 Cost of funds with demand account 3.20 2.05 2.69 1.82 Net interest margin, tax equivalent 2.96 2.96 3.11 2.85 Non-interest expense to average total assets 2.31 1.94 1.91 1.81 Efficiency ratio 78.35 65.58 61.61 62.60 End of period book value per share $ 6.82 $ 6.95 Full time equivalent employees 166 164 Common Stock Performance: Fourth quarter Third quarter 2005 2005 Market value of common stock - End of period $ 17.40 $ 11.25 Market value of common stock - High 18.15 11.90 Market value of common stock - Low 9.77 10.85 As of As of December 31, September 30, 2005 2005 Book value of common stock $ 6.82 $ 7.10 Market/book value of common stock 255.02 % 158.37 % Price/12 month trailing earnings ratio (43.52) x 36.85 x FCMN Contact: rowew@snbtx.com DATASOURCE: SNB Bancshares, Inc. CONTACT: R. Darrell Brewer, CFO, +1-281-269-7271, or , or Whitney Rowe, Investor Relations & Corporate Secretary, +1-281-269-7220, or , both of SNB Bancshares, Inc. Web site: http://www.snbtx.com/

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