TRBS Texas Regional Bancshares

Texas Regional Bancshares, Inc. Reports Second Quarter Earnings MCALLEN, Texas, July 18 /PRNewswire-FirstCall/ -- Texas Regional Bancshares, Inc. ("Texas Regional") (NASDAQ:TRBS), bank holding company for Texas State Bank, today reported net income for second quarter 2005 of $21,914,000, or $0.44 per diluted common share, compared to $18,832,000, or $0.38 per diluted common share, for the comparable 2004 period. All per share amounts for prior periods have been adjusted for the three-for-two stock split effected as a 50 percent stock dividend declared and distributed to shareholders of Texas Regional during third quarter 2004. Return on assets and return on shareholders' equity averaged 1.43 percent and 14.26 percent, respectively, compared to 1.39 percent and 13.79 percent, respectively, for the corresponding 2004 period. For the six months ended June 30, 2005, net income totaled $45,713,000, or $0.92 per diluted common share, compared to $35,989,000, or $0.76 per diluted common share, for the corresponding 2004 period. Return on assets and return on shareholders' equity averaged 1.51 percent and 15.07 percent, respectively for the six months ended June 30, 2005, compared to 1.46 percent and 14.41 percent, respectively, for the matching 2004 period. Texas Regional completed the acquisitions of Southeast Texas Bancshares, Inc. ("Southeast Texas") on March 12, 2004, Valley Mortgage Company, Inc. ("Valley Mortgage") on November 23, 2004 and Mercantile Bank & Trust, FSB ("Mercantile") on January 14, 2005. The results of operations for Southeast Texas, Valley Mortgage and Mercantile have been included in the consolidated financial statements since their respective purchase dates. The Company benefited from special distributions received during the first and second quarters of 2005, as a result of the merger of PULSE EFT Association with Discover Financial Services, a business unit of Morgan Stanley. Such distributions amounted to $0.01 per diluted common share for second quarter of 2005 and $0.08 per diluted common share for the six months ended June 30, 2005. "Our earnings per share continue to show increases over the corresponding periods of the prior year. Adjusted for securities gains and one-time gains, earnings per share grew 16.7 percent for the second quarter of 2005, and 13.7 percent for the first half of the year as compared to the respective 2004 periods," said Glen E. Roney, Chairman of the Board. "We are also expanding our 71 banking center network. There are currently new banking centers under construction in Houston, Dallas and Bishop and in June we moved into our new facility in Eagle Pass. Furthermore, we have acquired three additional sites in Houston and one in Corpus Christi." Operating Highlights Net interest income of $58,475,000 for second quarter 2005 increased $6,741,000, or 13.0 percent over second quarter 2004. Average total interest- earning assets, the primary factor in net interest income growth, increased 13.6 percent from second quarter 2004 to $5,594,489,000 for second quarter 2005. The net interest margin, on a taxable-equivalent basis, decreased four basis points to 4.26 percent for second quarter 2005 compared to the corresponding 2004 period. For the six months ended June 30, 2005, net interest income totaled $116,155,000, reflecting a $21,317,000 or 22.5 percent increase from the equivalent 2004 period. This growth resulted principally from an increase of 21.9 percent in average total interest-earning assets to $5,539,218,000 for the six months ended June 30, 2005 as compared to the 2004 period. The net interest margin, on a taxable-equivalent basis, for the six months ended June 30, 2005 was 4.30 percent, an increase of two basis points when compared to the matching 2004 period. Provision for loan losses of $5,801,000 for second quarter 2005 increased $1,108,000 or 23.6 percent as compared to the provision for loan losses during second quarter 2004, primarily due to an increase in loan volume. The provision for loan losses represented 0.60 percent of average loans held for investment for second quarter 2005 compared to 0.56 percent for second quarter 2004. Net charge-offs totaled $5,091,000 for second quarter 2005, representing 0.53 percent of average loans held for investment compared to 0.46 percent of average loans held for investment for second quarter 2004. For the six months ended June 30, 2005, provision for loan losses totaled $11,208,000, reflecting a $2,591,000 or 30.1 percent increase over the comparable prior year period. Provision for loan losses totaled 0.58 percent of average loans held for investment for the six months ended June 30, 2005 compared to 0.57 percent for the six months ended June 30, 2004. Noninterest income of $20,441,000 for second quarter 2005 increased $1,497,000 or 7.9 percent over second quarter 2004. Service charges on deposits amounted to $9,641,000 for second quarter 2005, a decrease of $623,000 as compared to second quarter 2004. The decrease in service charges on deposits resulted primarily from a $715,000 reduction in non-sufficient and return item charges during the second quarter of 2005 compared to the same quarter of 2004. Trust service fees of $1,904,000 for second quarter 2005 increased 31.9 percent over second quarter 2004 attributable to an increase in the average fair value of trust accounts by 29.0 percent during second quarter 2005 compared to the same period of the prior year. The increase in the average fair value of trust accounts was primarily due to additional trust business developed during the last twelve months. The fair value of assets managed by the trust department totaled $1,681,922,000 at June 30, 2005. Net realized gains on sales of securities available for sale decreased to a $323,000 net gain for second quarter 2005 compared to a $1,383,000 net gain for second quarter 2004. Loan servicing income (loss), net of amortization of the mortgage servicing rights ("MSR") asset, increased to $3,000 net servicing income for second quarter 2005 compared to $279,000 net servicing loss for second quarter 2004. This reflects an increase of $282,000 from the prior year period. The increase resulted primarily from $170,000 in servicing income from Valley Mortgage, as well as a decrease in MSR amortization of $219,000 during second quarter 2005 compared to second quarter 2004. Other noninterest income increased by $1,993,000 to $2,738,000 for second quarter 2005 compared to second quarter 2004, primarily due to a $1,112,000 increase in gains on sale of loans held for sale and mortgage servicing rights. In addition, during second quarter 2005, the Company received a $908,000 special distribution, as a result of the merger of PULSE EFT Association with Discover Financial Services. For the six months ended June 30, 2005, noninterest income totaled $45,102,000 reflecting an increase of $12,763,000 or 39.5 percent over the corresponding 2004 period. Service charges on deposits increased $1,219,000 to $18,781,000 for the six months ended June 30, 2005 compared to the same 2004 period, primarily due to deposit growth, including related item charges. Total deposits increased 12.0 percent from the comparable prior year. Other service charges increased $1,444,000 to $5,654,000 for the six months ended June 30, 2005, primarily due to an increase in merchant credit and debit card income of $841,000 and mortgage banking fees of $236,000. Net realized gains on sales of securities available for sale of $321,000 for the six months ended June 30, 2005 decreased $1,561,000 from the comparable prior year period as callable security sales were decreased during a period of rising interest rates. Loan servicing income (loss), net of amortization of the MSR asset, increased $617,000 to $156,000 net servicing income for the six months ended June 30, 2005 compared to the net servicing loss for the matching 2004 period. The increase is primarily due to $351,000 in servicing income generated from Valley Mortgage, as well as a decrease of $476,000 in MSR amortization for the six months ended June 30, 2005 compared to the corresponding 2004 period. Other noninterest income increased by $8,344,000 to $9,696,000 for the six months ended June 30, 2005 compared to the same 2004 period. The increase is primarily due to an aggregate $6,160,000 in special distributions received during the first two quarters of 2005, as a result of the merger of PULSE EFT Association with Discover Financial Services. Noninterest expense of $39,072,000 for second quarter 2005 increased $703,000 or 1.8 percent over second quarter 2004. This increase corresponds generally with growth in business volumes during the twelve months ended June 30, 2005, including business volumes attributable to the acquisition of Mercantile and its three banking centers in January 2005 and increases from the Weslaco banking center opened in February 2005. As of June 30, 2005, Texas State Bank had a total of 71 banking centers. The efficiency ratio was 49.51 percent for the quarter ended June 30, 2005, compared to 54.29 percent for the quarter ended June 30, 2004. The improvement in the efficiency ratio resulted primarily from the minor increase in noninterest expense. Noninterest expense increased only 1.8 percent during second quarter 2005 compared to the same period in 2004 primarily due to the reversal of $1,179,000 in pension plan and bonus expense accrued during the first quarter of 2005 compared to $1,322,000 in pension plan and bonus expense during the second quarter of 2004. The efficiency ratio was also affected by the $908,000 special distribution received from the merger of PULSE EFT Association with Discover Financial Services during second quarter 2005. For the six months ended June 30, 2005, noninterest expense totaled $80,094,000 reflecting an increase of $14,942,000 or 22.9 percent over the corresponding 2004 period due to the above mentioned growth in banking operations. Noninterest expense as a percent of average total assets for the six months ended June 30, 2005 was 2.65 percent, representing an increase of two basis points when compared to the same 2004 period. Salaries and employee benefits increased $9,121,000 to $42,326,000 for the six months ended June 30, 2005 compared to the six months ended June 30, 2004 primarily due to higher salaries and staffing levels resulting from recent acquisitions. The number of full-time equivalent employees of 2,057 at June 30, 2005 represented an increase of 8.2 percent as compared to the number of full-time equivalent employees at June 30, 2004. Salaries and employee benefits represented 1.40 percent of average total assets for the six months ended June 30, 2005, an increase of six basis points compared to the six months ended June 30, 2004. The efficiency ratio totaled 49.67 percent for the six months ended June 30, 2005 compared to 51.23 percent for the corresponding 2004 period. Financial Condition Assets totaled $6,226,165,000 at June 30, 2005, reflecting an increase of $787,417,000, or 14.5 percent from June 30, 2004, primarily due to an increase in loan production. Loans held for investment of $3,903,850,000 at June 30, 2005 increased $465,184,000 or 13.5 percent from June 30, 2004. Deposits increased to $5,153,937,000 at June 30, 2005, up $552,713,000 or 12.0 percent from June 30, 2004. Excluding volumes acquired through business combinations, internal growth rates for loans and deposits averaged 10.1 percent and 8.2 percent, respectively, for the twelve months ended June 30, 2005. Other assets at June 30, 2005 included total goodwill and identifiable intangibles of $223,402,000. Shareholders' equity at June 30, 2005 increased $82,123,000 from June 30, 2004 to $621,624,000, reflecting a 15.2 percent increase. The increase resulted primarily from net income for the twelve months ended June 30, 2005 of $86,382,000. The total risk-based, tier 1 risk-based and leverage capital ratios of 11.74 percent, 10.66 percent and 7.98 percent at period end, respectively, substantially exceeded regulatory requirements for a well- capitalized bank holding company. Asset Quality At June 30, 2005, total loans held for investment of $3,903,850,000 included $46,688,000 or 1.20 percent classified as nonperforming compared to 0.35 percent at June 30, 2004. Nonperforming loans increased by $34,723,000 to $46,688,000 at June 30, 2005 compared to $11,965,000 at June 30, 2004. The increase resulted primarily from the addition of five loan relationships totaling $33,465,000. The allowance for loan losses of $48,022,000 represented 1.23 percent of loans held for investment and 102.86 percent of nonperforming loans at June 30, 2005. The allowance for loan losses of $41,956,000 at June 30, 2004 represented 1.22 percent of loans held for investment and 350.66 percent of nonperforming loans. Net charge-offs for second quarter 2005 were 0.53 percent of average loans held for investment compared to 0.46 percent for second quarter 2004. Total nonperforming assets at June 30, 2005 of $56,010,000 represented 1.43 percent of total loans held for investment and foreclosed and other assets compared to 0.65 percent at June 30, 2004. Accruing loans 90 days or more past due of $22,782,000 at June 30, 2005 totaled 0.58 percent of total loans held for investment and foreclosed and other assets compared to 0.23 percent at June 30, 2004. Accruing loans 90 days or more past due increased by $14,677,000 to $22,782,000 at June 30, 2005 compared to $8,105,000 at June 30, 2004. This increase is primarily a result of the addition of six loan relationships totaling $17,632,000 during the last year. Since June 30, 2005, a cash payment of $4,000,000 has been made on the Company's largest nonperforming credit. Also since June 30, 2005, the borrower on the Company's second largest problem credit closed a real estate transaction, which according to the terms of the settlement, provides for a payment of approximately $4,000,000 to be paid to the Company. As of June 30, 2005, this problem credit was classified as 90 days past due and still accruing, and had a principal balance of approximately $7,000,000. Management anticipates that upon receipt of the funding of this payment, the principal balance of the credit will be substantially reduced without a change in the Company's collateral position. Over $2,600,000 of the Company's foreclosed real estate properties as of June 30, 2005 have pending contracts for sale. Management anticipates closing on most if not all of these transactions within the next 60 days. Other Information Texas Regional will host a conference call with analysts and investment professionals on Monday, July 18, 2005 at 10:00 a.m. CDT. Interested parties may listen to the live call by dialing (800) 289-0528 or can access the live webcast on the Internet at http://www.trbsinc.com/. The broadcast can be accessed by clicking the webcast link from the home page. A telephone replay will be available through the end of day Friday, July 22nd. To access the replay, dial (888) 203-1112; ID number 6478948. The webcast of the conference call will be archived on the Company's website at http://www.trbsinc.com/. Texas Regional paid a quarterly cash dividend of $0.12 per share on July 15, 2005 to common shareholders of record on July 1, 2005. This dividend represents a $0.037 per share, or 44.6 percent increase over the dividend paid for the same period in 2004. Texas Regional is a McAllen-based bank holding company whose stock trades on The Nasdaq Stock Market(R) under the symbol TRBS. Texas State Bank, its wholly owned subsidiary, conducts commercial banking business through 71 banking centers primarily located in the metropolitan areas of Beaumont-Port Arthur, Brownsville-Harlingen-San Benito, Corpus Christi, Dallas, Houston, McAllen-Edinburg-Mission and Tyler. Additional financial, statistical and business-related information, as well as business trends, is included in a Financial Supplement. This release, the Financial Supplement and other information are available on Texas Regional's website at http://www.trbsinc.com/. The Financial Supplement and other information available on Texas Regional's website can also be obtained by calling John A. Martin, Chief Financial Officer, at (956) 631-5400. This document and information on Texas Regional's website may contain forward-looking information (including information related to plans, projections or future performance of Texas Regional and its subsidiaries and planned market opportunities, employment opportunities and synergies from mergers), the occurrence of which involve certain risks, uncertainties, assumptions and other factors which could materially affect future results. If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, Texas Regional's results could differ materially from Texas Regional's expectations in these statements. Texas Regional assumes no obligation and does not intend to update these forward-looking statements. For further information, please see Texas Regional's reports filed with the SEC pursuant to the Securities Exchange Act of 1934, which are available at Texas Regional's website at http://www.trbsinc.com/ and the SEC's website at http://www.sec.gov/. Texas Regional Bancshares, Inc. and Subsidiaries Financial Highlights (Unaudited) At / For Three Months Ended (Dollars in Thousands, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Except Per Share Data) 2005 2005 2004 2004 2004 Condensed Income Statements Loans Held for Investment $70,001 $66,061 $62,127 $57,904 $54,669 Securities 15,459 14,139 13,283 13,399 12,573 Other Interest- Earning Assets 856 776 498 254 389 Total Interest Income 86,316 80,976 75,908 71,557 67,631 Deposits 24,280 20,238 17,538 15,638 14,185 Other Borrowed Money 3,561 3,058 2,802 2,098 1,712 Total Interest Expense 27,841 23,296 20,340 17,736 15,897 Net Interest Income 58,475 57,680 55,568 53,821 51,734 Provision for Loan Losses 5,801 5,407 5,769 6,197 4,693 Service Charges - Deposits 9,641 9,140 10,449 10,530 10,264 Other Service Charges 2,704 2,950 2,326 2,194 2,182 Insurance Commission, Fees and Premiums 980 998 1,259 1,173 1,077 Trust Service Fees 1,904 1,840 1,843 1,674 1,444 Net Realized Gains (Losses) on Sales of Securities Available for Sale 323 (2) 1,010 2,963 1,383 Data Processing Service Fees 2,148 2,624 2,201 2,080 2,128 Loan Servicing Income (Loss), Net 3 153 (188) (67) (279) Other Noninterest Income 2,738 6,958 1,097 658 745 Total Noninterest Income 20,441 24,661 19,997 20,595 18,944 Salaries and Employee Benefits 19,609 22,717 20,527 20,372 19,428 Net Occupancy Expense 3,747 3,414 3,000 3,136 3,299 Equipment Expense 3,610 3,323 3,655 3,222 3,234 Other Real Estate (Income) Expense, Net 418 229 (199) (57) 572 Amortization - Identifiable Intangibles 1,652 1,841 1,791 1,987 1,602 Other Noninterest Expense, Net 10,036 9,498 9,758 9,624 10,234 Total Noninterest Expense 39,072 41,022 38,532 38,284 38,369 Income Before Income Tax Expense 34,043 35,912 31,264 29,935 27,616 Income Tax Expense 12,129 12,113 10,416 10,114 8,784 Net Income $21,914 $23,799 $20,848 $19,821 $18,832 Per Common Share Data (1) Net Income-Basic $ 0.44 $ 0.48 $ 0.42 $ 0.41 $ 0.39 Net Income-Diluted 0.44 0.48 0.42 0.40 0.38 Market Value at Period End 30.48 30.11 32.68 31.09 30.61 Book Value at Period End 12.53 12.12 11.99 11.67 11.04 Cash Dividends Declared 0.120 0.100 0.100 0.100 0.083 Share Data (1) (in Thousands) Basic 49,606 49,570 49,185 48,921 48,858 Diluted 49,855 49,855 49,566 49,500 49,424 Shares Outstanding at Period End (1) 49,624 49,592 49,553 48,960 48,875 Selected Financial Data Return on Average Assets 1.43% 1.60% 1.46% 1.43% 1.39% Return on Average Equity 14.26 15.90 14.10 14.10 13.79 Leverage Capital Ratio 7.98 7.83 8.32 8.17 7.99 Expense Efficiency Ratio (2) 49.51 49.82 50.99 51.45 54.29 TE Net Interest Income (3) $59,396 $58,679 $56,658 $54,813 $52,653 TE Adjustment (3) 921 999 1,090 992 919 Net Interest Income, as Reported 58,475 57,680 55,568 53,821 51,734 TE Net Interest Margin (3) 4.26% 4.34% 4.36% 4.34% 4.30% Goodwill, Net 194,849 194,963 174,503 163,928 165,637 Identifiable Intangibles, Net 28,553 30,022 29,607 30,803 30,668 Selected Financial Data - Continued Trust Assets Held, at Fair Value $1,681,922 $1,475,545 $1,466,841 $1,420,664 $1,315,346 Full-Time Equivalent Employees 2,057 2,061 1,997 1,914 1,901 Condensed Balance Sheets Loans Held for Investment $3,903,850 $3,843,779 $3,750,519 $3,538,428 $3,438,666 Securities 1,741,827 1,652,438 1,530,713 1,513,536 1,470,178 Other Interest-Earning Assets 24,307 47,834 29,769 20,471 17,728 Total Interest- Earning Assets 5,669,984 5,544,051 5,311,001 5,072,435 4,926,572 Cash and Due from Banks 141,181 133,450 145,528 138,860 134,907 Premises and Equipment, Net 143,136 140,145 134,239 131,443 128,302 Other Assets, Net 319,886 319,140 293,603 319,697 290,923 Allowance for Loan Losses (48,022) (47,313) (45,024) (43,153) (41,956) Total Assets $6,226,165 $6,089,473 $5,839,347 $5,619,282 $5,438,748 Savings and Time Deposits $4,237,210 $4,081,869 $3,894,067 $3,721,681 $3,740,983 Other Borrowed Money 405,888 441,329 461,751 437,970 280,868 Total Interest- 4,643,098 4,523,198 4,355,818 4,159,651 4,021,851 Bearing Liabilities Demand Deposits 916,727 920,271 866,773 850,432 860,241 Other Liabilities 44,716 45,108 22,698 37,808 17,155 Total Liabilities 5,604,541 5,488,577 5,245,289 5,047,891 4,899,247 Shareholders' Equity 621,624 600,896 594,058 571,391 539,501 Total Liabilities and Equity $6,226,165 $6,089,473 $5,839,347 $5,619,282 $5,438,748 Condensed Average Balance Sheets Loans Held for Investment $3,876,051 $3,858,477 $3,631,640 $3,483,354 $3,383,797 Securities 1,685,893 1,581,314 1,517,518 1,523,544 1,501,918 Other Interest-Earning Assets 32,545 43,542 23,820 17,987 40,621 Total Interest- Earning Assets 5,594,489 5,483,333 5,172,978 5,024,885 4,926,336 Cash and Due from Banks 130,212 143,284 136,899 126,523 141,624 Premises and Equipment, Net 141,391 138,366 132,538 129,560 126,577 Other Assets, Net 321,237 314,765 294,784 292,067 290,574 Allowance for Loan Losses (48,500) (48,548) (44,804) (43,108) (43,849) Total Assets $6,138,829 $6,031,200 $5,692,395 $5,529,927 $5,441,262 Savings and Time Deposits $4,184,552 $4,103,834 $3,804,139 $3,758,880 $3,747,073 Other Borrowed Money 404,928 396,068 399,386 312,575 283,272 Total Interest- 4,589,480 4,499,902 4,203,525 4,071,455 4,030,345 Bearing Liabilities Demand Deposits 902,549 896,633 871,569 864,818 834,725 Other Liabilities 30,556 27,655 29,216 34,473 26,852 Total Liabilities 5,522,585 5,424,190 5,104,310 4,970,746 4,891,922 Shareholders' Equity 616,244 607,010 588,085 559,181 549,340 Total Liabilities and Equity $6,138,829 $6,031,200 $5,692,395 $5,529,927 $5,441,262 Nonperforming Assets & Past Due Loans Nonaccrual Loans $44,884 $41,518 $19,750 $16,610 $11,965 Restructured Loans 1,804 -- -- -- -- Foreclosed and Other Assets 9,322 8,002 7,398 11,386 10,594 Total Nonperforming Assets 56,010 49,520 27,148 27,996 22,559 Accruing Loans 90 Days or More Past Due 22,782 27,764 19,684 6,785 8,105 Net Charge-Offs 5,091 4,642 3,898 5,000 3,831 Net Charge-Offs to Average Loans 0.53% 0.49% 0.43% 0.57% 0.46% Texas Regional Bancshares, Inc. and Subsidiaries Financial Highlights (Unaudited) At / For Six Months Ended (Dollars in Thousands, Jun 30, Jun 30, Except Per Share Data) 2005 2004 Condensed Income Statements Loans Held for Investment $136,062 $99,184 Securities 29,598 24,703 Other Interest-Earning Assets 1,632 682 Total Interest Income 167,292 124,569 Deposits 44,518 26,623 Other Borrowed Money 6,619 3,108 Total Interest Expense 51,137 29,731 Net Interest Income 116,155 94,838 Provision for Loan Losses 11,208 8,617 Service Charges - Deposits 18,781 17,562 Other Service Charges 5,654 4,210 Insurance Commission, Fees and Premiums 1,978 1,373 Trust Service Fees 3,744 2,171 Net Realized Gains on Sales of Securities Available for Sale 321 1,882 Data Processing Service Fees 4,772 4,250 Loan Servicing Income (Loss), Net 156 (461) Other Noninterest Income 9,696 1,352 Total Noninterest Income 45,102 32,339 Salaries and Employee Benefits 42,326 33,205 Net Occupancy Expense 7,161 5,472 Equipment Expense 6,933 5,961 Other Real Estate Expense, Net 647 693 Amortization - Identifiable Intangibles 3,493 2,400 Other Noninterest Expense, Net 19,534 17,421 Total Noninterest Expense 80,094 65,152 Income Before Income Tax Expense 69,955 53,408 Income Tax Expense 24,242 17,419 Net Income $45,713 $35,989 Per Common Share Data (1) Net Income-Basic $0.92 $0.76 Net Income-Diluted 0.92 0.76 Market Value at Period End 30.48 30.61 Book Value at Period End 12.53 11.04 Cash Dividends Declared 0.220 0.166 Share Data (1) (in Thousands) Basic 49,588 47,048 Diluted 49,824 47,576 Shares Outstanding at Period End (1) 49,624 48,875 Selected Financial Data Return on Average Assets 1.51% 1.46% Return on Average Equity 15.07 14.41 Leverage Capital Ratio 7.98 7.99 Expense Efficiency Ratio (2) 49.67 51.23 TE Net Interest Income (3) $118,075 $96,620 TE Adjustment (3) 1,920 1,782 Net Interest Income, as Reported $116,155 $94,838 TE Net Interest Margin (3) 4.30% 4.28% Goodwill, Net $194,849 $165,637 Identifiable Intangibles, Net 28,553 30,668 Trust Assets Held, at Fair Value 1,681,922 1,315,346 Full-Time Equivalent Employees 2,057 1,901 Condensed Balance Sheets Loans Held for Investment $3,903,850 $3,438,666 Securities 1,741,827 1,470,178 Other Interest-Earning Assets 24,307 17,728 Total Interest-Earning Assets 5,669,984 4,926,572 Cash and Due from Banks 141,181 134,907 Premises and Equipment, Net 143,136 128,302 Other Assets, Net 319,886 290,923 Allowance for Loan Losses (48,022) (41,956) Total Assets $6,226,165 $5,438,748 Savings and Time Deposits $4,237,210 $3,740,983 Other Borrowed Money 405,888 280,868 Total Interest-Bearing Liabilities 4,643,098 4,021,851 Demand Deposits 916,727 860,241 Other Liabilities 44,716 17,155 Total Liabilities 5,604,541 4,899,247 Shareholders' Equity 621,624 539,501 Total Liabilities and Equity $6,226,165 $5,438,748 Condensed Average Balance Sheets Loans Held for Investment $3,867,312 $3,048,721 Securities 1,633,892 1,459,414 Other Interest-Earning Assets 38,014 36,321 Total Interest-Earning Assets 5,539,218 4,544,456 Cash and Due from Banks 136,712 122,766 Premises and Equipment, Net 139,887 119,013 Other Assets, Net 318,019 225,763 Allowance for Loan Losses (48,524) (39,453) Total Assets $6,085,312 $4,972,545 Savings and Time Deposits $4,144,416 $3,462,058 Other Borrowed Money 400,523 265,050 Total Interest-Bearing Liabilities 4,544,939 3,727,108 Demand Deposits 899,607 717,224 Other Liabilities 29,114 25,830 Total Liabilities 5,473,660 4,470,162 Shareholders' Equity 611,652 502,383 Total Liabilities and Equity $6,085,312 $4,972,545 Nonperforming Assets & Past Due Loans Nonaccrual Loans $44,884 $11,965 Restructured Loans 1,804 -- Foreclosed and Other Assets 9,322 10,594 Total Nonperforming Assets 56,010 22,559 Accruing Loans 90 Days or More Past Due 22,782 8,105 Net Charge-Offs 9,733 6,690 Net Charge-Offs to Average Loans 0.51% 0.44% Certain amounts in the prior periods' presentation have been reclassified to conform to the current presentation. These reclassifications have no effect on previously reported net income. (1) Restated to retroactively give effect for the three-for-two stock split effected as a 50% stock dividend declared and distributed by the Company during third quarter 2004. (2) Ratio of Noninterest Expense divided by the sum of Net Interest Income and Noninterest Income. (3) Taxable-equivalent adjustment computed based on a 35% tax rate. CONTACT: Glen E. Roney, Chief Executive Officer, or John A. Martin, Chief Financial Officer, (956) 631-5400, both of Texas Regional. DATASOURCE: Texas Regional Bancshares, Inc. CONTACT: Glen E. Roney, Chief Executive Officer, or John A. Martin, Chief Financial Officer, +1-956-631-5400, both of Texas Regional Web site: http://www.trbsinc.com/

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