State Bank Achieves SBA Lender Status & 

Opens New Loan Production Office

February 23, 2004

For Information Contact:

Tom Adams, 979.968.7261

       AUSTIN –Texas United Bancshares, Inc. announced today that its wholly owned subsidiary, State Bank, recently achieved Preferred Lender Status through its Small Business Administration Lending Division (SBA) and has opened a new loan production facility in San Antonio, according to Michael Litton, State Bank SBA Lending Group Manager. 

            “Preferred lender status allows State Bank’s SBA Group to exercise delegated authority on the SBA’s 7(a) loan program.  This will reduce the turnaround time for processing SBA loans by as much as several weeks,” Litton said.

            State Bank was granted this authority by the SBA Central Office in Washington based on the recommendations of two district offices in Texas one year from the date it entered the SBA program.  The authority recognizes State Bank’s performance, staff experience levels, safety and soundness of the bank, as well as its demonstrated proficiency in making, servicing and liquidating SBA loans.

            State Bank’s new loan production office will serve the markets of San Antonio, New Braunfels, Seguin, Gonzales and South Texas.  It will be headed by State Bank Vice President, Michelle Machen who has 11 years of experience in the San Antonio and surrounding area marketplace.  State Bank will be offering SBA 7(a) and 504 loans, as well as USDA B & I loans, through the office located at 8000 IH 10, Suite 600 to help growing businesses access funds that are not available through conventional sources.

            In addition to its new loan processing office in San Antonio, State Bank is actively serving 86 counties in the Austin-Houston-San Antonio areas with SBA-assisted financing. 

            “State Bank has a premier team of experts with combined experience in SBA lending of more than 60 years,” Litton added.  “We offer an unparalleled level of expertise, common sense underwriting and solutions to the problems common to small business owners everywhere.  We know our markets and all decisions are made locally.  We don’t have to call someone in another time zone to get a decision on a loan for a market they aren’t necessarily familiar with.  We make loans where we live and work.”

Texas United Bancshares, Inc. is a registered financial holding company that trades on the Nasdaq National Market under the ticker symbol "TXUI." State Bank, a wholly owned subsidiary of Texas United Bancshares, Inc., conducts a complete range of banking services in the greater central and south central Texas area. Headquartered in La Grange, State Bank operates 18 full-service banking centers located in the Texas counties of Fayette, Lee, Waller, Atascosa, Comal, Harris, Williamson, Travis, Colorado, Gonzales, and Brazos.            

Except for historical information, certain of the matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including, but not limited to, the following: general business and economic conditions in the markets Texas United serves may be less favorable than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; changes in the interest rate environment which could reduce Texas United's net interest margin; acquisition integration may be more difficult than anticipated; legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; competitive factors may increase, including product and pricing pressures among financial services organizations; and changes in accounting principles, policies or guidelines.  All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements.  Please also read the additional risks and factors described from time to time in the company's reports and registration statements filed with the Securities and Exchange Commission.