July 30, 2003

For Information Contact:
Erica Vasek at State Bank (979) 968-7294
erica.vasek@statebanktx.com

LA GRANGE - Texas United Bancshares, Inc. (Nasdaq: TXUI) today reported second quarter 2003 net income of $1.4 million or $0.50 per diluted share, compared with net income of $1.3 million or $0.50 per diluted share for the second quarter of 2002. For the three months ended June 30, 2003, the annualized return on average assets was 0.93% and annualized return on average equity was 14.4%. For the first six months of 2003, net income was $2.5 million or $0.92 per diluted share, down from $2.7 million or $1.03 per diluted share in the first six months of 2002. The annualized return on average assets was 0.84% and annualized return on average equity was 13.5% for the first six months of the year.

"Earnings were stable for the first six months of 2003 compared to the same period last year despite the impairment in fair value of the Company's mortgage servicing rights portfolio and the increased provision for loan losses," said Don Stricklin, President and Chief Executive Officer. "The residential servicing portfolio grew $66.6 million or 48.4% since December 31, 2002, while the value of the mortgage servicing rights asset has increased only $100,000 or 3.4% during the same period."

"We are pleased to report a $15.2 million or 18.5% increase in our non-interest bearing deposits since December 31, 2002 as a result of new commercial relationships in banking centers less than three years old," added Mr. Stricklin. The Company's net interest margin remains stable in spite of the challenging rate environment."

Other financial results for the quarter included net interest income of $6.8 million before provision for loan losses, up 30.8% from the second quarter of 2002. For the first six months of 2003, net interest income before the provision for loan losses was $13.3 million, up 35.7% from the first six months of 2002. The net interest margin for the second quarter of 2003 was 5.16% compared with 5.29% for the same period in 2002. Average total loans, including loans held for sale, for the second quarter of 2003 were up $93.8 million, a 34.2% increase from the second quarter last year. Average deposits for the second quarter of 2003 were up $105.9 million, a 28.6% increase from the same period of 2002.

Non-interest income was $3.4 million in the second quarter of 2003, compared to $2.6 million for the same period in 2002. For the first six months of 2003, non-interest income was $6.0 million, compared with $5.6 million for the same period in 2002.

Non-interest expenses for the second quarter of 2003 were $7.7 million, compared to $5.6 million for the same period in 2002. The increase is mainly attributed to the acquisition of Bryan-College Station, increased mortgage salaries and commissions, and increased cost related to employee benefits. For the first six months of 2003, non-interest expense was $14.4 million, compared to $10.9 million for the same period in 2002. The provision for loan losses was $500,000 in the second quarter 2003, compared to $400,000 for the same quarter in 2002.

Non-performing assets totaled $1.8 million or 0.49% of loans and foreclosed assets at June 30, 2003 compared to $2.0 million or 0.52% at December 31, 2002. For the first six months of 2003, net charge-offs were $1.0 million or 0.27% of average total loans, compared to $1.1 million or 0.34% for the year ended December 31, 2002. The allowance for loan losses totaled $3.6 million at June 30, 2003 compared to $3.3 million at December 31, 2002.

As of June 30, 2003, Texas United Bancshares, Inc. had total assets of $614.4 million and total deposits of $495.6 million. Equity capital of $38.6 million represented 6.3% of total assets.

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.

Copies of our Company filings are available on our website www.statebanktx.com under the caption of investor relations.