November 18, 2002

Reporters may contact:
Tom Adams at State Bank (979) 968-7261
tom.adams@statebanktx.com

LA GRANGE – Texas United Bancshares, Inc. (Nasdaq: TXUI) today reported third quarter 2002 net income of $591,000 or $0.22 per diluted share, a decrease of $0.19 per diluted share, compared to the third quarter of 2001. The annualized return on average assets was 0.44% and annualized return on average equity was 7.00%. For the first nine months of 2002, net income was $3.4 million or $1.30 per diluted share, up from $1.15 per diluted share earned in the first nine months of 2001. The annualized return on average assets was 0.97% and annualized return on average equity was 14.9% for the first nine months of the year.

"Our third quarter financial results include merger costs associated with the Bryan-College Station acquisition, the reduction in fair value in our mortgage servicing rights portfolio, and increased provision for loan losses," said Don Stricklin, President and Chief Executive Officer. "Higher earnings asset balances and mortgage refinance activity remained strong during the third quarter and margins continued to hold up well. TXUI has been proactive in dropping deposit costs and our balance sheet has relatively few adjustable rate loans."

Other financial results for the quarter included net interest income of $5.9 million before provision for loan losses, up 37.2% for the third quarter 2001. For the first nine months of 2002, interest income before the provision for loan losses was $15.7 million, up 27.6% from the first nine months of 2001. The net interest margin for the third quarter of 2002 was 4.93%. Average total loans, including loans held for sale for the third quarter 2002 were up $88.9 million, a 33.5% increase from the third quarter last year. Average deposits for the third quarter were up $95.6 million, a 33.8% increase from a year ago. TXUI added total loans and deposits from the Bryan-College Station acquisition of $57.8 million and $73.9 million, respectively.

Non-interest income was $2.2 million in the third quarter, compared to $1.7 million for the same period in 2001. Non-interest expenses for the quarter were $6.8 million, compared to $4.4 million for the same period in 2001. The provision for loan losses was $500,000 in the third quarter 2002, compared to $256,000 in the same quarter in 2001.

Non-performing assets total $1.3 million or 0.37% of loans and foreclosed assets at September 30, 2002 compared to $562,000 or 0.20% at December 31, 2001. For the first nine months of the year, net charge-offs were $465,000 or 0.15% of average total loans, compared to $761,000 or 0.29% from December 31, 2001. The allowance for loan losses totaled $3.4 million at September 30, 2002 compared to $1.8 million at December 31, 2001.

As of September 30, 2002 Texas United Bancshares, Inc. had total assets of $558.3 million and total deposits of $442.0 million. Equity capital of $34.5 million represented 6.2% of total assets.

"We will open our 18th banking center in Liberty Hill, north of Austin in mid-December. Entering this fast-growing Texas community marks another strategic expansion for State Bank," Stricklin said.

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 17 full-service banking centers located in the Texas counties of Fayette, Lee, Waller, Atascosa, Comal, Harris, Williamson, Travis, Colorado, Washington, Gonzales, and Brazos.

Except for historical information, certain of the matters discussed in this letter 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.