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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

Commission file number 000-49928

TEXAS UNITED BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

202 W. COLORADO

LA GRANGE, TEXAS 78945

(Address of principal executive offices including zip code)

(979) 968-8451

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

As of November 1, 2004, the number of outstanding shares of Common Stock, par value $1.00 per share was 7,786,372.

PART I

FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except par value and share data)

See accompanying notes to condensed consolidated financial statements

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TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

See accompanying notes to condensed consolidated financial statements

2

TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

See accompanying notes to condensed consolidated financial statements

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TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity

Year Ended December 31, 2003 and

Nine Months Ended September 30, 2004

(Dollars in thousands, except share and per share amounts)

Unaudited

See accompanying notes to condensed consolidated financial statements

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TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

See accompanying notes to condensed consolidated financial statements

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TEXAS UNITED BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements include the accounts of Texas United Bancshares, Inc. (the “Company”) and its wholly-owned subsidiaries Texas United Nevada, Inc. (“TUNI”), State Bank (the “Bank”), and Community Home Loan, Inc. (“CHL”). All material intercompany accounts and transactions have been eliminated in the consolidated report of the Company.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary to present fairly the Company’s consolidated financial position at September 30, 2004, the Company’s consolidated results of operations for the three and nine months ended September 30, 2004 and 2003, respectively, consolidated cash flows for the nine months ended September 30, 2004 and 2003, and consolidated changes in shareholders’ equity for the nine months ended September 30, 2004. Interim period results are not necessarily indicative of results of operations or cash flows for a full-year period. The 2003 year-end consolidated balance sheet and statement of changes in shareholders’ equity data were derived from audited financial statements, but do not include all disclosures required by generally accepted accounting principles.

These financial statements and the notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2003 appearing in the Company’s Annual Report on Form 10-K for 2003.

2. EARNINGS PER COMMON SHARE

Basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income available to common shareholders by the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are computed using the treasury stock method.

The amounts shown above do not give effect to the additional shares that the Company issued on October 1, 2004 related to the acquisition of GNB Bancshares, Inc. as more fully described in Note 9.

3. INTANGIBLE ASSETS

The gross carrying amount of intangible assets and associated amortization at September 30, 2004 is presented in the following table:

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The projections of amortization expense shown below for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of September 30, 2004. Future amortization expense may be significantly different depending upon changes in the mortgage servicing portfolio, mortgage interest rates and market conditions.

The following table shows the current period and estimated future amortization for intangible assets:

4. STOCK BASED COMPENSATION

The Company accounts for its stock based employee compensation plans on the “intrinsic value method” provided in Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Because the exercise price of the Company’s employee stock options equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recognized on option plans.

Statement of Financial Accounting Standards (SFAS) No. 123, (SFAS 123) “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” requires pro forma disclosures of net earnings and earnings per share for companies not adopting its fair value accounting method for stock-based employee compensation. The pro forma disclosures below use the fair value method of SFAS 123 to measure compensation expense for stock-based compensation plans.

5. ACCOUNTING CHANGES

Mortgage Loan Interest Rate Lock Commitments

The Securities and Exchange Commission staff recently released Staff Accounting Bulletin (SAB) 105, “Loan Commitments Accounted for as Derivative Instruments.” SAB 105 requires that a lender should not consider the expected future cash flows related to loan servicing or include any internally developed intangible assets, such as customer-related intangible assets, in determining the fair value of loan commitments accounted for as derivatives.

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Companies were required to adopt SAB 105 for commitments entered into after March 31, 2004. The requirements of SAB 105 apply to the Company’s mortgage loan interest rate lock commitments related to loans held for sale. At September 30, 2004, such commitments with a notional amount of approximately $21.2 million were outstanding at the Bank. The fair value of these commitments is insignificant. The Company adopted SAB 105 as of April 1, 2004, and application of its guidance had no material impact on the Company’s results of operations and financial position.

In March 2004, the EITF reached consensus on Issue 03-01 (EITF 03-01), “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” EITF 03-01 includes new guidance for evaluating and recording impairment losses on debt and equity investments, as well as new disclosure requirements for investments that are deemed to be temporarily impaired. This Issue specifically addresses whether an investor has the ability and intent to hold an investment until recovery. In addition, Issue 03-01 contains disclosure requirements that provide useful information about impairments that have not been recognized as other-than-temporary for investments with in the scope of this Issue. On September 30, 2004, the Financial Accounting Standards Board deferred the effective date of the Issue’s guidance on how to evaluate and recognize an impairment loss that is other-than-temporary. This Issue’s guidance is pending the issuance of a final FASB Staff Position (“FSP”) relating to the draft FSP EITF Issue 03-01-a, Implementation Guidance for the Application of Paragraph 16 of EITF Issue No. 03-01, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments,” which the Board may issue as early as November. This deferral did not change the disclosure guidance which remains effective for fiscal years ending after December 15, 2003. Matters being considered by the FASB which may impact the Company’s financial reporting include the accounting as a component in determining net income for declines in market value of debt securities which are due solely to changes in market interest rates and the effect of sales of available-for-sale securities which have market values below cost at the time of sale and whether such sale indicates an absence of intent and ability of the investor to hold to a forecasted recovery of the investment’s value to its original cost.

6. OFF BALANCE SHEET CREDIT COMMITMENTS

In the normal course of business, the Company enters into various transactions, which, in accordance with generally accepted accounting principles, are not included in its consolidated balance sheet. These transactions are referred to as “off balance-sheet commitments.” The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit, which involve elements of credit risk in excess of the amounts recognized in the consolidated balance sheet. The Company minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures.

The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Customers use credit commitments to ensure that funds will be available for working capital purposes, for capital expenditures and to ensure access to funds at specified terms and conditions. Substantially all of the Company’s commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for loan losses. Commitments to extend credit totaled $121.8 million at September 30, 2004 and $58.0 million at December 31, 2003.

Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The Company’s policies generally require that standby letters of credit arrangements contain collateral and debt covenants similar to those contained in loan agreements. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the Company would be entitled to seek recovery from the customer. Standby letters of credit totaled $2.3 million at September 30, 2004 and $695,000 at December 31, 2003. At September 30, 2004, the outstanding standby letters of credit had a weighted average term of approximately one year. As of September 30, 2004 and December 31, 2003, no liability for the fair value of the Company’s potential obligations under these guarantees has been recorded since the amount is deemed immaterial.

7. CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies are integral to understanding the results reported. The Company’s accounting policies are described in detail in Note A to its consolidated financial statements included in its Annual Report on Form 10-K. The Company believes that of its significant accounting policies, the allowance for loan losses and mortgage servicing rights assets may involve a higher degree of judgment and complexity.

The allowance for loan losses is a valuation allowance for probable losses inherent in the loan portfolio. Loans are charged to the allowance when the loss is confirmed or when a determination is made that a probable loss has occurred on a specific loan. Recoveries are credited to the allowance at the time of recovery. Throughout the year, management estimates the probable level of losses to determine whether the allowance for loan losses is adequate to absorb losses in the existing portfolio. Based on these estimates, an amount is charged to the provision for loan losses and credited to the allowance for loan losses in order to adjust the

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allowance to a level determined to be adequate to absorb losses. Management’s judgment as to the level of probable losses on existing loans involves the consideration of current economic conditions and their estimated effects on specific borrowers; an evaluation of the existing relationships among loans, potential loan losses and the present level of the allowance; results of examinations of the loan portfolio by regulatory agencies; and management’s internal review of the loan portfolio. In determining the collectability of certain loans, management also considers the fair value of any underlying collateral. The amount ultimately realized may differ from the carrying value of these assets because of economic, operating or other conditions beyond the Company’s control. Please refer to the subsequent discussion of “Allowance for Loan Losses” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional insight into management’s approach and methodology in estimating the allowance for loan losses.

Mortgage servicing rights assets are established and accounted for based on discounted cash flow modeling techniques which require management to make estimates regarding the amount and timing of expected future cash flows, including assumptions about loan repayment rates, loan loss experience, and costs to service, as well as discount rates that consider the risk involved. Because the values of these assets are sensitive to changes in assumptions, the valuation of mortgage servicing rights is considered a critical accounting estimate. Please refer to Note 3 to the Condensed Consolidated Financial Statements above and discussion of “Noninterest Income” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional insight into management’s approach in estimating transfers and servicing of financial assets.

8. SEGMENT INFORMATION

Beginning in 2004, the Company has two reportable operating segments; commercial banking and mortgage banking. The mortgage banking activities are conducted through CHL and the mortgage division of the Bank. The Bank owns 100% of CHL and operates CHL as a subsidiary of the Bank. The Company reports the financial position and the results of operations of each segment on a consolidated basis. The commercial banking and the mortgage banking segments are managed separately because each business requires distinct marketing strategies and each offers different products and services.

Summarized below is the financial information by operating segment for the three and nine-month periods ended September 30, 2004:

9. STOCK OFFERING AND ACQUISITIONS

Pursuant to a registration statement on Form S-1 filed with, and declared effective by, the Securities and Exchange Commission, the Company sold 2,000,000 shares of its common stock at $17.00 per share to the public in an underwritten firm commitment offering which closed on August 10, 2004. The underwriters exercised their 30-day option on August 26, 2004 to purchase an additional 300,000 shares to cover over-allotments. Of the $36.1 million in net proceeds, after deduction of underwriting discounts and commissions and $788,000 in offering expenses, approximately $10.0 million was used to repay the Company’s outstanding line of credit which was used as additional capital to support the acquisition of the additional assets from the Central Bank branches. In addition, approximately $18.4 million of the net proceeds will be used to pay the cash portion of the merger consideration to be paid to GNB shareholders and the balance will be used for general corporate purposes, including contributions to the capital of State Bank, the possible opening of additional branches and the possible acquisition of financial institutions.

        On April 29, 2004, the Company entered into a definitive agreement to acquire GNB Bancshares, Inc., Gainesville, Texas. The Company completed the acquisition on October 1, 2004. Pursuant to the terms of the agreement, in exchange for all outstanding shares of GNB capital stock, the Company paid $18.4 million in cash and issued 1,456,819 shares of its common stock. The Company operates GNB’s wholly-owned subsidiary bank, GNB Financial, n.a., as a separate subsidiary. GNB Financial has seven full-service banking centers located in Gainesville, Denton and Ennis, Texas. As of September 30, 2004, on a consolidated basis, GNB had total assets of $223.7 million, total loans of $166.6 million, total deposits of $186.3 million and shareholders’ equity of $19.2 million.

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On May 3, 2004, the Company entered into a definitive agreement to purchase the loans and premises and assume the deposit liabilities of the Caldwell, Texas and Lexington, Texas branches of Central Bank, Houston, Texas. Under the terms of the agreement, the Company agreed to pay a premium of 8.02% of total deposits and $800,000 for the related real property and improvements and the related furniture, fixtures and equipment. The Company completed the acquisition on July 30, 2004. On such date, deposits at both branches totaled $99.2 million and loans totaled $33.1 million. Based on these totals, the Company paid approximately $8.8 million to acquire these branches. Under the terms of the purchase agreement, on September 23, 2004, the Company put-back approximately $5.3 million in loans. Goodwill of $8.0 million was recognized in connection with this transaction.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Cautionary Notice Regarding Forward-looking Statements

Statements and financial discussion and analysis contained in the Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 Reform Act of 1995 and are including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements include information about possible or assumed future results of the Company’s operations or performance. When the Company uses any of the words “believe,” “expect”, “anticipate”, “estimate”, “continue”, “intend”, “may”, “will”, “should”, or similar expressions, identifies these forward-looking statements. Many possible factors or events could affect the future financial results and performance of the Company and could cause those financial results or performance to differ materially from those expressed in the forward-looking statement. These possible events or factors include, without limitation:

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. The Company believes it has chosen the assumptions or bases in good faith and that they are reasonable. However, the Company cautions you that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. The Company will not update these statements unless the securities laws require us to do so.

Acquisitions. On April 29, 2004, the Company entered into a definitive agreement to acquire GNB Bancshares, Inc., Gainesville, Texas. The Company completed the acquisition on October 1, 2004. Pursuant to the terms of the agreement, in exchange for all outstanding shares of GNB capital stock, the Company paid $18.4 million in cash and issued 1,456,819 shares of its common stock. The Company operates GNB’s wholly-owned subsidiary bank, GNB Financial, n.a., as a separate subsidiary. GNB Financial has seven full-service banking centers located in Gainesville, Denton and Ennis, Texas. As of September 30, 2004, on a consolidated basis, GNB had total assets of $223.7 million, total loans of $166.6 million, total deposits of $186.3 million and shareholders’ equity of $19.2 million.

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On May 3, 2004, the Company entered into a definitive agreement to purchase the loans and premises and assume the deposit liabilities of the Caldwell, Texas and Lexington, Texas branches of Central Bank, Houston, Texas. Under the terms of the agreement, the Company agreed to pay a premium of 8.02% of total deposits and $800,000 for the related real property and improvements and the related furniture, fixtures and equipment. The Company completed the acquisition on July 30, 2004. On such date, deposits at both branches totaled $99.2 million and loans totaled $33.1 million. Based on these totals, the Company paid approximately $8.8 million to acquire these branches. Under the terms of the purchase agreement, on September 23, 2004, the Company put-back approximately $5.3 million in loans. Goodwill of $8.0 million was recognized with this transaction.

Public Offering. Pursuant to a registration statement on Form S-1 filed with, and declared effective by, the Securities and Exchange Commission, the Company sold 2,000,000 shares of its common stock at $17.00 per share to the public in an underwritten firm commitment offering which closed on August 10, 2004. The underwriters exercised their 30-day option on August 26, 2004 to purchase an additional 300,000 shares to cover over-allotments. Of the $36.1 million in net proceeds, after deduction of underwriting discounts and commissions and $788,000 in offering expenses, approximately $10.0 million was used to repay the Company’s outstanding line of credit which was used as additional capital to support the acquisition of the additional assets from the Central Bank branches. In addition, approximately $18.4 million of the net proceeds will be used to pay the cash portion of the merger consideration to be paid to GNB shareholders and the balance will be used for general corporate purposes, including contributions to the capital of State Bank, the possible opening of additional branches and the possible acquisition of financial institutions.

General. The Company is a Texas corporation formed in 1995 as a bank holding company for State Bank, which was chartered in 1906. The Company adopted its current name, Texas United Bancshares, Inc., in June 1998 after the merger of South Central Texas Bancshares, Inc. with and into the Company, which was then named Premier Bancshares, Inc. The Company derives substantially all of its net income from its wholly-owned subsidiary State Bank. At September 30, 2004, through State Bank, the Company had 20 full service banking centers and three loan production offices serving 11 counties primarily between the Houston, Austin and San Antonio metropolitan areas in central and south central Texas. In addition, the Company has eight loan production offices of CHL located in Houston and San Antonio.

Net earnings for the three months ended September 30, 2004 were $1.6 million, an increase of 2.1% compared with $1.5 million for the same period in 2003. The increase in net earnings was a combined result of higher net interest income and increased non-interest income, partially offset by higher non-interest expense. Net earnings for the nine months ended September 30, 2004 were $4.6 million, representing an increase of 14.0% compared with $4.1 million for the same period in 2003. This increase was primarily due to gains on the sale of mortgage loans generated by CHL, a decrease in the provision for loan losses and an increase in net interest income, partially offset by a decrease in mortgage servicing revenue, a decrease in gains on the sale of securities and higher non-interest expense compared with the same period in 2003. Basic and diluted earnings per share (EPS) for the three months ended September 30, 2004 were $0.30 and $0.29 compared with $0.38 and $0.37, respectively, for the same period in 2003. For the nine months ended September 30, 2004, basic and diluted EPS were $1.04 and $1.00, respectively, compared with $1.02 and $0.98, respectively, for the same period in 2003. The decrease in basic and diluted earnings per share for the three months ended September 30, 2004 and the slight increase for the nine months ended September 30, 2004 compared with the same periods in 2003, notwithstanding the increase in net earnings during those periods, is due to the 2,300,000 additional shares of common stock issued in connection with the Company’s public offering completed in August 2004.

At September 30, 2004, total assets were $839.3 million compared with $637.7 million at December 31, 2003. The $201.6 million or 31.6% increase in total assets over December 31, 2003 was primarily attributable to increases in investment securities, net loans and loans held for sale, and the addition of the Central Bank branches. At September 30, 2004, net loans, including loans held for sale, were $494.1 million compared with $380.4 million at December 31, 2003. The increase is primarily due to internal growth and the acquisitions of Community Home Loan and the Central Bank branches. Total deposits at September 30, 2004 were $688.9 million compared with $501.1 million at December 31, 2003. The $187.8 million or 37.5% increase in deposits compared with December 31, 2003 is primarily attributed to internal growth and the addition of the Central Bank branches. Shareholders’ equity at September 30, 2004 was $78.7 million compared with $38.0 million at December 31, 2003. The $40.7 million or 107.1% increase is primarily attributed to the $36.1 million in net proceeds from the public offering. The Company’s annualized return on average assets was 0.85% for the nine months ended September 30, 2004, compared with 0.90% for the same period in 2003. The annualized return on average shareholders’ equity was 13.4% for the nine months ended September 30, 2004, down from 14.6% for the same period in 2003.

Net Interest Income. For the three months ended September 30, 2004, net interest income, before the provision for loan losses, increased by 21.0% to $8.2 million compared with $6.8 million in the same period in 2003. The increase was primarily due to the increased volumes in loans and investment securities in relation to the decrease in rates on earning assets. For the three months ended September 30, 2004 and 2003, the net interest margin decreased by 31 basis points to 4.42% from 4.73% and the net interest spread decreased by 39 basis points to 4.06% from 4.45%, respectively.

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For the nine months ended September 30, 2004, net interest income, before the provision for loan losses, increased by 12.2% to $22.0 million compared with $19.6 million in the same period in 2003. For the nine months ended September 30, 2004 and 2003, the net interest margins and spreads decreased by 38 basis points to 4.49% from 4.87% and by 35 basis points to 4.22% from 4.57%, respectively. The decrease of the net interest margin was a combined result of lower yields in investments and loan balances, and a decrease in the cost of funds.

Interest income for the three months ended September 30, 2004 was $11.5 million compared with $9.4 million for the same period in 2003. As compared to the three months ended September 30, 2003, the average total loan volumes for the three months ended September 30, 2004 increased by $92.1 million or 23.9%, while the average yields on average total loan volumes decreased 31 basis points to 7.63%. Average total investment volumes for the three months ended September 30, 2004 increased by $77.2 million or 42.9% compared with the same period in 2003, while the average yields on average investments decreased by 2 basis points. For the three months ended September 30, 2004, compared to the same period in 2003, the yield on total average earning assets decreased by 33 basis points to 6.2%.

Interest income for the nine months ended September 30, 2004 was $30.6 million compared with $27.6 million for the same period in 2003. This increase was maintained through growth in average earning assets. As compared to the nine months ended September 30, 2003, the average total loan volumes for the nine month period ended September 30, 2004 increased by $52.0 million or 13.7%, while the average yields on average total loans decreased by 47 basis points to 7.64%. Compared with the nine months ended September 30, 2003, average total investment volumes for the nine months ended September 30, 2004 increased by $65.7 million or 42.3%, while the average yields on average investment securities decreased by 34 basis points. For the nine months ended September 30, 2004 compared with the same period in 2003, the yield on total average earning assets decreased by 62 basis points to 6.25%.

Interest expense increased for the three months ended September 30, 2004 by $699,000 or 27.0% to $3.3 million, compared with $2.6 million for the same period in 2003. The increased interest expense was the result of higher average interest-bearing deposit volumes. Compared with the three month period ended September 30, 2003, average interest bearing deposit volumes for the three months ended September 30, 2004 increased by $128.0 million or 31.7%, while the average rates paid on interest-bearing deposits decreased by 8 basis points to 1.74%.

For the nine months ended September 30, 2004, interest expense increased by $555,000 or 6.9% to $8.6 million compared with $8.0 million for the same period in 2003. The increased interest expense was the result of higher interest-bearing deposit volumes coupled with overall lower interest rates paid on those deposits. Compared with the nine months ended September 30, 2003, average interest-bearing deposit volumes increased by $90.0 million or 23.4%, while the average rates paid on interest-bearing deposits decreased by 27 basis points to 1.73%.

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The following tables set forth for the periods indicated an analysis of net interest income by each major category of interest-earning assets and interest-bearing liabilities, the average amounts outstanding and the interest earned or paid on such amounts. The tables also set forth the average rate earned on total interest-earning assets, the average rate paid on total interest-bearing liabilities and the net interest margin on average total interest-earning assets for the same periods. All average balances are daily average balances and nonaccruing loans have been included in the table as loans carrying a zero yield.