Page 5 - Annual Report 2017

in 2015. Non-Interest Income, all income earned other than Interest Income, increased to $3.3

million, an increase over the 2015 amount of $2.9 million. Non-Interest Expense, all expenses
other than Interest Expense, totaled $16.5 million compared to $15.3 million in 2015. The

resulting Net Income for 2016 was $6 million, down marginally compared to $6.3 million in
2015.

STRATEGIES

In the winter of 2016, the Boards of Texas Gulf Bancshares, Inc. and Texas Gulf Bank, NA

convened for a two day meeting to discuss, debate, and at the end of the day, agree on a Strategic

Plan for our Company. During the two day event, our facilitator led the participants through
virtually every strategic issue facing our company. While the following is not a complete

summary of our time together, it is meant to share several key points. The group discussed the
issue of independence and agreed that remaining independent in the foreseeable future was the

best option for our Company but agreed to revisit the topic annually during our follow up
sessions. Shareholder demands ranging from 1) financial strength of the Company to 2)

financial returns for our Shareholders to 3) Shareholder liquidity were also covered. Since each

of those topics were recognized as key issues for our Boards, Management has been tasked with
establishing action plans to address said issues. Growth in our financial footings and earnings on

those assets were both assessed and agreements were reached for desired growth levels for the

Balance Sheet as well as desired return on asset expectations. As you might expect, the burden
regulatory compliance plays in our daily management of the Bank was a hot topic. It was agreed

that maintaining excellent relationships with our Regulators as well as continuing to operate
within the boundaries of the rules and regulations governing our industry will remain a high

priority of our Management team and our Boards. Information Technology and the role it plays
in the financial industry was an equally robust discussion. Although we recognized we are not in

a position to be on the leading edge of financial technology, the participants agreed committing

sufficient resources to maintain our position on the technology continuum is essential to our

TEXAS GULF BANCSHARES, INC. AND SUBSIDIARY TEXAS GULF BANK

ESTABLISHED 1913