Example of the grunge texteffect

Step 1: Type the text.

Make a new document of 620 by 200px.
Type the text. In the example I've used Arial Black, font size: 120p, color: black and Bookman Old Style Light, font size 42px, color: black.

Merge the two text layers by activating the top layer and go to Layer > Merge down.
Duplicate the text layer.
Activate the top text layer and add a layer mask filled with white to the text layer by going to Layer > Mask > Add Layer Mask (White).
And hide the other text layer by clicking on the eye in front of the layer in the layer window.

Step 2: Get a texture to create the grunge effect.

As texture for the text download this wood texture from textureking.com.
Open it as a layer by going to File > Open as Layer.

The texture layer is 1600px width. Scale the texture layer so it is a bit bigger than the image by going to Layer > Scale layer and set the width to 800px, the height will change as well.
Activate the move tool and reposition the texture layer so you have a nice textured part. It is useful to lower the opacity of the texture layer to around 80. That way you'll see the text as well.

Go to Layer > Layer to Image size. The parts of the texture layer that fall out of the image will be cute of. If you don't do this the the reposition you just did would be useless.

Step 3: Use the texture layer as a layer mask

Now we are going place the texture in the layer mask of the text layer so it will hide parts of the text.
This has to be done expect like this:
Copy the layer by going to Edit > Copy.
Go to the layer Window and activate the layer mask of the text layer. When the layer mask is active there is a white border around the layer mask.

Go to Edit > Past
Click on the 'Anchor the floating layer' button at the bottom of the layer window.

The texture is now pasted as a layer mask. But the original texture layer is on top so you don't see it. So hide the texture layer and you'll get this.

Step 3: Give the grunge effect some color and a drop shadow.

Set red (#de0101) as the foreground color. Make the other text layer visible again (the texture effect will temporally not be visible).
Check the Lock ('Lock Alfa Channel') box in the layer window And fill the layer with red.

Add a simple drop shadow. Go to Filter > Light and Shadow > Drop shadow.
Offset-X, Offset-Y: 1
Blur radius: 8
opacity: 50

Step 4: Use levels to change the texture.

Activate the layer mask of the top text layer.
Go to Color > Levels. And experiment to get a nice result. In the example the white a gray point are moved.

And the grunge textured effect is ready.