FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission file number 0-9439
INTERNATIONAL BANCSHARES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 74-2157138
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1200 SAN BERNARDO AVENUE, LAREDO, TEXAS 78042-1359
(Address of principal executive offices)
(Zip Code)
(956) 722-7611
------------------------------------
(Registrant's telephone number, including area code)
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS SHARES ISSUED AND OUTSTANDING
----- --------------------------------
Common Stock, $1.00 par value 17,230,133 shares outstanding at
August 9, 1999
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1999 1998
----------- -----------
<S> <C> <C>
Cash and due from banks ....................................................... $ 97,549 $ 94,594
Federal funds sold ............................................................ -- 26,000
----------- -----------
Total cash and cash equivalents .................................. 97,549 120,594
Time deposits with banks ...................................................... 1,679 1,373
Investment securities:
Held to maturity
(Market value of $2,310 on June 30, 1999
and $2,505 on December 31, 1998) .......................................... 2,312 2,508
Available for sale
(Amortized cost of $2,926,725 on June 30,
1999 and $2,991,836 on December 31, 1998) ................................. 2,896,396 3,005,369
----------- -----------
Total investment securities ...................................... 2,898,708 3,007,877
Loans:
Commercial, financial and agricultural ..................................... 962,230 896,060
Real estate - mortgage ..................................................... 254,906 215,689
Real estate - construction ................................................. 103,452 94,374
Consumer ................................................................... 243,910 250,917
Foreign .................................................................... 194,816 166,324
----------- -----------
Total loans ...................................................... 1,759,314 1,623,364
Less unearned discounts .................................................... (7,592) (8,025)
----------- -----------
Loans, net of unearned discounts ................................. 1,751,722 1,615,339
Less allowance for possible loan losses .................................... (27,303) (25,551)
----------- -----------
Net loans ........................................................ 1,724,419 1,589,788
----------- -----------
Bank premises and equipment, net .............................................. 142,687 137,568
Accrued interest receivable ................................................... 32,918 31,542
Other investments ............................................................. 111,135 16,026
Intangible assets ............................................................. 45,579 44,971
Other assets .................................................................. 51,378 38,138
----------- -----------
Total assets ..................................................... $ 5,106,052 $ 4,987,877
=========== ===========
(Continued)
</TABLE>
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION, CONTINUED
(DOLLARS IN THOUSANDS)
June 30, December 31,
1999 1998
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand - non-interest bearing ........... $ 455,299 $ 414,412
Savings and interest bearing demand ..... 983,328 947,408
Time .................................... 2,097,273 2,007,817
----------- -----------
Total deposits .................. 3,535,900 3,369,637
Federal funds purchased and securities
sold under repurchase agreements ........ 115,704 135,700
Other borrowed funds ...................... 1,055,000 1,074,000
Other liabilities ......................... 37,192 38,257
----------- -----------
Total liabilities ............... 4,743,796 4,617,594
----------- -----------
Shareholders' equity:
Common stock of $1.00 par value ...........
Authorized 40,000,000 shares;
issued 21,036,000 shares in 1999
and 16,790,999 shares in 1998 ........... 21,036 16,791
Surplus ................................... 23,022 22,250
Retained earnings ......................... 360,259 341,025
Accumulated other comprehensive income .... (19,713) 8,797
----------- -----------
384,604 388,863
Less cost of shares in treasury,
3,436,568 shares in 1999 and
2,670,927 shares in 1998 ................ (22,348) (18,580)
----------- -----------
Total shareholders' equity ...... 362,256 370,283
----------- -----------
Total liabilities and
shareholders' equity ......... $ 5,106,052 $ 4,987,877
=========== ===========
See accompanying notes to interim condensed consolidated financial statements.
3
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1999 1998 1999 1998
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees ................ $ 38,924 $35,643 $ 76,533 $ 70,619
Time deposits with banks ............. 29 21 51 49
Federal funds sold ................... 265 388 441 886
Investment securities:
Taxable ............................ 38,961 42,644 81,546 85,432
Tax-exempt ......................... 1,170 21 1,832 40
Other interest income ................ 74 56 194 176
-------- ------- -------- --------
Total interest income ......... 79,423 78,773 160,597 157,202
-------- ------- -------- --------
Interest expense:
Savings deposits ..................... 6,941 6,507 13,650 13,074
Time deposits ........................ 23,848 25,687 47,697 50,821
Federal funds purchased and securities
sold under repurchase agreements .... 1,456 2,612 2,942 8,804
Other borrowings ..................... 8,739 8,442 20,431 13,308
-------- ------- -------- --------
Total interest expense ..... 40,984 43,248 84,720 86,007
-------- ------- -------- --------
Net interest income ........ 38,439 35,525 75,877 71,195
Provision for possible loan losses ...... 2,327 2,077 4,514 4,203
-------- ------- -------- --------
Net interest income after
provision for possible
loan losses ............. 36,112 33,448 71,363 66,992
-------- ------- -------- --------
Non-interest income:
Service charges on deposit accounts .. 7,712 5,339 14,591 10,213
Other service charges, commissions
and fees ........................... 2,559 2,337 4,949 4,734
Investment securities transactions ... (352) 1,300 105 1,703
Other investments .................... 1,786 360 2,866 1,567
Other income ......................... 2,172 1,393 4,067 3,080
-------- ------- -------- --------
Total non-interest income .. 13,877 10,729 26,578 21,297
-------- ------- -------- --------
</TABLE>
4
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Non-interest expense:
Employee compensation and benefits ... 10,722 9,999 20,837 19,708
Occupancy ............................ 1,709 1,908 3,254 3,525
Depreciation of premises and equipment 2,929 2,669 5,791 5,070
Professional fees .................... 1,328 936 2,305 1,816
Stationery and supplies .............. 769 750 1,431 1,659
Amortization of intangible assets .... 990 992 1,917 1,985
Other ................................ 7,878 7,783 14,808 15,291
----------- ----------- ----------- -----------
Total non-interest expense . 26,325 25,037 50,343 49,054
----------- ----------- ----------- -----------
Income before income taxes . 23,664 19,140 47,598 39,235
Income taxes ............................ 7,621 6,338 15,660 12,835
----------- ----------- ----------- -----------
Net Income ................. $ 16,043 $ 12,802 $ 31,938 $ 26,400
=========== =========== =========== ===========
Basic earnings per common:
Net Income ........................... $ 1.02 $ .82 $ 2.14 $ 1.78
Weighted average number of shares
outstanding ........................ 15,729,302 15,686,135 14,929,952 14,867,018
Diluted earnings per common share:
Net Income ........................... $ 1.00 $ .79 $ 2.10 $ 1.72
Weighted average number of shares
outstanding ........................ 16,092,814 16,199,065 15,219,089 15,334,561
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.
5
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income ............................ $ 16,043 $ 12,802 $ 31,938 $ 26,400
-------- -------- -------- --------
Other comprehensive income, net of tax:
Unrealized holding gains (losses)
on securities arising during
period, net of reclassification
adjustment for (gains) losses
included in net income ......... (28,689) (3,780) (28,510) (5,685)
-------- -------- -------- --------
Comprehensive income .................. $(12,646) $ 9,022 $ 3,428 $ 20,715
======== ======== ======== ========
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.
6
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1999 1998
--------- -----------
<S> <C> <C>
Operating activities:
Net Income .......................................................... $ 31,938 $ 26,400
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for possible loan losses .............................. 4,514 4,203
Recoveries on charged-off loans ................................. 755 902
Net cost (profit) of operations for other
real estate owned ............................................. 114 (28)
Depreciation of bank premises and equipment ..................... 5,791 5,070
Accretion of investment securities discounts .................... (6,703) (3,591)
Amortization of investment securities premiums .................. 6,387 6,841
Realized gain on investment securities
transactions, net ............................................. (105) (1,703)
Gain on sale of bank premises and equipment ..................... (30) (56)
(Increase) decrease in accrued interest
receivable .................................................... (1,352) 2,259
(Decrease) increase in other liabilities ........................ (1,127) 2,241
--------- -----------
Net cash provided by operating activities .................. 40,182 42,538
--------- -----------
Investing activities:
Cash acquired in purchase transaction ............................... 20,320 --
Proceeds from maturities of securities .............................. 1,850 975
Proceeds from sales of available
for sale securities ............................................... 560,097 385,729
Purchases of available for sale securities .......................... (932,959) (1,054,741)
Principal collected on mortgage-backed securities ................... 452,092 464,017
Proceeds from matured time deposits with banks ...................... 288 1,092
Purchases of time deposits with banks ............................... (594) (482)
Net increase in loans ............................................... (135,397) (38,449)
Net (increase) decrease in other assets ............................. (106,505) 20,265
Purchase of bank premises and equipment ............................. (10,412) (10,463)
Proceeds from sale of bank premises and equipment ................... 54 278
--------- -----------
Net cash used in investing activities ...................... (151,166) (231,779)
--------- -----------
</TABLE>
7
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(DOLLARS IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
-------------------------
1999 1998
----------- -----------
Financing activities:
Net increase (decrease) in non-interest
bearing demand deposits ........................ $ 39,961 $ (137,599)
Net increase in savings and interest bearing
demand deposits ................................ 27,696 156,376
Net increase in time deposits .................... 70,733 65,057
Net decrease in federal funds purchased and
securities sold under repurchase agreements .... (19,996) (323,261)
Proceeds from issuance of other borrowed funds ... 1,090,000 1,276,000
Principal payments on other borrowed funds ....... (1,109,000) (932,000)
Purchase of treasury stock ....................... (3,768) (630)
Proceeds from stock transactions ................. 813 2,151
Payments of cash dividends ....................... (8,474) (5,642)
Payments of cash dividends in lieu of
fractional shares .............................. (26) (41)
----------- -----------
Net cash provided by financing activities 87,939 100,411
----------- -----------
Decrease in cash and cash equivalents ... (23,045) (88,830)
Cash and cash equivalents
at beginning of year ........................... 120,594 237,763
----------- -----------
Cash and cash equivalents
at end of period ............................... $ 97,549 $ 148,933
=========== ===========
Supplemental cash flow information:
Interest paid .................................. $ 83,008 $ 88,729
Income taxes paid .............................. 13,685 12,834
Supplemental schedule of noncash investing and
financing activities relating to the purchase
transaction:
Loans acquired ............................... $ 4,503 $ --
Other assets acquired ........................ 3,112 --
Deposits and other liabilities assumed ....... 27,935 --
See accompanying notes to interim condensed consolidated financial statements.
8
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accounting and reporting policies of International Bancshares
Corporation ("Corporation") and Subsidiaries (the Corporation and Subsidiaries
collectively referred to herein as the "Company") conform to generally accepted
accounting principles and to general practices within the banking industry. The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries, International Bank of Commerce, Laredo ("IBC"),
Commerce Bank, International Bank of Commerce, Zapata, International Bank of
Commerce, Brownsville and the Corporation's wholly-owned non-bank subsidiaries,
IBC Subsidiary Corporation, IBC Life Insurance Company, IBC Trading Company and
IBC Capital Corporation. All significant intercompany balances and transactions
have been eliminated in consolidation. The consolidated financial statements are
unaudited, but include all adjustments which, in the opinion of management, are
necessary for a fair presentation of the results of the periods presented. All
such adjustments were of a normal and recurring nature. It is suggested that
these financial statements be read in conjunction with the financial statements
and the notes thereto in the Company's latest Annual Report on Form 10K.
All per share data presented has been restated to reflect the stock splits
effected through stock dividends.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as a "fair value hedge," a
"cash flow hedge," or a hedge of a foreign currency exposure of a net investment
in a foreign operation. The accounting for changes in the fair value of a
derivative (that is, gains and losses) depends on the intended use of the
derivative and the resulting designation. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. Management of the
Company does not expect that the adoption of SFAS No. 133 will have a material
impact on the Company's financial position, results of operation, or liquidity.
In October 1998, the Financial Accounting Standards Board issued SFAS No.
134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise." SFAS No. 134 further amends Statement 65, "Accounting for Certain
Mortgage Banking Activities, as amended by SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," and SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
requires that after securitization of mortgage loans held for sale, an entity
engaged in mortgage banking activities classify the resulting mortgage-backed
securities or other retained interests based on its ability and intent to sell
or hold those investments. SFAS No. 134 is effective for the first fiscal
quarter beginning after December 15, 1998. Management of the Company does not
expect that the adoption of SFAS No. 134 will have a material impact on the
Company's financial position, results of operation, or liquidity.
9
<PAGE>
NOTE 2 - INVESTMENT SECURITIES
The Company classifies debt and equity securities into one of three
categories: held-to maturity, available-for-sale, or trading. Such
classifications are reassessed for appropriate classification at each reporting
date. Securities classified as "held-to-maturity" are carried at amortized cost
for financial statement reporting, while securities classified as
"available-for-sale" and "trading" are carried at their fair value. Unrealized
holding gains and losses are included in net income for those securities
classified as "trading", while unrealized holding gains and losses related to
those securities classified as "available-for-sale" are excluded from net income
and reported net of tax as other comprehensive income and as a separate
component of shareholders' equity until realized.
A summary of the investment securities held to maturity and securities
available for sale as reflected on the books of the Company is as follows:
JUNE 30, DECEMBER 31,
1999 1998
---------- ----------
(DOLLARS IN THOUSANDS)
U. S. Treasury and federal agencies
Held to maturity ....................... $ -- $ --
Available for sale ..................... 2,677,448 2,759,083
States and political subdivisions
Held to maturity ....................... 322 518
Available for sale ..................... 94,567 28,200
Other
Held to maturity ....................... 1,990 1,990
Available for sale ..................... 124,381 218,086
---------- ----------
Total investment securities ............ $2,898,708 $3,007,877
========== ==========
NOTE 3 - ALLOWANCE FOR POSSIBLE LOAN LOSSES
A summary of the transactions in the allowance for possible loan losses is
as follows:
1999 1998
-------- --------
(DOLLARS IN THOUSANDS)
Balance at January 1 ........................... $ 25,551 $ 24,516
Losses charged to allowance .............. (3,517) (3,501)
Recoveries credited to allowance ......... 755 902
-------- --------
Net losses charged to allowance .......... (2,762) (2,599)
Provisions charged to operations ......... 4,514 4,203
-------- --------
Balance at June 30 ............................. $ 27,303 $ 26,120
======== ========
The Company classifies as impaired those loans where it is probable that
all amounts due will not be collected according to contractual terms of the loan
agreement. The Company has identified these loans through its normal loan review
procedures. Impaired loans included 1) all non-accrual loans, 2) loans which are
90 days or over past due unless they are well secured (the collateral value is
sufficient to cover principal and accrued interest) and are in the process of
collection, and 3) other loans which management believes are impaired.
Substantially all of the Company's
10
<PAGE>
impaired loans are measured at the fair value of the collateral. In limited
cases the Company may use other methods to determine the level of impairment of
a loan if such loan is not collateral dependent. Amounts received on
non-accruals are applied, for financial accounting purposes, first to principal
and then to interest after all principal has been collected.
Management of the Company recognizes the risks associated with impaired
loans. However, management's decision to place loans in this category does not
necessarily mean that the Company expects losses to occur. The Company's
impaired loan balance at the end of the six month period of both 1999 and 1998
was not material to the Company's consolidated financial position.
The subsidiary banks charge off that portion of any loan which management
considers to represent a loss as well as that portion of any other loan which is
classified as a "loss" by bank examiners. Commercial and industrial or real
estate loans are generally considered by management to represent a loss, in
whole or part, when an exposure beyond any collateral coverage is apparent and
when no further collection of the loss portion is anticipated based on the
borrower's financial condition and general economic conditions in the borrower's
industry. Generally, unsecured consumer loans are charged-off when 90 days past
due.
While management of the Company considers that it is generally able to
identify borrowers with financial problems reasonably early and to monitor
credit extended to such borrowers carefully, there is no precise method of
predicting loan losses. The determination that a loan is likely to be
uncollectible and that it should be wholly or partially charged-off as a loss,
is an exercise of judgment. Similarly, the determination of the adequacy of the
allowance for possible loan losses, can be made only on a subjective basis. It
is the judgment of the Company's management that the allowance for possible loan
losses at June 30, 1999, was adequate to absorb possible losses from loans in
the portfolio at that date.
NOTE 4 - STOCK AND CASH DIVIDENDS
All per share data presented has been restated to reflect the 25% stock
split effected through a stock dividend which became effective May 22, 1998 and
May 20, 1999 and were paid on June 12, 1998 and June 11, 1999, respectively.
Such stock dividends resulted in the issuance of 3,349,777 and 4,204,251 shares
of Common Stock in 1998 and 1999, respectively. A special cash dividend of $.50
and $.40 per share was paid to holders of record of Common Stock on April 20,
1998 and October 15, 1998, respectively. A special cash dividend of $.60 per
share was paid to holders of record of Common Stock on April 15, 1999.
The Company announced a new formal stock repurchase program on June 22,
1999 and announced it expanded the stock repurchase program on July 16, 1999.
Under the stock repurchase program, the Company is authorized to repurchase up
to $22,500,000 of its common stock through June 2000. Stock repurchases may be
made from time to time, on the open market or through private transactions.
Shares repurchased in this program will be held in treasury for reissue for
various corporate purposes, including employee stock option plans. As of August
12, 1999 a total of 393,541 shares were repurchased under this program at a cost
of $17,215,000. Stock repurchases are presented quarterly at the Company's Board
of Directors meetings and the Board of Directors has stated that the aggregate
investment in treasury stock should not exceed $45,000,000. In the past, the
board has increased previous caps on treasury stock once they were met, but
there are no assurances that an increase of the $45,000,000 cap will occur in
the future. As of August 12, 1999 the Company has approximately $38,188,000
invested in treasury shares, which amount has been accumulated since the
inception of the Company.
11
<PAGE>
On April 3, 1996, the Board of Directors adopted the 1996 International
Bancshares Corporation Stock Option Plan. The Plan replaced the 1987
International Bancshares Corporation Key Contributor Stock Option Plan. Subject
to certain adjustments, the maximum number of shares of common stock which may
be made subject to options granted under the new Plan is 705,455 with 23,235
shares remaining available for the issuance of options under the new Plan. The
263,783 shares of common stock remaining available under the 1987 Plan will be
treated as authorized for issuance upon exercise of options granted under the
1987 Plan only. As of June 30, 1999, options to acquire 263,783 and 682,220
shares of common stock remain outstanding under the 1987 Plan and the new Plan,
respectively.
NOTE 5 - COMMITMENTS AND CONTINGENT LIABILITIES
The Company and its bank subsidiaries are involved in various legal
proceedings that are in various stages of litigation. Some of these actions
allege "lender liability" claims on a variety of theories and claim substantial
actual and punitive damages. The Company and its subsidiaries have determined,
based on discussions with their counsel, that any material loss in such actions,
individually or in the aggregate, is remote or the damages sought, even if fully
recovered, would not be considered material to the financial condition or
results of operations of the Company and its subsidiaries. However, many of
these matters are in various stages of proceedings and further developments
could cause management to revise its assessment of these matters.
The Company's lead bank subsidiary has invested in several lease financing
transactions. Two of the lease financing transactions have been examined by the
Internal Revenue Service ("IRS"). In both transactions, a subsidiary of the lead
bank is the owner of a ninety-nine percent (99%) limited partnership interest.
The IRS has issued a Notice of Proposed Adjustments to Affected Items of a
partnership for one of the transactions and the affected partnership has
submitted a Protest contesting the adjustments. The IRS has issued a Notice of
Proposed Adjustments to Affected Items of a Partnership for the other
transaction and the partnership intends to file a Protest contesting the
proposed adjustments. No reliable prediction can be made at this time as to the
likely outcome of the Protests; however, if the Protests are decided adversely
to the partnerships, all or a portion of the $12 million in tax benefits
previously recognized by the Company in connection with these lease financing
transactions would be in question.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net income for the second quarter of 1999 was $16,043,000 or $1.02 per
share - basic ($1.00 per share - diluted) compared to $12,802,000 or $.82 per
share - basic ($.79 per share - diluted) in the corresponding 1998 period.
Historically, the Company's acquisitions have been accounted for using the
purchase method of accounting which results in the creation of goodwill. The
Company's goodwill is being amortized as a non-cash reduction of net income over
time periods from ten to twenty years. "Cash" earnings reflect the net income of
the Company excluding goodwill amortization. In computing the income tax
adjustment, management has considered tax deductible goodwill separately from
non-tax deductible goodwill in making this calculation. The income tax on tax
deductible goodwill has been computed using the standard corporate tax rate of
35%, and the non-tax deductible goodwill has been grossed-up using the same 35%
tax rate to reflect the earnings result. These two calculations have been
combined to reflect the net income tax adjustment displayed in the cash earnings
table on the following page. The table reconciles reported earnings
12
<PAGE>
to net income excluding intangible amortization ("cash" earnings) to help
facilitate peer group comparisons.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Reported net income ............. $ 16,043 $ 12,802 $ 31,938 $ 26,400
Amortization of intangible assets 990 992 1,917 1,985
Income tax adjustment ........... (83) (83) (143) (167)
-------- -------- -------- --------
Cash earnings ................... $ 16,950 $ 13,711 $ 33,712 $ 28,218
======== ======== ======== ========
Cash earnings per common share:
Basic ........................ $ 1.08 $ .87 $ 2.26 $ 1.90
Diluted ...................... $ 1.05 $ .85 $ 2.22 $ 1.84
</TABLE>
Total assets at June 30, 1999 were $5,106,052,000 which represents a 10%
increase over total assets of $4,641,213,000 at June 30, 1998 and a 2% increase
over total assets of $4,987,877,000 as of December 31, 1998. Deposits at June
30, 1999 were $3,535,900,000 an increase of 8% over the $3,259,394,000 amount
reported at June 30, 1998, and an increase of 5% over the $3,369,637,000 amount
reported at December 31, 1998. Total loans at June 30, 1999 increased 18% to
$1,759,314,000 over $1,487,656,000 reported at June 30, 1998 and increased 8%
over the $1,623,364,000 amount reported at December 31, 1998. Other investments
increased $95,109,000 to $111,135,000 due to the purchase of bank owned life
insurance. The increase in assets and deposits during the first six months in
1999 reflects growth opportunities in the Company's market through its branch
system. The aggregate amount of repurchase agreements, short term fixed
borrowings and certificates of indebtedness with the Federal Home Bank of Dallas
("FHLB"), Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") decreased to $1,055,000,000 at June 30, 1999,
from $1,074,000,000 at December 31, 1998. Such funds are used to fund the
earning asset base of the Company.
As part of its strategy to manage interest rate risk, the Company strives
to manage both assets and liabilities so that interest sensitivities match. In
this way both earning assets and funding sources of the Company respond to
changes in a similar time frame. Net interest income for the second quarter of
1999 increased $2,914,000 (8%) over the same period in 1998 and the increase is
the result of the Company's efforts to manage interest rate risk.
Investment securities increased 5% to $2,898,708,000 at June 30, 1999 over
$2,768,625,000 at June 30, 1998. Time deposits with other banks at June 30, 1999
increased to $1,679,000 from $977,000 at June 30, 1998. There were no federal
funds sold at June 30, 1999 as compared to $10,000,000 at June 30, 1998.
Interest and fees on loans for the second quarter in 1999 increased
$3,281,000 (9%) over the same quarter in 1998 and increased $5,914,000 (8%) for
the six month period ended June 30, 1999 as compared to the same period in 1998.
Interest income on taxable and tax exempt investment securities for the second
quarter in 1999 decreased $2,534,000 (6%) from the same quarter in 1998 and
decreased $2,094,000 (2%) for the six month period ended June 30, 1999 as
compared to the same period in 1998. Interest income on time deposits with banks
for the second quarter in 1999 increased $8,000 (38%) over the same quarter in
1998 and increased $2,000 (4%) for the six month period ended June 30, 1999 as
compared to the same period in 1998. Interest income on federal funds sold for
the second quarter in 1999 decreased $123,000 (32%) from the same
13
<PAGE>
quarter in 1998 and decreased $445,000 (50%) for the six month period ended June
30, 1999 as compared to the same period in 1998. Overall, total interest income
from loans, time deposits, federal funds sold, investment securities and other
interest income for the second quarter in 1999 increased $650,000 (1%) over the
same quarter in 1998 and increased $3,395,000 (2%) for the six month period
ended June 30, 1999 as compared to the same period in 1998. The increase in
total interest income was primarily due to income derived from the Company's
loan portfolio.
Total interest expense for savings deposit, time deposits and other
borrowings decreased $2,264,000 (5%) for the second quarter of 1999 from the
same quarter in 1998 and decreased $1,287,000 (1%) for the six month period
ended June 30, 1999 from the same period in 1998. The decrease in total interest
expense was primarily due to the decrease in short-term fixed borrowings
compared to the corresponding 1998 period. As a result, net interest income for
the second quarter of 1999 increased $2,914,000 (8%) over the same period in
1998 and increased $4,682,000 (7%) for the six month period ended June 30, 1999
over the corresponding period in 1998. This increase is attributed to the
Company's efforts to maintain an adequate interest rate spread between the cost
of funds and the investment of those funds.
Non-interest income increased $3,148,000 (29%) to $13,877,000 in the
second quarter of 1999 as compared to $10,729,000 for the quarter ended June 30,
1998 and increased $5,281,000 (25%) to $26,578,000 for the six month period
ended June 30, 1999 as compared to $21,297,000 for the six months ended June 30,
1998. The increase in non-interest income was primarily due to the increase in
service charge income. The increase in service charges was attributable to the
amount of account transaction fees received as a result of the deposit growth,
new deposit products and increased collection efforts.
Non-interest expense increased $1,288,000 (5%) to $26,325,000 for the
second quarter of 1999 as compared to $25,037,000 for the quarter ended June 30,
1998 and increased $1,289,000 (3%) to $50,343,000 for the six month period ended
June 30, 1999 as compared to $49,054,000 for the six months ended June 30, 1998.
Non-interest expense increased only slightly due to the Company's increased
efforts to control expenses by maintaining optimum staffing levels, an effective
budgeting process, and internal consolidation of bank functions.
The efficiency ratio, a measure of non-interest expense to net interest
income plus non-interest income was 49% for the six month period ended June 30,
1999, compared to the year ago ratio of 53%.
The allowance for possible loan losses increased 5% to $27,303,000 at the
end of the second quarter of 1999 from $26,120,000 for the corresponding date in
1998. The provision for possible loan losses charged to expense increased 7% to
$4,514,000 for the first six months of 1999 compared to $4,203,000 for the first
six months of 1998. Increases in the allowance for possible loan losses were
largely due to the increase in the size of the loan portfolio. The allowance for
possible loan losses was 1.55% of total loans at June 30, 1999, compared to
1.76% at June 30, 1998 and 1.57% at December 31, 1998.
On June 30, 1999, the Company had $5,106,052,000 of consolidated assets of
which approximately $196,604,000 or 4% were related to loans outstanding to
borrowers domiciled in Mexico. Of the $196,604,000, 63% is directly or
indirectly secured by U.S. assets, principally certificates of deposits and real
estate; 34% is secured by Mexican real estate; 1% is unsecured; 1% consists of
direct unsecured Mexican sovereign debt (principally former FICORCA debt) and 1%
represents accrued interest receivable on the portfolio.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The maintenance of adequate liquidity provides the Company's bank
subsidiaries with the ability to meet potential depositor withdrawals, provide
for customer credit needs, maintain adequate statutory reserve levels and take
full advantage of high-yield investment opportunities as they arise. Liquidity
is afforded by access to financial markets and by holding appropriate amounts of
liquid assets. The bank subsidiaries of the Company derive their liquidity
largely from deposits of individuals and business entities. In recent years,
deposit growth has largely been attributable to acquisitions, however the
deposit growth during the first two quarters of 1999 was only partially
attributable to a branch acquisition. Historically, the Mexico based deposits of
the Company's bank subsidiaries have been a stable source of funding. Deposits
from persons and entities domiciled in Mexico comprise a significant portion of
the deposit base of the Company's bank subsidiaries. Other important funding
sources for the Company's bank subsidiaries during 1999 and 1998 have been
wholesale liabilities with FHLB, FNMA, and FHLMC and large certificates of
deposit, requiring management to closely monitor its asset/liability mix in
terms of both rate sensitivity and maturity distribution. Primary liquidity of
the Company and its subsidiaries has been maintained by means of increased
investment in shorter-term securities, certificates of deposit and loans. As in
the past, the Company will continue to monitor the volatility and cost of funds
in an attempt to match maturities of rate-sensitive assets and liabilities, and
respond accordingly to anticipated fluctuations in interest rates over
reasonable periods of time.
During the first six months of 1999, there were no material changes in
market risk exposures that affected the quantitative and qualitative disclosures
regarding market risk presented in the Company's Form 10-K for the year ended
December 31, 1998.
Principal sources of liquidity and funding for the Company are dividends
from subsidiaries and borrowed funds, with such funds being used to finance the
Company's cash flow requirements. The Company has a number of available
alternatives to finance the growth of its existing banks as well as future
growth and expansion. Among the activities and commitments the Company funded
during the first six months in 1999 and expects to continue to fund during 1999
is a continuous effort to modernize and improve our existing facilities and
expand our bank branch network.
The Company maintains an adequate level of capital as a margin of safety
for its depositors and shareholders. At June 30, 1999, shareholders' equity was
$362,256,000 compared to $357,797,000 at June 30, 1998, an increase of
$4,459,000 or 1%. This increase in capital resulted primarily from the retention
of earnings. The Company had a leverage ratio of 6.90% and 6.50%, risk-weighted
Tier 1 capital ratio of 14.01% and 13.36% and risk-weighted total capital ratio
of 15.15% and 14.45% at June 30, 1999 and December 31, 1998, respectively. The
core deposit intangibles and goodwill of $44,407,000 at June 30, 1999, recorded
in connection with financial institution acquisitions of the Company, are
deducted from the sum of core capital elements when determining the capital
ratios of the Company.
As in the past, the Company will continue to monitor the volatility and
cost of funds in an attempt to match maturities of rate-sensitive assets and
liabilities, and respond accordingly to anticipated fluctuations in interest
rates by adjusting the balance between sources and uses of funds as deemed
appropriate. The net-interest rate sensitivity as of June 30, 1999 is
illustrated in the table on page 16. This information reflects the balances of
assets and liabilities whose rates are subject to change. A mix of assets and
liabilities that are roughly equal in volume and repricing characteristics
represents a matched interest rate sensitivity position. Any excess of assets or
liabilities results in an interest rate sensitivity gap.
15
<PAGE>
The Company undertakes the interest rate sensitivity analysis to monitor
the potential risk on future earnings resulting from the impact of possible
future changes in interest rates on currently existing net asset or net
liability positions. However, this type of analysis is as of a point-in-time
position, when in fact that position can quickly change as market conditions,
customer needs, and management strategies change. Thus, interest rate changes do
not affect all categories of asset and liabilities equally or at the same time.
As indicated in the table, the Company is liability sensitive during the early
time periods and becomes asset sensitive in the longer periods. The Company's
Asset and Liability Committee reviews semi-annually the consolidated position
along with simulation and duration models, and makes adjustments as needed to
control the Company's interest rate risk position. The Company uses modeling of
future events as a primary tool for monitoring interest rate risk.
INTEREST RATE SENSITIVITY
(Dollars in Thousands)
<TABLE>
<CAPTION>
RATE/MATURITY RATE/MATURITY RATE/MATURITY RATE/MATURITY
JUNE 30, 1999 3 MONTHS OVER 3 MONTHS OVER 1 YEAR TOTAL
(DOLLARS IN THOUSANDS) OR LESS TO 1 YEAR TO 5 YEARS OVER 5 YEARS
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
SECTION A
- ---------------------------------------------------------------------------------------------------------------------
RATE SENSITIVE ASSETS
FED FUNDS SOLD ................... -- -- -- -- --
DUE FROM BANK INT EARNING ........ 495 1,184 -- -- 1,679
INVESTMENT SECURITIES ............ 295,209 640,630 1,669,619 293,250 2,898,708
LOANS, NET OF NON-ACCRUALS ....... 1,215,871 121,802 266,699 149,283 1,753,655
- ---------------------------------------------------------------------------------------------------------------------
TOTAL EARNING ASSETS ............. 1,511,575 763,616 1,936,318 442,533 4,654,042
- ---------------------------------------------------------------------------------------------------------------------
CUMULATIVE EARNING ASSETS ........ 1,511,575 2,275,191 4,211,509 4,654,042
=====================================================================================================================
SECTION B
- ---------------------------------------------------------------------------------------------------------------------
RATE SENSITIVE LIABILITIES
TIME DEPOSITS .................... 1,007,626 866,142 223,177 328 2,097,273
OTHER INT BEARING DEPOSITS ....... 983,328 -- -- -- 983,328
FED FUNDS PURCHASED & REPOS ...... 50,981 62,676 2,047 -- 115,704
OTHER BORROWINGS ................. 1,055,000 -- -- -- 1,055,000
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST BEARING LIABILITIES 3,096,935 928,818 225,224 328 4,251,305
- ---------------------------------------------------------------------------------------------------------------------
CUMULATIVE SENSITIVE LIABILITIES . 3,096,935 4,025,753 4,250,977 4,251,305
=====================================================================================================================
SECTION C
- ---------------------------------------------------------------------------------------------------------------------
REPRICING GAP .................... (1,585,360) (165,202) 1,711,094 442,205 402,737
CUMULATIVE REPRICING GAP ......... (1,585,360) (1,750,562) (39,468) 402,737
RATIO OF INTEREST-SENSITIVE ...... .49 .82 8.60 -- 1.09
ASSETS TO LIABILITIES
RATIO OF CUMULATIVE, INTEREST- ... .49 .57 .99 1.09
SENSITIVE ASSETS TO LIABILITIES
=====================================================================================================================
</TABLE>
YEAR 2000
This section contains forward-looking statements that have been
prepared on the basis of the Company's best judgments and currently available
information. These forward-looking statements are inherently subject to
significant business, third party, and regulatory uncertainties and other
contingencies, many of which are beyond the
16
<PAGE>
control of the Company. In addition, these forward-looking statements are based
upon the Company's current internal assessments and remediation plans,
incorporating certain representations of third-party servicers, and are subject
to change. Accordingly, there can be no assurance that the Company's results of
operations will not be adversely affected by difficulties or delays in the
Company's or third parties' Year 2000 readiness efforts.
Many existing computer programs use only two digits to identify a
year. These programs were designed and developed without considering the impact
of the upcoming change in the century. If uncorrected, many computer
applications could fail or create erroneous results by or at the Year 2000. The
Year 2000 issue affects virtually all companies and organizations.
The Company has developed and implemented a plan to deal with the
Year 2000 problem. The plan consists of a five-phase program ("Action Plan")
recommended by the Federal Financial Institutions Examination Council. This
Action Plan consists of awareness, assessment, renovation, validation and
implementation processes. The Action Plan provides for addressing critical and
noncritical issues, with the assignment of responsibility and target dates for
completion, and as of June 30, 1999, the Company was principally involved in the
validation and implementation phases of the Action Plan. Testing of core
applications, such as mainframe software, hardware, and network applications
were substantially complete by December 31, 1998.
Currently, the Company estimates that the total dollar amount to
remediate its Year 2000 issue will be less than one million dollars. The data
processing system which the Company purchased in 1990 was substantially Year
2000 compliant. The cost of remediating the remaining Year 2000 issues are based
on management's best estimates which were derived utilizing assumptions of
future events including the continued availability of certain resources, third
party vendor remediation plans and other factors. The related costs totaled
approximately $660,000 for the year 1998 and the first two quarters of 1999.
These costs are being expensed as incurred.
The Company does not expect that the cost of addressing the Year 2000
issue will be a material event or uncertainty that would cause its reported
financial information not to be indicative of future operating results or future
financial condition, or that the costs or consequences of incomplete or untimely
resolution of any Year 2000 issue represent a known material event or
uncertainty that is reasonably likely to affect its future financial results, or
cause its reported financial information not to be indicative of future
operating results or future financial condition. However, the Year 2000 issue is
pervasive and complex and can potentially affect any computer process.
Accordingly, no assurance can be given that Year 2000 compliance can be achieved
without additional unanticipated expenditures and uncertainties that might
affect future financial results.
Additionally, the federal bank regulators have enforcement powers
with respect to Year 2000 compliance. Failure to institute an acceptable Year
2000 readiness plan could result in the disapproval of expansion applications
filed with bank regulatory agencies or the imposition of cease and desist orders
or civil money penalties.
Regardless of the Year 2000 compliance of the Company's systems,
there is no complete assurance that the Company will not be adversely affected
to the extent other entities not affiliated with the Company are unsuccessful in
properly addressing this issue. In an effort to minimize this possibility,
active communication has been ongoing between the Company and its external
service providers and intermediaries. In addition, a risk reduction program was
initiated in 1998 that addresses potential Year 2000 exposure in the loan
portfolio. Correspondence has been sent by the Company to
17
<PAGE>
customers and suppliers during 1998 and the first half of 1999 urging them to
adequately address their Year 2000 issues, and such communication is planned to
continue throughout 1999. However, there can be no guarantee that customers and
suppliers will become Year 2000 compliant on a timely basis or in a manner that
is compatible with the Company's systems. Significant business interruptions or
failures by key business customers, suppliers, trading partners or governmental
agencies resulting from the effects of the Year 2000 issue could have a material
adverse effect on the Company.
The Company currently has in place a remediation and contingency plan
in the event an application has unresolved Year 2000 issues as well as a
disaster recovery plan in the event of an unforeseen interruption in the
Company's data processing capabilities. These plans focus on an
application-by-application strategy that would be implemented in the event of
Year 2000 related problems in particular applications, which strategies include,
among others, the replacement of the faulty application as well as strategies to
be employed should the Company suffer an area wide interruption of data
processing capabilities due to loss of power or communications or a similar
failure, which strategies would include, among others, alternate processing
facilities.
While the Company will have contingency plans in place to address a
temporary disruption in these services, there can be no assurance that any
disruption or failure will be only temporary, that the Company's contingency
plans will function as anticipated, or that the results of operations, financial
condition, or liquidity of the Company will not be adversely affected in the
event of a prolonged disruption or failure.
Additionally, there can be no assurance that the banking or other
federal regulators will not issue new regulatory requirements that require
additional work by the Company and, if issued, that new regulatory requirements
will not increase the cost or delay the completion of the Company's Action Plan.
FORWARD LOOKING INFORMATION
Certain matters discussed in this report, excluding historical
information, include forward-looking statements. Although the Company believes
such forward-looking statements are based on reasonable assumptions, no
assurance can be given that every objective will be reached. The words
"estimate," "expect," "intend" and "project," as well as other words or
expressions of similar meaning are intended to identify forward-looking
statements. Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date of this report. Such statements are
based on current expectations, are inherently uncertain, are subject to risks
and should be viewed with caution. Actual results and experience may differ
materially from the forward-looking statements as a result of many factors.
Factors that could cause actual results to differ materially from any
results that are projected, forecasted, estimated or budgeted by the Company in
forward-looking statements include, among others, the following possibilities:
(I) changes in local, state, national and international economic conditions,
(II) changes in the capital markets utilized by the Company and its
subsidiaries, including changes in the interest rate environment that may reduce
margins, (III) changes in state and/or federal laws and regulations to which the
Company and its subsidiaries, as well as their customers, competitors and
potential competitors, are subject, including, without limitation, banking, tax,
securities, insurance and employment laws and regulations, and (IV) the loss of
senior management or operating personnel, (V) the Company's inability to
complete its Year 2000 action plan on a timely basis, and (VI) increased
competition from both within and without the banking industry. It is not
possible to foresee or
18
<PAGE>
identify all such factors. The Company makes no commitment to update any
forward-looking statement, or to disclose any facts, events or circumstances
after the date hereof that may affect the accuracy of any forward-looking
statement.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held May 20,
1999 for the consideration of the following items which were approved by the
number of votes set forth:
VOTES VOTES VOTES
FOR AGAINST ABSTAINED
---------- ---------- ----------
1) To elect eleven (10) directors of
the Company until the next Annual
Meeting of Shareholders and until
their successors are elected and
qualified; The following directors,
constituting the entire board of
directors, were elected:
Lester Avigael ...................... 11,187,336 515 750
R. David Guerra ..................... 11,187,851 0 750
Irving Greenblum .................... 11,176,951 10,900 750
Richard E. Haynes ................... 11,187,851 0 750
Roy Jennings, Jr .................... 11,187,516 335 750
Sioma Neiman ........................ 11,187,851 0 750
Peggy J. Newman ..................... 11,187,851 0 750
Dennis E. Nixon ..................... 11,185,749 2,102 750
Leonardo Salinas .................... 11,171,713 16,138 750
A.R. Sanchez Jr ..................... 11,180,719 7,132 750
2) To approve the appointment of
independent auditors for the 1999
fiscal year ......................... 11,180,941 992 6,668
3) To transact such other business as
may lawfully come before the meeting
of any adjournment thereof. Proxies
were solicited pursuant to Schedule
14A under the Securities Exchange
Act of 1934 ......................... 11,188,601 NONE NONE
19
<PAGE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27. International Bancshares Corporation Financial Data
Schedule for the Period ended June 30, 1999.
(b) REPORTS ON FORM 8-K
Registrant filed a current report on Form 8-K on May 12, 1999,
covering Item 5 - Other Events and Item 7 - Financial Statements and Exhibits in
connection with the announcement of the Company's First Quarter 1999 Earnings.
Registrant filed a current report on Form 8-K on June 28, 1999,
covering Item 5 - Other Events and Item 7 - Financial Statements and Exhibits in
connection with the announcement of the Company's stock repurchase program.
Registrant filed a current report on Form 8-K on July 16, 1999,
covering Item 5 - Other Events and Item 7 - Financial Statements and Exhibits in
connection with the announcement of the expansion of the Company's stock
repurchase program.
Registrant filed a current report on Form 8-K on August 12, 1999,
covering Item 5 - Other Events and Item 7 - Financial Statements and Exhibits
in connection with the announcement of the Company's Second Quarter 1999
Earnings.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
INTERNATIONAL BANCSHARES CORPORATION
Date: AUGUST 16, 1999 /S/ DENNIS E. NIXON
--------------- -------------------------------------
Dennis E. Nixon
President
Date: AUGUST 16, 1999 /S/ IMELDA NAVARRO
--------------- -------------------------------------
Imelda Navarro
Treasurer (Chief Accounting Officer)
21
<PAGE>
FINANCIAL DATA SCHEDULE
ITEM NUMBER ITEM DESCRIPTION
9-03(1) 97,549 Cash and due from banks
9-03(2) 1,679 Interest-bearing deposits
9-03(3) - Federal funds sold-purchased securities for
resale
9-03(4) - Trading account assets
9-03(5) 2,896,396 Investment and mortgage backed securities
held for sale
9-03(6) 2,312 Investment and mortgage backed securities
held to maturity - carrying value
9-03(6) 2,310 Investment and mortgage backed securities
held to maturity - market value
9-03(7) 1,759,314 Loans
9-03(7)(2) 27,303 Allowance for losses
9-03(11) 5,106,052 Total assets
9-03(12) 3,535,900 Deposits
9-03(13) 955,000 Short-term borrowing
9-03(15) 37,192 Other liabilities
9-03(16) 100,000 Long-term debt
9-03(19) - Preferred stock-mandatory redemption
9-03(20) - Preferred stock-no mandatory redemption
9-03(21) 21,036 Common stocks
9-03(22) 341,220 Other stockholder's equity
9-03(23) 5,106,052 Total liabilities and stockholders' equity
9-04(1) 76,533 Interest and fees on loans
9-04(2) 83,870 Interest and dividends on investments
9-04(4) 194 Other interest income
9-04(5) 160,597 Total interest income
9-04(6) 61,347 Interest on deposits
9-04(9) 84,720 Total interest expense
9-04(10) 75,877 Net interest income
9-04(11) 4,514 Provision for loan losses
9-04(13)(h) 105 Investment securities gains/losses
9-04(14) 50,343 Other expenses
9-04(15) 47,598 Income/loss before income tax
9-04(17) 47,598 Income/loss before extraordinary items
9-04(18) - Extraordinary items, less tax
9-04(19) - Cumulative change in accounting principles
9-04(20) 31,938 Net income or loss
9-04(21) 2.14 Earnings per share - basic
9-04(21) 2.10 Earnings per share - diluted
22
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 97,549
<INT-BEARING-DEPOSITS> 1,679
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,896,396
<INVESTMENTS-CARRYING> 2,312
<INVESTMENTS-MARKET> 2,310
<LOANS> 1,759,314
<ALLOWANCE> 27,303
<TOTAL-ASSETS> 5,106,052
<DEPOSITS> 3,535,900
<SHORT-TERM> 955,000
<LIABILITIES-OTHER> 37,192
<LONG-TERM> 100,000
0
0
<COMMON> 21,036
<OTHER-SE> 341,220
<TOTAL-LIABILITIES-AND-EQUITY> 5,106,052
<INTEREST-LOAN> 76,533
<INTEREST-INVEST> 83,870
<INTEREST-OTHER> 194
<INTEREST-TOTAL> 160,597
<INTEREST-DEPOSIT> 61,347
<INTEREST-EXPENSE> 84,720
<INTEREST-INCOME-NET> 75,877
<LOAN-LOSSES> 4,514
<SECURITIES-GAINS> 105
<EXPENSE-OTHER> 50,343
<INCOME-PRETAX> 47,598
<INCOME-PRE-EXTRAORDINARY> 47,598
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,938
<EPS-BASIC> 2.14
<EPS-DILUTED> 2.10
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
