Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1994 Commission file number 0-7275
Cullen/Frost Bankers, Inc.
(Exact name of registrant as specified in its charter)
Texas 74-1751768
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 W. Houston Street, San Antonio, Texas 78205
(Address of principal executive offices) (Zip code)
(210) 220-4011
(Registrant's telephone number, including area code)
N/A
(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: At July 28, 1994 there were
11,061,896 shares of Common Stock, $5 par value, outstanding.
<PAGE>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
<TABLE>
<CAPTION>
Consolidated Statements of Income
Cullen/Frost Bankers, Inc. and Subsidiaries
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
--------------------- -----------------
1994 1993 1994 1993
------- ------- ------ ------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $25,371 $23,261 $49,002 $44,855
Securities:
Taxable 23,643 23,483 46,054 45,987
Tax-exempt 85 191 181 365
------ ------- ------- -------
Total Securities 23,728 23,674 46,235 46,352
Time Deposits 1 1 2 2
Federal funds sold and securities
purchased under resale agreements 937 2,049 2,539 3,931
------- ------- ------- -------
Total Interest Income 50,037 48,985 97,778 95,140
INTEREST EXPENSE
Deposits 14,619 15,256 28,339 29,394
Federal funds purchased and securities
sold under repurchase agreements 1,560 886 2,633 1,677
Long-term notes payable and other borrowings --- 9 --- 255
------ ------- ------- -------
Total Interest Expense 16,179 16,151 30,972 31,326
------- ------- ------- -------
Net Interest Income 33,858 32,834 66,806 63,814
Provision (credit) for possible loan losses --- --- --- (590)
------ ------- ------- -------
Net Interest Income After Provision
(Credit) For Possible Loan Losses 33,858 32,834 66,806 64,404
NON-INTEREST INCOME
Trust department 7,114 6,393 14,396 12,630
Service charges on deposit accounts 6,387 6,402 12,682 12,259
Other service charges, collection and exchange
charges, commissions and fees 2,894 2,418 5,572 4,575
Net gain (loss) on securities transactions (446) (3) (440) 5
Other 3,002 3,612 6,077 7,036
------- ------- ------- -------
Total Non-Interest Income 18,951 18,822 38,287 36,505
NON-INTEREST EXPENSE
Salaries and wages 13,391 13,607 26,406 26,774
Pension and other employee benefits 2,888 3,094 5,957 6,233
Net occupancy of banking premises 4,066 5,308 8,263 10,244
Furniture and equipment 2,528 2,363 5,100 4,649
Provision for real estate losses --- 251 --- 1,164
Restructuring costs --- --- --- 1,958
Other 15,733 16,088 31,300 30,997
------- ------- ------- -------
Total Non-Interest Expense 38,606 40,711 77,026 82,019
Income Before Income Taxes and Cumulative
Effect of Accounting Change 14,203 10,945 28,067 18,890
Income Taxes 4,961 218 9,727 378
------- ------- ------- -------
Income Before Cumulative Effect of
Accounting Change 9,242 10,727 18,340 18,512
Cumulative effect of change in
accounting for income taxes --- --- --- 8,439
------- ------- ------- -------
Net Income $ 9,242 $10,727 $18,340 $26,951
======= ======= ======= =======
Per Share
Income before cumulative effect of
accounting change $ .82 $ .96 $ 1.64 $ 1.67
Net Income .82 .96 1.64 2.43
Dividends .15 --- .30 ---
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands)
June 30 December 31 June 30
1994 1993 1993
---------- ---------- ----------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 302,963 $ 334,564 $ 330,965
Time deposits 6 147 146
Securities held to maturity 1,110,990 997,395 1,299,905
Securities available for sale 592,827 614,476 317,527
Federal funds sold and securities
purchased under resale agreements 44,266 250,250 165,575
Loans, net of unearned discount of $5,454 at
June 30, 1994, $8,456 at December 31, 1993
and $11,151 at June 30, 1993 1,324,913 1,247,809 1,181,085
Less: Allowance for possible loan losses (25,647) (26,298) (31,050)
---------- ---------- ----------
Net Loans 1,299,266 1,221,511 1,150,035
Banking premises and equipment 90,180 86,676 89,161
Accrued interest and other assets 134,785 134,028 140,254
---------- ---------- ----------
Total Assets $3,575,283 $3,639,047 $3,493,568
========== ========== ==========
Liabilities
Demand Deposits:
Commercial and individual $ 692,617 $ 705,786 $ 648,644
Correspondent banks 71,348 129,106 120,442
Public funds 38,111 46,200 37,969
---------- ---------- ----------
Total demand deposits 802,076 881,092 807,055
Time Deposits:
Savings and Interest-on-Checking 797,835 800,161 777,251
Money market deposit accounts 544,275 527,230 520,126
Time accounts 859,397 860,642 917,306
Public funds 73,590 80,303 79,797
---------- ---------- ----------
Total time deposits 2,275,097 2,268,336 2,294,480
---------- ---------- ----------
Total deposits 3,077,173 3,149,428 3,101,535
Federal funds purchased and securities
sold under repurchase agreements 169,647 166,519 99,664
Long-term notes payable --- --- 6,400
Accrued interest and other liabilities 47,097 49,567 41,748
---------- ---------- ----------
Total Liabilities 3,293,917 3,365,514 3,249,347
Shareholders' Equity
Common stock, par value $5 per share 55,306 55,046 54,808
Shares authorized: 30,000,000
Shares outstanding: 11,061,150;
11,009,198; and 10,961,690
Surplus 114,656 113,385 112,062
Retained earnings 111,162 95,978 77,351
Unrealized gain on securities available
for sale 242 9,124 ---
---------- ---------- ----------
Total Shareholders' Equity 281,366 273,533 244,221
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $3,575,283 $3,639,047 $3,493,568
========== ========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands)
Unrealized
Gain (Loss)
on Securities
Common Retained Available
Stock Surplus Earnings for Sale Total
------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 $52,061 $102,042 $52,041 $206,144
Net income for the year ended
December 31, 1993 47,236 47,236
Proceeds from employee stock
purchase plan and options 387 1,767 2,154
Tax benefit related to exercise
of stock options 207 207
Loan payments from employee stock
ownership plan 200 200
Issuance of restricted stock 25 152 177
Restricted stock plan deferred
compensation expense, net (59) (59)
Conversion of subordinated debentures 2,339 7,661 10,000
Unrealized gain on securities
available for sale, net of tax $9,124 9,124
Cash dividend (1,650) (1,650)
Effect of ten percent stock dividend 234 1,556 (1,790)
------- -------- ------- --------- --------
Balance at December 31, 1993 55,046 113,385 95,978 9,124 273,533
Net income for the six months ended
June 30, 1994 18,340 18,340
Proceeds from employee stock purchase
plan and options 260 1,092 1,352
Tax benefit related to exercise
of stock options 179 179
Loan payments from employee stock
ownership plan 100 100
Restricted stock plan deferred
compensation expense 54 54
Adjustment to unrealized gain (loss)
on securities available for
sale, net of tax (8,882) (8,882)
Cash dividend (3,310) (3,310)
------- -------- -------- -------- --------
Balance at June 30, 1994 $55,306 $114,656 $111,162 $ 242 $281,366
======= ======== ======== ======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flow
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands)
Six Months Ended
June 30
---------------------
1994 1993
--------- ----------
<S> <C> <C>
Operating Activities
Net income $ 18,340 $26,951
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (credit) for possible loan losses --- (590)
Provision for real estate losses --- 1,164
Deferred income tax provision (benefit) 1,074 (2,517)
Accretion of discounts on loans (2,995) (6,352)
Accretion of securities' discounts (4,614) (1,343)
Amortization of securities' premiums 2,056 3,009
Net (gain) loss on securities transactions 440 (5)
Net gain on sale of assets (1,556) (341)
Depreciation and amortization 9,118 6,569
(Increase) decrease in interest receivable (1,303) 213
Increase in interest payable (210) (80)
Net change in other assets and liabilities 2,641 (5,335)
--------- ---------
Net cash provided by operating activities 22,991 21,343
Investing Activities
Proceeds from sales of securities held to maturity --- 1,400
Proceeds from maturities of securities held to maturity 85,592 258,037
Purchases of securities held to maturity (208,459) (455,562)
Proceeds from sales of securities available for sale 10,567 74,829
Proceeds from maturities of securities available for sale 154,378 425,000
Purchases of securities available for sale (151,420) (448,940)
Net increase in loans (80,202) (4,066)
Net increase in bank premises and equipment (8,068) (6,488)
Proceeds from sales of repossessed properties 890 2,285
Net cash and cash equivalents received from
bank acquisition/exchange 2,599 183,268
--------- ---------
Net cash (used) provided by investing activities (194,123) 29,763
Financing Activities
Net increase (decrease) in demand deposits,
IOC accounts, and savings accounts (61,831) 4,411
Net decrease in certificates of deposits (8,333) (118,603)
Net increase (decrease) in short-term borrowings 5,528 (20,250)
Proceeds from employee stock purchase
plan and options 1,352 969
Dividends paid (3,310) ---
--------- ---------
Net cash used by financing activities (66,594) (133,473)
--------- ---------
Decrease in cash and cash equivalents (237,726) (82,367)
Cash and cash equivalents at beginning of year 584,961 579,053
--------- ---------
Cash and cash equivalents at the end
of the period $347,235 $496,686
========= ========
Supplemental information:
Interest paid $ 31,181 $ 31,405
Loans originated to facilitate the sale
of repossessed properties 800 1,737
Conversion of long-term debt to common stock ------ 10,000
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
Cullen/Frost Bankers, Inc. and Subsidiaries
(tables in thousands)
Basis of Presentation
The consolidated financial statements include the accounts of the
Corporation and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. The
consolidated financial statements have not been audited by independent
auditors, but in the opinion of management, reflect all adjustments necessary
for a fair presentation of the financial position and results of operations.
All such adjustments were of a normal and recurring nature. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Corporation's annual report on Form 10-K for the year
ended December 31, 1993. The balance sheet at December 31, 1993 has been
derived from the audited financial statements at that date but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
Allowance for Possible Loan Losses
An analysis of the transactions in the allowance for possible loan
losses is presented below. The amount charged or credited to operating
expense is a reflection of management's assessment of the adequacy of the
allowance.
Six Months Ended
June 30
--------------------
(in thousands) 1994 1993
- - -----------------------------------------------------------------------
Balance at beginning of the period $26,298 $31,897
Provision (credit) for possible loan losses --- (590)
Changes related to disposition of bank subsidiary (2,684) ---
Net charge-offs:
Losses charged to the allowance (1,604) (4,129)
Recoveries 3,637 3,872
------- -------
Net (charge-offs) recoveries 2,033 (257)
------- -------
Balance at the end of period $25,647 $31,050
======= =======
Earnings Per Common Share
Earnings per common share calculations for the six months ended June 30,
1994 and June 30, 1993 include the effect of common stock equivalents
applicable to the stock option contracts.
The weighted average numbers of shares used to compute primary per common
share earnings, including the common stock equivalents where applicable, were
11,200,403, and 11,125,822 for the six months ended June 30, 1994, and 1993,
respectively.
Income Taxes
The tax expense for the second quarter of 1994 was $4,961,000. This
amount consisted of current tax expense of $4,437,000 and deferred tax
expense of $524,000. Year-to-date tax expense is $9,727,000, consisting of
current tax expense of $8,653,000 and deferred tax expense of $1,074,000.
Net deferred tax assets were $18,734,000 with no valuation allowance at June
30, 1994. The deferred tax assets were supported by taxes paid in prior
years, the future reversal of existing taxable temporary differences, and
future taxable income. The tax expense for the second quarter of 1993 was
$218,000. Tax expense for the second quarter of 1993 was affected by a
reduction of $2,800,000 million in the valuation allowance for deferred tax
assets. A valuation allowance of $13,600,000 million was established at the
beginning of 1993 when SFAS 109 was adopted. Income tax payments for the
first six months of 1994 and 1993 were $7,746,000 and $2,041,000,
respectively.
Acquisition
On April 15, 1994, the Corporation acquired Texas Commerce Bank in
Corpus Christi in exchange for Cullen/Frost Bank of Dallas, N.A. ("C/F
Dallas"). The banks exchanged were of comparable asset size. C/F Dallas
represented 4.6 percent of the Corporation's total assets at March 31, 1994.
No gain or loss was recognized on this transaction.
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Review
Cullen/Frost Bankers, Inc. and Subsidiaries
(taxable-equivalent basis - tables in thousands)
Results of Operations
Cullen/Frost Bankers, Inc. reported net income of $9,242,000 or $.82 per
common share for the quarter ended June 30, 1994 compared with $10,727,000 or
$.96 per common share for the second quarter of 1993 and net income of
$9,098,000 or $.81 per common share for the first quarter of 1994.
Net income for the six months ended June 30, 1994 was $18,340,000 or
$1.64 per common share compared with $26,951,000 or $2.43 per common share
for the same period of 1993. Net income after taxes for 1993 was positively
impacted by the cumulative effect of a change in accounting for income taxes.
The one-time accounting change added $8,439,000 to net income.
For 1994, the Corporation is recognizing income tax expense that
approximates the statutory rate. At the beginning of 1993 the Corporation
had a valuation allowance for deferred tax assets of $13.6 million. This
valuation allowance was reduced to zero by the end of 1993 and resulted in
income tax expense of $378,000 for the first six months of 1993 compared with
$9,727,000 for the same period in 1994.
On April 15, 1994, the Corporation acquired Texas Commerce Bank-Corpus
Christi in exchange for Cullen/Frost Bank of Dallas, N.A. The banks
exchanged were of comparable asset size.
The results of operations are included in the material that follows.
All balance sheet figures are presented in averages unless otherwise noted.
<TABLE>
<CAPTION>
Summary of Operations
-------------------------------------------------
Three Months Ended
Six Months Ended ----------------------------
June 30 1994 1993
------------------- ------------------ ---------
1994 1993 June 30 March 31 June 30
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Taxable-equivalent net
interest income $67,103 $64,290 $33,999 $33,104 $33,074
Taxable-equivalent adjustment 297 476 141 156 240
------- ------- ------- ------- -------
Net interest income 66,806 63,814 33,858 32,948 32,834
Provision(credit) for possible
loan losses --- (590) --- --- ---
Non-Interest income:
Net gain (loss) on securities
transactions (440) 5 (446) 6 (3)
Other 38,727 36,500 19,397 19,330 18,825
------- ------- ------- ------- -------
Total non-interest income 38,287 36,505 18,951 19,336 18,822
Non-Interest expense:
Restructuring costs --- 1,958 --- --- ---
Provision for real estate losses --- 1,164 --- --- 251
Other 77,026 78,897 38,606 38,420 40,460
------- ------- ------- ------- -------
Total non-interest expense 77,026 82,019 38,606 38,420 40,711
Income before income taxes and ------- ------- ------- ------- -------
cumulative effect of accounting change 28,067 18,890 14,203 13,864 10,945
Income Taxes 9,727 378 4,961 4,766 218
------- ------- ------- ------- -------
Income before cumulative effect of
accounting change 18,340 18,512 9,242 9,098 10,727
Cumulative effect of change in
accounting for income taxes --- 8,439 --- --- ---
------- ------- ------- -------- --------
Net Income $18,340 $26,951 $ 9,242 $ 9,098 $10,727
======= ======= ======= ======= ========
Per Share
Net income-primary $ 1.64 $ 2.43 $ .82 $ .81 $ .96
</TABLE>
Net Interest Income
The increase in net interest income from the first quarter of 1994 is
due to increases in loan volumes and loan yields. The increase in net
interest income from the second quarter of 1993 is primarily due to increases
in loan volumes and investment securities. Net interest margin was 4.39
percent for the second quarter of 1994 compared to 4.30 percent and 4.32
percent for the first quarter of 1994 and second quarter of 1993,
respectively. Net interest spread increased eight basis points from the
first quarter of 1994 and six basis points from the second quarter of 1993 to
3.87 percent. The net interest spread increased from the first quarter
primarily as a result of the rising interest rate environment.
<TABLE>
<CAPTION>
Change in Net Interest Income
-----------------------------------------------------------------
Second Quarter Second Quarter Year-to-Date
1994 1994 1994
vs. vs. vs.
Second Quarter First Quarter Year-to-Date
1993 1994 1993
------------------------------------------------------------------
Percentage of Percentage of Percentage of
Amount Total Change Amount Total Change Amount Total Change
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Due to volume $ 3,090 58.80% $ 627 70.06% $ 8,963 59.31%
Due to interest rate
spread (2,165) 41.20 268 . 29.94 (6,150) 40.69
-------- -------- -------- ------- ------ -------
$ 925 100.00% $ 895 100.00% $ 2,813 100.00%
======= ======= ======= ======= ======= =======
</TABLE>
Non-Interest Income
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 -------------------------------
-------------------- 1994 1993
--------------------- -------
Non-Interest Income 1994 1993 June 30 March 31 June 30
- - -------------------------------------------------------------------------------- -------
<S> <C> <C> <C> <C> <C>
Trust department $14,396 $12,630 $ 7,114 $ 7,282 $ 6,393
Service charges on deposit accounts 12,682 12,259 6,387 6,295 6,402
Other service charges, collection
and exchange charges, commissions
and fees 5,572 4,575 2,894 2,678 2,418
Net gain (loss) on securities
transactions (440) 5 (446) 6 (3)
Other 6,077 7,036 3,002 3,075 3,612
------- -------- ------- ------- -------
Total $38,287 $36,505 $18,951 $19,336 $18,822
======= ======== ======= ======= =======
</TABLE>
For the second quarter 1994 ...
Excluding securities transactions, total non-interest income was flat
compared to the first quarter of 1994 and was up 3.0 percent from the second
quarter of 1993.
Trust income of $7,114,000 increased 11.3 percent from the second
quarter of 1993. This can be attributed to growth in the number of accounts
and assets under management.
Service charges on deposit accounts totaled $6,387,000 for the quarter
ended June 30, 1994, flat compared to the same quarter one year ago. Other
service charges increased 19.7 percent from the second quarter of 1993
primarily due to fees associated with increased volumes, bank card discounts,
and service charges.
During the second quarter of 1994, the Corporation recorded a net loss
on securities transactions of $446,000 by repositioning a portion of the
available for sale securities portfolio. A low-yielding security was sold
and a higher-yielding security was purchased which should favorably impact
earnings in the future.
Other non-interest income of $3,002,000 is lower than the second quarter
of 1993 primarily due to less income from foreclosed assets, moderately
offset by an increase in sundry income.
For the six months ended June 30, 1994...
Excluding securities transactions, non-interest income totaled
$38,727,000 compared with $36,500,000 for the same period last year. Trust
income increased by 14.0 percent primarily because of an increase in
investment fees resulting from growth in the number of accounts and assets
under management. Other service charges and fees increased by 21.8 percent
when compared to the same period last year. The increase is primarily due to
fees associated with increased volumes, bankcard discounts, and service
charges
The increase in Trust and other service charges and fees were offset by
the decrease in other income. The decrease is due to the reduction in income
recognized on the sale of foreclosed assets.
<TABLE>
<CAPTION>
Non-Interest Expense
Three Months Ended
Six Months Ended -------------------------------
June 30 1994 1993
----------------- --------------------- -------
Non-Interest Expense 1994 1993 June 30 March 31 June 30
- - -------------------------------------------------------------------------------- -------
<S> <C> <C> <C> <C> <C>
Salaries and wages $26,406 $26,774 $13,391 $13,015 $13,607
Pension and other employee
benefits 5,957 6,233 2,888 3,069 3,094
Net occupancy of banking
premises 8,263 10,244 4,066 4,197 5,308
Furniture and equipment 5,100 4,649 2,528 2,572 2,363
Restructuring costs --- 1,958 --- --- ---
Other 31,300 30,997 15,733 15,567 16,088
------- ------- ------- ------- -------
77,026 80,855 38,606 38,420 40,460
Provision for real estate losses --- 1,164 --- --- 251
------- ------- ------- ------- -------
Total $77,026 $82,019 $38,606 $38,420 $40,711
======= ======= ======= ======= =======
</TABLE>
For the second quarter 1994 ...
Excluding the provision for real estate losses, non-interest expense was
$38,606,000, flat when compared to the first quarter of 1994, and down 4.6
percent from the second quarter of 1993. The second quarter of 1993 included
$2.0 million in non-recurring costs related to the New First City
acquisition.
Salaries and wages were up 2.9 percent from the first quarter of 1994
and were down 1.6 percent compared with second quarter of 1993. Pensions and
employee benefits were down 5.9 percent and 6.7 percent compared with the
first quarter of 1994 and second quarter of 1993. The decrease is primarily
due to a decrease in workmen's compensation insurance.
Net occupancy of banking premises decreased 3.1 percent and 23.4 percent
from the first quarter of 1994 and second quarter of 1993, respectively. The
decrease from the second quarter last year primarily resulted from the impact
of the restructuring actions taken in the fourth quarter of 1993. In
addition, property tax expense was lower than in the second quarter of 1993.
Furniture and equipment expense decreased 1.7 percent from the first
quarter of 1994 and increased 7.0 percent when compared to the second quarter
of 1993. This increase is primarily due to higher depreciation expense.
Other non-interest expense of $15,733,000 was up 1.1 percent from the
first quarter of 1994. Other non-interest expense declined 2.2 percent when
compared to the second quarter of 1993.
For the six months ended June 30, 1994...
Non-interest expense was $77,026,000 compared with $82,019,000 for the
same period last year. Year-to-date 1993 results included non-recurring
charges of $5.0 million relating to the acquisition of New First City and
$1.9 million in costs for a retirement incentive program. Net occupancy of
banking premises decreased 19.3 percent from the same period in 1993
primarily due to the restructuring charges taken in the fourth quarter of
1993. The increase in furniture and equipment expense is primarily due to
increased depreciation expense. Other non-interest expense was $31,300,000
for the six months ended June 30, 1994 compared to $30,997,000 for the same
period in 1993. Excluding the non-recurring expenses associated with the
acquisition of New First City in 1993, other non-interest expenses would have
increased 14.6 percent for the six months ended June 30, 1994. The increase
is primarily due to amortization of goodwill and other intangibles associated
with the acquisition of New First City during February 1993 and timing of
charitable contributions.
Income Taxes
Tax expense for the second quarter of 1994 was $4,961,000. This
compares to tax expense of $218,000 for the second quarter of 1993. The
second quarter 1993 tax expense was affected by a reduction of $2.8 million
in the valuation allowance for deferred tax assets. A valuation allowance of
$13.6 million was established January 1, 1993 with the adoption of Statement
of Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income
Taxes." The valuation allowance was reduced to zero by the end of 1993. The
one-time cumulative effect of adopting FAS 109 was $8.4 million which
favorably impacted the results of operations for the first six months of
1993. The Corporation has an effective tax rate for 1994 which approximates
the statutory rate.
Balance Sheet
Average assets of $3,661,372,000 increased 2.3 percent and increased
slightly from the second quarter of 1993 and the first quarter of 1994,
respectively. The increase is primarily due to the increase in loan volume.
Total deposits averaged $3,125,708,000 for the current quarter and were flat
when compared to the second quarter of 1993 and the previous quarter.
Loans
<TABLE>
<CAPTION>
1994 1993
--------------------- -----------------------
Loan Portfolio Percentage
Period-End Balances June 30 of Total December 31 June 30
- - ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial & Industrial $ 323,246 24.4% $ 310,830 $ 297,113
Consumer 294,344 22.2 268,331 253,519
Real estate 656,101 49.5 626,056 611,064
Other 56,676 4.3 51,048 30,540
Unearned discount (5,454) (.4) (8,456) (11,151)
---------- ------ ---------- ----------
Total Loans $1,324,913 100.0% $1,247,809 $1,181,085
========== ====== ========== ==========
</TABLE>
Average loans for the second quarter of 1994 were $1,305,305,000.
This represents a 10.8 percent increase from the comparable quarter of last
year and is up 3.0 percent from the first quarter of 1994. This loan growth
reflects improved economic conditions in the Texas markets where the
Corporation's presence is concentrated. The growth was apparent in all
categories of loans.
Real Estate Loans
Of the total real estate loans outstanding at June 30, 1994, 67 percent
were located in San Antonio, 16 percent in Houston/Galveston, 10 percent in
Austin, and 7 percent in Corpus Christi. Residential permanent mortgage
loans at June 30, 1994 were $271,656,000 compared to $300,947,000 at June 30,
1993 and $274,662,000 at March 31, 1994. Real estate loans classified as
"other" are essentially amortizing commercial and industrial loans with
maturities of less than five years. Most are collateralized by completed and
occupied commercial real estate properties.
<TABLE>
<CAPTION>
1994 1993
--------------------- --------
Real Estate Loans Percentage
Period-End Balances June 30 of Total June 30
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Construction $ 37,814 5.8% $ 23,686
Land 32,201 4.9 22,959
Permanent mortgages:
Commercial 154,545 23.5 134,891
Residential 271,656 41.4 300,947
Other 159,885 24.4 128,581
-------- ------ --------
$656,101 100.0% $611,064
======== ====== ========
Non-accrual and restructured $ 11,305 1.7% $ 17,911
</TABLE>
As part of the acquisition of New First City-Austin, certain commercial
and industrial and commercial real estate loans of that bank are protected by
a loss-sharing arrangement with the Federal Deposit Insurance Corporation
(the "FDIC") whereby losses are shared 80 percent to the FDIC and 20 percent
to the Corporation. At June 30, 1994, these loans approximated $34 million.
At June 30, 1994, real estate loans 90 days past due (excluding non-
accrual and restructured loans) were $2,729,000, compared with $2,812,000 at
June 30, 1993, and $4,082,000 at March 31, 1994.
Mexico
The Corporation's cross border outstandings, excluding $33,591,000 in
loans secured by assets held in the United States, totaled $14,818,000 at
June 30, 1994 or 1.1 percent of total loans.
<TABLE>
<CAPTION>
MEXICAN LOANS
----------------------------------------
June 30, 1994 Amount Percentage of Total Loans
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Loans to financial institutions $14,790 1.1%
Loans to private firms or individuals 28
------- ----
$14,818 1.1%
======= ====
</TABLE>
Non-Performing Assets
<TABLE>
<CAPTION>
NON-PERFORMING ASSETS
--------------------------
Real
June 30, 1994 Estate Other Total
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Non-accrual $11,305 $1,565 $12,870
Foreclosed assets* 12,350 34 12,384
------- ------ -------
$23,655 $1,599 $25,254
======== ====== =======
As a percentage of total
non-performing assets 93.7% 6.3% 100.0%
*Foreclosed assets include $9.5 million of in-substance foreclosures.
</TABLE>
Non-performing assets totaled $25,254,000 at June 30, 1994 down from
$42,147,000 at June 30, 1993 and $27,133,000 at March 31, 1994. Non-
performing assets as a percentage of total loans and foreclosed assets
decreased to 1.9 percent at June 30, 1994 from 3.5 percent one year ago. As
a part of the acquisition of New First City, certain commercial and
commercial real estate loans are protected by a loss-sharing arrangement with
the FDIC. (See "Loans") At June 30, 1994, non-performing assets covered by
the loss-sharing arrangement totaled $1,511,000. These assets are included
in total non-performing assets at $179,000 which represents the carrying
value net of loss-sharing coverage and associated discounts.
Foreclosed assets consist of both property which has been formally
repossessed and that which is considered in-substance foreclosed even though
formal repossession has not occurred. Foreclosed assets are valued at the
lower of the loan balance or estimated fair value, less estimated selling
costs, at the time of foreclosure. Write-downs occurring at acquisition are
charged against the allowance for possible loan losses. On an ongoing basis,
properties are appraised as required by applicable regulations. Write-downs
are provided for subsequent declines in value. Expenses related to
maintaining foreclosed properties are included in other non-interest expense.
The after-tax impact (assuming a 35 percent marginal tax rate) of lost
interest from non-performing assets was $396,000 or $.04 per common share for
the second quarter of 1994, compared to approximately $608,000 or $.05 per
common share for the second quarter of 1993 and $382,000 or $.03 per common
share for the first quarter of 1994. For the six months ended June 30, 1994,
the after-tax impact (assuming a 35 percent marginal tax rate) was
approximately $778,000 or $.07 per common share, compared with approximately
$1,236,000 or $.11 per common share for the comparable period last year.
Total loans 90 days past due (excluding non-accrual and restructured loans)
were $4,310,000 at June 30, 1994, compared to $4,042,000 at June 30, 1993,
and $4,975,000 at March 31, 1994.
Allowance for Possible Loan Losses
The allowance for possible loan losses was $25,647,000 or 1.94 percent
of period-end loans at June 30, 1994, compared to $31,050,000 or 2.63 percent
at June 30, 1993 and $27,552,000 or 2.15 percent for the first quarter of
1994. The change in the allowance for loan losses includes a reduction of
$2,684,000 related to the exchange of Cullen/Frost Bank in Dallas for Texas
Commerce Bank-Corpus Christi. The allowance for possible loan losses as a
percentage of non-accrual and restructured loans was 199.3 percent at June
30, 1994, compared to 149.9 percent at June 30, 1993 and 176.3 percent at the
end of the first quarter of 1994.
No provision for possible loan losses was recorded for the second and
first quarters of 1994 and the second quarter of 1993. Net recoveries in the
second quarter of 1994 totaled $779,000, compared to net charge-offs of
$339,000 for the second quarter of 1993 and net recoveries of $1,254,000 for
the first quarter of 1994.
<TABLE>
<CAPTION>
NET CHARGE-OFFS (RECOVERIES)
-----------------------------------------
1994 1993
------------------------------- -------
Second Percentage First Second
Quarter of Total Quarter Quarter
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Real Estate $ (335) 43.0% $ (575) $ 76
Commercial and industrial (528) 67.8 (740) (22)
Energy --- --- --- (2)
Consumer 89 (11.4) 64 297
Other, including foreign (5) .6 (3) (10)
---------- ------ ------- -------
Net charge-offs (recoveries) $ (779) 100.0% $ (1,254) $ 339
========== ======= ======= =======
Provision (credit) for possible loan losses $ --- $ --- $ ---
Allowance for possible loan losses 25,647 27,552 31,050
</TABLE>
Capital and Liquidity
At June 30, 1994, shareholders' equity was $281,366,000 compared to
$244,221,000 at June 30, 1993 and $277,034,000 at March 31, 1994. The
Corporation paid a cash dividend of $.15 per common share in the second and
first quarters of 1994.
At December 31,1993, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The standard addresses the accounting for and reporting
of investments in debt securities and requires classification and accounting
treatment for securities as held to maturity, trading securities and
securities available for sale. At December 31, 1993, the unrealized gain on
securities avaliable for sale, net of deferred taxes, was $9.1 million compared
to $242,000 at June 30, 1994. This decrease is primarily due to an increase
in market rates.
The Federal Reserve Board (the "Board") utilizes capital guidelines
designed to measure Tier 1 and Total Capital and take into consideration the
risk inherent in both on-balance sheet and off-balance sheet items.
The following summarizes Tier 1 and Total Capital information for the
Corporation at June 30, 1994 and June 30, 1993.
<TABLE>
<CAPTION>
June 30, 1994 June 30, 1993
------------------- -------------------
Risk-Based Capital Amount Ratio Amount Ratio
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 237,983 14.22% $ 195,015 13.79%
Tier 1 Capital Minimum requirement 66,940 4.00 56,576 4.00
Total Capital $ 258,960 15.48% 214,380 15.16%
Total Capital Minimum requirement 133,881 8.00 113,153 8.00
Risk-adjusted assets, net of goodwill $1,673,412 $1,414,411
Leverage ratio 6.59% 5.52%
</TABLE>
The Board guidelines also require a leverage capital ratio which
measures Tier 1 Capital against quarterly average total assets, net of
goodwill. A leverage ratio of 3.0 percent is the minimum requirement for
only the most highly rated banking organizations. The leverage ratio for the
Corporation was 6.59 percent and 5.52 percent at June 30, 1994 and June 30,
1993, respectively.
In December of 1991, the FDIC Improvement Act of 1991 ("FDICIA")
established five capital tiers. Federal banking agencies adopted final rules
effective December 16, 1992 relating to these tiers. At June 30, 1994 the
Corporation and all of its subsidiary banks were "well capitalized" as
defined by FDICIA, the highest regulatory category. A financial institution
is deemed to be well capitalized if the institution has a total risk-based
capital ratio of 10.0 percent or greater, a Tier 1 risk-based capital ratio
of 6.0 percent or greater, and a leverage ratio of 5.0 percent or greater,
and the institution is not subject to an order, written agreement, capital
directive or prompt corrective action directive to meet and maintain a
specific level for any capital measure.
Funding sources available include a $7,500,000 short-term line of
credit. There were no borrowings outstanding from this source at June 30,
1994.
Asset liquidity is provided by cash and assets which are readily
marketable or which will mature in the near future. These include cash, time
deposits in banks, securities available for sale, maturities and cash flows
from securities held to maturity, and Federal funds sold and securities
purchased under resale agreements. Liability liquidity is provided by access
to funding sources, principally deposits and Federal funds purchased. The
liquidity position of the Corporation is continuously monitored and
adjustments are made to the balance between sources and uses of funds as
deemed appropriate.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balance Sheets and Interest Income Analysis-Year-to-Date
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
June 30, 1994 June 30, 1993
-------------------------- ------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
ASSETS -------- ------- ----- ---------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Time deposits $ 106 $ 2 3.40% $ 152 $ 2 2.79%
Securities:
U.S. Treasury 273,132 5,924 4.37 554,007 13,044 4.75
U.S. Government agencies
and corporations 1,346,406 39,258 5.83 923,047 31,286 6.78
States and political subdivisions 6,178 293 9.49 13,064 632 9.68
Other 33,439 857 5.17 61,587 1,587 5.20
---------- ------- ---------- -------
Total securities 1,659,155 46,332 5.59 1,551,705 46,549 6.02
Federal funds sold and securities
purchased under resale agreements 154,320 2,539 3.27 262,922 3,931 2.97
Loans, net of unearned discount 1,286,447 49,202 7.71 1,135,329 45,134 8.02
---------- ------- ---------- -------
Total Earning Assets and
Average Rate Earned 3,100,028 98,075 6.36 2,950,108 95,616 6.51
Cash and due from banks 339,626 306,289
Allowance for possible loan losses (26,528) (31,878)
Banking premises and equipment 88,548 84,592
Accrued interest and other assets 140,171 139,394
---------- ----------
Total Assets $3,641,845 $3,448,505
========== ==========
LIABILITIES
Demand deposits:
Commercial and individual $ 662,957 $ 602,726
Correspondent banks 133,488 149,702
Public funds 38,499 42,591
---------- ----------
Total demand deposits 834,944 795,019
Time deposits:
Savings and Interest-on-Checking 818,649 7,274 1.79 720,984 7,132 1.99
Money market deposit accounts 531,821 6,750 2.56 528,882 6,675 2.55
Time accounts 860,408 13,264 3.11 927,938 14,603 3.17
Public funds 83,404 1,051 2.54 59,039 984 3.36
---------- ------- ---------- -------
Total Time deposits 2,294,282 28,339 2.49 2,236,843 29,394 2.65
---------- ----------
Total Deposits 3,129,226 3,031,862
Federal funds purchased and securities
sold under resale agreements 174,496 2,633 3.00 132,411 1,677 2.52
Long-term notes payable --- --- --- 5,061 237 9.45
Other borrowings --- --- --- 587 18 6.33
---------- ------- ---------- -------
Total Interest-Bearing Funds
and Average Rate Paid 2,468,778 30,972 2.53 2,374,902 31,326 2.66
---------- ------- ---- ---------- ------ -----
Accrued interest and other liabilities 57,031 40,062
---------- ----------
Total Liabilities 3,360,753 3,209,983
SHAREHOLDERS' EQUITY 281,092 238,522
---------- ----------
Total Liabilities and
Shareholders' Equity $3,641,845 $3,448,505
========== ==========
Net interest income $67,103 $64,290
======= =======
Net interest spread 3.83% 3.85%
===== =====
Net interest income to total average earning assets 4.34% 4.37%
Net interest income to total average earning
assets - with federal funds net 4.57% 4.58%
*Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balance Sheets and Interest Income Analysis-By Quarter
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
June 30, 1994 March 31, 1994
-----------------------------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
ASSETS -------- ------- ----- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Time deposits $ 51 $ 1 3.48% $ 161 $ 1 3.37%
Securities:
U.S. Treasury 282,892 3,112 4.41 263,263 2,812 4.33
U.S. Government agencies
and corporations 1,374,981 20,126 5.86 1,317,513 19,132 5.81
States and political subdivisions 5,738 135 9.43 6,624 158 9.54
Other 30,973 400 5.18 35,932 457 5.16
---------- ------- ---------- -------
Total securities 1,694,584 23,773 5.61 1,623,332 22,559 5.57
Federal funds sold and securities
purchased under resale agreements 102,345 937 206,873 1,602 3.10
Loans, net of unearned discount 1,305,305 25,467 7.83 1,267,379 23,735 7.60
---------- ------- ---------- -------
Total Earning Assets and
Average Rate Earned 3,102,285 50,178 6.48 3,097,745 47,897 6.23
Cash and due from banks 341,648 337,582
Allowance for possible loan losses (26,005) (27,056)
Banking premises and equipment 89,859 87,222
Accrued interest and other assets 153,585 132,601
---------- ----------
Total Assets $3,661,372 $3,628,094
========== ==========
LIABILITIES
Demand deposits:
Commercial and individual $ 663,025 $ 662,888
Correspondent banks 128,499 138,533
Public funds 38,588 38,408
---------- ----------
Total demand deposits 830,112 839,829
Time deposits:
Savings and Interest-on-Checking 825,322 3,608 1.75 811,902 3,666 1.83
Money market deposit accounts 526,783 3,500 2.67 536,914 3,250 2.45
Time accounts 864,218 6,956 3.23 856,556 6,308 2.99
Public funds 79,273 555 2.81 87,582 496 2.30
---------- ------- ---------- -------
Total Time deposits 2,295,596 14,619 2.55 2,292,954 13,720 2.43
---------- ----------
Total Deposits 3,125,708 3,132,783
Federal funds purchased
and other borrowings 184,348 1,560 3.35 164,534 1,073 2.61
---------- ------- ---------- -------
Total Interest-Bearing Funds
and Average Rate Paid 2,479,944 16,179 2.61 2,457,488 14,793 2.44
---------- ------- ----- ---------- ------- -----
Accrued interest and other
liabilities 69,220 50,701
---------- ----------
Total Liabilities 3,379,276 3,348,018
SHAREHOLDERS' EQUITY 282,096 280,076
---------- ----------
Total Liabilities and
Shareholders' Equity $3,661,372 $3,628,094
========== ==========
Net interest income $33,999 $33,104
======= =======
Net interest spread 3.87% 3.79%
===== =====
Net interest income to total average earning assets 4.39% 4.30%
Net interest income to total average earning
assets - with federal funds net 4.54% 4.54%
*Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balance Sheets and Interest Income Analysis-By Quarter
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
December 31, 1993 September 30, 1993
-------------------------- -------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
ASSETS --------- -------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Time deposits $ 143 $ 1 2.47% $ 138 $ 1 2.64%
Securities:
U.S. Treasury 369,630 3,822 4.10 507,303 5,520 4.32
U.S. Government agencies
and corporations 1,170,032 17,381 5.94 1,065,008 16,488 6.19
States and political subdivisions 10,584 257 9.68 12,220 299 9.78
Other 43,089 557 5.12 51,295 648 5.02
--------- ------- ---------- -------
Total securities 1,593,335 22,017 5.52 1,635,826 22,955 5.60
Federal funds sold and securities
purchased under resale agreements 287,613 2,178 2.96 209,233 1,605 3.00
Loans, net of unearned discount 1,187,385 23,378 7.81 1,173,445 22,751 7.69
--------- ------ --------- ------
Total Earning Assets and
Average Rate Earned 3,068,476 47,574 6.16 3,018,642 47,312 6.23
Cash and due from banks 318,947 329,597
Allowance for possible loan losses (29,566) (31,212)
Banking premises and equipment 89,677 89,396
Accrued interest and other assets 153,285 142,326
---------- ----------
Total Assets $3,600,819 $3,548,749
========== ==========
LIABILITIES
Demand deposits:
Commercial and individual $ 658,800 $ 660,265
Correspondent banks 130,175 142,672
Public funds 39,344 43,790
--------- ---------
Total demand deposits 828,319 846,727
Time deposits:
Savings and Interest-on-Checking 784,712 3,849 1.95 773,906 3,859 1.98
Money market deposit accounts 542,428 3,359 2.46 538,869 3,392 2.50
Time accounts 871,620 6,446 2.93 901,681 6,644 2.92
Public funds 101,099 586 2.30 80,223 550 2.72
--------- ------- --------- -------
Total Time Deposits 2,299,859 14,240 2.46 2,294,679 14,445 2.50
--------- ---------
Total Deposits 3,128,178 3,141,406
Federal funds purchased
and other borrowings 155,266 1,022 2.58 111,411 760 2.67
--------- ------- --------- ------
Total Interest-Bearing Funds
and Average Rate Paid 2,455,125 15,262 2.46 2,406,090 15,205 2.51
--------- ------- ---- --------- ------- ----
Accrued interest and other
liabilities 52,399 44,078
--------- ---------
Total Liabilities 3,335,843 3,296,895
SHAREHOLDERS' EQUITY 264,976 251,854
--------- ---------
Total Liabilities and
Shareholders' Equity $3,600,819 $3,548,749
========== ==========
Net interest income $32,312 $32,107
======= ========
Net interest spread 3.70% 3.72%
===== =====
Net interest income to total average earning assets 4.19% 4.24%
Net interest income to total average earning
assets - with federal funds net 4.41% 4.39%
* Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balance Sheets and Interest Income Analysis-By Quarter
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
June 30, 1993
---------------------------
Interest
Average Income/ Yield/
Balance Expense Cost
ASSETS -------- ------- ------
<S> <C> <C> <C>
Time deposits $ 145 $ 1 2.80%
Securities:
U.S. Treasury 470,361 5,589 4.77
U.S. Government agencies
and corporations 1,068,412 17,139 6.42
States and political subdivisions 12,495 304 9.76
Other 58,309 740 5.09
--------- ------
Total securities 1,609,577 23,772 5.91
Federal funds sold and securities
purchased under resale agreements 276,382 2,049 2.93
Loans, net of unearned discount 1,178,407 23,403 7.97
--------- ------
Total Earning Assets and
Average Rate Earned 3,064,511 49,225 6.43
Cash and due from banks 318,506
Allowance for possible loan losses (31,394)
Banking premises and equipment 86,223
Accrued interest and other assets 141,304
---------
Total Assets $3,579,150
==========
LIABILITIES
Demand deposits:
Commercial and individual $ 639,144
Correspondent banks 150,225
Public funds 33,348
---------
Total demand deposits 822,717
Time deposits:
Savings and Interest-on-Checking 768,678 3,815 1.99
Money market deposit accounts 543,633 3,464 2.56
Time accounts 938,902 7,437 3.18
Public funds 76,565 540 2.83
--------- ------
Total Time Deposits 2,327,778 15,256 2.63
---------
Total Deposits 3,150,495
Federal funds purchased
and other borrowings 147,412 895 2.40
--------- ------
Total Interest-Bearing Funds
and Average Rate Paid 2,475,190 16,151 2.62
--------- ------ ----
Accrued interest and other
Liabilities 40,429
---------
Total Liabilities 3,338,336
SHAREHOLDERS' EQUITY 240,814
---------
Total Liabilities and
Shareholders' Equity $3,579,150
==========
Net interest income $33,074
=======
Net interest spread 3.81%
======
Net interest income to total average earning assets 4.32%
Net interest income to total average earning
assets - with federal funds net 4.53%
*Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
<PAGE>
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Corporation was held on May
17, 1994. The following matters were submitted to a vote of the
Corporation's shareholders.
1. Election of Directors:
Election of all nineteen director nominees to new one-year terms was
approved with no nominee receiving less than 9.6 million votes.
Nominee Total Votes For Total Votes Withheld
- - ------- --------------- --------------------
Isaac Arnold, Jr. 9,712,078 17,943
Henry E. Catto 9,623,009 107,012
Harry H. Cullen 9,629,554 100,467
Roy H. Cullen 9,623,509 106,512
Richard W. Evans, Jr. 9,710,938 19,083
W.N. Finnegan, III 9,705,767 24,254
Joseph H. Frost 9,630,076 99,945
T.C. Frost 9,702,715 27,306
James W. Gorman, Jr. 9,722,834 7,187
James L. Hayne 9,722,834 7,187
Harris L. Kempner, Jr. 9,712,224 17,797
Richard M. Kleberg III 9,721,734 8,287
Quincy Lee 9,695,494 39,527
Robert S. McClane 9,694,299 35,722
J. Gordon Muir, Jr. 9,712,174 17,847
William B. Osborn, Jr. 9,710,024 19,997
Robert G. Pope 9,714,834 15,187
Herman J. Richter 9,720,524 9,497
Curtis Vaughan, Jr. 9,712,334 17,687
2. Selection of Independent Auditors
Total Votes For 9,704,453
Total Votes Against 15,953
Total Abstentions 9,615
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement regarding Computation of Earnings per Share
(b) Reports on Form 8-K
None
<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.
Cullen/Frost Bankers, Inc.
(Registrant)
Date: August 1, 1994 By:/s/Phillip D. Green
-----------------------
Phillip D. Green
Executive Vice President
and Treasurer
(Duly Authorized Officer and
Principal Accounting Officer)
<PAGE>
Cullen/Frost Bankers, Inc.
Form 10-Q
Exhibit Index
Exhibit Description
- - ------- -----------
11 Statement re: Computation of Earnings per Share
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11 Cullen/Frost Bankers, Inc.
Computation of Earnings Per Common Share
Primary and Fully Diluted (Unaudited)
(in thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30 June 30
-------------------- --------------------
Primary Earnings per Share 1994 1993 1994 1993
--------- --------- --------------------
<S> <C> <C> <C> <C>
Income before cumulative effect of
accounting change $18,340 $18,512 $ 9,242 $10,727
Elimination of interest on 9.75%
convertible subordinated debentures
due 1996, net of tax 54
-------- -------- -------- -------
Income applicable to common stock before
cumulative effect of accounting change 18,340 18,566 9,242 10,727
Cumulative effect of accounting change 8,439
-------- -------- --------- -------
Net income applicable to common stock $18,340 $27,005 $ 9,242 $10,727
======== ======== ========= =======
Weighted average shares outstanding 11,032 10,857 11,044 10,955
Addition from assumed exercise of
stock options 168 189 172 194
Addition of assumed conversion of
9.75% convertible subordinated
debentures due 1996 80
-------- -------- --------- -------
Weighted average number of common
shares outstanding 11,200 11,126 11,216 11,149
======== ======== ========= =======
Primary earnings per common share:
Income before cumulative effect of
accounting change $ 1.64 $ 1.67 $ .82 $ .96
Net Income 1.64 2.43 .82 .96
Six Months Ended Three Months Ended
June 30 June 30
---------------------- ---------------------
Fully Diluted Earnings per Share 1994 1993 1994 1993
--------- -------- --------- ---------
Income before cumulative effect of
accounting change $18,340 $18,512 $ 9,242 $10,727
Elimination of interest on 9.75%
convertible subordinated
debentures due 1996, net of tax 54
-------- --------- ------- -------
Income applicable to common stock before
cumulative effect of accounting change 18,340 18,566 9,242 10,727
Cumulative effect of accounting change 8,439
-------- ---------- ------- -------
Net income applicable to common stock $18,340 $27,005 $ 9,242 $10,727
======== ========== ======= =======
Weighted average shares outstanding 11,032 10,857 11,044 10,955
Addition from assumed exercise of
stock options 168 189 172 194
Addition of assumed conversion of
9.75% convertible subordinated
debentures due 1996 80
--------- --------- -------- -------
Weighted average number of common
shares outstanding 11,200 11,126 11,216 11,149
========= ========= ======= =======
Fully diluted earnings per common share
Income before cumulative effect of
accounting change $ 1.64 $ 1.67 $ .82 $ .96
Net income 1.64 2.43 .82 .96
</TABLE>
