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 September 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 October 27, 1994 there
were 11,092,811 shares of Common Stock, $5 par value, outstanding.
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 Nine Months Ended
September 30 September 30
--------------------- -------------------
1994 1993 1994 1993
------- --------- ------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $27,821 $22,630 $76,823 $ 67,485
Securities:
Taxable 24,259 22,679 70,313 68,666
Tax-exempt 84 180 265 545
------ ------- -------- --------
Total Securities 24,343 22,859 70,578 69,211
Time Deposits --- 1 2 3
Federal funds sold and securities
purchased under resale agreements 506 1,605 3,045 5,536
------- ------- ------- --------
Total Interest Income 52,670 47,095 150,448 142,235
INTEREST EXPENSE
Deposits 16,128 14,445 44,467 43,839
Federal funds purchased and securities
sold under repurchase agreements 1,739 681 4,372 2,358
Long-term notes payable and other borrowings --- 79 --- 334
------ ------- ------- -------
Total Interest Expense 17,867 15,205 48,839 46,531
------- ------- ------- -------
Net Interest Income 34,803 31,890 101,609 95,704
Provision (credit) for possible loan losses --- (2,251) --- (2,841)
------ ------- ------- -------
Net Interest Income After Provision
(Credit) For Possible Loan Losses 34,803 34,141 101,609 98,545
NON-INTEREST INCOME
Trust department 7,628 6,841 22,024 19,471
Service charges on deposit accounts 6,773 6,719 19,455 18,978
Other service charges, collection and exchange
charges, commissions and fees 3,095 2,598 8,667 7,173
Net gain (loss) on securities transactions (51) 3 (491) 8
Other 4,008 2,685 10,085 9,721
------- ------- ------- -------
Total Non-Interest Income 21,453 18,846 59,740 55,351
NON-INTEREST EXPENSE
Salaries and wages 13,030 13,389 39,436 40,163
Pension and other employee benefits 2,734 2,994 8,691 9,227
Net occupancy of banking premises 4,232 5,526 12,495 15,770
Furniture and equipment 2,770 2,638 7,870 7,287
Provision for real estate losses --- 266 --- 1,430
Restructuring costs 830 591 830 2,549
Other 17,888 15,446 49,188 46,443
------- ------- ------- -------
Total Non-Interest Expense 41,484 40,850 118,510 122,869
------- ------- ------- -------
Income Before Income Taxes and Cumulative
Effect of Accounting Change 14,772 12,137 42,839 31,027
Income Taxes 5,278 160 15,005 538
------- ------- ------- -------
Income Before Cumulative Effect of
Accounting Change 9,494 11,977 27,834 30,489
Cumulative effect of change in
accounting for income taxes --- --- --- 8,439
------- ------- ------- -------
Net Income $ 9,494 $11,977 $27,834 $38,928
======= ======= ======= =======
Per Share
Income before cumulative effect of
accounting change $ .84 $ 1.07 $ 2.48 $2.74
Net Income .84 1.07 2.48 3.50
Dividends .15 --- .45 ---
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands)
September 30 December 31 September 30
1994 1993 1993
----------- ----------- -------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 320,819 $ 334,564 $ 348,477
Time deposits 12 147 147
Securities held to maturity 1,079,814 997,395 1,281,264
Securities available for sale 600,599 614,476 302,866
Federal funds sold and securities
purchased under resale agreements 82,241 250,250 202,435
Loans, net of unearned discount of $4,338 at
September 30, 1994, $8,456 at December 31, 1993
and $9,280 at September 30, 1993 1,365,041 1,247,809 1,173,877
Less: Allowance for possible loan losses (25,467) (26,298) (28,559)
---------- ---------- ----------
Net Loans 1,339,574 1,221,511 1,145,318
Banking premises and equipment 89,695 86,676 89,340
Accrued interest and other assets 131,200 134,028 138,309
---------- ---------- ----------
Total Assets $3,643,954 $3,639,047 $3,508,156
========== ========== ==========
Liabilities
Demand Deposits:
Commercial and individual $ 710,644 $ 705,786 $ 669,715
Correspondent banks 92,158 129,106 115,842
Public funds 37,782 46,200 39,734
---------- ---------- ----------
Total demand deposits 840,584 881,092 825,291
Time Deposits:
Savings and Interest-on-Checking 766,516 800,161 765,760
Money market deposit accounts 570,526 527,230 537,957
Time accounts 850,339 860,642 884,853
Public funds 73,934 80,303 88,313
---------- ---------- ----------
Total time deposits 2,261,315 2,268,336 2,276,883
---------- ---------- ----------
Total deposits 3,101,899 3,149,428 3,102,174
Federal funds purchased and securities
sold under repurchase agreements 199,047 166,519 100,559
Long-term notes payable --- --- 3,400
Accrued interest and other liabilities 54,215 49,567 45,007
---------- ---------- ----------
Total Liabilities 3,355,161 3,365,514 3,251,140
Shareholders' Equity
Common stock, par value $5 per share 55,450 55,046 54,943
Shares authorized: 30,000,000
Shares outstanding: 11,089,986;
11,009,198; and 10,988,609
Surplus 115,519 113,385 112,666
Retained earnings 119,057 95,978 89,407
Unrealized gain (loss) on securities
available for sale (1,233) 9,124 ---
---------- ---------- ----------
Total Shareholders' Equity 288,793 273,533 257,016
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $3,643,954 $3,639,047 $3,508,156
========== ========== ==========
See notes to consolidated financial statements.
</TABLE>
<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 nine months ended
September 30, 1994 27,834 27,834
Proceeds from employee stock purchase
plan and options 404 1,914 2,318
Tax benefit related to exercise
of stock options 220 220
Loan payments from employee stock
ownership plan 135 135
Restricted stock plan deferred
compensation expense 81 81
Adjustment to unrealized gain (loss)
on securities available for
sale, net of tax (10,357) (10,357)
Cash dividend (4,971) (4,971)
------- -------- -------- -------- --------
Balance at September 30, 1994 $55,450 $115,519 $119,057 $(1,233) $288,793
======= ======== ======== ======== ========
See notes to consolidated financial statements.
</TABLE>
Consolidated Statements of Cash Flow
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands)
Nine Months Ended
September 30
---------------------
1994 1993
--------- ----------
Operating Activities
Net income $ 27,834 $38,928
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (credit) for possible loan losses --- (2,841)
Provision for real estate losses --- 1,430
Deferred income tax provision (benefit) 2,123 (2,635)
Accretion of discounts on loans (3,888) (8,163)
Accretion of securities' discounts (7,894) (2,032)
Amortization of securities' premiums 2,748 4,503
Net (gain) loss on securities transactions 491 (8)
Net gain on sale of assets (1,648) (417)
Depreciation and amortization 13,791 11,947
(Increase) decrease in interest receivable (1,525) 1,335
Increase (decrease) in interest payable 439 (31)
Net change in other assets and liabilities 9,506 (5,190)
--------- ---------
Net cash provided by operating activities 41,977 36,826
Investing Activities
Proceeds from sales of securities held to maturity --- 64,428
Proceeds from maturities of securities held to maturity 116,865 380,153
Purchases of securities held to maturity (209,115) (622,870)
Proceeds from sales of securities available for sale 10,515 114,639
Proceeds from maturities of securities available for sale 252,232 550,000
Purchases of securities available for sale (256,168) (599,086)
Net increase in loans (119,390) 5,316
Net increase in bank premises and equipment (10,271) (9,290)
Proceeds from sales of repossessed properties 2,030 2,822
Net cash and cash equivalents received from
bank acquisition 2,599 183,268
--------- ---------
Net cash (used) provided by investing activities (210,703) 69,380
Financing Activities
Net (decrease) increase in demand deposits,
IOC accounts, and savings accounts (28,047) 37,503
Net decrease in certificates of deposits (17,391) (151,056)
Net increase (decrease) in short-term borrowings 34,928 (22,355)
Proceeds from employee stock purchase
plan and options 2,318 1,708
Dividends paid (4,971) ---
--------- ---------
Net cash used by financing activities (13,163) (134,200)
--------- ---------
Decrease in cash and cash equivalents (181,889) (27,994)
Cash and cash equivalents at beginning of year 584,961 579,053
--------- ---------
Cash and cash equivalents at the end
of the period $403,072 $551,059
========= ========
Supplemental information:
Interest paid $ 48,399 $ 46,562
Loans originated to facilitate the sale
of repossessed properties 1,067 2,542
Conversion of long-term debt to common stock ------ 10,000
See notes to consolidated financial statements.
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.
Nine Months Ended
September 30
--------------------
(in thousands) 1994 1993
- - -----------------------------------------------------------------------
Balance at beginning of the period $26,298 $31,897
Provision (credit) for possible loan losses --- (2,841)
Changes related to disposition of bank subsidiary (2,684) ---
Net charge-offs:
Losses charged to the allowance (3,214) (6,330)
Recoveries 5,067 5,833
------- -------
Net (charge-offs) recoveries 1,853 (497)
------- -------
Balance at the end of period $25,467 $28,559
======= =======
Earnings Per Common Share
Earnings per common share calculations for the three and nine months
ended September 30, 1994 and September 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
11,214,416, and 11,139,578 for the nine months ended September 30, 1994, and
1993, respectively and were 11,241,686 and 11,166,116 for the three months
ended September 30, 1994, and 1993, respectively.
Income Taxes
Income tax expense for the third quarter of 1994 was $5,278,000. This
amount consisted of current tax expense of $4,228,000 and deferred tax
expense of $1,050,000. Year-to-date income tax expense is $15,005,000,
consisting of current tax expense of $12,882,000 and deferred tax expense of
$2,123,000. Net deferred tax assets were $18,479,000 with no valuation
allowance at September 30, 1994. The deferred tax assets were supported by
taxes paid in prior years, the future reversal of existing taxable temporary
differences, and the expectation of future taxable income. Income tax
expense for the third quarter of 1993 was $160,000. Income tax expense for
the third quarter of 1993 was affected by a reduction of $5.2 million in the
valuation allowance for deferred tax assets. A valuation allowance of $13.6
million was established at the beginning of 1993. Income tax payments for
the first nine months of 1994 and 1993 were $12,513,000 and $3,234,000,
respectively.
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 $9,494,000 or $.84 per
common share for the quarter ended September 30, 1994 compared with
$11,977,000 or $1.07 per common share for the third quarter of 1993 and net
income of $9,242,000 or $.82 per common share for the second quarter of 1994.
Net income for 1994 was lower than 1993 net income because of significant
differences in the Corporation's effective tax rate.(See Income Taxes)
Net income for the nine months ended September 30, 1994 was $27,834,000
or $2.48 per common share compared with $38,928,000 or $3.50 per common share
for the same period of 1993. Net income 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.
Pre-tax income in 1994 is at an all-time high for the quarter and for
the year to date.
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 $538,000 for the first nine months of 1993 compared
with $15,005,000 for the same period in 1994.
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
Nine Months Ended ----------------------------
September 30 1994 1993
------------------- ----------------- ---------
1994 1993 Sept 30 June 30 Sept 30
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Taxable-equivalent net
interest income $102,063 $96,397 $34,960 $33,999 $32,107
Taxable-equivalent adjustment 454 693 157 141 217
------- ------- ------- ------- -------
Net interest income 101,609 95,704 34,803 33,858 31,890
Provision(credit) for possible
loan losses --- (2,841) --- --- (2,251)
Non-Interest income:
Net gain (loss) on securities
transactions (491) 8 (51) (446) 3
Other 60,231 55,343 21,504 19,397 18,843
------- ------- ------- ------- -------
Total non-interest income 59,740 55,351 21,453 18,951 18,846
Non-Interest expense:
Restructuring costs 830 2,549 830 --- 591
Provision for real estate losses --- 1,430 --- --- 266
Other 117,680 118,890 40,654 38,606 39,993
------- ------- ------- ------- -------
Total non-interest expense 118,510 122,869 41,484 38,606 40,850
Income before income taxes and ------- ------- ------- ------- -------
cumulative effect of accounting change 42,839 31,027 14,772 14,203 12,137
Income Taxes 15,005 538 5,278 4,961 160
------- ------- ------- ------- -------
Income before cumulative effect of
accounting change 27,834 30,489 9,494 9,242 11,977
Cumulative effect of change in
accounting for income taxes --- 8,439 --- --- ---
------- ------- ------- ------- --------
Net Income $27,834 $38,928 $ 9,494 $ 9,242 $11,977
======= ======= ======= ======= ========
Per Share
Net income-primary $ 2.48 $ 3.50 $ .84 $ .82 $ 1.07
</TABLE>
Net Interest Income
The increase in net interest income from the second quarter of 1994 is
due to increases in loan volumes and loan yields. The increase in net
interest income from the third quarter of 1993 is primarily due to increases
in loan volumes and investment securities. Net interest margin was 4.49
percent for the third quarter of 1994 compared to 4.39 percent and 4.24
percent for the second quarter of 1994 and third quarter of 1993,
respectively. Net interest spread increased two basis points from the second
quarter of 1994 and seventeen basis points from the third quarter of 1993 to
3.89 percent. The net interest spread increased primarily due to improved
spreads between loans and deposit costs. Year-to-date net interest income
increased $5,666,000 due to increases in loan volumes and investment
securities. A rising interest rate environment could put pressure on the net
interest spread thus negatively impacting net interest income in the future.
<TABLE>
<CAPTION>
Change in Net Interest Income
-----------------------------------------------------------------
Third Quarter Third Quarter Year-to-Date
1994 1994 1994
vs. vs. vs.
Third Quarter Second 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 $ 3,637 82.27% $ 562 58.48% $12,720 64.33%
Due to interest rate
spread (784) 17.73 399 . 41.52 (7,054) 35.67
-------- -------- -------- ------- ------ -------
$ 2,853 100.00% $ 961 100.00% $ 5,666 100.00%
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Non-Interest Income
Nine Months Ended Three Months Ended
September 30 -------------------------------
-------------------- 1994 1993
--------------------- -------
Non-Interest Income 1994 1993 Sept 30 June 30 Sept 30
- - -------------------------------------------------------------------------------- -------
<S> <C> <C> <C> <C> <C>
Trust department $22,024 $19,471 $ 7,628 $ 7,114 $ 6,841
Service charges on deposit accounts 19,455 18,978 6,773 6,387 6,719
Other service charges, collection
and exchange charges, commissions
and fees 8,667 7,173 3,095 2,894 2,598
Net gain (loss) on securities
transactions (491) 8 (51) (446) 3
Other 10,085 9,721 4,008 3,002 2,685
------- -------- ------- ------- -------
Total $59,740 $55,351 $21,453 $18,951 $18,846
======= ======== ======= ======= =======
</TABLE>
For the third quarter 1994 ...
Excluding securities transactions, total non-interest income was up 10.9
percent compared to the second quarter of 1994 and was up 14.1 percent from
the third quarter of 1993.
Trust income increased 11.5 percent from the third quarter of 1993 and
7.2 percent from the previous quarter. This can be attributed to growth in
the number of accounts and increased fees.
Service charges on deposit accounts for the quarter ended September 30,
1994 were flat compared to the same quarter one year ago and up 6.0 percent
from the second quarter of 1994. This is primarily due to the increase in
retail transaction fees. Other service charges increased 19.1 percent from
the third quarter of 1993 and were up 6.9 percent from the second quarter of
1994 primarily due to fees associated with increased volumes and bankcard
discounts.
Other non-interest income increased 33.5 percent from the second quarter
of 1994 and 49.3 percent from the third quarter of 1993. The increase is
primarily due to income related to foreclosed properties.
For the nine months ended September 30, 1994...
Excluding securities transactions, non-interest income increased 8.8
percent compared to the same period last year. Trust income increased by
13.1 percent, primarily because of an increase in investment fee income
resulting from growth in the number of accounts and increased fees. Other
service charges and fee income increased by 20.8 percent when compared to the
same period of 1993. The increase is primarily due to fees associated with
increased volumes and bankcard discounts.
<TABLE>
<CAPTION>
Non-Interest Expense
Three Months Ended
Nine Months Ended -------------------------------
September 30 1994 1993
----------------- --------------------- -------
Non-Interest Expense 1994 1993 Sept 30 June 30 Sept 30
- - -------------------------------------------------------------------------------- -------
<S> <C> <C> <C> <C> <C>
Salaries and wages $ 39,436 $ 40,163 $13,030 $13,391 $13,389
Pension and other employee
benefits 8,691 9,227 2,734 2,888 2,994
Net occupancy of banking
premises 12,495 15,770 4,232 4,066 5,526
Furniture and equipment 7,870 7,287 2,770 2,528 2,638
Restructuring charges 830 2,549 830 --- 591
Other 49,188 46,443 17,888 15,733 15,446
-------- -------- ------- ------- -------
118,510 121,439 41,484 38,606 40,584
Provision for real estate losses --- 1,430 --- --- 266
-------- -------- ------- ------- -------
Total $118,510 $122,869 $41,484 $38,606 $40,850
======== ======== ======= ======= =======
</TABLE>
For the third quarter 1994 ...
Excluding the provision for real estate losses, non-interest expense was
up 7.5 percent when compared to the second quarter of 1994, and up 2.2
percent from the third quarter of 1993.
Salaries and wages were down 2.7 percent when compared to both periods.
Pension and employee benefits were down 5.3 percent and 8.7 percent compared
with the second quarter of 1994 and third quarter of 1993, respectively. The
decrease is primarily due to a decrease in retirement plan expense, payroll
taxes, and medical insurance.
Net occupancy of banking premises decreased 23.4 percent compared with
the third quarter of 1993. The decrease from the third quarter last year
resulted primarily from restructuring actions taken in the fourth quarter of
1993. During the third quarter of 1994, the Corporation recorded an
additional $830,000 restructuring charge, primarily an adjustment to market
valuations associated with banking premises held for sale.
Furniture and equipment expense increased 9.6 percent from the second
quarter of 1994 and 5.0 percent when compared to the third quarter of 1993.
This is primarily due to equipment rental, service contracts, and software
maintenance and amortization.
Other non-interest expense was up 13.7 percent from the second quarter
of 1994 and 15.8 percent when compared to the third quarter of 1993. The
increase is due to the timing of charitable contributions, litigation
expenses (primarily a settlement), and increased state sales and use taxes.
For the nine months ended September 30, 1994...
Non-interest expense was down 3.5 percent compared to 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. In addition,
restructuring charges in 1993 included $1.9 million in costs for a retirement
incentive program and severance costs of $591,000 related to the branching
conversion of the Corporation's Houston offices.
Net occupancy of banking premises decreased 20.8 percent from the same
period in 1993 primarily due to the restructuring actions 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 $49,188,000 compared to $46,443,000 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 15.0
percent for the nine months ended September 30, 1994 as compared to the same
period in 1993. The increase is due to amortization of goodwill and other
intangibles associated with the acquisition of New First City during February
1993, timing of charitable contributions, litigation expenses (primarily a
settlement) and state sales and use taxes.
Income Taxes
Income tax expense for the third quarter of 1994 was $5,278,000. This
compares to income tax expense of $160,000 for the third quarter of 1993.
The third quarter 1993 tax expense was affected by a reduction of $5.2
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 Corporation's results of operations for the
first nine months of 1993. The Corporation has an effective tax rate for
1994 which approximates the statutory rate.
Balance Sheet
Average assets of $3,640,583,000 for the third quarter of 1994
reflected an increase of 2.6 percent from the third quarter of 1993 and were
flat as compared with the previous quarter. Total deposits averaged
$3,112,724,000 for the current quarter and were flat when compared to the
third quarter of 1993 and the previous quarter.
Loans
<TABLE>
<CAPTION>
1994 1993
--------------------- -------------------------
Loan Portfolio Percentage
Period-End Balances September 30 of Total December 31 September 30
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial & Industrial $ 327,985 24.0% $ 310,830 $ 290,033
Consumer 312,422 22.9 268,331 261,998
Real estate 676,462 49.6 626,056 588,990
Other 52,510 3.8 51,048 42,136
Unearned discount (4,338) (.3) (8,456) (9,280)
---------- ------ ---------- ----------
Total Loans $1,365,041 100.0% $1,247,809 $1,173,877
========== ====== ========== ==========
</TABLE>
Average loans for the third quarter of 1994 were $1,343,800,000. This
represents a 14.5 percent increase from the comparable quarter of last year
and is up 2.9 percent from the second quarter of 1994. This loan growth
reflects improved economic conditions in the Texas markets where the
Corporation's presence is concentrated.
Real Estate Loans
Of the total real estate loans outstanding at September 30, 1994, 74
percent were located in San Antonio, 13 percent in Houston/Galveston, 7
percent in Austin, and 6 percent in Corpus Christi. Residential permanent
mortgage loans at September 30, 1994 were $278,711,000 compared to
$285,024,000 at September 30, 1993 and $271,656,000 at June 30, 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 Sept 30 of Total Sept 30
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Construction $ 37,827 5.6% $ 32,776
Land 31,417 4.6 20,355
Permanent mortgages:
Commercial 163,823 24.2 119,157
Residential 278,711 41.2 285,024
Other 164,684 24.4 131,678
-------- ------ --------
$676,462 100.0% $588,990
======== ====== ========
Non-accrual and restructured $ 9,224 1.4% $ 17,706
</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 September 30, 1994, these loans approximated $28
million.
At September 30, 1994, real estate loans 90 days past due (excluding non-
accrual and restructured loans) were $3,685,000, compared with $3,610,000 at
September 30, 1993, and $2,729,000 at June 30, 1994.
Mexico
The Corporation's cross border outstandings, excluding $22,499,000 in
loans secured by assets held in the United States, totaled $7,950,000 at
September 30, 1994 or .6 percent of total loans.
<TABLE>
<CAPTION>
MEXICAN LOANS
----------------------------------------
September 30, 1994 Amount Percentage of Total Loans
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Loans to financial institutions $ 7,923 .6%
Loans to private firms or individuals 27
------- ----
$ 7,950 .6%
======= ====
</TABLE>
Non-Performing Assets
Non-performing assets totaled $20,509,000 at September 30, 1994 down from
$39,791,000 at September 30, 1993 and $25,254,000 at June 30, 1994. Non-
performing assets as a percentage of total loans and foreclosed assets
decreased to 1.5 percent at September 30, 1994 down from 3.3 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 September 30, 1994, non-performing assets covered
by the loss-sharing arrangement totaled $2,077,000. These assets are
included in total non-performing assets at $310,000 which represents the
carrying value net of loss-sharing coverage and associated discounts.
<TABLE>
<CAPTION>
NON-PERFORMING ASSETS
--------------------------
Real
September 30, 1994 Estate Other Total
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Non-accrual $ 9,224 $1,360 $10,584
Foreclosed assets* 9,896 29 9,925
------- ------ -------
$19,120 $1,389 $20,509
======== ====== =======
As a percentage of total
non-performing assets 93.2% 6.8% 100.0%
*Foreclosed assets include $5.4 million of in-substance foreclosures.
</TABLE>
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 $374,000 or $.03 per common share for
the third quarter of 1994, compared to approximately $529,000 or $.05 per
common share for the third quarter of 1993 and $396,000 or $.04 per common
share for the second quarter of 1994. For the nine months ended September
30, 1994, the after-tax impact (assuming a 35 percent marginal tax rate) was
approximately $1,152,000 or $.10 per common share, compared with
approximately $1,766,000 or $.16 per common share for the comparable period
last year. Total loans 90 days past due (excluding non-accrual and
restructured loans) were $5,423,000 at September 30, 1994, compared to
$4,839,000 at September 30, 1993, and $4,310,000 at June 30, 1994.
Allowance for Possible Loan Losses
The allowance for possible loan losses was $25,467,000 or 1.87 percent
of period-end loans at September 30, 1994, compared to $28,559,000 or 2.43
percent at September 30, 1993 and $25,647,000 or 1.94 percent at the end of
the second quarter of 1994. The change in the allowance for loan losses from
last year 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 240.6 percent at September 30, 1994, compared to 140.8
percent at September 30, 1993 and 199.3 percent at the end of the second
quarter of 1994.
No provision for possible loan losses has been made during 1994. Net
charge-offs in the third quarter totaled $180,000, compared to net charge-
offs of $240,000 for the third quarter of 1993 and net recoveries of $779,000
for the second quarter of 1994.
<TABLE>
<CAPTION>
NET CHARGE-OFFS (RECOVERIES)
-----------------------------------------
1994 1993
------------------------------- -------
Third Percentage Second Third
Quarter of Total Quarter Quarter
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Real Estate $ 805 447.2% $ (335) $ 307
Commercial and industrial (810) (450.0) (528) (329)
Energy --- --- --- (2)
Consumer 221 122.8 89 285
Other, including foreign (36) (20.0) (5) (21)
---------- ------ ------- ------
Net charge-offs (recoveries) $ 180 100.0% $ (779) $ 240
========== ======= ======= =======
Provision (credit) for possible loan losses $ --- $ --- $(2,251)
Allowance for possible loan losses 25,467 25,647 28,559
</TABLE>
Capital and Liquidity
At September 30, 1994, shareholders' equity was $288,793,000 compared to
$257,016,000 at September 30, 1993 and $281,366,000 at June 30, 1994. The
Corporation paid a cash dividend of $.15 per common share in each of the
first three 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 available for sale, net of deferred taxes, was $9.1 million
compared to an unrealized loss of $1.2 million at September 30, 1994. This
decrease is primarily due to an increase in market rates. Currently under
regulatory requirements, the unrealized gain or loss on securities available
for sale is not included in the calculation of risk-based and leverage
capital ratios.
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 September 30, 1994 and September 30, 1993.
<TABLE>
<CAPTION>
September 30, 1994 September 30, 1993
------------------- -------------------
Risk-Based Capital Amount Ratio Amount Ratio
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 248,947 14.88% $ 211,926 15.08%
Tier 1 Capital Minimum requirement 66,917 4.00 56,200 4.00
Total Capital $ 269,914 16.13% $ 231,144 16.45%
Total Capital Minimum requirement 133,834 8.00 112,400 8.00
Risk-adjusted assets, net of goodwill $1,672,931 $1,404,996
Leverage ratio 6.92% 6.05%
</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 6.92 percent and 6.05 percent at September 30, 1994 and
September 30, 1993, respectively.
At September 30, 1994 the Corporation and all of its subsidiary banks
were "well capitalized" as defined by the FDIC Improvement Act of 1991
("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 September
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.
<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*)
September 30, 1994 September 30, 1993
-------------------------- ------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
-------- ------- ----- ---------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Time deposits $ 75 $ 2 3.41% $ 148 $ 3 2.75%
Securities:
U.S. Treasury 277,015 8,971 4.33 538,265 18,564 4.61
U.S. Government agencies
and corporations 1,362,043 60,058 5.88 970,887 47,774 6.56
States and political subdivisions 6,013 428 9.49 12,780 931 9.71
Other 31,141 1,264 5.43 58,118 2,235 5.14
---------- ------- ---------- -------
Total securities 1,676,212 70,721 5.63 1,580,050 69,504 5.87
Federal funds sold and securities
purchased under resale agreements 119,533 3,045 3.36 244,829 5,536 2.98
Loans, net of unearned discount 1,305,775 77,134 7.90 1,148,174 67,885 7.90
---------- ------- ---------- -------
Total Earning Assets and
Average Rate Earned 3,101,595 150,902 6.50 2,973,201 142,928 6.42
Cash and due from banks 337,551 314,144
Allowance for possible loan losses (26,270) (31,654)
Banking premises and equipment 89,320 86,211
Accrued interest and other assets 139,224 140,385
---------- ----------
Total Assets $3,641,420 $3,482,287
========== ==========
LIABILITIES
Demand deposits:
Commercial and individual $ 669,699 $ 622,116
Correspondent banks 126,787 147,333
Public funds 38,752 42,995
---------- ----------
Total demand deposits 835,238 812,444
Time deposits:
Savings and Interest-on-Checking 809,189 10,869 1.80 738,819 10,991 1.99
Money market deposit accounts 540,509 11,007 2.72 532,248 10,067 2.53
Time accounts 857,476 20,932 3.26 919,089 21,247 3.09
Public funds 81,253 1,659 2.73 66,178 1,534 3.10
---------- ------- ---------- ------
Total Time deposits 2,288,427 44,467 2.60 2,256,334 43,839 2.60
---------- ----------
Total Deposits 3,123,665 3,068,778
Federal funds purchased and securities
sold under resale agreements 177,098 4,372 3.26 123,892 2,358 2.51
Long-term notes payable --- --- --- 4,501 304 9.04
Other borrowings --- --- --- 685 30 5.86
---------- ------- ---------- ------
Total Interest-Bearing Funds
and Average Rate Paid 2,465,525 48,839 2.65 2,385,412 46,531 2.61
------- ---- ------ -----
Accrued interest and other liabilities 55,945 41,416
---------- ----------
Total Liabilities 3,356,708 3,239,272
SHAREHOLDERS' EQUITY 284,712 243,015
---------- ----------
Total Liabilities and
Shareholders' Equity $3,641,420 $3,482,287
========== ==========
Net interest income $102,063 $96,397
======== =======
Net interest spread 3.85% 3.81%
===== =====
Net interest income to total average earning assets 4.39% 4.33%
Net interest income to total average earning
assets - with federal funds net 4.57% 4.51%
*Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Average Balance Sheets and Interest Income Analysis-By Quarter
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
September 30, 1994 June 30, 1994
-----------------------------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
-------- ------- ----- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Time deposits $ 15 $ --- 3.56% $ 51 $ 1 3.48%
Securities:
U.S. Treasury 284,653 3,047 4.25 282,892 3,112 4.41
U.S. Government agencies
and corporations 1,392,808 20,800 5.97 1,374,981 20,126 5.86
States and political subdivisions 5,689 135 9.48 5,738 135 9.43
Other 26,621 407 5.69 30,973 400 5.18
---------- ------- ---------- -------
Total securities 1,709,771 24,389 5.70 1,694,584 23,773 5.61
Federal funds sold and securities
purchased under resale agreements 51,091 506 3.87 102,345 937 3.62
Loans, net of unearned discount 1,343,800 27,932 8.25 1,305,305 25,467 7.83
---------- ------- ---------- -------
Total Earning Assets and
Average Rate Earned 3,104,677 52,827 6.77 3,102,285 50,178 6.48
Cash and due from banks 333,469 341,648
Allowance for possible loan losses (25,763) (26,005)
Banking premises and equipment 90,840 89,859
Accrued interest and other assets 137,360 153,585
---------- ----------
Total Assets $3,640,583 $3,661,372
========== ==========
LIABILITIES
Demand deposits:
Commercial and individual $ 682,961 $ 663,025
Correspondent banks 113,604 128,499
Public funds 39,251 38,588
---------- ----------
Total demand deposits 835,816 830,112
Time deposits:
Savings and Interest-on-Checking 790,578 3,595 1.80 825,322 3,608 1.75
Money market deposit accounts 557,601 4,257 3.03 526,783 3,500 2.67
Time accounts 851,708 7,668 3.57 864,218 6,956 3.23
Public funds 77,021 608 3.13 79,273 555 2.81
---------- ------- ---------- -------
Total Time deposits 2,276,908 16,128 2.81 2,295,596 14,619 2.55
---------- ----------
Total Deposits 3,112,724 3,125,708
Federal funds purchased
and other borrowings 182,217 1,739 3.73 184,348 1,560 3.35
---------- ------- ---------- -------
Total Interest-Bearing Funds
and Average Rate Paid 2,459,125 17,867 2.88 2,479,944 16,179 2.61
------- ----- ------- -----
Accrued interest and other
liabilities 53,807 69,220
---------- ----------
Total Liabilities 3,348,748 3,379,276
SHAREHOLDERS' EQUITY 291,835 282,096
---------- ----------
Total Liabilities and
Shareholders' Equity $3,640,583 $3,661,372
========== ==========
Net interest income $34,960 $33,999
======= =======
Net interest spread 3.89% 3.87%
===== =====
Net interest income to total average earning assets 4.49% 4.39%
Net interest income to total average earning
assets - with federal funds net 4.57% 4.54%
*Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Average Balance Sheets and Interest Income Analysis-By Quarter
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
March 31, 1994 December 31, 1993
-------------------------- -------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
--------- -------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Time deposits $ 161 $ 1 3.37% $ 143 $ 1 2.47%
Securities:
U.S. Treasury 263,263 2,812 4.33 369,630 3,822 4.10
U.S. Government agencies
and corporations 1,317,513 19,132 5.81 1,170,032 17,381 5.94
States and political subdivisions 6,624 158 9.54 10,584 257 9.68
Other 35,932 457 5.16 43,089 557 5.12
--------- ------- ---------- -------
Total securities 1,623,332 22,559 5.57 1,593,335 22,017 5.52
Federal funds sold and securities
purchased under resale agreements 206,873 1,602 3.10 287,613 2,178 2.96
Loans, net of unearned discount 1,267,379 23,735 7.60 1,187,385 23,378 7.81
--------- ------ --------- ------
Total Earning Assets and
Average Rate Earned 3,097,745 47,897 6.23 3,068,476 47,574 6.16
Cash and due from banks 337,582 318,947
Allowance for possible loan losses (27,056) (29,566)
Banking premises and equipment 87,222 89,677
Accrued interest and other assets 132,601 153,285
---------- ----------
Total Assets $3,628,094 $3,600,819
========== ==========
LIABILITIES
Demand deposits:
Commercial and individual $ 662,888 $ 658,800
Correspondent banks 138,533 130,175
Public funds 38,408 39,344
--------- ---------
Total demand deposits 839,829 828,319
Time deposits:
Savings and Interest-on-Checking 811,902 3,666 1.83 784,712 3,849 1.95
Money market deposit accounts 536,914 3,250 2.45 542,428 3,359 2.46
Time accounts 856,556 6,308 2.99 871,620 6,446 2.93
Public funds 87,582 496 2.30 101,099 586 2.30
--------- ------- --------- -------
Total Time Deposits 2,292,954 13,720 2.43 2,299,859 14,240 2.46
--------- ---------
Total Deposits 3,132,783 3,128,178
Federal funds purchased
and other borrowings 164,534 1,073 2.61 155,266 1,022 2.58
--------- ------- --------- ------
Total Interest-Bearing Funds
and Average Rate Paid 2,457,488 14,793 2.44 2,455,125 15,262 2.46
------- ---- ------ ----
Accrued interest and other
liabilities 50,701 52,399
--------- ---------
Total Liabilities 3,348,018 3,335,843
SHAREHOLDERS' EQUITY 280,076 264,976
--------- ---------
Total Liabilities and
Shareholders' Equity $3,628,094 $3,600,819
========== ==========
Net interest income $33,104 $32,312
======= =======
Net interest spread 3.79% 3.70%
===== =====
Net interest income to total average earning assets 4.30% 4.19%
Net interest income to total average earning
assets - with federal funds net 4.54% 4.41%
* Taxable-equivalent basis assuming a 35% tax rate.
</TABLE>
Consolidated Average Balance Sheets and Interest Income Analysis-By Quarter
Cullen/Frost Bankers, Inc. and Subsidiaries
(dollars in thousands - taxable-equivalent basis*)
September 30, 1993
---------------------------
Interest
Average Income/ Yield/
Balance Expense Cost
ASSETS -------- ------- ------
Time deposits $ 138 $ 1 2.64%
Securities:
U.S. Treasury 507,303 5,520 4.32
U.S. Government agencies
and corporations 1,065,008 16,488 6.19
States and political subdivisions 12,220 299 9.78
Other 51,295 648 5.02
--------- ------
Total securities 1,635,826 22,955 5.60
Federal funds sold and securities
purchased under resale agreements 209,233 1,605 3.00
Loans, net of unearned discount 1,173,445 22,751 7.69
--------- ------
Total Earning Assets and
Average Rate Earned 3,018,642 47,312 6.23
Cash and due from banks 329,597
Allowance for possible loan losses (31,212)
Banking premises and equipment 89,396
Accrued interest and other assets 142,326
---------
Total Assets $3,548,749
==========
LIABILITIES
Demand deposits:
Commercial and individual $ 660,265
Correspondent banks 142,672
Public funds 43,790
---------
Total demand deposits 846,727
Time deposits:
Savings and Interest-on-Checking 773,906 3,859 1.98
Money market deposit accounts 538,869 3,392 2.50
Time accounts 901,681 6,644 2.92
Public funds 80,223 550 2.72
--------- ------
Total Time Deposits 2,294,679 14,445 2.50
---------
Total Deposits 3,141,406
Federal funds purchased
and other borrowings 111,411 760 2.67
--------- ------
Total Interest-Bearing Funds
and Average Rate Paid 2,406,090 15,205 2.51
------ ----
Accrued interest and other
Liabilities 44,078
---------
Total Liabilities 3,296,895
SHAREHOLDERS' EQUITY 251,854
---------
Total Liabilities and
Shareholders' Equity $3,548,749
==========
Net interest income $32,107
=======
Net interest spread 3.72%
======
Net interest income to total average earning assets 4.24%
Net interest income to total average earning
assets - with federal funds net 4.39%
*Taxable-equivalent basis assuming a 35% tax rate.
Part II: Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement regarding Computation of Earnings per Share
27 Statement regarding Financial Data Schedules
(b) Reports on Form 8-K
None
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: October 31, 1994 By:/s/ Phillip D. Green
-----------------------
Phillip D. Green
Executive Vice President
and Treasurer
(Duly Authorized Officer and
Principal Accounting Officer)
Cullen/Frost Bankers, Inc.
Form 10-Q
Exhibit Index
Exhibit Description
- - ------- -----------
11 Statement re: Computation of Earnings per Share
27 Statement re: Financial Data Schedule
Exhibit 11 Cullen/Frost Bankers, Inc.
Computation of Earnings Per Common Share
Primary and Fully Diluted (Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
-------------------- --------------------
Primary Earnings per Share 1994 1993 1994 1993
--------- --------- --------------------
<S> <C> <C> <C> <C>
Income before cumulative effect of
accounting change $27,834 $30,489 $ 9,494 $11,977
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 27,834 30,543 9,494 11,977
Cumulative effect of accounting change 8,439
-------- -------- --------- -------
Net income applicable to common stock $27,834 $38,982 $ 9,494 $11,977
======== ======== ========= =======
Weighted average shares outstanding 11,045 10,896 11,070 10,972
Addition from assumed exercise of
stock options 169 191 172 194
Addition of assumed conversion of
9.75% convertible subordinated
debentures due 1996 53
-------- -------- --------- -------
Weighted average number of common
shares outstanding 11,214 11,140 11,242 11,166
======== ======== ========= =======
Primary earnings per common share:
Income before cumulative effect of
accounting change $ 2.48 $ 2.74 $ .84 $ 1.07
Net Income 2.48 3.50 .84 1.07
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
---------------------- ---------------------
Fully Diluted Earnings per Share 1994 1993 1994 1993
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Income before cumulative effect of
accounting change $27,834 $30,489 $ 9,494 $11,977
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 27,834 30,543 9,494 11,977
Cumulative effect of accounting change 8,439
-------- ---------- ------- -------
Net income applicable to common stock $27,834 $38,982 $ 9,494 $11,977
======== ========== ======= =======
Weighted average shares outstanding 11,045 10,896 11,070 10,972
Addition from assumed exercise of
stock options 181 193 176 194
Addition of assumed conversion of
9.75% convertible subordinated
debentures due 1996 53
--------- --------- -------- -------
Weighted average number of common
shares outstanding 11,226 11,142 $11,246 $11,166
========= ========= ======= =======
Fully diluted earnings per common share
Income before cumulative effect of
accounting change $ 2.48 $ 2.74 $ .84 $ 1.07
Net income 2.48 3.50 .84 1.07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 320,819
<INT-BEARING-DEPOSITS> 12
<FED-FUNDS-SOLD> 82,241
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 600,599
<INVESTMENTS-CARRYING> 1,079,814
<INVESTMENTS-MARKET> 1,032,980
<LOANS> 1,365,041
<ALLOWANCE> (25,467)
<TOTAL-ASSETS> 3,643,954
<DEPOSITS> 3,101,899
<SHORT-TERM> 199,047
<LIABILITIES-OTHER> 54,215
<LONG-TERM> 0
<COMMON> 55,450
0
0
<OTHER-SE> 233,343
<TOTAL-LIABILITIES-AND-EQUITY> 3,643,954
<INTEREST-LOAN> 76,823
<INTEREST-INVEST> 70,578
<INTEREST-OTHER> 3,047
<INTEREST-TOTAL> 150,448
<INTEREST-DEPOSIT> 44,467
<INTEREST-EXPENSE> 48,839
<INTEREST-INCOME-NET> 101,609
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (491)
<EXPENSE-OTHER> 118,510
<INCOME-PRETAX> 42,839
<INCOME-PRE-EXTRAORDINARY> 42,839
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,834
<EPS-PRIMARY> 2.48
<EPS-DILUTED> 2.48
<YIELD-ACTUAL> 6.5
<LOANS-NON> 10,584
<LOANS-PAST> 5,423
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,174
<ALLOWANCE-OPEN> 26,298
<CHARGE-OFFS> (3,214)
<RECOVERIES> 5,067
<ALLOWANCE-CLOSE> 25,467
<ALLOWANCE-DOMESTIC> 25,467
<ALLOWANCE-FOREIGN> 68
<ALLOWANCE-UNALLOCATED> 7,350
</TABLE>
