SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to _________________
Commission file number 0-7275
401(k) STOCK PURCHASE PLAN
FOR EMPLOYEES OF CULLEN/FROST BANKERS, INC.
AND ITS AFFILIATES
CULLEN/FROST BANKERS, INC.
100 W. Houston Street
San Antonio, Texas 78205
401(k) Stock Purchase Plan
for the Employees of
Cullen/Frost Bankers, Inc. and Its
Affiliates
Financial Statements
and Supplemental Schedules
Years Ended December 31, 1993 and 1992
with Report of Independent Auditors
<PAGE>
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Financial Statements
and Supplemental Schedules
Years Ended December 31, 1993 and 1992
Contents
Report of Independent Auditors .............................................1
Financial Statements
Statements of Net Assets Available for Benefits ............................3
Statements of Changes in Net Assets Available for Benefits...................4
Notes to Financial Statements ..............................................5
Supplemental Schedules
Item 27a - Schedule of Assets Held for Investment Purposes..................11
Item 27d - Schedule of Reportable Transactions ............................12
<PAGE>
Report of Independent Auditors
Compensation and Benefits Committee of the
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
San Antonio, Texas
We have audited the accompanying statements of net assets available for
benefits of the 401(k) Stock Purchase Plan for the Employees of Cullen/Frost
Bankers, Inc. and Its Affiliates as of December 31, 1993 and 1992, and the
related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1993 and 1992, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1993, and reportable trans-
actions for the year then ended are presented for purposes of complying with
the Department of Labor's Rules and Regulations for Reporting and Disclosure
1
Compensation and Benefits Committee of the
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
under the Employee Retirement Income Security Act of 1974, and are not a re-
quired part of the financial statements. The supplemental schedules have been
subjected to the auditing procedures applied in our audit of the 1993 financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the 1993 financial statements taken as a whole.
June 10, 1994 /s/ Ernst & Young
------------------
ERNST & YOUNG
2
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Statements of Net Assets Available for Benefits
December 31
1993 1992
---------------------
Assets
Investments, at fair value:
Common stock of Cullen/Frost Bankers, Inc. $ 28,015,748 $ 24,369,224
Money market fund 1,582,029 730,523
Receivables:
Employer contributions 53,949 45,463
Participants' contributions 124,357 75,605
Interest 4,046 1,983
Cash 184,935 -
Participant loans 2,443,302 1,546,518
--------------------------
Total assets 32,408,366 26,769,316
Liabilities
Notes payable to Cullen/Frost Bankers, Inc. 170,000 370,000
Accrued interest and other liabilities 1,621 3,528
--------------------------
Total liabilities 171,621 373,528
--------------------------
Net assets available for benefits $ 32,236,745 $ 26,395,788
==========================
See accompanying notes.
3
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31
1993 1992
-----------------------
Additions to net assets attributed to:
Investment activities:
Gain on sale or distribution of Cullen/Frost
Bankers, Inc. common stock $ 2,343,762 $ 872,064
Interest 42,310 15,533
Dividends 3,134,833 -
Net unrealized appreciation in fair value of
Cullen/Frost Bankers, Inc. common stock 563,919 11,913,111
--------------------------
6,084,824 12,800,708
Contributions:
Employer 1,053,130 701,667
Participants 2,285,759 1,861,208
--------------------------
Total additions 9,423,713 15,363,583
Deductions from net assets attributed to:
Benefits paid to terminated participants 3,566,963 1,166,497
Interest on notes payable 15,793 29,599
--------------------------
Total deductions 3,582,756 1,196,096
--------------------------
Net increase 5,840,957 14,167,487
Net assets available for benefits at
beginning of year 26,395,788 12,228,301
---------------------------
Net assets available for benefits at
end of year $ 32,236,745 $ 26,395,788
===========================
See accompanying notes.
4
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Notes to Financial Statements
December 31, 1993 and 1992
1. Significant Accounting Policies
The accounting records of the 401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates (the Plan) are maintained on the
accrual basis of accounting.
The Plan's investments are held in common stock of Cullen/Frost Bankers, Inc.
(CFBI), which is stated at fair value based on quoted market prices on the
valuation date and in a money market fund. Changes in fair market value are
reflected in the statement of changes in net assets available for benefits as
net unrealized appreciation (depreciation) in fair value of investments.
Money market investments are valued at cost which approximates fair value.
The historical cost of a specific security sold is used to compute gains and
losses on the sale of investment securities.
Administrative expenses of the Plan are paid by CFBI.
Certain amounts reported for 1992 have been reclassified to conform with the
current year presentation.
2. Description of the Plan
The following is a general description of the Plan. Participants should refer
to the Plan agreement for a more complete description of the Plan's provisions.
As of December 31, 1990, CFBI maintained the Employee Stock Ownership Plan for
Employees of Cullen/Frost Bankers, Inc. and Its Affiliates (the ESOP). Effect-
ive January 1, 1991, the ESOP was amended as the Plan. All ESOP participants
as of December 31, 1990 became 100% vested in their accounts as of January 1,
1991 with the inception of the Plan.
The Plan is a defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code and covers all employees scheduled to work 1,000 or more
hours a year or, if not scheduled to work 1,000 hours, those employees who do
actually work 1,000 hours in a year. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
5
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Notes to Financial Statements (continued)
December 31, 1993 and 1992
2. Description of the Plan (continued)
Participants may contribute an amount not less than 2% and not exceeding 16% of
their compensation, limited by 401(k) regulations, and may direct investments of
their accounts in either common stock of CFBI or money market funds. The first
6% of the participant's contribution must be invested in common stock of CFBI.
Additional contributions above 6% can be invested in additional common stock of
CFBI or in a money market fund. CFBI matches 100% of the participants' contri-
butions up to 6% of the participants' compensation.
Plan earnings for each investment are allocated to each participant based on
the ratio of the participant's account balance, net of participant loans, to
the total of all participants' account balances.
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Participants employed prior to January 1, 1991 are
100% vested in their employer contributions. Participants employed after
December 31, 1990 vest in their employer contributions at 20% per year with
100% vesting occurring after completion of five years of service, or upon death
or disability.
Upon normal retirement at age 65, or in the event of death or disability, a
participant will receive a lump-sum payment of his (her) account in the Plan
and all amounts which have been allocated to his (her) ESOP account. Distri-
bution of a participant's account must occur no later than April of the
calendar year after the participant reaches age 70 1/2. In the event of term-
ination of employment with the employer for any other reason, the participant
is entitled to the vested portion of his (her) account in the Plan and all
vested amounts which have been allocated to his (her) ESOP account.
Participants may borrow from the vested value of their account balance with a
minimum loan of $500 and a maximum of the lower of $50,000 or 50% of the part-
icipant's vested account balance, reduced by the highest amount of any loan
outstanding within the previous 12 months.
Subject to IRS limitations, participants may make hardship withdrawals from a
portion of their 401(k) contributions to pay for an immediate and heavy
financial need.
6
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Notes to Financial Statements (continued)
December 31, 1993 and 1992
2. Description of the Plan (continued)
Although it has not expressed any intent to do so, CFBI has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of plan termination, partici-
pants will become 100% vested in their accounts.
3. Benefits Payable to Terminated Participants
At December 31, 1993 there were 68 terminated participants in the Plan entitled
to aggregate vested benefits totaling 20,850.6325 shares of CFBI common stock,
or $734,985, applying the fair market value of the stock of $35.25 per share at
December 31, 1993. The actual distribution of these benefits, in the form of
stock and cash, will occur subsequent to December 31, 1993 at the $35.25 market
price for those participants electing their distributions in cash, and at the
market price as of the distribution date subsequent to year-end for those part-
icipants electing their distributions in shares. At December 31, 1992, there
were 32 terminated participants entitled to aggregate vested benefits totaling
15,007.6600 shares of CFBI common stock.
4. Notes Payable to Cullen/Frost Bankers, Inc.
During 1988, the Board of Directors of CFBI authorized the borrowing of up to
$1,000,000 for the purpose of buying additional shares through the ESOP. The
ESOP borrowed $300,000 during 1988 and the remaining $700,000 during 1989 from
CFBI. Interest at floating prime and principal payments of $50,000 are due
quarterly through November 1, 1994. The notes are collateralized by the
investments of the ESOP acquired with the proceeds of the notes.
7
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Notes to Financial Statements (continued)
December 31, 1993 and 1992
5. Form 5500
The Department of Labor requires that the realized gains and losses from secur-
ities transactions reflected in Form 5500 be calculated as the difference
between the proceeds of securities sold and the fair market value of those
securities at the beginning of the year (or purchase price if acquired during
the year of sale). Under generally accepted accounting principles (GAAP),
realized gains and losses are calculated on the difference between the sales
proceeds and the historical cost. The following schedule shows the amounts
reflected in the accompanying GAAP financial statements, compared to the
amounts in the Form 5500, as of and for the years ended December 31, 1993 and
1992:
GAAP
Financial
Statements Form 5500
------------------------------
Year Ended December 31, 1993
Realized gain $ 2,343,762 $ 272,894
Net unrealized appreciation in fair value 563,919 2,634,787
Year Ended December 31, 1992
Realized gain 872,064 705,543
Net unrealized appreciation in fair value 11,913,111 12,079,632
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31
1993 1992
----------------------------
Net assets available for benefits per the
financial statements $ 32,236,745 $ 26,395,788
Amounts allocated to withdrawing
participants (734,985) (465,237)
------------- -------------
Net assets available for benefits per
the Form 5500 $ 31,501,760 $ 25,930,551
============= =============
8
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Notes to Financial Statements (continued)
December 31, 1993 and 1992
5. Form 5500 (continued)
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended December 31
1993 1992
-------------------------
Benefits paid to participants per the financial
statements $ 3,566,963 $ 1,166,497
Add amounts allocated to withdrawing
participants at the end of the year 734,985 465,237
Less amounts allocated to withdrawing
participants at the end of the prior year (465,237) (347,299)
------------ ------------
Benefits paid to participants per the
Form 5500 $ 3,836,711 $ 1,284,435
=========== ===========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
6. Income Tax Status
The plan administrator is in the process of obtaining a determination letter
from the Internal Revenue Service of the Plan's qualification under Internal
Revenue Code (IRC) Section 401(a). The plan was amended during 1993. It
is anticipated that the Plan qualifies under 401(a) Section of the IRC and
is, therefore, not subject to tax under present income tax laws.
7. Stock Dividend
On March 2, 1993, Cullen/Frost Bankers, Inc. paid a 10% stock dividend. As a
result, the Plan was issued 78,861 of additional shares of Cullen/Frost Bankers,
Inc. common stock. The stock dividend is included in dividends in the 1993
statement of changes in net assets available for benefits based on the
March 2, 1993 closing price of $38.25.
9
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Notes to Financial Statements (continued)
December 31, 1993 and 1992
8. Statement of Changes in Net Assets Available for Benefits Segregated by
Participant Directed Investment Type
The following represents the changes in net assets available for benefits
segregated by participant directed investment type.
Cullen/Frost
Bankers,Inc. Money
Common Stock Market Loan
Fund Fund Fund Total
--------------------------------------------
Additions to net assets
attributed to:
Gain on sale or distribution of
Cullen/Frost Bankers, Inc.
common stock $ 2,343,762 $ - $ - $ 2,343,762
Interest 5,317 36,993 - 42,310
Dividends 3,134,833 - - 3,134,833
Investment election transfer (892,156) 892,156 - -
Net unrealized appreciation in
fair value of Cullen/Frost
Bankers, Inc. common stock 563,919 - - 563,919
Contributions:
Employer 1,053,130 - - 1,053,130
Participants 1,971,678 314,081 - 2,285,759
Loan withdrawals (2,164,596) (440,490) 2,605,086 -
----------------------------------------------
Total additions 6,015,887 802,740 2,605,086 9,423,713
Deductions to net assets
attributed to:
Benefits paid to terminated
participants 3,475,163 91,800 - 3,566,963
Interest on notes payable 15,793 - - 15,793
Loan interest and principal (1,490,170) (218,132) 1,708,302 -
----------------------------------------------
Total deductions 2,000,786 (126,332) 1,708,302 3,582,756
----------------------------------------------
Net increase 4,015,101 929,072 896,784 5,840,957
Net assets available for benefits
at beginning of year 24,113,374 735,896 1,546,518 26,395,788
----------------------------------------------
Net assets available for benefits
at end of year $ 28,128,475 $1,664,968 $2,443,302 $32,236,745
==============================================
10
Supplemental Schedules
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Item 27a Schedule of Assets Held for Investment Purposes
December 31, 1993
Description of Investment,
Identity of Issue, Including Maturity Date,
Borrower, Lessor, Rate of Interest,Collateral, Current
or Similar Party Par or Maturity Date Cost Value
- - -----------------------------------------------------------------------------
Common stock of Cullen/
Frost Bankers, Inc. 794,773 shares $13,600,332 $28,015,748
Short-Term Prime Money market deposit
Portfolio - I account,variable interest,
available upon demand 1,582,029 1,582,029
Participant loans Interest accrued at Frost
National Bank prime rate,
varying maturity dates 2,443,302 2,443,302
6% - 6.5% charged during 1993
11
401(k) Stock Purchase Plan for the Employees of
Cullen/Frost Bankers, Inc. and Its Affiliates
Item 27d - Schedule of Reportable Transactions(1)
Year Ended December 31, 1993
<TABLE>
<CAPTION>
Description of
Asset (Including Current Value
Interest Rate and Expense of Asset on
Identity of Maturity in Case Purchase Selling Lease Incurred With Cost of Transaction Net Gain
Party Involved of a Loan) Price Price Rental Transaction Asset Date or(Loss)
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Category(ii) - Series of
Nonsecurities Transactions
Short-Term Investment $5,670,214 principal
Company Prime amount, short-term
Portfolio - I investment fund $5,670,214 $ - $ - $ - $5,670,214 $ 5,670,214 $ -
Short-Term Investment $4,818,708 principal
Company Prime amount, short-term
Portfolio - I investment fund - 4,818,708 - - 4,818,708 4,818,708 -
Category(iii)-Series of
Securities Transactions
Common stock: (3)
Cullen/Frost Bankers, Inc. 79,252 shares - 2,642,189 - - 1,006,397 2,642,189 1,635,792
Cullen/Frost Bankers, Inc. 33,958 shares(2) - 1,140,185 - - 432,215 1,140,185 707,970
Cullen/Frost Bankers, Inc. 43,018 shares 1,504,784 - - - 1,504,784 1,504,784 -
There were no Category (i) or
(iv) transactions during the
year ended December 31,
1993.
(1) Reportable transactions consist of transactions or series of transactions in
excess of 5% of the current value of plan assets at the beginning of year.
(2) Shares distributed to terminated participants.
(3) On March 2, 1993, Cullen/Frost Bankers, Inc. paid a 10% stock dividend. As a
result, the Plan was issued 78,861 shares of Cullen/Frost Bankers, Inc.
common stock.
</TABLE>
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrator of the plan has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
June 28, 1994 401(k) Stock Purchase Plan
for the Employees of
Cullen/Frost Bankers, Inc. and
Its Affiliates
/s/ James A. Eckel
-------------------
JAMES A. ECKEL
Secretary, Compensation and
Benefits Committee
Consent of Independent Auditors
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-30776) pertaining to the Cullen/Frost Bankers, Inc. 1983
Nonqualified Stock Option Plan, the Registration Statement (Form S-8 No.
33-30777) pertaining to the Cullen/Frost Bankers, Inc. 1988 Nonqualified
Stock Option Plan, the Registration Statement (Form S-8 No. 33-37500) per-
taining to the 401(k) Stock Purchase Plan for Employees of Cullen/Frost
Bankers, Inc. and Its Affiliates, the Registration Statement (Form S-8 No.
33-39478) pertaining to the 1991 Thrift Incentive Stock Purchase Plan for
Employees of Cullen/Frost Bankers, Inc., the Registration Statement (Form
S-8 No. 33-53492) pertaining to the Cullen/Frost Bankers, Inc. Restricted
Stock Plan, and the Registration Statement (Form S-8 No. 33-53622) pertain-
ing to the Cullen/Frost Bankers, Inc. 1992 Stock Plan, of our report dated
June 10, 1994 with respect to the financial statements of the 401(k) Stock
Purchase Plan for the Employees of Cullen/Frost Bankers, Inc. and Its Affil-
iates included in this Annual Report (Form 11-K) for the year ended December
31, 1993.
/s/Ernst & Young
----------------
ERNST & YOUNG
San Antonio, Texas
June 28, 1994
