SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TEXAS REGIONAL BANCSHARES, INC.
(Names of Registrants as Specified in Their Charters)
(Name of Person(s) Filing Proxy Statement, if other than the Registrants)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
1
<PAGE>
[TEXAS REGIONAL BANCSHARES, INC. LETTERHEAD]
G. E. Roney
Chairman of the Board, President & 3700 North Tenth Street, Suite 301
Chief Executive Officer McAllen, Texas 78501
March 10, 1997
Dear Shareholder:
You are cordially invited to attend the annual meeting of the shareholders
which will be held at 4:30 p.m. Monday, April 14, 1997 at the McAllen Country
Club, 615 Wichita, McAllen, Texas 78503.
The notice of the meeting and proxy statement on the following pages detail
the formal business scheduled for discussion. The Texas Regional Bancshares,
Inc. 1996 Annual Report is enclosed and provides you with material which reviews
the financial results for the year 1996.
In order for you to be represented at the annual shareholders' meeting,
please complete, sign, date and return the enclosed proxy form promptly. The
proxy form includes authority to vote all of your shares of Class A Voting
Common Stock.
By returning the completed proxy form, you are assured of representation.
Should you attend the annual shareholders' meeting in McAllen, you retain the
right to revoke your proxy and vote in person even though you have previously
mailed the enclosed proxy form.
Your directors, officers and employees join me in expressing our
appreciation for your continued support.
Yours very truly,
G. E. RONEY
Chairman of the Board, President &
Chief Executive Officer
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
3700 North Tenth Street, Suite 301
McALLEN, TEXAS 78501
NOTICE OF ANNUAL MEETING APRIL 14, 1997
The annual meeting of shareholders of Texas Regional Bancshares, Inc. (the
"Company") will be held at the McAllen Country Club, 615 Wichita, McAllen,
Texas 78503 on April 14, 1997 at 4:30 p.m. for the following purposes:
1. TO ELECT DIRECTORS;
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE
MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.
Only stockholders of record of the Company's Class A Voting Common Stock at
the close of business on February 28, 1997 are entitled to notice of and to vote
at the annual meeting and any postponements or adjournments thereof.
A copy of the Company's annual report containing financial data and a
summary of operations for 1996 accompanies this notice.
By Order of the Board of Directors,
NANCY F. SCHULTZ
Senior Vice President, Secretary
& Treasurer
McAllen, Texas
March 10, 1997
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE AT
YOUR EARLIEST CONVENIENCE.
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
3700 North Tenth Street, Suite 301
McALLEN, TEXAS 78501
---------------------------
PROXY STATEMENT
---------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Texas Regional Bancshares, Inc. ("Texas Regional" or
the "Company"), 3700 North Tenth Street, McAllen, Texas 78501 of proxies for
use at the annual meeting of shareholders on April 14, 1997 and at any and all
postponements and adjournments of the meeting, for the purposes set forth in the
accompanying Notice of Annual Meeting. The meeting will be held at the McAllen
Country Club, 615 Wichita, McAllen, Texas 78503 at 4:30 p.m. Holders of record
of the Company's Class A Voting Common Capital Stock ("Common Stock") at the
close of business on February 28, 1997 will be entitled to one vote for each
share held on all matters to come before the meeting.
The presence at the annual meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding at February 28, 1997
will constitute a quorum. As of February 28, 1997, there were outstanding
8,708,898 shares of Common Stock. This Proxy Statement and the proxies being
solicited were first mailed or given to shareholders on or about March 10, 1997.
The Company's principal executive offices are located at 3700 North 10th
Street, Suite 301, McAllen, Texas 78501.
Any shareholder of record entitled to vote at the annual meeting may revoke
a proxy before it has been voted by delivering to the Company a written notice
of revocation or by delivering to the Company a duly executed proxy bearing a
later date or by attending the meeting, revoking the proxy and voting in person.
Attendance at the annual meeting will not, in itself, constitute revocation of a
previously granted proxy.
A shareholder entitled to vote for the election of directors can withhold
authority to vote for all nominees for directors or can withhold authority to
vote for certain nominees for directors. Abstentions are included in the
determination of the number of shares present and voting and are not counted for
purposes of determining whether a proposal has been approved. Broker nonvotes
are not included in the determination of the number of shares present and are
not counted for purposes of determining whether a proposal has been approved.
The Company will bear the cost of soliciting proxies. The Company will
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their reasonable expenses incurred in forwarding soliciting materials to
beneficial owners of stock held of record by such persons. Proxies may be
solicited by directors, officers or employees of the Company personally or by
further mailing, telephone, telegram or facsimile without additional
compensation other than their regular compensation.
ITEM 1 -- ELECTION OF DIRECTORS
A board of 9 directors is to be elected by the shareholders at the annual
meeting. The proxy holders named in the proxies being solicited will vote for
the election of the 9 persons named below, unless authorization to do so is
withheld. The Board of Directors of the Company does not contemplate that any of
the nominees will be unable to serve; however, if any nominee is unable to serve
or for good cause will not
1
<PAGE>
serve, the proxy holders may vote for the election of a substitute nominee in
the exercise of their own judgment.
Each person elected as a director will hold office until the next annual
meeting of shareholders and until his successor has been elected and qualified.
The name and age of each nominee and the year in which each nominee became a
director of the Company are set forth below.
All persons named below are directors of the Company at the present time.
There is no family relationship between any director, executive officer or
person nominated or chosen by the Company to become a director or executive
officer except that G. E. Roney, the Chairman of the Board & Chief Executive
Officer of the Company and Texas State Bank is the father-in-law of Douglas G.
Bready, a Director and Executive Vice President of Texas State Bank. In
addition, Tudor G. Uhlhorn, a Director of Texas State Bank, is the son of Julie
G. Uhlhorn, a member of the Board of Directors of the Company and Texas State
Bank; Robert R. Farris, a Director of Texas State Bank, is the son of Robert G.
Farris, a member of the Board of Directors of the Company and Texas State Bank;
and Robert F. Boggus, a Director of Texas State Bank, is the son of Frank N.
Boggus, a member of the Board of Directors of the Company and Texas State Bank.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION(1) AGE SINCE
- ------------------------------------- ------------------------------------------------------------ --- --------
<S> <C> <C> <C>
Morris Atlas Senior and Managing Partner, 70 1994
Atlas & Hall L.L.P.
Frank N. Boggus Chairman of the Board, 68 1983
Boggus Motor Company, Inc.
Robert G. Farris President, Valley Transit Company 66 1983
Joe M. Kilgore Partner, McGinnis, Lochridge & 78 1983
Kilgore, L.L.P.
C. Kenneth Landrum, M.D. Gynecologist (Retired) 68 1994
G. E. Roney Chairman of the Board, President and Chief Executive 66 1985
Officer, Texas Regional Bancshares, Inc. and Chairman of the
Board, Chief Executive Officer and Trust Officer, Texas
State Bank(2)
Julie G. Uhlhorn Chairman of the Board, Rio Grande Equipment Company Inc. 66 1983
Paul G. Veale, Sr., CPA Investments 75 1985
Jack Whetsel Investments 76 1985
</TABLE>
- ------------
(1) Each of the foregoing persons has been engaged in the principal occupation
indicated for the past five years, except that Mr. Whetsel's principal
occupation was Chairman of the Board of Broadway Hardware, Inc. (a retail
hardware, electronics and home improvements store located in McAllen) prior
to his retirement in 1993, and Dr. Landrum's principal occupation was as a
medical doctor practicing with Landrum-Chester OB-GYN Associates prior to
his retirement in 1994.
(2) Subsidiary of the Company.
Mr. Kilgore is a director of other publicly-held corporations. He serves as
a director of Reno Air, Inc. (a regional airline based in Reno, Nevada) and of
Photo Control, Inc. (a supplier of photographic equipment).
2
<PAGE>
BOARD MEETINGS AND COMMITTEES
During 1996, the Board of Directors held fourteen meetings and the
committees described below each held the number of meetings indicated. No
director attended fewer than 75% of the total number of meetings of the Board of
Directors and Committees on which such director served.
The Company has an Audit Committee and a Stock Option and Compensation
Committee but does not have a Nominating Committee. In addition, four of the
Company's directors serve as Trustees of the Texas Regional Bancshares, Inc.
Employee Stock Ownership Trust (the "KSOP Trust") which administers assets
held pursuant to the Company's Employee Stock Ownership Plan (with 401k
provisions) (the "KSOP Plan").
During 1996, Messrs. Boggus, Landrum, Kilgore and Mrs. Uhlhorn were members
of the Audit Committee whose function is to recommend independent auditors to
the Board of Directors and review the scope of proposed audits, the adequacy of
the Company's accounting procedures and controls, and the services performed by
the auditors. The Audit Committee held six meetings in 1996.
During 1996, Messrs. Atlas, Boggus, Farris, Kilgore, Landrum and Whetsel
were members of the Stock Option and Compensation Committee, which recommends to
the Board of Directors the compensation and stock options to be granted to the
Company's officers. The Stock Option and Compensation Committee held five
meetings during 1996.
The Trustees of the KSOP Trust, who hold and invest the Trust's assets,
held seven meetings during 1996. The Trustees of the KSOP Trust are Messrs.
Atlas, Boggus, Kilgore and Roney.
COMPENSATION OF DIRECTORS
The Company pays directors and advisory directors $700 for each Texas
Regional Board of Directors meeting and reimburses all directors for
out-of-pocket expenses incurred in attending meetings. In addition, during 1996,
the Company paid each non-management director a bonus of $3,000 for service as a
director of the Company and Texas State Bank. Each director of the Company's
subsidiary, Texas State Bank (which includes each director of Texas Regional),
receives $600 for each Texas State Bank Board of Directors meeting.
Non-management directors during 1996 also received bonuses aggregating $3,000
for service as a director of the Bank. Mr. Roney also receives compensation from
the Company as an executive officer of the Company and its subsidiary, as
indicated below.
EXECUTIVE OFFICERS
The Company's executive officers are elected annually by the Board of
Directors, each to serve a one-year term or until his or her successor is
elected and qualified. The name, age, year each first became an executive
officer and current and proposed position held at the Company by each appears in
the following table:
OFFICER
NAME AGE SINCE CURRENT POSITION
- ----------------------- --- ------- ----------------------------------
G. E. Roney 66 1985 Chairman of the Board, President &
Chief Executive Officer
George R. Carruthers 46 1985 Executive Vice President &
Chief Financial Officer
Nancy F. Schultz 56 1985 Senior Vice President, Secretary &
Treasurer
3
<PAGE>
The Company's subsidiary, Texas State Bank, has the following senior
executive officers. The name, age, year each first became an officer and current
position held at Texas State Bank by each appears in the following table:
OFFICER
NAME AGE SINCE CURRENT POSITION
- ----------------------- --- ------- --------------------------------------
G. E. Roney 66 1985 Chairman of the Board, Chief Executive
Officer & Trust Officer
Paul S. Moxley 52 1986 President & Secretary of the Board
Danny L. Buttery 49 1985(1) President -- Harlingen location
Frank A. Kavanagh 50 1992 Senior Executive Vice President --
Mission location
George R. Carruthers 46 1985 Executive Vice President & Chief
Financial Officer
- ------------
(1) Includes service before and since the merger of Harlingen State Bank into
Texas State Bank.
Each of the executive officers has been engaged in the principal occupation
for the past five years as previously noted and as presented above except for
Frank Kavanagh who served as president of Mid Valley Bank from August 1988 until
its merger with Texas State Bank in 1992.
COMPENSATION COMMITTEE INTERLOCKS
Prior to June 1994 Frank N. Boggus served as President of the Company and
currently serves on the Stock Option and Compensation Committee. However, Mr.
Boggus is not now, nor was he at the time of his service as an officer, an
employee of the Company. Mr. Boggus does not receive compensation from the
Company or Texas State Bank other than director fees and outside director
bonuses indicated above.
4
<PAGE>
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth compensation information with respect to the
Chief Executive Officer and the four most highly compensated executive officers
of the Company.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION NUMBER OF
NAME AND --------------------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS GRANTED COMPENSATION(2)
- ------------------------------------- --------- ---------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
G. E. Roney 1996 $ 407,436 $ 300,000 0 $ 100,555
Chairman of the Board, 1995 406,273 175,000 65,000 99,430
President & Chief Executive 1994 385,505 85,000 135,050 99,430
Officer of the Company and Chairman
of the Board,
Chief Executive Officer and
Trust Officer of the Bank
Paul S. Moxley 1996 170,269 38,000 0 13,406
President & Secretary of 1995 154,001 28,000 4,000 13,014
the Board of Directors of 1994 143,403 18,000 5,270 12,790
Texas State Bank
Danny L. Buttery 1996 164,947 28,000 0 12,000
President of the Bank's 1995 152,448 23,000 4,000 12,000
Harlingen location 1994 143,236 18,000 5,270 12,000
Frank A. Kavanagh 1996 168,564 30,000 0 13,500
Senior Executive Vice 1995 154,408 25,000 4,000 13,500
President of the Bank's 1994 146,464 18,000 5,270 13,500
Mission location
George R. Carruthers 1996 101,804 51,500 0 11,547
Executive Vice President & 1995 91,302 20,000 3,500 9,817
Chief Financial Officer of the 1994 86,269 13,500 3,162 8,844
Company and of the Bank
</TABLE>
- ------------
(1) The amounts indicated include wages, automobile allowances and director
fees.
(2) The amounts in this column represent the amount of the Company's optional
and matching contribution for each listed executive officer under the KSOP
Plan. In addition, with regard to Mr. Roney, the amount indicated includes
$87,430 accrued during each of 1996, 1995 and 1994 pursuant to the Deferred
Compensation Plan adopted by the Company for the benefit of G. E. Roney,
described in the Report of the Compensation Committee. The KSOP Plan
contributions were determined in each case based upon the lesser of the
compensation set forth in the table above or the maximum allowable under the
KSOP Plan.
5
<PAGE>
OPTION EXERCISES AND VALUES AT YEAR END 1996
The following table sets forth as to each of the named executive officers
information with respect to option exercises during 1996 and the status of their
options on December 31, 1996: (i) the number of shares of Common Stock
underlying options exercised during 1996, (ii) the aggregate dollar value
realized upon the exercise of such options, (iii) the total number of
exercisable and non-exercisable stock options held on December 31, 1996 and (iv)
the aggregate dollar value of in-the-money exercisable options on December 31,
1996.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
------------------------------------------------------------------------------
VALUE OF
UNEXERCISED
IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS AT
VALUE REALIZED OPTIONS FISCAL
SHARES (MARKET PRICE AT AT FISCAL YEAR-END YEAR-END(1)
ACQUIRED ON EXERCISE LESS ---------------------------- -----------
NAME EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------------- ----------- ---------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
G. E. Roney -- $-- 151,300 48,750 $ 3,243,288
Paul S. Moxley -- -- 6,270 3,000 132,690
Danny L. Buttery -- -- 6,270 3,000 132,690
Frank A. Kavanagh -- -- 6,270 3,000 132,690
George R. Carruthers -- -- 4,037 2,625 84,220
</TABLE>
NAME UNEXERCISABLE
- ------------------------------------- -------------
G. E. Roney $ 816,563
Paul S. Moxley 50,250
Danny L. Buttery 50,250
Frank A. Kavanagh 50,250
George R. Carruthers 43,969
- ------------
(1) Calculated by subtracting the exercise price from the fair market value of
the underlying Common Stock. For purposes of this table, fair market value
is deemed to be $34.00, the closing price per share for the Common Stock as
reported on the NASDAQ National Market System on December 31, 1996.
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
The record date for the determination of shareholders entitled to notice of
and to vote at the annual meeting was the close of business on February 28, 1997
(the "Record Date"). On the Record Date there were 8,708,898 shares of the
Company's Common Stock. Each share of Common Stock is entitled to one vote on
each matter to be acted upon at the meeting, and neither the Company's Articles
of Incorporation nor its Bylaws provide for cumulative voting rights. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the meeting is required for the election of directors.
The following table sets forth certain information regarding the ownership
of the Company's voting securities as of the Record Date by each shareholder who
is known by the Company to own beneficially more than 5% of the Company's
outstanding voting securities, each director, each executive officer named in
the Cash Compensation Table and all executive officers and directors as a group.
The number of shares of Common Stock beneficially owned by each person as
indicated in the table is determined under rules of the Securities and Exchange
Commission and the information is not necessarily indicative of beneficial
ownership for any other purpose. Except as otherwise noted, the indicated
shareholders have sole voting and investment power over the number of shares
shown.
6
<PAGE>
COMMON STOCK
------------------
NAME OF BENEFICIAL OWNER NUMBER(1) %
- ------------------------------------- --------- ---
Morris Atlas(2)...................... 76,480 .88%
Frank N. Boggus(3)................... 147,903 1.70%
Danny L. Buttery(4).................. 20,099 .23%
George R. Carruthers(5).............. 14,345 .16%
James W. Collins, Individually and as
Trustee of Carvan,
Vanco, KVTC, Vannie Cook and Cook
Memorial Trusts
P.O. Box 1239
McAllen, TX 78502(6)............... 597,659 6.90%
Robert G. Farris(7).................. 4,977 .06%
Frank A. Kavanagh(8)................. 12,582 .14%
Joe M. Kilgore(9).................... 188,626 2.17%
C. Kenneth Landrum, M.D.(10)......... 77,928 .89%
Paul S. Moxley(11)................... 107,037 1.23%
Entities affiliated with
RCM Capital Management, L.L.C.,
Four Embarcadero Center, Suite 2900
San Francisco, CA 94111(12)........ 507,100 5.80%
G. E. Roney
3700 North Tenth Street, Suite 301
McAllen, Texas 78501(13)........... 790,573 8.94%
Julie G. Uhlhorn(14)................. 77,828 .89%
Paul G. Veale, Sr.(15)............... 40,908 .47%
Entities affiliated with
Wanger Asset Management, L.P.
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606(16)........ 480,000 5.51%
Jack Whetsel(17)..................... 182,362 2.09%
All officers and directors as a group
(14 persons)(18)................... 1,584,531 17.83%
- ------------
(1) Included in the total indicated for each of Messrs. Atlas, Boggus, Kilgore
and Roney are 3,645 shares which are unallocated shares held by the KSOP
Plan. Messrs. Atlas, Boggus, Kilgore and Roney are the Trustees for the
KSOP Plan. The KSOP Plan gives the Trustees the right to vote shares not
allocated to participant's accounts. Each participant is entitled to direct
the Trustees as to the exercise of any voting rights attributable to shares
of Company stock allocated to his account. In the event voting instructions
are not received from participants, the KSOP Plan provides that the
Trustees shall not vote those shares. Each Director disclaims beneficial
ownership of the 3,645 unallocated shares, except that Mr. Roney does not
disclaim beneficial ownership of those shares later allocated to his
account as an employee of the Company in accordance with the KSOP Plan.
(2) The total includes 2,000 shares held by Mr. Atlas' wife. In addition,
included in this total are 3,645 shares with respect to which Mr. Atlas
holds shared voting power with other Trustees of the Company's KSOP Plan.
Mr. Atlas disclaims any beneficial ownership in such KSOP shares.
(3) The total includes 106,540 shares owned by five companies controlled by Mr.
Boggus. In addition, included in this total are 3,645 shares with respect
to which Mr. Boggus holds shared voting power with other Trustees of the
Company's KSOP Plan. Mr. Boggus disclaims any beneficial ownership in such
KSOP shares.
(4) The total includes 13,829 shares allocated to Mr. Buttery's account as a
participant in the KSOP Plan and 6,270 shares Mr. Buttery has the right to
acquire within 60 days through the exercise of options.
(FOOTNOTES CONTINUE ON FOLLOWING PAGE)
7
<PAGE>
Not included in the total are 3,000 shares which represent options granted
in 1995 and not exercisable by Mr. Buttery. See "Executive
Compensation -- Option Exercises and Values at year end 1996."
(5) The total includes 9,978 shares allocated to Mr. Carruthers' account as a
participant in the KSOP Plan and 4,037 shares Mr. Carruthers has the right
to acquire within 60 days through the exercise of options. Not included in
the total are 2,625 shares which represent options granted in 1995 and not
exercisable by Mr. Carruthers. See "Executive Compensation -- Option
Exercises and Values at year end 1996."
(6) The information presented has been derived from Schedule 13D filed by Mr.
Collins, dated February 7, 1997. Based on information contained in the
Schedule 13D, Mr. Collins has sole voting power with respect to 592,605
shares, shared voting power with respect to 5,054 shares, sole dispositive
power with respect to 592,605 shares and shared dispositive power with
respect to 5,054 shares. In addition, Mr. Collins, as trustee of the named
trusts, filed a Schedule 13G dated February 7, 1997, indicating the trusts'
ownership, with sole voting power and sole dispositive power, of 544,483
shares, or 6.30% of the outstanding common stock of the Company.
(7) The total includes 2,384 shares held by Mr. Farris' wife. Mr. Farris
disclaims beneficial ownership of his wife's shares.
(8) The total includes 6,312 shares allocated to Mr. Kavanagh's account as a
participant in the KSOP Plan and 6,270 shares Mr. Kavanagh has the right to
acquire within 60 days through the exercise of options. Not included in the
total are 3,000 shares which represent options granted in 1995 and not
exercisable by Mr. Kavanagh. See "Executive Compensation -- Option
Exercises and Values at year end 1996."
(9) The total includes 8,333 shares held by Mr. Kilgore's wife, 1,381 shares
held by Mr. Kilgore as custodian for his grandchildren and 34,511 shares
held by an independent trustee for Mr. Kilgore's Individual Retirement
Account. In addition, included in this total are 3,645 shares with respect
to which Mr. Kilgore holds shared voting power with other Trustees of the
Company's KSOP Plan. Mr. Kilgore disclaims any beneficial ownership in such
KSOP shares.
(10) The total includes 16,258 shares held by a trust for the benefit of Dr.
Landrum, 6,172 shares held by a trust for Dr. Landrum's pension plan, 2,000
shares held in a Charitable Trust where Dr. Landrum acts as Trustee and
53,498 shares held in a trust for the benefit of Dr. Landrum's wife. Dr.
Landrum disclaims beneficial ownership of his wife's shares.
(11) The total includes 406 shares held by Mr. Moxley's wife, 15,169 shares
allocated to Mr. Moxley's account as a participant in the KSOP Plan, 78,610
shares held by trusts at Texas State Bank for which Mr. Moxley, Mr. Roney
and Mr. Whetsel serve as trustees along with other individuals who are not
directors of the Company but in which they have no interest as
beneficiaries and 6,270 shares Mr. Moxley has the right to acquire within
60 days through the exercise of options. Not included in the total are
3,000 shares which represent the options granted in 1995 and not
exercisable by Mr. Moxley. See "Executive Compensation -- Option Exercises
and Values at year end 1996."
(12) The information presented, together with the information in this footnote,
has been derived from Schedule 13G filed by RCM Capital Management, L.L.C.,
RCM Limited, L.P. and RCM General Corporation, dated February 3, 1997, and
from Schedule 13G filed by Dresdner Bank AG, dated February 7, 1997 (all
such entities are herein collectively called the "RCM Group"). RCM
Capital Management, L.L.C. is an investment adviser registered under
section 203 of the Investment Advisers Act of 1940. The managing agent of
RCM Capital Management, L.L.C. is RCM Limited L.P., and the general partner
of RCM Limited L.P., is RCM General Corporation. The address of each of RCM
Capital Management, L.L.C., RCM Limited L.P., and RCM General Corporation
is the address indicated. RCM Capital Management, L.L.C., is a wholly owned
subsidiary of Dresdner Bank AG, the address of which is Jurgen-Ponto-Platz
1, 60301 Frankfurt, Germany. The RCM Group has sole voting power with
respect to 429,600 shares, sole dispositive power with respect to 489,600
shares, and shared dispositive power with respect to 17,500 shares.
(13) The total includes 47,549 shares held by Mr. Roney's wife, 5,202 shares
held by Mr. Roney's wife as trustee, 2,000 shares held by a trust for the
benefit of Mr. Roney's wife, 76,610 shares held by trusts at
(FOOTNOTES CONTINUE ON FOLLOWING PAGE)
8
<PAGE>
Texas State Bank for which Mr. Roney, Mr. Moxley and Mr. Whetsel serve as
trustees along with other individuals who are not directors of the Company
but in which they have no interest as beneficiaries, 4,854 shares held by a
company partly owned by Mr. Roney, 43,947 shares allocated to Mr Roney's
account as a participant in the KSOP Plan, 151,300 shares Mr. Roney has the
right to acquire within 60 days through the exercise of options, and 3,645
shares with respect to which Mr. Roney holds shared voting power with other
Trustees of the Company's KSOP Plan. Mr. Roney disclaims any beneficial
ownership in such KSOP shares, except that Mr. Roney does not disclaim
beneficial ownership of those shares later allocated to his account as an
employee of the Company in accordance with the KSOP Plan. In addition, Mr.
Roney disclaims beneficial ownership of shares held by his wife, shares
held by Trusts for the benefit of his wife and shares held by his wife as
Trustee. Not included in the total are 48,750 shares which represent
options granted in 1995 and not exercisable by Mr. Roney. See "Executive
Compensation -- Option Exercises and Values at year end 1996."
(14) The total includes 27,016 shares which represent Mrs. Uhlhorn's beneficial
interests in a trust and 26,854 shares held by a partnership owned 30% by
Mrs. Uhlhorn.
(15) The shares indicated are owned by a limited partnership controlled by Mr.
Veale.
(16) The information presented, together with the information in this footnote,
has been derived from Schedule 13G filed by Wanger Asset Management, L.P.,
Wanger Asset Management, Ltd., and Ralph Wanger, dated February 14, 1997
(all such entities are herein collectively called the "Wanger Group").
Wanger Asset Management, L.P. is an investment adviser registered under
section 203 of the Investment Advisers Act of 1940. The general partner of
Wanger Asset Management, L.P. is Wanger Asset Management, Ltd., and Ralph
Wanger is the principal shareholder of Wanger Asset Management, Ltd. The
address of each member of the Wanger Group is the address indicated. The
Wanger Group has shared voting power and shared dispositive power with
respect to all such shares.
(17) The total includes 78,610 shares held by trusts at Texas State Bank for
which Mr. Whetsel, Mr. Moxley and Mr. Roney serve as trustees along with
other individuals who are not directors of the Company but in which they
have no interest as beneficiaries and 103,752 shares held in a trust for
the benefit of Mr. Whetsel.
(18) Includes 1,167,416 shares as to which directors and officers have sole
voting power, 417,115 shares as to which they have shared voting power,
1,071,491 shares as to which they have sole investment power and 513,040
shares as to which they have shared investment power. In addition, included
in this total are 177,004 shares the officers have a right to acquire
within 60 days through the exercise of options.
STOCK OPTION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
REPORT OF THE COMPENSATION COMMITTEE
This Report of the Compensation Committee of the Board of the Directors of
Texas Regional Bancshares, Inc. describes the basis upon which the Committee has
made recommendations concerning the 1996 compensation payable to the officers of
the Company and its wholly-owned subsidiary, Texas State Bank. It has been the
duty of the Compensation Committee to consider the compensation of all officers,
including the officers named in the compensation tables contained in the Proxy
Statement included with the Notice of Annual Meeting of Shareholders of the
Company scheduled for April 1997. During 1996, the recommendations of the
Compensation Committee were accepted by the Board of Directors of the Company
and by the Board of Directors of the Company's wholly-owned subsidiary, Texas
State Bank.
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COMPENSATION PHILOSOPHY
The policy of the Compensation Committee is to make compensation decisions
on the basis of long-term growth and performance objectives of the Company. As
in 1995, the Compensation Committee gave particular emphasis to the Company's
growth in total assets and book value in its consideration of compensation
decisions. During 1996, in particular, the Committee considered the significant
expansion of the Company's business as a result of the successful acquisitions
of First State Bank & Trust Co. of Mission and The Border Bank of Hidalgo,
Texas, and the increased responsibilities of senior management as a result of
those acquisitions.
For 1996, as in recent prior years, the compensation program has been based
on the following principles:
o The Company is committed to providing a competitive pay program that
helps attract and retain quality personnel. To ensure that pay is
competitive, the Company has regularly compared its pay practices with
those of other financial institutions, particularly banks and bank
holding companies, in the markets served by the Company, and from time
to time modifies pay parameters based on this review.
o Officers and other key management personnel rewards are based upon a
combination of performance company-wide, performance of the business
unit for which they are responsible, and individual performance. Among
the performance standards reviewed in 1996 were sustained growth
objectives and an ability to maximize profitability of individual
business units, or contain costs within those units. For officers for
whom community relationships are significant, compensation decisions
have also been considered in light of the activities undertaken by
those officers and the sense of the Board members of the community
perceptions of the officers. Those officers with supervisory authority
have also been evaluated, and compensation in part determined, on
their ability to interact both with those persons who work for them
and those persons who are required to work with them. In each case,
the performance criteria are subjective and therefore the compensation
decisions are not based upon a mathematical application of the
performance criteria.
o The Company has also strived for a recognition of the success of the
organization as a whole in matters relative to compensation of
individual officers. At those times when the organization's
profitability and growth are strong, the Company believes that the
officers and other employees of the organization should be entitled to
compensation adjustments as a result of the availability of resources
which they helped create.
The Company has had an ongoing program of evaluation of employees and
executives, in which senior officers set objectives and goals for junior
officers and other employees reporting to them, evaluate the employees and
officers on performance, and compare the results to the performance of others in
the Company. Managers, including the chief executive officer, review the results
of individual officers and employees, and consider other evaluation information
in making recommendations to the Compensation Committee as to compensation for
the officers of the Company and the Bank. The Committee considered these
recommendations for purposes of 1996 compensation decisions. The Compensation
Committee then made a recommendation to the Board of Directors of each of the
Company and Texas State Bank on the basis of the evaluations presented for
management other than the chief executive officer, and made a separate
recommendation for the compensation of the chief executive officer based in part
on the evaluation of the chief executive officer made by the Board of Directors.
In 1996, the recommendations of the Compensation Committee were accepted by the
Board of Directors of the Company and the Bank.
In evaluating compensation, the Company is aware of the limitations on
deductibility of compensation paid to highly compensated persons as imposed by
Internal Revenue Code section 162(m). While the
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Company does not at this time have any executive officer within the range of
compensation for which limitations are imposed by that section, it is the policy
of the Compensation Committee to review the impact of that section, and the
requirements imposed on performance-based compensation described in that
section, in the context of any qualifying compensation that may be proposed to
be paid in the future.
COMPENSATION PROGRAM COMPONENTS
The Compensation Committee regularly reviews the Company's compensation
programs to ensure that the components of the compensation program will allow
the Company to successfully attract and retain key employees. At the present
time, the compensation program components available to the employees of the
Company are:
BASE SALARY. Base Salary levels are largely determined based upon
comparison with peer group members as well as other potential competitors
for the officers. Actual salaries are based upon individual performance
contributions in accordance with the compensation philosophy of the
Company.
BONUSES. The officers of the Company in 1996 were granted
performance-based bonuses as a component of their compensation. Bonuses
were based on profitability of the Company and the profit center for which
the particular officer is responsible. Among the factors considered in
awarding bonuses are growth of deposits, the efforts of specific
individuals on behalf of the Company and its growth and development, the
profitability of the Company and containment of costs, as well as other
factors considered important by the Company.
EMPLOYEE STOCK OWNERSHIP PROGRAM. The Committee believes that
participation in the employee stock ownership program of the Company
encourages the officers and other employees of the Company to work toward
the long-term goals and objectives of the Company. Decisions relative to
contributions to the employee stock ownership program are made annually,
with the aggregate amount based on a resolution of the Board of Directors,
with individual allocations based on a formula. Any participant in the Plan
who was employed by the Company as of December 31, 1996 and credited with
at least 1,000 hours of service was eligible to participate in
contributions to the Plan for 1996. During 1996, the Plan was amended to
provide that the definition of service under the Plan, and crediting of
service for purposes of vesting under the Plan, would include periods of
employment by First State Bank & Trust Co. and The Border Bank, for persons
who became employees of the Company as a result of the acquisition of those
banks during 1996.
STOCK OPTIONS. While no options were granted during 1996, the Stock
Option and Compensation Committee continues to believe that stock options
provide an appropriate incentive to encourage management, particularly
senior management, to maximize shareholder returns. The Stock Option and
Compensation Committee will consider recommending the award of stock
options to existing employees or to prospective employees in the future as
circumstances warrant.
DEFERRED COMPENSATION PLAN. During 1993, the Company adopted a
Deferred Compensation Plan for the Company's chief executive officer, Glen
E. Roney. The Deferred Compensation Plan provides for payments of $100,000
per year for fifteen years beginning October 29, 2002, with such payments
to be made to his designated beneficiary in the event of his death prior to
full payout. The Plan benefits will be accelerated in the event that Mr.
Roney should die before October 29, 2002, while still in the employ of the
Company (with certain exceptions). The Company has established a Trust from
which the deferred compensation payments are to be made, which is to be
funded in an amount to be determined periodically at the discretion of the
Board of Directors. An aggregate of $87,430 was transferred by the Company
to the Trust during 1996. Funding of the Trust is to be accelerated in the
event of the occurrence of certain defined events, including a change of
control of the Company.
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DISCUSSION OF CHIEF EXECUTIVE OFFICER COMPENSATION.
The compensation of the Chief Executive Officer of the Company for fiscal
year 1996 was reviewed in connection with his individual performance for the
Company. Among qualitative and quantitative measures of the Company's
performance considered by the Compensation Committee in making recommendations
for the Chief Executive Officer's compensation were the growth of the Company,
both from internal sources and from acquisition of the First State Bank & Trust
Co. and The Border Bank, increasing profitability of the Company and its
subsidiary, the capital of the Company and its subsidiary in relation to
regulatory guidelines, the ability of the Company and its senior management to
work cooperatively with regulatory authorities, the morale of personnel in the
organization, and perception of the Compensation Committee as to the acceptance
of the organization in the community.
Specifically, in making compensation recommendations for the chief
executive officer for compensation payable during 1996, the Compensation
Committee considered as significant the fact that the Company successfully
completed a substantial stock offering to fund the First State Bank & Trust Co.
and The Border Bank transactions, the fact that book value per share of the
Company's Class A Voting Common Stock increased from $9.00 at December 31, 1994,
to $14.71 at December 31, 1996, and that the ratio of net income to average
total assets increased from 1.43% for the year ended December 31, 1994, to 1.62%
for the year ended December 31, 1996. The Compensation Committee also considered
the expanded role of the chief executive officer as spokesperson for the Company
in the public market.
The Compensation Committee also reviewed the base salary and bonus for the
Chief Executive Officer in the context of the compensation packages available
for executives of similar-sized financial institutions, and the Committee
considered the significant dependence of the organization on the continued
involvement of the chief executive officer with the organization, and the need
to treat the chief executive officer fairly in light of the responsibilities he
has undertaken for the growth and development of the organization, in particular
growth resulting from the acquisitions of First State Bank & Trust Co. and The
Border Bank.
Compensation Committee of the Board of Directors of Texas Regional
Bancshares, Inc.
Joe M. Kilgore, Chairman
Morris Atlas
Frank N. Boggus
Robert G. Farris
C. Kenneth Landrum
Jack Whetsel
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PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the S&P 500 Index and to the CRSP Total Return Index for NASDAQ
Bank Stocks, which has been prepared by The Center for Research in Securities
Prices (CRSP) at the University of Chicago for NASDAQ, for the last five years.
The graph assumes that the value of the investment of the Company's Common Stock
and each index was $100 at December 31, 1991 and that all dividends were
reinvested.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 1992 1993 1994 1995 1995
---- ---- ---- ---- ---- ----
Texas Regional ........... 100 129 192 206 293 586
S&P 500 Index ............ 100 108 118 120 165 203
NASDAQ Bank Stock Index .. 100 146 166 165 246 326
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TRANSACTIONS WITH MANAGEMENT AND OTHERS
Some of the Company's officers and directors and their related parties have
had, in the ordinary course of business, banking transactions with Texas State
Bank. All such transactions have been in the ordinary course of business, on
substantially the same terms including interest rates and collateral, as those
prevailing for comparable transactions with others, and have not included more
than the normal risk of collectibility or other unfavorable features.
Texas State Bank, along with other banks in the Rio Grande Valley, sells
credit life insurance for Texas State Life Insurance Company. Texas State Life
Insurance Company is partly owned by Mr. G. E. Roney, who is the Chairman of the
Board, President and Chief Executive Officer of the Company. Commission fee
income received by Texas State Bank from Texas State Life Insurance Company
totaled $223,082 for the year ended December 31, 1996.
Mr. Joe Kilgore, a Director of the Company, is a partner in the law firm of
McGinnis, Lochridge & Kilgore, L.L.P. His firm received fees for legal services
rendered to the Company and its subsidiary during 1996, but the amount of the
fees received did not exceed either 5% of his firm's gross revenues for 1996 or
5% of the Company's total operating expenses for the year ended December 31,
1996.
Mr. Morris Atlas, a Director of the Company, is a partner in the law firm
of Atlas & Hall L.L.P. His firm received fees for legal services rendered to the
Company and its subsidiary during 1996, but the amount of the fees received did
not exceed either 5% of his firm's gross revenues for 1996 or 5% of the
Company's total operating expenses for the year ended December 31, 1996.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Form 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, and written representations from reporting persons that no Form 5
was required, the Company believes that no officer or director has failed to
report transactions in the Company's securities on a timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
On October 7, 1996, the Company engaged KPMG Peat Marwick to perform an
examination of its financial statements for the year ended December 31, 1996. It
is the normal practice of the Board of Directors to select its independent
public accountants at a Board meeting subsequent to the annual meeting. The
Audit Committee has not yet made a recommendation to the Board of Directors
concerning the appointment of auditors for the year ending December 31, 1997. It
is anticipated that the Audit Committee will make their recommendation for the
selection of the auditors to the Board of Directors at a meeting of the Board
held subsequent to the annual meeting.
A representative of KPMG Peat Marwick is expected to be present at the
annual meeting of shareholders with the opportunity to make a statement if such
firm desires to do so and to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
In order to be included in the proxy materials for the 1998 annual meeting
of shareholders, shareholder proposals for the 1998 annual meeting of
shareholders must be received by the Company on or before November 10, 1997. Any
shareholder proposal must also comply with applicable requirements of the proxy
solicitation rules of the Securities and Exchange Commission.
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OTHER BUSINESS
The Board of Directors does not know of any other matters likely to be
brought before the meeting for action. However, if any matters do properly come
before the meeting, it is intended that the enclosed proxy will be voted in
accordance with the judgment of the persons voting the proxy.
FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE
DIRECTED TO ANN M. SEFCIK, CONTROLLER & ASSISTANT SECRETARY, TEXAS REGIONAL
BANCSHARES, INC., P. O. BOX 5910, MCALLEN, TEXAS 78502-5910.
BY ORDER OF THE BOARD OF DIRECTORS,
NANCY F. SCHULTZ
Senior Vice President, Secretary
and Treasurer
March 10, 1997
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FRONT SIDE OF PROXY
TEXAS REGIONAL BANCSHARES, INC.
ANNUAL MEETING OF
SHAREHOLDERS -- APRIL 14, 1997
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints Frank N. Boggus, G.
E. Roney, and Jack Whetsel, and each of them,
proxies, with full power of substitution, to vote
in the manner indicated on the reverse side hereof
on proposal (1) and in their discretion on such
other business as may properly come before the
meeting, any and all of my (our) shares of record
of Texas Regional Bancshares, Inc. Class A Voting
Common Stock at the annual meeting of shareholders
to be held April 14, 1997 at the McAllen Country
Club, 615 Wichita, McAllen, Texas 78503 and at all
postponements and adjournments of the meeting.
Dated , 1997
Signatures
Signature(s) should agree with the name(s) to the
left
(Please mark, date, sign and return in the enclosed envelope)
Unless otherwise specified, proxies will be voted FOR proposal (1)
The Board of Directors recommends a vote FOR proposal (1)
(1) Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the (to vote for all nominees
contrary below) listed below)
<PAGE>
BACK SIDE OF PROXY
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Morris Atlas, Frank N. Boggus, Robert G. Farris, Joe M. Kilgore, C. Kenneth
Landrum, M.D., G. E. Roney, Julie G. Uhlhorn, Paul G. Veale, Sr. and Jack
Whetsel
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE BOARD OF DIRECTORS' RECOMMENDATIONS. THIS PROXY
ALSO CONFERS DISCRETIONARY AUTHORITY TO VOTE FOR THE ELECTION OF ANY PERSON AS A
DIRECTOR FOR WHICH A NOMINEE IS NAMED ABOVE IF SUCH NOMINEE IS UNABLE TO SERVE
OR FOR GOOD CAUSE WILL NOT SERVE.
