FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 33-39386
A. Full title of the plan and the address of plan, if different from that
of the issuer named below:
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(including 401(k) provisions)
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
TEXAS REGIONAL BANCSHARES, INC.
3700 North 10th, Suite 301
McAllen, Texas 78501
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Required Information
Item 1 and 2. Financial Statements
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[KPMG LOGO]
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(k) PROVISIONS)
FINANCIAL STATEMENTS
AND SCHEDULES
DECEMBER 31, 1996 AND 1995
(WITH INDEPENDENT AUDITORS'
REPORT THEREON)
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INDEPENDENT AUDITOR'S REPORT
Administrative Committee
Texas Regional Bancshares, Inc.
Employee Stock Ownership Plan
(with 401(k) provisions):
We have audited the accompanying statement of net assets available for plan
benefits of Texas Regional Bancshares, Inc. Employee Stock Ownership Plan (with
401(k) provisions) as of December 31, 1996 and 1995 and the related statement of
changes in net assets available for plan benefits for the years then ended.
These financial statements are the responsibility of the Plan Administrator. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 the
Plan Administrator, 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 plan benefits of Texas
Regional Bancshares, Inc. Employee Stock Ownership Plan (with 401(k) provisions)
as of December 31, 1996 and 1995, and the changes in net assets available for
plan benefits for the years ended December 31, 1996 and 1995, in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The information contained in Schedule 1 is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The information in
Schedule 1 has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
March 14, 1997
Houston, Texas
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TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(K) PROVISIONS)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1996 and 1995
--------------------------
ASSETS 1996 1995
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Investments, at fair value (note 3):
Certificates of deposit ...................... $ 530,876 371,313
U.S. government securities ................... 1,187 1,251
Common stock ................................. 11,414,854 5,209,621
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Total investments ............................ 11,946,917 5,582,185
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Cash ......................................... 128,290 370,415
Employer contributions receivable ............ 58,424 495
Accrued interest receivable .................. 3,257 2,541
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Net assets available for plan
benefits ..................................... $12,136,888 5,955,636
=========== =========
See accompanying notes to financial statements.
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TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(K) PROVISIONS)
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Years ended December 31, 1996 and 1995
1996 1995
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Investment income:
Net appreciation in fair value of
common stock (note 3) ............................. $ 5,319,245 1,432,110
Interest ........................................... 29,163 19,906
Dividends .......................................... 124,803 116,340
Employer contributions ............................. 808,574 526,115
Employee contributions ............................. 280,364 163,051
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Total additions .................................... 6,562,149 2,257,522
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Benefits paid to participants ...................... 380,897 716,168
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Net increase in net assets
available for plan
benefits ........................................... 6,181,252 1,541,354
Net assets available for plan benefits:
Beginning of year .................................. 5,955,636 4,414,282
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End of year ........................................ $12,136,888 5,955,636
=========== =========
See accompanying notes to financial statements
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TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(K) PROVISIONS)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
(1) DESCRIPTION OF THE PLAN
The following description of Texas Regional Bancshares, Inc.'s (the
Company) Employee Stock Ownership Plan (with 401(k) provisions) (the
ESOP or Plan) provides only general information. Participants should
refer to the plan agreement for a more complete description of the
Plan's provisions.
(A) GENERAL
The Texas Regional Bancshares, Inc. Employee Stock Ownership Plan
(with 401(k) provisions) is a defined contribution plan
established effective January 1, 1990 for eligible employees of
Texas Regional Bancshares, Inc. and its subsidiary. The ESOP is a
complete amendment and restatement of the Texas Regional
Bancshares, Inc. Target Benefit Plan (the Target Benefit Plan), a
target benefit plan established effective January 1, 1984 for
eligible employees of the Company and its subsidiaries.
The Plan is a stock bonus plan containing Section 401(k) features
that is intended to qualify under Section 401(a) of the Internal
Revenue Code, as amended (the Code). The Plan is also designed to
be an employee stock ownership plan under Section 4975 (e) (7) of
the Code. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974. All employees who
participated in the Company's Target Benefit Plan continue to
participate in the ESOP. Each other employee is eligible to
participate in the ESOP on January 1 or July 1 immediately
following the completion of one year of service, as defined in the
Plan provided the employee has attained the age of 21.
(B) CONTRIBUTIONS
A participant may authorize the Company and its subsidiary
(collectively referred to as Employer) to reduce his salary and
contribute to the 401(k) account an amount which shall not be less
than one (1) percent or more than fifteen (15) percent of the
participant's compensation. Such contributions when taken into
account with other employer contributions shall not exceed the
maximum deferral percentage computed in accordance with Internal
Revenue Code 401(k)(3).
The Employer may make a Discretionary Matching Contribution
(Matching Contribution), a Discretionary Basic Contribution (Basic
Contribution) and a Discretionary Optional Contribution (Optional
Contribution). All Employer Contributions shall be determined at
the sole discretion of the Board of Directors of the Company.
A Matching Contribution may be made on behalf of each participant
up to a maximum of one hundred (100) percent of the participant's
salary reduction contribution. The maximum Matching Contribution
shall be based on a participant's salary reduction contribution
of up to four (4) percent of a participant's compensation.
Contributions to the Plan are subject to limitations.
(Continued)
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(C) PARTICIPANT ACCOUNTS
Participant's account are adjusted annually with the amount of
Employer contributions, participants' contributions, if any,
forfeitures and Plan earnings. Employer optional contributions and
forfeitures are allocated in proportion to the amount that each
entitled participant's adjusted compensation, as defined, bears to
the aggregate of all such participant's adjusted compensation at
the end of the plan year. The Basic Contribution, if any, is
allocated as of the anniversary date, defined as the 31st day of
December (last day of Plan year), among the entitled participants
in a manner necessary to satisfy the nondiscrimination
requirements of the Code. Employer matching Contributions, if any,
are allocated as of the anniversary date among the participants
based upon their salary reduction contributions.
(D) VESTING
Participants are immediately vested in their 401(k) contributions
and Employer Basic and Matching Contributions plus allocated
earnings thereon. Vesting in the remainder of their accounts is
based on years of service. A participant is 100 percent vested
after six years of service, upon death, upon reaching normal
retirement age or upon becoming disabled. The Plan is not
considered top heavy under the Code Section 416.
(E) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
(F) PAYMENT OF BENEFITS
On termination of service, with the approval of the Administrative
Committee, a participant may elect to receive either the normal
form of payment which is a straight life annuity if single or a
qualified joint and survivor annuity if married or one of the
optional forms of payment. The optional forms of payment include a
lump-sum amount equal to the vested balance of the account,
installments certain not to exceed the greater of the life
expectancy of the participant or the joint lives and last survivor
expectancies of the participant and the participant's designated
beneficiary, a combination of the previous methods of payment or a
direct rollover to a rollover account.
(G) ADMINISTRATION AND TRUSTEES
The general administration of the Plan is performed by an
Administrative Committee appointed by the Board of Directors of
the Company. This administrator has broad powers regarding
supervision and administration of the Plan.
(Continued)
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Pursuant to the terms of the Plan, the Company's Board of
Directors has appointed four members to act on a Board of
Trustees. Among other duties, the Board of Trustees is responsible
for receiving and investing contributions, managing investments,
making payments to members in accordance with the Plan and
performing other actions as directed by the administrator.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the
accrual basis of accounting.
USE OF ESTIMATES
The Plan Administrator has made a number of estimates and assumptions
relating to reporting of assets to prepare these financial statements
in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
INVESTMENTS
All of the investments of the Plan are held in trust by the Company
and the Federal Reserve and are stated at fair value. Unrealized
appreciation or depreciation in the fair value of investments held at
year-end and realized gain or loss on sales of investments during the
year are determined using the realized value at the beginning of the
year or cost if acquired since that date. Purchases and sales of
securities are recorded on a trade date basis. Interest income is
recorded on the accrual basis. Dividends are recorded on the
record date.
TAX STATUS
The Plan obtained its latest determination letter on July 29, 1993, in
which the Internal Revenue Service stated that the plan, as then
designated, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan has been amended since receiving the
determination letter. The Plan has not applied for a new determination
letter. The Plan administrator believes the Plan is currently designed
and operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, they believe that the Plan was
qualified and tax exempt as of the financial statement date.
EXPENSES
All expenses incident to the administration of the Plan may be paid by
the Company and, if not paid by the Company, shall be paid by the Plan.
The Company elected to pay all expenses in the years ended December 31,
1996 and 1995.
(Continued)
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(3) INVESTMENTS COMPRISING AT LEAST 5% OF
NET ASSETS AVAILABLE FOR PLAN BENEFITS
The following individual investments comprised at least 5% of net
assets available for plan benefits at December 31, 1996.
IDENTITY OF DESCRIPTION
ISSUE, BORROWER, OF FAIR
OR SIMILAR PARTY INVESTMENT COST VALUE
---------------- --------------- ----------- -----------
Common stock,
Texas Regional 335,731 shares,
Bancshares, Inc. $1 par value $ 3,456,784 $11,414,854
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SCHEDULE 1
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(K) PROVISIONS)
ITEM 27(A) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
<TABLE>
<CAPTION>
BORROWER, LESSOR, IDENTITY OF ISSUE, FAIR
OR SIMILAR PARTY DESCRIPTION OF INVESTMENT COST VALUE
- --------------------------- ------------------------- --------- ----------
<S> <C> <C> <C>
U.S. Government Securities:
Federal National Mortgage $1,173 par value, 8.5%, due
Association May 1, 1998 $1,187 1,187
Corporate stocks:
Texas Regional Bancshares, Inc. Common stock 335,731
shares, $1 par value 3,456,784 11,414,854
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$3,457,971 11,416,041
</TABLE>
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934,the trustee (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on in its behalf by the
undersigned hereunto duly authorized.
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(Including 401(k) provisions)
Date: 3-31-97 /s/ GEORGE R. CARRUTHERS
----------------------------- --------------------------------------
George R. Carruthers
Member of Administrative Committee
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INDEX TO EXHIBITS FILED HEREWITH
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------- ------------
1 Independent Accountants' Consent
EXHIBIT 1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Texas Regional Bancshares, Inc.
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Texas Regional Bancshares, Inc. (filed under Securities and Exchange
Commission File No. 33-39386) of our report dated March 14, 1997, relating to
the statement of net assets available for plan benefits of Texas Regional
Bancshares, Inc. Employee Stock Ownership Plan (with 401(k) provisions) at
December 31, 1996, the related statement of changes in net assets available for
plan benefits for the year ended December 31, 1996, which report appears in the
December 31, 1996 annual report of Form 11-k of Texas Regional Bancshares, Inc.
Employee Stock Ownership Plan (with 401(k) provisions).
KPMG Peat Marwick LLP
Houston, Texas
March 31, 1997
