FORM 11-K
AMENDMENT N0. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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
INDEPENDENT AUDITORS' REPORT
Administrative Committee
Texas Regional Bancshares, Inc.
Employee Stock Ownership Plan
(with 401(k) provisions):
We have audited the accompanying statements of net assets available for plan
benefits of Texas Regional Bancshares, Inc. Employee Stock Ownership Plan (with
401(k) provisions) as of December 31, 1997 and 1996 and the related statements
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 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 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, 1997 and 1996, and the changes in net assets available for
plan benefits for the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The information contained in the Schedule
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
the Schedule 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.
/s/ KPMG PEAT MARWICK LLP
Houston, Texas
May 8, 1998
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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, 1997 and 1996
ASSETS 1997 1996
------ ---- ----
Investments, at fair value (note 3):
Certificates of deposit $ 753,564 530,876
U.S. government securities 293 1,187
Common stock 15,743,429 11,414,854
------------- -------------
Total investments 16,497,286 11,946,917
------------- -------------
Cash 134,960 128,290
Employer contributions receivable 8,988 58,424
Accrued interest receivable -- 3,257
------------- -------------
Net assets available for plan
benefits $ 16,641,234 12,136,888
============= =============
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, 1997 and 1996
1997 1996
---- ----
Investment income:
Net appreciation in fair value of
common stock $ 3,952,624 5,319,245
Interest 40,847 29,163
Dividends 161,751 124,803
Employer contributions 648,988 808,574
Employee contributions 400,594 280,364
-------------- -------------
Total additions 5,204,804 6,562,149
-------------- -------------
Benefits paid to participants 700,458 380,897
-------------- -------------
Net increase in net assets
available for plan
benefits 4,504,346 6,181,252
Net assets available for plan benefits:
Beginning of year 12,136,888 5,955,636
-------------- -------------
End of year $ 16,641,234 12,136,888
============== =============
See accompanying notes to financial statements.
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(k) PROVISIONS)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
(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; however, the
Matching Contribution shall not exceed four (4) percent of a
participant's compensation.
Contributions to the Plan are subject to limitations.
( Continued )
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2
(c)PARTICIPANT ACCOUNTS
Each participant's account is 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
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. The amounts
in the Plan's participant accounts are then distributed to the Plan's
participants who become automatically 100% vested upon Plan
termination.
(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.
( Continued )
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3
(g)ADMINISTRATION AND TRUSTEES
The general administration of the Plan is performed by the
Administrative Committee appointed by the Board of Directors of the
Company. This administrator has broad powers regarding supervision and
administration of the Plan.
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, the Plan adminstrator believes that the Plan was
qualified and tax exempt as of the financial statement date.
( Continued )
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4
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, 1997
and 1996.
(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, 1997.
Identity of Description
issue, borrower, of Fair
or similar party investment Cost value
---------------- ---------- ---- -----
Texas Regional Common stock,
Bancshares, Inc. 516,178 shares,
$1 par value $ 3,832,360 $ 15,743,429
========= ==========
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SCHEDULE
--------
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(k) PROVISIONS)
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
<TABLE>
<CAPTION>
Identity of issue,
borrower, lessor, Fair
or similar party Description of investment Cost value
---------------- ------------------------- ---- -----
<S> <C> <C> <C>
Certificates of deposit:
Texas State Bank 6.25%, due September 2, 1998 $ 150,628 150,628
Texas State Bank 5.75%, due June 2, 1998 182,119 182,119
Texas State Bank 5.50%, due March 1, 1998 110,810 110,810
Texas State Bank 5.35%, due December 1, 1998 201,734 201,734
Texas State Bank 6.25%, due September 2, 1998 60,495 60,495
Texas State Bank 5.50%, due March 1, 1998 47,778 47,778
U.S. government securities:
Federal National Mortgage $7,500 par value, 8.50%, due
Association May 1, 1998 293 293
Common stock:
Texas Regional Bancshares, Common stock 516,178
Inc. shares, $1 par value 3,832,360 15,743,429
----------- ------------
$ 4,586,217 16,497,286
=========== ============
</TABLE>
See accompanying independent auditors' report
<PAGE>
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: June 12, 1998 /s/ GEORGE R. CARRUTHERS
----------------------------- --------------------------------------
George R. Carruthers
Member of Administrative Committee
<PAGE>
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 May 8, 1998, 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, 1997, the related statement of changes in net assets available for
plan benefits for the year ended December 31, 1997, which report appears in the
December 31, 1997 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
June 12, 1998
