UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 11-K
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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.
3900 North 10th Street, 11th Floor
McAllen, Texas 78501
<PAGE>
<PAGE>
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, 1999 and 1998 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 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 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, 1999 and 1998, and the changes in net assets available for
plan benefits for the years ended December 31, 1999 and 1998, 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.
Houston, Texas
April 21, 2000
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
ASSETS 1999 1998
------------ ------------
Investments (note 3):
Certificates of deposit, at fair value ....... $ 1,167,893 983,534
Common stock, at fair value .................. 15,875,616 13,383,275
Participant loans, at contract value ......... 7,586 4,449
------------ ------------
Total investments .................... 17,051,095 14,371,258
------------ ------------
Cash ............................................ 43,043 44,463
Employer contributions receivable ............... 4,764 --
------------ ------------
Assets available for plan benefits ... 17,098,902 14,415,721
LIABILITIES
Excess contributions payable .................... (4,489) --
------------ ------------
Net assets available for plan benefits $ 17,094,413 14,415,721
============ ============
See accompanying notes to financial statements.
2
<PAGE>
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, 1999 and 1998
1999 1998
----------- -----------
Investment income:
Net appreciation (depreciation) in fair
value of common stock ........................ $ 2,081,915 (2,772,518)
Interest ....................................... 60,932 55,250
Dividends ...................................... 263,145 234,268
Employer contributions ............................ 959,764 480,000
Employee contributions ............................ 697,875 614,191
----------- -----------
Total additions (reductions), net ...... 4,063,631 (1,388,809)
----------- -----------
Benefits paid to participants ..................... 1,384,939 836,704
----------- -----------
Net increase (decrease) in net assets
available for plan benefits .......... 2,678,692 (2,225,513)
Net assets available for plan benefits:
Beginning of year .............................. 14,415,721 16,641,234
----------- -----------
End of year .................................... $17,094,413 14,415,721
=========== ===========
See accompanying notes to financial statements.
3
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
Notes to Financial Statements
December 31, 1999 and 1998
(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 document 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 subsidiaries. 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 (ERISA) 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 and credited with at least 1,000 hours of service.
(B) CONTRIBUTIONS
A participant may authorize the Company and its subsidiaries
(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.
4
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
Notes to Financial Statements
December 31, 1999 and 1998
(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) PARTICIPANT LOANS
Participants may borrow from their accounts up to a maximum equal to
the lesser of $50,000 or 50 percent of their account balance. Loan
terms shall not exceed five years unless the loan is for the primary
residence of the participant. The loans are secured by the balance in
the participant's account and bear interest at a rate commensurate
with local prevailing rates as determined by the Administrative
Committee. Participant loans are valued at contract value which
approximates fair value.
(F) 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.
(G) 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.
5
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
Notes to Financial Statements
December 31, 1999 and 1998
(H) 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 three 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
(A) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the
accrual basis of accounting.
(B) 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.
(C) INVESTMENTS
All of the investments of the Plan are held in trust by the Company.
All investments are stated at fair value except participant loans
which are at contract value. Quoted market prices are used to value
investments. 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.
(D) 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.
6
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
Notes to Financial Statements
December 31, 1999 and 1998
(E) 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, 1999 and 1998.
(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, 1999 and 1998.
IDENTITY OF
ISSUE,
BORROWER, OR DESCRIPTION FAIR
DATE SIMILAR PARTY OF INVESTMENT VALUE
----------------- ------------------ ----------------- -----------
December 31, 1999 Texas Regional Common stock,
Bancshares, Inc. 547,435 shares,
$1 par value $15,875,616
December 31, 1998 Texas Regional Common stock,
Bancshares, Inc. 533,966 shares,
$1 par value 13,383,275
(4) SUBSEQUENT EVENTS
The Company adopted an amendment to the Plan effective April 1, 2000 which
reduces the service requirements for eligibility to participant in the
salary deferral provisions (Section 401(k) and the match provisions
(Section 401(m)) of the Plan.
ELIGIBILITY
All employees that are currently participating in the Plan as of April 1,
2000 shall continue to participate in the Plan. Each other employee who has
attained age twenty-one shall become a Participant and shall be eligible to
make Salary Reduction Contributions and receive Matching Contributions to
the Plan on the first day of the calendar month following their completion
of three (3) consecutive months of service in which they are credited with
at least 250 hours of service. Additionally, each other employee shall
become eligible to begin receiving the Basic Contribution and Optional
Contribution on January 1st or July 1st whichever the case may be following
their initial date of service provided they have attained age 21 and
completed 12 consecutive months of service with 1,000 hours of service.
For purposes of the Matching Contribution, the Participant's compensation
for the first year of his eligibility to participate in the salary deferral
and match provisions of the Plan shall be the Compensation of the
Participant from the date of his initial Salary Reduction Contribution to
the end of the Plan year.
7
<PAGE>
SCHEDULE
TEXAS REGIONAL BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
(With 401(k) Provisions)
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
IDENTITY OF ISSUE,
BORROWER, LESSOR, FAIR
OR SIMILAR PARTY DESCRIPTION OF INVESTMENT COST VALUE
-------------------------- ---------------------------- ----------- ----------
Certificates of deposit:
* Texas State Bank 5.25%, due March 1, 2000 $ 52,944 52,944
* Texas State Bank 5.25%, due March 1, 2000 342,843 342,843
* Texas State Bank 5.00%, due June 2, 2000 240,543 240,543
* Texas State Bank 6.00%, due December 1, 2000 246,329 246,329
* Texas State Bank 5.44% due December 2, 2000 67,937 67,937
* Texas State Bank 5.44%, due December 2, 2000 217,297 217,297
Common stock:
* Texas Regional Common stock 547,435 shares,
Bancshares, Inc. $1 par value 5,547,136 15,875,616
* Participants Participant loans, bearing
interest at 6%, due in
2003 5,996 5,996
* Participants Participant loans, bearing
interest at 8.25%, due in
2002 1,590 1,590
----------- ----------
$ 6,722,615 17,051,095
=========== ==========
* Party-in-interest
See accompanying independent auditors' report
8
<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 26, 2000 /s/ G. E. RONEY
----------------------------- --------------------------------------
G. E. Roney
Trustee
<PAGE>
INDEX TO EXHIBITS FILED HEREWITH
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
1 Independent Auditors' Consent
