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Securities and Exchange Commission
Washington, D.C. 20549 |
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Click here for a
printer-friendly format. |
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Form 10-Q |
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Quarterly Report Under Section 13 or 15(d) |
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of the Securities Exchange Act of 1934 |
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For Quarter Ended June 30, 2002 |
Commission file number 0-7275 |
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Cullen/Frost Bankers, Inc. |
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(Exact name of registrant as specified in its charter) |
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Texas |
74-1751768 |
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(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
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|
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100 W. Houston Street, San Antonio, Texas |
78205 |
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(Address of principal executive offices) |
(Zip code) |
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(210) 220-4011 |
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(Registrant's telephone number, including area code) |
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N/A |
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(Former name, former address and former fiscal year, if changed since last report) |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing |
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requirements for the past 90 days. |
Yes |
X |
No |
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Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: At July 17, 2002, there were 51,019,992 shares of Common Stock, $.01 par value, outstanding. |
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income |
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|
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(dollars in thousands, except per share amounts)
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Three Months Ended
June 30 |
|
|
Six Months Ended
June 30 |
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|
|
|
|
|
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|
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| |
|
|
|
|
2002 |
|
|
2001 |
|
|
2002 |
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Interest Income: |
|
|
|
|
|
|
|
|
|
|
|
|
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Loans, including fees |
$ |
67,791 |
|
$ |
90,033 |
|
$ |
134,393 |
|
$ |
188,636 |
|
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Taxable |
|
28,144 |
|
|
22,137 |
|
|
56,448 |
|
|
46,460 |
|
| |
Tax-exempt |
|
1,975 |
|
|
1,869 |
|
|
3,956 |
|
|
3,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Securities |
|
30,119 |
|
|
24,006 |
|
|
60,404 |
|
|
50,219 |
|
| |
Time deposits |
|
65 |
|
|
99 |
|
|
115 |
|
|
215 |
|
| |
Federal funds sold and securities purchased under repurchase agreements |
524 |
|
|
3,520 |
|
|
1,000 |
|
|
5,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Interest Income |
|
98,499 |
|
|
117,658 |
|
|
195,912 |
|
|
244,834 |
|
|
Interest Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Deposits |
|
13,876 |
|
|
32,422 |
|
|
29,187 |
|
|
71,962 |
|
| |
Federal funds purchased and securities sold under repurchase agreements |
|
1,310 |
|
|
3,417 |
|
|
2,497 |
|
|
7,779 |
|
| |
Guaranteed preferred beneficial interests in the Corporation's junior |
|
|
|
|
|
|
|
|
|
|
|
|
| |
subordinated deferrable interest debentures |
|
2,119 |
|
|
2,119 |
|
|
4,238 |
|
|
4,238 |
|
| |
Subordinated notes payable and other borrowings |
|
1,639 |
|
|
502 |
|
|
3,522 |
|
|
1,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Interest Expense |
|
18,944 |
|
|
38,460 |
|
|
39,444 |
|
|
85,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net Interest Income |
|
79,555 |
|
|
79,198 |
|
|
156,468 |
|
|
159,817 |
|
|
Provision for possible loan losses |
|
5,396 |
|
|
1,000 |
|
|
12,196 |
|
|
16,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net Interest Income After Provision For Possible Loan Losses |
|
74,159 |
|
|
78,198 |
|
|
144,272 |
|
|
143,786 |
|
|
Non-Interest Income: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Trust fees |
|
12,073 |
|
|
12,837 |
|
|
24,188 |
|
|
24,843 |
|
| |
Service charges on deposit accounts |
|
19,585 |
|
|
18,051 |
|
|
37,992 |
|
|
34,551 |
|
| |
Insurance commissions |
|
5,537 |
|
|
3,598 |
|
|
11,143 |
|
|
7,493 |
|
| |
Other service, collection and exchange charges, commissions and fees |
|
7,939 |
|
|
6,665 |
|
|
13,984 |
|
|
12,599 |
|
| |
Net gain (loss) on securities transactions |
|
88 |
|
|
(12 |
) |
|
88 |
|
|
(2 |
) |
| |
Other |
|
9,960 |
|
|
7,334 |
|
|
18,580 |
|
|
15,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Non-Interest Income |
|
55,182 |
|
|
48,473 |
|
|
105,975 |
|
|
95,231 |
|
|
Non-Interest Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Salaries and wages |
|
35,996 |
|
|
36,711 |
|
|
72,136 |
|
|
72,321 |
|
| |
Employee benefits |
|
8,664 |
|
|
8,339 |
|
|
17,590 |
|
|
17,250 |
|
| |
Net occupancy |
|
7,393 |
|
|
7,343 |
|
|
14,806 |
|
|
14,546 |
|
| |
Furniture and equipment |
|
5,591 |
|
|
6,240 |
|
|
11,415 |
|
|
12,252 |
|
| |
Intangible amortization |
|
1,735 |
|
|
3,752 |
|
|
3,612 |
|
|
7,632 |
|
| |
Other |
|
21,886 |
|
|
21,382 |
|
|
41,945 |
|
|
42,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Non-Interest Expense |
|
81,265 |
|
|
83,767 |
|
|
161,504 |
|
|
166,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Income Before Income Taxes and Cumulative Effect of Accounting Change |
|
48,076 |
|
|
42,904 |
|
|
88,743 |
|
|
72,649 |
|
|
Income taxes |
|
15,423 |
|
|
14,243 |
|
|
28,373 |
|
|
24,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before cumulative effect of accounting change |
|
32,653 |
|
|
28,661 |
|
|
60,370 |
|
|
48,191 |
|
|
Cumulative effect of change in accounting for derivatives, net of tax |
|
|
|
|
|
|
|
3,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net Income |
$ |
32,653 |
|
$ |
28,661 |
|
$ |
60,370 |
|
$ |
51,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income before cumulative effect of accounting change |
$ |
.64 |
|
$ |
.56 |
|
$ |
1.18 |
|
$ |
.93 |
|
| |
Cumulative effect of change in accounting, net of taxes |
|
|
|
|
|
|
|
|
|
|
.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net Income |
$ |
.64 |
|
$ |
.56 |
|
$ |
1.18 |
|
$ |
.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Diluted per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income before cumulative effect of accounting change |
$ |
.61 |
|
$ |
.54 |
|
$ |
1.13 |
|
$ |
.90 |
|
| |
Cumulative effect of change in accounting, net of taxes |
|
|
|
|
|
|
|
|
|
|
.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net Income |
$ |
.61 |
|
$ |
.54 |
|
$ |
1.13 |
|
$ |
.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per common share |
|
.22 |
|
|
.215 |
|
|
.435 |
|
|
.410 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
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|
See notes to consolidated financial statements. |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
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|
|
|
|
|
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| |
|
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|
|
|
|
|
|
|
|
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|
2 |
|
Consolidated Balance Sheets |
|
|
(dollars in thousands, except per share amounts) |
|
June 30
2002 |
|
December 31
2001 |
|
June 30
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
1,038,195 |
|
$ |
994,622 |
|
$ |
975,169 |
|
|
Time deposits |
|
9,354 |
|
|
6,530 |
|
|
4,379 |
|
|
Securities held to maturity |
|
42,781 |
|
|
51,231 |
|
|
61,534 |
|
|
Securities available for sale |
|
2,069,187 |
|
|
2,105,247 |
|
|
1,651,385 |
|
|
Trading account securities |
|
|
|
|
118 |
|
|
1,665 |
|
|
Federal funds sold and securities purchased under resale agreements |
|
93,275 |
|
|
129,550 |
|
|
141,650 |
|
|
Loans, net of unearned discount of $8,905 at June 30, 2002; $5,005 at December 31, 2001 and $6,762 at June 30, 2001 |
|
4,497,905
|
|
|
4,518,608
|
|
|
4,545,914 |
|
|
Less: Allowance for possible loan losses |
|
(78,577 |
) |
|
(72,881 |
) |
|
(65,254 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loans |
|
4,419,328 |
|
|
4,445,727 |
|
|
4,480,660 |
|
|
Premises and equipment |
|
173,734 |
|
|
148,871 |
|
|
149,853 |
|
|
Accrued interest and other assets |
|
396,055 |
|
|
487,688 |
|
|
398,191 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
$ |
8,241,909 |
|
$ |
8,369,584 |
|
$ |
7,864,486 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Demand deposits (non-interest bearing): |
|
|
|
|
|
|
|
|
|
|
Commercial and individual |
$ |
1,982,823 |
|
$ |
2,317,926 |
|
$ |
2,029,368 |
|
|
Correspondent banks |
|
499,420 |
|
|
298,055 |
|
|
250,451 |
|
|
Public funds |
|
48,510 |
|
|
53,848 |
|
|
40,077 |
|
|
|
|
|
|
|
|
|
|
|
|
Total demand deposits |
|
2,530,753 |
|
|
2,669,829 |
|
|
2,319,896 |
|
|
Time deposits (interest bearing): |
|
|
|
|
|
|
|
|
|
|
Savings and Interest-on-Checking |
|
979,094 |
|
|
1,063,923 |
|
|
951,151 |
|
|
Money market deposit accounts |
|
1,830,729 |
|
|
1,804,796 |
|
|
1,820,766 |
|
|
Time |
|
1,163,909 |
|
|
1,202,246 |
|
|
1,271,100 |
|
|
Public funds |
|
336,725 |
|
|
357,213 |
|
|
324,177 |
|
|
|
|
|
|
|
|
|
|
|
|
Total time deposits |
|
4,310,457 |
|
|
4,428,178 |
|
|
4,367,194 |
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
6,841,210 |
|
|
7,098,007 |
|
|
6,687,090 |
|
|
Federal funds purchased and securities sold under repurchase agreements |
|
370,220 |
|
|
305,384 |
|
|
342,896 |
|
|
Accrued interest and other liabilities |
|
133,998 |
|
|
120,499 |
|
|
121,232 |
|
|
Subordinated notes payable and other notes payable |
|
149,984 |
|
|
152,152 |
|
|
2,236 |
|
|
Guaranteed preferred beneficial interest in the Corporation's junior subordinated deferrable interest debentures, net |
|
98,650
|
|
|
98,623
|
|
|
98,595
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
7,594,062 |
|
|
7,774,665 |
|
|
7,252,049 |
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
Common stock, par value $.01 per share; Shares authorized: 90,000,000; Shares issued: 53,561,616 |
|
536
|
|
|
536
|
|
|
536
|
|
|
Surplus |
|
195,039 |
|
|
191,856 |
|
|
190,240 |
|
|
Retained earnings |
|
514,724 |
|
|
478,432 |
|
|
473,932 |
|
|
Accumulated other comprehensive income (loss), net of tax |
|
17,843 |
|
|
(14,005 |
) |
|
3,605 |
|
|
Treasury stock (2,541,624; 2,206,381; 1,980,490 shares) |
|
(80,295 |
) |
|
(61,900 |
) |
|
(55,876 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders' Equity |
|
647,847 |
|
|
594,919 |
|
|
612,437 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity |
$ |
8,241,909 |
|
$ |
8,369,584 |
|
$ |
7,864,486 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity |
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
Accumulated Other |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Comprehensive Income / (Loss)
net of tax |
|
|
|
|
|
|
Common Stock |
Surplus
|
Retained Earnings |
Treasury Stock |
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2001 |
$ |
536 |
|
|
$ |
187,673 |
|
$ |
448,006 |
|
$ |
(4,023 |
) |
|
$ |
(59,166 |
) |
$ |
573,026 |
|
| |
Net Income for the twelve months ended
December 31, 2001 |
|
|
|
|
|
|
|
80,916
|
|
|
|
|
|
|
|
|
80,916
|
|
| |
Unrealized loss on securities available for
sale of $4,672, net of tax and
reclassification adjustment for after-tax
gains included in net income of $51 |
|
|
|
|
|
|
|
|
|
|
(4,723
|
)
|
|
|
|
|
|
(4,723
|
)
|
| |
Additional minimum pension liability, net
of tax |
|
|
|
|
|
|
|
|
|
|
(5,259
|
)
|
|
|
|
|
|
(5,259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Transactions from employee stock
purchase plan and options |
|
|
|
|
|
|
|
(6,234
|
)
|
|
|
|
|
5,193
|
|
|
(1,041
|
)
|
| |
Tax benefit related to exercise of stock
options |
|
|
|
|
3,475
|
|
|
|
|
|
|
|
|
|
|
|
3,475
|
|
| |
Purchase of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,424 |
) |
|
(10,424 |
) |
| |
Issuance of restricted stock |
|
|
|
|
708 |
|
|
|
|
|
|
|
|
2,497 |
|
|
3,205 |
|
| |
Restricted stock plan deferred
compensation, net |
|
|
|
|
|
|
|
(960
|
)
|
|
|
|
|
|
|
|
(960
|
)
|
| |
Cash dividend |
|
|
|
|
|
|
|
(43,296 |
) |
|
|
|
|
|
|
|
(43,296 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2001 |
|
536 |
|
|
|
191,856 |
|
|
478,432 |
|
|
(14,005 |
) |
|
|
(61,900 |
) |
|
594,919 |
|
| |
Net Income for the six months ended
June 30, 2002 |
|
|
|
|
|
|
|
60,370
|
|
|
|
|
|
|
|
|
60,370
|
|
| |
Unrealized gain on securities available for
sale of $31,905, net of tax and
reclassification adjustment for after-tax
gains included in net income of $57 |
|
|
|
|
|
|
|
|
|
|
31,848
|
|
|
|
|
|
|
31,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|