TEXAS REGIONAL BANCSHARES INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2004

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 000-14517

TEXAS REGIONAL BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Texas		74-2294235
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3900 North 10^th Street, 11^th Floor McAllen, Texas 78501
(Address of principal executive offices) (Zip Code)

(956) 631-5400
(Registrant’s telephone number, including area code)

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 requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý Noo

There were 32,739,172 shares of the registrant’s Class A Voting Common Stock, $1.00 par value, outstanding as of May 7, 2004.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Texas Regional Bancshares, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in Thousands, Except Share Data)	March 31, 2004			December 31, 2003
	(Unaudited)
Assets
Cash and Due From Banks	$	173,974		$	100,167
Interest-Bearing Deposits at Other Banks	36,465			556
Total Cash and Cash Equivalents	210,439			100,723
Time Deposits	104			199
Securities Available for Sale, at Fair Value	1,513,947			1,385,814
Securities Held to Maturity, at Amortized Cost (Fair Value of $427 in 2004 and $431 in 2003)	410			410
Loans Held for Sale	18,945			24,078
Loans Held for Investment, Net of Unearned Discount of $1,003 in 2004 and $261 in 2003	3,297,220			2,519,694
Less: Allowance for Loan Losses	(41,094		)	(31,234		)
Net Loans Held for Investment	3,256,126			2,488,460
Premises and Equipment, Net	125,582			107,875
Accrued Interest Receivable	31,125			27,740
Other Real Estate	12,098			8,785
Goodwill	165,808			29,856
Identifiable Intangibles, Net	32,259			15,263
Other Assets	86,528			28,733
Total Assets	$	5,453,371		$	4,217,936
Liabilities
Deposits
Demand	$	828,470		$	536,211
Savings	213,383			147,236
Money Market Checking and Savings	1,308,433			964,436
Time Deposits	2,197,458			1,868,552
Total Deposits	4,547,744			3,516,435
Other Borrowed Money	307,881			259,565
Accounts Payable and Accrued Liabilities	43,949			20,205
Total Liabilities	4,899,574			3,796,205
Commitments and Contingencies
Shareholders’ Equity
Preferred Stock; $1.00 Par Value, 10,000,000 Shares Authorized; None Issued and Outstanding	—			—
Common Stock – Class A; $1.00 Par Value, 50,000,000 Shares Authorized; Issued and Outstanding 32,564,604 Shares in 2004 and 29,470,659 Shares in 2003	32,565			29,471
Paid-In Capital	385,769			278,131
Retained Earnings	116,839			103,773
Accumulated Other Comprehensive Income	18,624			10,356
Total Shareholders’ Equity	553,797			421,731
Total Liabilities and Shareholders’ Equity	$	5,453,371		$	4,217,936

The accompanying notes are an integral part of the condensed consolidated financial statements.

Texas Regional Bancshares, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

	Three Months Ended March 31,
(Dollars in Thousands, Except Per Share Data)	2004			2003
	(Unaudited)
Interest Income
Loans Held for Sale	$	259		$	608
Loans Held for Investment, Including Fees	44,975			39,805
Securities
Taxable	11,209			10,661
Tax-Exempt	921			824
Interest-Bearing and Time Deposits	17			31
Federal Funds Sold	17			58
Total Interest Income	57,398			51,987
Interest Expense
Deposits	12,438			14,661
Federal Funds Purchased and Securities Sold Under Repurchase Agreements	575			980
Federal Home Loan Bank Advances	283			581
Trust Preferred Securities	—			320
Subordinated Debentures	—			110
Junior Subordinated Debentures	538			—
Total Interest Expense	13,834			16,652
Net Interest Income Before Provision for Loan Losses	43,564			35,335
Provision for Loan Losses	3,924			3,691
Net Interest Income After Provision for Loan Losses	39,640			31,644
Noninterest Income
Service Charges on Deposit Accounts	6,838			5,482
Other Service Charges	2,397			1,748
Trust Service Fees	727			675
Net Realized Gains on Sales of Securities Available for Sale	499			1,754
Data Processing Service Fees	2,122			1,721
Loan Servicing Loss, Net	(182		)	(393		)
Other Noninterest Income	607			1,305
Total Noninterest Income	13,008			12,292
Noninterest Expense
Salaries and Employee Benefits	13,782			10,849
Net Occupancy Expense	2,173			1,557
Equipment Expense	3,219			2,353
Other Real Estate Expense, Net	121			244
Amortization of Identifiable Intangibles	798			850
Other Noninterest Expense, Net	6,770			5,366