SEC Info - Texas Regional Bancshares Inc - ‘10-Q’ for 9/30/95

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Texas Regional Bancshares Inc – ‘10-Q’ for 9/30/95 – EX-19

As of: Wednesday, 11/1/95 · For: 9/30/95 · Accession #: 912057-95-9189 · File #: 0-14517

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/01/95  Texas Regional Bancshares Inc     10-Q        9/30/95    3:90K                                    Merrill Corp/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                       3     13K 
 2: EX-19       Exhibit 19 Quarterly Report                           28    164K 
 3: EX-27       Financial Data Schedule                                2      8K

EX-19 — Exhibit 19 Quarterly Report
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Allowance for Loan Losses Nonperforming Assets
1	1st Page - Filing Submission
22	Nonperforming Assets
23	Allowance for Loan Losses

EX-19 1st Page of 28 TOC ↑Top Previous Next ↓Bottom Just 1st
 
  TEXAS REGIONAL
  BANCSHARES, INC.

  [LOGO]

 1995  THIRD
 QUARTER
  REPORT

 S E P T E M B E R  3 0 ,  1 9 9 5

EX-19 2nd Page of 28 TOC 1st Previous Next ↓Bottom Just 2nd
Texas Regional Bancshares, Inc.                                                 

Texas   Regional  Bancshares,  Inc.   is  a  registered   bank  holding  company
headquartered in McAllen, Texas. Its wholly-owned subsidiary, Texas State  Bank,
operates  a  total of  eight full-service  banking locations  in the  Rio Grande
Valley of Texas.  Four locations are  in the city  of McAllen, one  each in  the
cities of Harlingen, Rio Grande City, Roma and Weslaco.                         

TEXAS STATE BANK                                                      
3900 N. 10th                                                          
P.O. Box 4797                                                         
McAllen, Texas 78502                                                  
(210) 631-5401                                                        

TEXAS STATE BANK - KERRIA*                                            
3700 N. 10th, Suite 301                                               
P.O. Box 4797                                                         
McAllen, Texas 78502                                                  
(210) 631-5400                                                        

TEXAS STATE BANK - SOUTH*                                             
900 E. Jackson Avenue                                                 
P.O. Box 4797                                                         
McAllen, Texas 78502                                                  
(210) 971-6800                                                        

TEXAS STATE BANK - WEST*                                              
2250 Nolana                                                           
P.O. Box 4797                                                         
McAllen, Texas 78502                                                  
(210) 631-7101                                                        

TEXAS STATE BANK - HARLINGEN*                                         
521 N. 77 Sunshine Strip                                              
P.O. Box 191                                                          
Harlingen, Texas 78551                                                
(210) 430-5000                                                        

TEXAS STATE BANK - RIO GRANDE CITY*                                   
100 N. Britton                                                        
Drawer M                                                              
Rio Grande City, Texas 78582                                          
(210) 487-5681                                                        

TEXAS STATE BANK - ROMA*                                              
1004 E. Highway 83                                                    
P.O. Box 961                                                          
Roma, Texas 78584                                                     
(210) 849-7003                                                        

TEXAS STATE BANK - WESLACO*                                           
500 S. Missouri                                                       
P.O. Box 8008                                                         
Weslaco, Texas 78599                                                  
(210) 968-4511                                                        

Members:                                                              
Federal Deposit Insurance Corporation                                 
Federal Reserve System                                                
Texas Regional Bancshares, Inc.                                       

*Branch Locations                                                     
[LOGO]                                                        

EX-19 3rd Page of 28 TOC 1st Previous Next ↓Bottom Just 3rd
F I N A N C I A L  H I G H L I G H T S  ( U N A U D I T E D )                 

                                                        [Enlarge/Download Table]

Texas Regional Bancshares, Inc. and Subsidiary                                         

                                                                                       
(Dollars in Thousands, Except Per Share Data)          1995       1994       % Change  
---------------------------------------------------------------------------------------
For the Nine Months Ended September 30:                                                
  Net Income                                         $   6,305  $   4,904        28.6% 
  Return on Average Assets                                1.51%      1.32%       14.4  
  Return on Average Shareholders' Equity                 14.43      13.26         8.8  
  Per Common Share                                                                     
    Net Income -- Fully Diluted                      $    1.01  $    0.79        27.8  
    Book Value at Month End                               9.81       8.74        12.2  
    Cash Dividends Declared Per Common Share              0.30       0.16        87.5  
    Weighted Average Shares Outstanding (in                                            
     Thousands)                                          6,220      5,979         4.0  
---------------------------------------------------------------------------------------
Capital Ratios at September 30:                                                        
  Tier 1 Capital Ratio                                   12.63%     15.24%      (17.1)%
  Total Capital Ratio                                    13.58      16.23       (16.3) 
  Equity to Assets Ratio                                  9.81      10.56        (7.1) 
  Leverage Ratio                                          7.99      10.30       (22.4) 
---------------------------------------------------------------------------------------
Balances at September 30:                                                              
  Total Assets                                       $ 619,287  $ 513,023        20.7% 
  Loans                                                394,607    314,946        25.3  
  Investment Securities                                160,059    134,825        18.7  
  Earning Assets                                       563,966    464,271        21.5  
  Deposits                                             553,702    454,264        21.9  
  Shareholders' Equity                                  60,744     54,152        12.2  
---------------------------------------------------------------------------------------
Average Balances at September 30:                                                      
  Total Assets                                       $ 558,948  $ 497,595        12.3% 
  Loans                                                356,085    304,728        16.9  
  Investment Securities                                126,465    128,425        (1.5) 
  Earning Assets                                       503,421    444,204        13.3  
  Deposits                                             495,354    444,057        11.6  
  Shareholders' Equity                                  58,417     49,446        18.1  
---------------------------------------------------------------------------------------

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LOGO                                                                            
T E X A S  R E G I O N A L                                            

B    A    N   C    S    H   A    R    E   S    ,       I    N    C   .

 B O A R D  O F  D I R E C T O R S
   -----------------------------------------------------------------------------
GLEN E. RONEY -- Chairman of the Board, President & Chief         
Executive Officer                                                 
------------------------------------------------------------------
MORRIS ATLAS -- Senior & Managing Partner, Atlas & Hall, L.L.P.   
------------------------------------------------------------------
FRANK N. BOGGUS -- Chairman of the Board, Boggus Motor Company    
------------------------------------------------------------------
JAMES W. COLLINS -- General Partner, Rioco Partners, Ltd          
------------------------------------------------------------------
ROBERT G. FARRIS -- President, Valley Transit Company             
------------------------------------------------------------------
JOE M. KILGORE -- Partner, McGinnis, Lochridge & Kilgore, L.L.P.  
------------------------------------------------------------------
C. KENNETH LANDRUM, M.D. -- Retired                               
------------------------------------------------------------------
JULIE G. UHLHORN -- Chairman of the Board, Rio Grande Equipment   
Company                                                           
------------------------------------------------------------------
PAUL G. VEALE, SR., CPA -- Investments                            
------------------------------------------------------------------
JACK WHETSEL -- Investments                                       
------------------------------------------------------------------

A D V I S O R Y  D I R E C T O R S
   -----------------------------------------------------------------------------
DANNY L. BUTTERY -- President, Texas State Bank, Harlingen, Texas 
------------------------------------------------------------------
FRANK A. KAVANAGH -- President, Texas State Bank, Weslaco, Texas  
------------------------------------------------------------------
PAUL S. MOXLEY -- President & Secretary of the Board of Directors,
  Texas State Bank, McAllen, Texas
------------------------------------------------------------------

 O F F I C E R S
   -----------------------------------------------------------------------------
GLEN E. RONEY -- Chairman of the Board, President & Chief         
Executive Officer                                                 
------------------------------------------------------------------
GEORGE R. CARRUTHERS, JR. -- Executive Vice President & Chief     
Financial Officer                                                 
------------------------------------------------------------------
NANCY F. SCHULTZ -- Senior Vice President & Secretary/Treasurer   
------------------------------------------------------------------
ANN M. SEFCIK -- Controller & Assistant Secretary                 
------------------------------------------------------------------

-2- 

EX-19 5th Page of 28 TOC 1st Previous Next ↓Bottom Just 5th
--------------------------------------------------------------------------------
T O  O U R  S H A R E H O L D E R S 

  WE  ARE PLEASED TO REPORT NET INCOME OF  $2.3 MILLION FOR THE THIRD QUARTER OF
1995 OR $0.36 PER SHARE, COMPARED WITH $2.0 MILLION OR $0.32 PER SHARE  REPORTED
FOR  THE THIRD QUARTER OF 1994. NET INCOME  WAS $6.3 MILLION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995, OR $1.01 PER  SHARE, COMPARED WITH NET INCOME OF  $4.9
MILLION  OR $0.79  PER SHARE  REPORTED FOR THE  NINE MONTHS  ENDED SEPTEMBER 30,
1994.                                                                           
  DURING  AUGUST  1995,  TEXAS  STATE  BANK,  A  SUBSIDIARY  OF  TEXAS  REGIONAL
BANCSHARES,  INC., ACQUIRED TWO  BRANCH BANK LOCATIONS, ONE  IN RIO GRANDE CITY,
TEXAS, AND THE OTHER  IN ROMA, TEXAS. THE  TRANSACTION INCLUDED THE PURCHASE  OF
$43.7  MILLION IN  LOANS AND  THE ASSUMPTION  OF APPROXIMATELY  $79.7 MILLION IN
DEPOSIT LIABILITIES OF THESE BRANCHES. THIS  TRANSACTION WAS ACCOUNTED FOR AS  A
PURCHASE.                                                                       
  CONSISTENT WITH MANAGEMENT'S ONGOING EFFORTS TO EXPAND OUR PRESENCE IN THE RIO
GRANDE VALLEY, A NEW 4,000 SQUARE FOOT FULL-SERVICE BANKING FACILITY WITH A FIVE
LANE  MOTOR BANK AND A DRIVE-UP ATM  LANE WILL BE CONSTRUCTED IN WESLACO, TEXAS.
THIS NEW BANKING FACILITY IS EXPECTED TO OPEN IN JANUARY 1996.                  
  THE OUTLOOK  FOR THE  REGIONAL  ECONOMY OF  THE MARKETS  WE  SERVE IS  ONE  OF
MODERATE,  YET STEADY GROWTH. THE PESO DEVALUATION IN MEXICO HAS HAD A TEMPORARY
IMPACT ON THE RETAIL TRADE SEGMENT OF THE RIO GRANDE VALLEY ECONOMY.  MANAGEMENT
DOES  NOT BELIEVE  THAT THE  FINANCIAL UNCERTAINTIES  IN MEXICO  WILL MATERIALLY
AFFECT THE COMPANY'S FUTURE PROGRESS.                                           
  BUILDING SHAREHOLDER VALUE  IS OUR  PRIMARY GOAL. THIS  IS BEING  ACCOMPLISHED
THROUGH  THE  CONTINUED EFFORT  AND DEDICATION  OF  OUR EMPLOYEES,  OFFICERS AND
DIRECTORS. WE APPRECIATE THE LOYAL SUPPORT OF OUR FRIENDS AND BANK CUSTOMERS.   

               VERY TRULY YOURS,

                         [/S/ G. E. RONEY]

         G. E. RONEY
                   CHAIRMAN OF THE BOARD

-3- 

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CONSOLIDATED FINANCIAL STATEMENTS                                               

Texas Regional Bancshares, Inc. and Subsidiary                                  
CONSOLIDATED BALANCE SHEETS (UNAUDITED)                                         

                                                        [Enlarge/Download Table]

                                                                   September 30,      December 31, 
                                                                --------------------  -------------
(Dollars in Thousands)                                            1995       1994         1994     
                                                                                                   
---------------------------------------------------------------------------------------------------
Assets                                                                                             
  Cash and Due From Banks                                       $  26,356  $  25,488    $  40,477  
  Federal Funds Sold                                                9,300     14,500        1,300  
---------------------------------------------------------------------------------------------------
    Total Cash and Cash Equivalents                                35,656     39,988       41,777  
  Securities Available for Sale                                    82,259     72,163       54,814  
  Securities Held to Maturity (Estimated Market Value of                                           
   $78,043 and $61,334 at September 30, 1995 and 1994,                                             
   respectively, and $69,626 at December 31, 1994)                 77,800     62,662       72,014  
  Loans, Net of Unearned Discount of $1,293 and $793 at                                            
   September 30, 1995 and 1994, respectively and $774 at                                           
   December 31, 1994                                              394,607    314,946      339,939  
  Less Allowance for Loan Losses                                   (4,121)    (3,771)      (3,511) 
---------------------------------------------------------------------------------------------------
    Net Loans                                                     390,486    311,175      336,428  
  Premises and Equipment, Net                                      17,400     15,479       15,268  
  Accrued Interest Receivable                                       6,444      4,637        4,538  
  Other Real Estate                                                 1,413      2,382        2,342  
  Intangibles                                                       5,674      2,038        1,909  
  Other Assets                                                      2,155      2,499        2,744  
---------------------------------------------------------------------------------------------------
    Total Assets                                                $ 619,287  $ 513,023    $ 531,834  
---------------------------------------------------------------------------------------------------
Liabilities                                                                                        
  Deposits                                                                                         
    Demand                                                      $ 108,140  $  95,058    $  99,643  
    Savings                                                        36,924     29,598       28,689  
    Money Market Checking and Savings                             127,782    131,842      140,750  
    Time Deposits                                                 280,856    197,766      203,026  
---------------------------------------------------------------------------------------------------
      Total Deposits                                              553,702    454,264      472,108  
  Federal Funds Purchased and Securities Sold Under Repurchase                                     
   Agreements (Note 4)                                                750        895        1,149  
  Short-Term Borrowings                                                --        429          429  
  Accounts Payable and Accrued Liabilities                          4,091      3,283        2,417  
---------------------------------------------------------------------------------------------------
    Total Liabilities                                             558,543    458,871      476,103  
---------------------------------------------------------------------------------------------------
Commitment and Contingencies (Notes 8 and 9)                                                       
Shareholders' Equity                                                                               
  Preferred Stock; Cumulative $1.00 par value, $100                                                
   Liquidation Value, 10,000,000 Shares Authorized; None                                           
   Issued and Outstanding                                                                          
   (Note 6)                                                            --         --           --  
  Common Stock -- Class A; $1.00 par value, 20,000,000 Shares                                      
   Authorized; Issued and Outstanding, 6,193,629 (Notes 2 and                                      
   7)                                                               6,193      6,193        6,193  
  Paid-In Capital                                                  29,204     29,204       29,204  
  Retained Earnings                                                25,368     19,135       20,921  
  Unrealized Loss on Securities Available for Sale                    (21)      (380)        (587) 
---------------------------------------------------------------------------------------------------
    Total Shareholders' Equity                                     60,744     54,152       55,731  
---------------------------------------------------------------------------------------------------
    Total Liabilities and Shareholders' Equity                  $ 619,287  $ 513,023    $ 531,834  
---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements.              

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Texas Regional Bancshares, Inc. and Subsidiary                                  
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                                   

                                                        [Enlarge/Download Table]

                                                                 Three Months Ended    Nine Months Ended  
                                                                   September 30,         September 30,    
                                                                --------------------  --------------------
(Dollars in Thousands, Except Per Share Data)                     1995       1994       1995       1994   
                                                                                                          
----------------------------------------------------------------------------------------------------------
Interest Income                                                                                           
  Loans, Including Fees                                         $   9,452  $   7,126  $  26,807  $  20,298
  Investment Securities                                                                                   
    Taxable                                                         1,837      1,503      4,945      4,211
    Tax-Exempt                                                         70         55        215        178
  Federal Funds Sold                                                  510        195        926        349
----------------------------------------------------------------------------------------------------------
    Total Interest Income                                          11,869      8,879     32,893     25,036
----------------------------------------------------------------------------------------------------------
Interest Expense                                                                                          
  Deposits                                                          4,846      3,007     12,827      8,298
  Federal Funds Purchased and Securities Sold Under Repurchase                                            
   Agreements                                                          11          2         38         12
  Short-Term Borrowing                                                 --          8         16         24
  Note Payable                                                         --         --         --         16
----------------------------------------------------------------------------------------------------------
    Total Interest Expense                                          4,857      3,017     12,881      8,350
----------------------------------------------------------------------------------------------------------
Net Interest Income                                                 7,012      5,862     20,012     16,686
Provision for Loan Losses                                             372        220      1,060        630
----------------------------------------------------------------------------------------------------------
    Net Interest Income After Provision for Loan Losses             6,640      5,642     18,952     16,056
----------------------------------------------------------------------------------------------------------
Noninterest Income                                                                                        
  Service Charges on Deposit Accounts                                 899        791      2,517      2,251
  Other Service Charges                                               192        204        688        670
  Trust Service Fees                                                  314        277        917        866
  Investment Security Losses                                           --         --        (13)        --
  Data Processing Service Fees                                        112         65        270        187
  Other Operating Income                                              106         73        410        284
----------------------------------------------------------------------------------------------------------
    Total Noninterest Income                                        1,623      1,410      4,789      4,258
----------------------------------------------------------------------------------------------------------
Noninterest Expense                                                                                       
  Salaries and Employee Benefits                                    2,454      2,003      7,004      6,009
  Net Occupancy Expense                                               277        253        790        694
  Equipment Expense                                                   535        418      1,464      1,222
  Other Real Estate Expense, Net                                       60         29        152         60
  Other Noninterest Expense                                         1,368      1,318      4,532      4,735
----------------------------------------------------------------------------------------------------------
    Total Noninterest Expense                                       4,694      4,021     13,942     12,720
----------------------------------------------------------------------------------------------------------
Income Before Income Tax Expense                                    3,569      3,031      9,799      7,594
Income Tax Expense                                                  1,292      1,058      3,494      2,690
----------------------------------------------------------------------------------------------------------
Net Income                                                      $   2,277  $   1,973  $   6,305  $   4,904
----------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share (Note 2)                                                                
  Net Income                                                    $    0.37  $    0.32  $    1.02  $    0.82
  Weighted Average Number of Common Shares Outstanding (In                                                
   Thousands)                                                       6,223      6,221      6,209      5,654
----------------------------------------------------------------------------------------------------------
Fully Diluted Earnings Per Common Share (Note 2)                                                          
  Net Income                                                    $    0.36  $    0.32  $    1.01  $    0.79
  Weighted Average Number of Common Shares Outstanding (In                                                
   Thousands)                                                       6,242      6,221      6,220      5,979
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements.                     

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EX-19 8th Page of 28 TOC 1st Previous Next ↓Bottom Just 8th
Texas Regional Bancshares, Inc. and Subsidiary                                  
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)          
For the Year Ended December 31, 1994                                            
And the Nine Months Ended September 30, 1995                                    

                                                        [Enlarge/Download Table]

                                                                                   Unrealized                 
                                               Class A                             Gain (Loss)                
                               Convertible     Voting                             on Securities      Total    
                                Preferred      Common      Paid-In    Retained      Available    Shareholders'
(Dollars in Thousands)            Stock         Stock      Capital    Earnings      for Sale        Equity    
                                                                                                              
--------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993      $      74     $   4,186   $  20,063   $  15,481     $     179      $  39,983  
Conversion of 74,172 shares                                                                                   
 of Preferred Stock Into                                                                                      
 979,009 shares of Class A                                                                                    
 Voting Common Stock                  (74)          979        (905)         --            --             --  
Redemption of 356 shares of                                                                                   
 Preferred Stock at $104.00                                                                                   
 per share                             --            --         (36)         (1)           --            (37) 
Change in Unrealized Gain                                                                                     
 (Loss) on Securities                                                                                         
 Available for Sale                    --            --          --          --          (766)          (766) 
Sale of 1,028,291 shares of                                                                                   
 Class A Voting Common Stock           --         1,028      10,082          --            --         11,110  
Preferred Stock Dividends              --            --          --        (258)           --           (258) 
Class A Voting Common Stock                                                                                   
 Cash Dividends                        --            --          --      (1,486)           --         (1,486) 
Net Income for the Year                                                                                       
 Ended December 31, 1994               --            --          --       7,185            --          7,185  
--------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994             --         6,193      29,204      20,921          (587)        55,731  
Change in Unrealized Gain                                                                                     
 (Loss) on Securities                                                                                         
 Available for Sale                    --            --          --          --           566            566  
Class A Voting Common Stock                                                                                   
 Cash Dividends                        --            --          --      (1,858)           --         (1,858) 
Net Income for the Nine                                                                                       
 Months Ended September 30,                                                                                   
 1995                                  --            --          --       6,305            --          6,305  
--------------------------------------------------------------------------------------------------------------
Balance, September 30, 1995     $      --     $   6,193   $  29,204   $  25,368     $     (21)     $  60,744  
--------------------------------------------------------------------------------------------------------------

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

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Texas Regional Bancshares, Inc. and Subsidiary                                  
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                               
For the Nine Months Ended September 30, 1995 and 1994                           

                                                        [Enlarge/Download Table]

(Dollars in Thousands)                                                                     1995       1994    
                                                                                                              
------------------------------------------------------------------------------------------------------------- 
Cash Flows from Operating Activities                                                                          
  Net Income                                                                             $   6,305  $   4,904 
  Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities                            
    Depreciation, Amortization and Accretion, Net                                            1,480      1,613 
    Provision for Loan Losses                                                                1,060        630 
    Provision for Estimated Losses on Other Real Estate and Other Assets                       119         45 
    Net Loss on Sale of Other Real Estate                                                       73         21 
    Loss on Sale of Securities Available for Sale                                               13         -- 
    (Gain) Loss of Sale of Fixed Assets                                                         (1)         8 
    Gain on Sale of Other Assets                                                                (2)        -- 
    Increase in Accrued Interest Receivable and Other Assets                                (4,917)    (1,296)
    Increase in Accounts Payable and Accrued Liabilities                                     1,258      1,451 
------------------------------------------------------------------------------------------------------------- 
Net Cash Provided by Operating Activities                                                    5,388      7,376 
------------------------------------------------------------------------------------------------------------- 
Cash Flows from Investing Activities                                                                          
  Proceeds from Sales of Securities Available for Sale                                       8,957      2,498 
  Proceeds from Maturing Securities Held to Maturity                                         9,460        872 
  Proceeds from Maturing Securities Available for Sale                                      28,000     27,600 
  Purchases of Securities Held to Maturity                                                 (15,622)   (21,861)
  Purchases of Securities Available for Sale                                               (63,506)   (17,882)
  Proceeds from Sale of Loans                                                                   --      1,119 
  Purchases of Loans                                                                       (44,474)    (1,778)
  Loan Origination and Advances                                                            (11,459)   (25,108)
  Recoveries of Charged-Off Loans                                                              478        145 
  Proceeds from Sale of Other Assets                                                            14        107 
  Proceeds from Sale of Other Real Estate                                                      994        883 
  Proceeds from Sale of Fixed Assets                                                             2         -- 
  Purchases of Premises and Equipment                                                       (3,385)    (1,709)
------------------------------------------------------------------------------------------------------------- 
Net Cash Used in Investing Activities                                                      (90,541)   (35,114)
------------------------------------------------------------------------------------------------------------- 
Cash Flows from Financing Activities                                                                          
  Net Increase in Demand Deposits, Money Market Checking and Savings Accounts                3,764      5,016 
  Net Increase in Time Deposits                                                             77,830     19,727 
  Proceeds from Sale of Common Stock                                                            --     11,110 
  Net Increase (Decrease) in Securities Sold Under Repurchase Agreements                      (399)       895 
  Net Decrease in Short-Term Borrowings                                                       (429)       (60)
  Repayment of Note Payable                                                                     --     (1,150)
  Cash Dividends Paid on Preferred Stock                                                        --       (258)
  Redemption of Preferred Stock (Note 6)                                                        --        (37)
  Cash Dividends Paid on Class A Voting Common Stock (Note 7)                               (1,734)      (991)
------------------------------------------------------------------------------------------------------------- 
Net Cash Provided by Financing Activities                                                   79,032     34,252 
------------------------------------------------------------------------------------------------------------- 
Increase (Decrease) in Cash and Cash Equivalents                                            (6,121)     6,514 
Cash and Cash Equivalents at Beginning of Year                                              41,777     33,474 
------------------------------------------------------------------------------------------------------------- 
Cash and Cash Equivalents at End of Quarter                                              $  35,656  $  39,988 
------------------------------------------------------------------------------------------------------------- 
Supplemental Disclosures of Cash Flow Information                                                             
  Interest Paid                                                                          $  12,157  $   8,276 
  Income Taxes Paid                                                                          3,063      2,436 
Supplemental Schedule of Noncash Investing and Financing Activities                                           
  Foreclosure and Repossession in Partial Satisfaction of Loans Receivable                     337        882 
Loans Originated to facilitate Sale of Other Real Estate                                       N/A        N/A 
------------------------------------------------------------------------------------------------------------- 
The accompanying notes are an integral part of the consolidated financial statements.                         

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Texas Regional Bancshares, Inc. and Subsidiary                                  
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS                            

NOTE 1 -- BASIS OF PRESENTATION                                                 

The  accompanying unaudited consolidated financial information has been prepared
in accordance with the instructions to Form 10-Q and therefore does not  include
all  information and  footnotes necessary for  a fair  presentation of financial
position, results  of operations  and cash  flows in  conformity with  generally
accepted  accounting principles. However, the information furnished reflects all
adjustments which  are, in  the  opinion of  management,  necessary for  a  fair
presentation  of the results for the  interim periods. All such adjustments were
of a  normal  and  recurring  nature.  The  consolidated  financial  information
includes  Texas Regional  Bancshares, Inc.  and its  subsidiary (the "Company").
Intercompany balances and transactions have been eliminated.                    

NOTE 2 -- EARNINGS PER SHARE COMPUTATIONS                                       

Primary earnings per  share is computed  by dividing net  income less  preferred
stock dividends, by the weighted average number of common stock and common stock
equivalents outstanding during the period.                                      

NOTE 3 -- IMPACT OF NEW ACCOUNTING STANDARDS                                    

Effective January 1, 1995, the Company adopted Statement of Financial Accounting
Standards  ("SFAS") No. 114, "Accounting by  Creditors for Impairment of a Loan"
and the amendment thereof, SFAS No. 118, "Accounting by Creditors for Impairment
of a Loan-Income  Recognition and Disclosures".  Under SFAS No.  114, a loan  is
considered  impaired  when, based  upon current  information  and events,  it is
probable that a creditor will be unable to collect all amounts due according  to
the  contractual terms  of the  loan agreement.  SFAS No.  114 requires  that an
impaired loan be valued utilizing (i) the present value of expected future  cash
flows discounted at the effective interest rate of the loan, (ii) the fair value
of  the underlying collateral, or iii) the  observable market price of the loan.
SFAS  No.  118  amended  SFAS  No.  114  by  expanding  the  related  disclosure
requirements  and permitting  use of  existing methods  for recognizing interest
income on impaired loans.                                                       

Loans which were  restructured prior to  the adoption of  Statement No. 114  and
which  are performing in accordance with the renegotiated terms are not required
to be reported  as impaired. Loans  restructured subsequent to  the adoption  of
Statement  No.  114 are  required  to be  reported as  impaired  in the  year of
restructuring. Thereafter,  such loans  can be  removed from  the impaired  loan
disclosure  if the loans  were paying a market  rate of interest  at the time of
restructuring and are performing in accordance with their renegotiated terms.   

For loans  covered  by this  statement,  the  Company makes  an  assessment  for
impairment when and while such loans are on nonaccrual or when the loan has been
restructured.  When a loan with unique  risk characteristics has been identified
as being impaired,  the amount  of impairment will  be measured  by the  Company
using  discounted  cash  flows,  except  when it  is  determined  that  the sole
(remaining) source of repayment for the loan is the operation or liquidation  of
the  underlying  collateral.  In  such  case,  the  current  fair  value  of the
collateral, reduced by costs to sell, will  be used in place of discounted  cash
flows.  At the time a  loan is placed on  nonaccrual status, interest previously
recognized but  uncollected  is reversed  and  charged against  current  income.
Subsequent  interest payments  received on  nonaccrual loans  are either applied
against principal or reported as income, depending upon management's  assessment
of the ultimate collectability of principal.                                    

In  management's opinion, the adoption of SFAS No.  114 and SFAS No. 118 has not
had, and is not anticipated to have, a material effect on the Company's  results
of operations.                                                                  

At  September  30,  1995, the  Company  had  a $715,000  recorded  investment in
impaired loans  for which  there was  a  related allowance  for loan  losses  of
$29,000. At September 30, 1995, there were no impaired loans for which there was
no related allowance for loan losses. The average level of impaired loans during
the  nine months  ended September  30, 1995  was $718,000.  The Company recorded
interest income of $19,000  on its impaired loans  during the nine months  ended
September 30, 1995.                                                             

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EX-19 11th Page of 28 TOC 1st Previous Next ↓Bottom Just 11th
NOTE 4 -- SECURITIES SOLD UNDER REPURCHASE AGREEMENTS                           

Securities sold under agreements to repurchase are comprised of customer deposit
agreements   with  maturities  ranging  from  overnight  to  six  months.  These
obligations are  not federally  insured, but  are collateralized  by a  security
interest in various investment securities. The pledged securities are segregated
and maintained by a third party bank.                                           

NOTE 5 -- INCOME TAX                                                            

Deferred  income tax assets and liabilities are computed for differences between
the financial statements and the tax  basis of assets and liabilities that  have
future  tax consequences  using the  currently enacted  tax laws  and rates that
apply to  the periods  in which  they  are expected  to effect  taxable  income.
Valuation  allowances are established, if necessary,  to reduce the deferred tax
assets to the  amount that will  more likely  than not be  realized. Income  tax
expense  is the current tax  payable or refundable for  the period plus or minus
the net change in the deferred tax assets and liabilities.                      

NOTE 6 -- PREFERRED STOCK                                                       

On March  21, 1994,  the Board  of Directors  adopted a  resolution calling  for
redemption  on April  22, 1994, of  all issued and  outstanding Preferred Stock,
including the Company's  First Series Convertible  Preferred Stock, Series  1990
Convertible  Preferred Stock and Series 1991 Convertible Preferred Stock (herein
collectively called the  "Preferred Stock") at  a redemption price  of $104  per
share  plus  all  accrued  and  unpaid  dividends  through  the  date  fixed for
redemption. The Preferred  Stock was  convertible into  13.2 shares  of Class  A
Voting  Common Stock for each share of Preferred Stock held. Effective April 22,
1994, 356 shares of Preferred Stock were redeemed and 74,172 shares of Preferred
Stock were converted into 979,009 shares of Class A Voting Common Stock.        

On February 14,  1995, the  Board of Directors  of the  Corporation approved  an
amendment  to the  Articles of Incorporation  to eliminate the  series of shares
known as the  First Preferred,  the Series 1990  Preferred and  the Series  1991
Preferred shares of the Corporation, and further provided for the elimination of
all  references thereto from the  Articles of Incorporation. As  a result of the
elimination of  the series  of Preferred  shares, the  shares resume  status  as
authorized  but unissued shares of  Preferred Stock for which  the Board has the
authority to determine the  designations, preferences, limitations and  relative
rights.                                                                         

NOTE 7 -- COMMON STOCK                                                          

On  March 16,  1994, the  Company completed its  public offering  of 1.2 million
shares of the Company's  Class A Voting  Common Stock and  began trading in  the
Nasdaq  National Market,  under the  trading symbol  of "TRBS."  The Company had
granted the Underwriters a  30-day option to purchase  up to 180,000  additional
shares  of Class A Voting Common Stock  solely to cover over-allotments, if any.
On April 15, 1994, the Underwriters exercised their option and purchased  28,291
additional shares of Class A Voting Common Stock.                               

On  September 12, 1995, the  Board of Directors approved  a $0.10 per share cash
dividend for shareholders of  record on October 2,  1995 and payable on  October
12, 1995.                                                                       

NOTE 8 -- EMPLOYEE BENEFITS                                                     

In   1984,  the  Company   adopted  a  target   benefit  pension  plan  covering
substantially all of its employees. In  December 1990, the Company restated  its
target  benefit pension plan  as an Employee Stock  Ownership Plan (with section
401(k) provisions) (the "KSOP"). The Company received a favorable  determination
letter, in which the Internal Revenue Service stated that the plan, as designed,
was in compliance with the applicable requirements of the Internal Revenue Code.
Employer  contributions to the KSOP are determined at the sole discretion of the
Board of Directors.                                                             

In March 1986,  the shareholders of  the Company approved  three separate  stock
plans  involving the Class A Voting Common  Stock, providing for the issuance of
up to 253,434  shares to  certain key employees  for their  purchase and  10,000
shares  as part of a  bonus plan for employees of  the Company. One option plan,
the Texas  Regional  Bancshares,  Inc. 1985  Non-Statutory  Stock  Option  Plan,
provides  for the sale of up to 126,717 shares to the chief executive officer at
a price to  be determined  by a  committee of directors  on the  date of  grant;
another,  the  Texas  Regional  Bancshares, Inc.  Incentive  Stock  Option Plan,
provides for the sale of up to 126,717  shares at fair market value at the  date
the  options  are granted,  to  key employees  of  the Company.  The  third plan
provides for up to 10,000 shares to be distributed as employee bonuses,  without
payment of consideration by the employees.                                      

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EX-19 12th Page of 28 TOC 1st Previous Next ↓Bottom Just 12th
On  May 10, 1994, options to acquire up  to 126,717 Class A Voting Common shares
at $12.00  per share  were granted  to Glen  E. Roney,  Chairman of  the  Board,
President  & Chief Executive Officer pursuant  to the Texas Regional Bancshares,
Inc. 1985 Non-Statutory Stock Option Plan exercisable commencing May 10, 1995.  

In addition, options to  acquire up to  49,433 Class A  Voting Common shares  at
$12.00  per share were granted to certain  key employees of the Company pursuant
to the Texas Regional Bancshares,  Inc. Incentive Stock Option Plan  exercisable
commencing  May 10,  1995 including options  to acquire 8,333  shares granted to
Glen E. Roney. The  Incentive Stock Option Plan  expired in September 1995.  Any
options  outstanding under this Plan, at the  time of its termination, remain in
effect until the options shall have been exercised or the expiration date of the
option, whichever  is earlier.  The options  to acquire  49,433 Class  A  Voting
Common Stock were awarded May 10, 1994, and expire on May 10, 2000.             

NOTE 9 -- ACQUISITION ACTIVITY                                                  

During August 1995, Texas State Bank, a subsidiary of Texas Regional Bancshares,
Inc., acquired two branch bank locations, one in Rio Grande City, Texas, and the
other  in Roma, Texas. The transaction included the purchase of $43.7 million in
loans and the assumption of  approximately $79.7 million in deposit  liabilities
of  these branches. Investment securities were not acquired. Purchase accounting
adjustments for the purchase of loans and the assumption of deposit  liabilities
of  these  branches were  immaterial. This  transaction was  accounted for  as a
purchase.                                                                       

The following Unaudited Pro  Forma Combined Condensed  Statements of Income  for
the  twelve months ended December 31, 1994,  and nine months ended September 30,
1995, assumes the acquisition occurred January 1, 1994. Intangibles arising from
acquisition  totaled  $3.9  million.  The  pro  forma  adjustments  reflect  the
amortization  of the  intangibles over  a 15-year  period, the  reduced interest
income on the $4.25 million purchase price at Texas Regional Bancshares,  Inc.'s
average federal funds sold rate of 4.52% for the twelve months ended at December
31, 1994, and 5.93% for the nine months ended at September 30, 1995, and the tax
effect of the prior two transactions using an effective tax rate of 34%. The pro
forma  results do not  necessarily represent the actual  results that would have
occurred  and  should  not  be  considered  indicative  of  future  results   of
operations.                                                                     

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                                                        [Enlarge/Download Table]

Pro Forma Combined Condensed                                                                          
Statements of Income                                                                                  
For the Twelve Months Ended                                                                           
December 31, 1994 (Unaudited)                   Texas Regional                                        
(Dollars in Thousands,                            Bancshares,                  Pro Forma    Pro Forma 
Except Per Share Data)                               Inc.         Branches    Adjustments    Balance  
                                                                                                      
------------------------------------------------------------------------------------------------------
Interest Income                                                                                       
  Loans, Including Fees                            $  28,005      $   4,985    $      --    $  32,990 
  Investment Securities                                6,107          1,290         (192)       7,205 
  Federal Funds Sold                                     519            154           --          673 
------------------------------------------------------------------------------------------------------
    Total Interest Income                             34,631          6,429         (192)      40,868 
------------------------------------------------------------------------------------------------------
Interest Expense                                                                                      
  Deposits                                            11,619          2,243           --       13,862 
  Borrowings                                              71              1           --           72 
------------------------------------------------------------------------------------------------------
    Total Interest Expense                            11,690          2,244           --       13,934 
------------------------------------------------------------------------------------------------------
Net Interest Income                                   22,941          4,185         (192)      26,934 
Provision for Loan Losses                              1,085            218           --        1,303 
------------------------------------------------------------------------------------------------------
    Net Interest Income After Provision for                                                           
     Loan Losses                                      21,856          3,967         (192)      25,631 
------------------------------------------------------------------------------------------------------
Noninterest Income                                                                                    
  Service Charges on Deposit Accounts                  3,035            555           --        3,590 
  Other Service Charges                                  904            151           --        1,055 
  Trust Service Fees                                   1,161              0           --        1,161 
  Other Operating Income                                 672            (39)          --          633 
------------------------------------------------------------------------------------------------------
    Total Noninterest Income                           5,772            667           --        6,439 
------------------------------------------------------------------------------------------------------
Noninterest Expense                                                                                   
  Salaries and Employee Benefits                       8,015          1,929           --        9,944 
  Net Occupancy Expense                                  961            191           --        1,152 
  Equipment Expense                                    1,648            310           --        1,958 
  Other Noninterest Expense                            5,883          1,579          259        7,721 
------------------------------------------------------------------------------------------------------
    Total Noninterest Expense                         16,507          4,009          259       20,775 
------------------------------------------------------------------------------------------------------
Income Before Income Tax Expense                      11,121            625         (451)      11,295 
Income Tax Expense                                     3,936            198         (153)       3,981 
------------------------------------------------------------------------------------------------------
Net Income                                         $   7,185      $     427    $    (298)   $   7,314 
------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share                                                                     
  Net Income                                       $    1.19                                $    1.21 
  Weighted Average Number of Common Shares                                                            
   Outstanding (In Thousands)                          5,791                                    5,791 
------------------------------------------------------------------------------------------------------
Fully Diluted Earnings Per Common Share                                                               
  Net Income                                       $    1.16                                $    1.18 
  Weighted Average Number of Common Shares                                                            
   Outstanding (In Thousands)                          6,035                                    6,035 
------------------------------------------------------------------------------------------------------

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                                                        [Enlarge/Download Table]

Pro Forma Combined Condensed                                                                            
Statements of Income                                                                                    
For the Nine Months Ended                                                                               
September 30, 1995 (Unaudited)                  Texas Regional                                          
(Dollars in Thousands,                            Bancshares,                   Pro Forma     Pro Forma 
Except Per Share Data)                               Inc.         Branches     Adjustments     Balance  
                                                                                                        
--------------------------------------------------------------------------------------------------------
Interest Income                                                                                         
  Loans, Including Fees                            $  26,216      $   3,559     $      --     $  29,775 
  Investment Securities                                5,160             --            --         5,160 
  Federal Funds Sold                                     719          1,399          (177)        1,941 
--------------------------------------------------------------------------------------------------------
    Total Interest Income                             32,095          4,958          (177)       36,876 
--------------------------------------------------------------------------------------------------------
Interest Expense                                                                                        
  Deposits                                            12,456          2,177            --        14,633 
  Borrowings                                              54             --            --            54 
--------------------------------------------------------------------------------------------------------
    Total Interest Expense                            12,510          2,177            --        14,687 
--------------------------------------------------------------------------------------------------------
Net Interest Income                                   19,585          2,781          (177)       22,189 
Provision for Loan Losses                              1,054              6            --         1,060 
--------------------------------------------------------------------------------------------------------
    Net Interest Income After Provision for                                                             
     Loan Losses                                      18,531          2,775          (177)       21,129 
--------------------------------------------------------------------------------------------------------
Noninterest Income                                                                                      
  Service Charges on Deposit Accounts                  2,472            354            --         2,826 
  Other Service Charges                                  678             73            --           751 
  Trust Service Fees                                     917             --            --           917 
  Other Operating Income                                 664             39            --           703 
--------------------------------------------------------------------------------------------------------
    Total Noninterest Income                           4,731            466            --         5,197 
--------------------------------------------------------------------------------------------------------
Noninterest Expense                                                                                     
  Salaries and Employee Benefits                       6,903          1,119            --         8,022 
  Net Occupancy Expense                                  770            137            --           907 
  Equipment Expense                                    1,430            182            --         1,612 
  Other Noninterest Expense                            4,383            980           195         5,558 
--------------------------------------------------------------------------------------------------------
    Total Noninterest Expense                         13,486          2,418           195        16,099 
--------------------------------------------------------------------------------------------------------
Income Before Income Tax Expense                       9,776            823          (372)       10,227 
Income Tax Expense                                     3,486            280          (126)        3,640 
--------------------------------------------------------------------------------------------------------
Net Income                                         $   6,290      $     543     $    (246)    $   6,587 
--------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share                                                                       
  Net Income                                       $    1.01                                  $    1.06 
  Weighted Average Number of Common Shares                                                              
   Outstanding (In Thousands)                          6,209                                      6,209 
--------------------------------------------------------------------------------------------------------
Fully Diluted Earnings Per Common Share                                                                 
  Net Income                                       $    1.01                                  $    1.06 
  Weighted Average Number of Common Shares                                                              
   Outstanding (In Thousands)                          6,220                                      6,220 
--------------------------------------------------------------------------------------------------------

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      
OPERATIONS                                                                      

Net  income for the  three months ended  September 30, 1995  was $2.3 million or
$0.36 per  share, reflecting  a net  increase  of $304,000  or $0.04  per  share
compared  to net income of $2.0 million or  $0.32 per share for the three months
ended September 30,  1994. Net income  for the nine  months ended September  30,
1995  was $6.3  million or $1.01  per share,  reflecting a net  increase of $1.4
million or $0.22 per share compared to  net income of $4.9 million or $0.79  per
share for the nine months ended September 30, 1994. Earnings performance for the
three  months  ended  September 30,  1995  compared  to the  three  months ended
September  30,  1994  reflected  an  improvement  in  net  interest  income  and
noninterest  income, partially offset by an  increase in noninterest expense and
provision for  loan  losses. Earnings  performance  for the  nine  months  ended
September 30, 1995 compared to nine months ended September 30, 1994 reflected an
increase in net interest income and noninterest income reduced by an increase in
noninterest  expense and provision for loan  losses. A more detailed description
of the results of operations is included in the presentation that follows.      

During August 1995, Texas State Bank, a subsidiary of Texas Regional Bancshares,
Inc., acquired two branch bank locations, one in Rio Grande City, Texas, and the
other in Roma, Texas (the "Acquisition"). The Acquisition included the  purchase
of  $43.7 million in loans and the  assumption of approximately $79.7 million in
deposit liabilities of these branches. This  transaction was accounted for as  a
purchase;  therefore, the results of operations of the two branches are included
in the consolidated financial statements from the date of acquisition.          

The following  table  presents  selected financial  data  regarding  results  of
operations:                                                                     

                                                        [Enlarge/Download Table]

Condensed Statements of Income                 1995                           1994             Nine Months Ended  
Taxable-Equivalent Basis         ---------------------------------  ------------------------     September 30,    
(Dollars in Thousands, Except       THIRD      Second      First      Fourth        Third     --------------------
Per Share Data)                    QUARTER     Quarter    Quarter     Quarter      Quarter      1995       1994   
                                                                                                                  
------------------------------------------------------------------------------------------------------------------
Interest Income                   $  11,904   $  10,880  $  10,218   $   9,629    $   8,908   $  33,002  $  25,126
Interest Expense                      4,857       4,295      3,729       3,340        3,017      12,881      8,350
------------------------------------------------------------------------------------------------------------------
Net Interest Income                   7,047       6,585      6,489       6,289        5,891      20,121     16,776
Provision for Loan Losses               372         322        366         455          220       1,060        630
------------------------------------------------------------------------------------------------------------------
Net Interest Income After                                                                                         
 Provision for Loan Losses            6,675       6,263      6,123       5,834        5,671      19,061     16,146
Noninterest Income                    1,623       1,576      1,590       1,514        1,410       4,789      4,258
Noninterest Expense                   4,694       4,654      4,594       3,787        4,021      13,942     12,720
------------------------------------------------------------------------------------------------------------------
Income Before                                                                                                     
 Taxable-Equivalent Adjustment                                                                                    
 and Income Tax                       3,604       3,185      3,119       3,561        3,060       9,908      7,684
Taxable-Equivalent Adjustment            35          35         39          34           29         109         90
Applicable Income Tax Expense         1,292       1,109      1,093       1,246        1,058       3,494      2,690
------------------------------------------------------------------------------------------------------------------
Net Income                        $   2,277   $   2,041  $   1,987   $   2,281    $   1,973   $   6,305  $   4,904
------------------------------------------------------------------------------------------------------------------
Net Income Per Common Share                                                                                       
  Primary                         $    0.37   $    0.33  $    0.32   $    0.37    $    0.32   $    1.02  $    0.82
  Fully Diluted                        0.36        0.33       0.32        0.37         0.32        1.01       0.79
------------------------------------------------------------------------------------------------------------------

NET INTEREST INCOME                                                             

Taxable-equivalent  net interest  income was $7.0  million for  the three months
ended September 30, 1995, an increase of  $1.2 million or 19.6% compared to  the
three  months ended September 30, 1994 of $5.9 million. The interest rate margin
of 5.15%  for  the three  months  ended September  30,  1995 reflects  a  slight
increase  of  two basis  points compared  to  5.13% for  the three  months ended
September 30, 1994.  The increase in  net interest income  for the three  months
ended  September 30, 1995 compared to the  three months ended September 30, 1994
was primarily attributable to the increase in the base lending rates and  volume
of  interest-earning assets exceeding the increase in base deposit rates and the

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increase in volume of interest-bearing liabilities. The increase in net interest
income for the  nine months  ended September 30,  1995 compared  to nine  months
ended  September 30, 1994 was also primarily attributable to the increase in the
base lending rates and the change in the mix of interest-earning assets.        

The average loan balance for the nine months ended September 30, 1995 of  $356.1
million  increased $51.4 million  or 16.9% compared to  the average loan balance
for the  nine months  ended September  30,  1994. The  increase in  the  average
balance of loans outstanding improved earnings.                                 

The following tables present for the three months ended September 30, 1995, June
30,  1995 and September 30,  1994 and the nine  months ended September 30, 1995,
and September 30, 1994, the total dollar amount of interest income from  average
interest-earning  assets and the resultant  yields, reported on a tax-equivalent
basis, as well as  the interest-bearing liabilities,  expressed both in  dollars
and  rates. Average  balances are  derived from  average daily  balances and the
yields and costs are  established by dividing income  or expense by the  average
balance  of the asset or liability.  Income and yield on interest-earning assets
include amounts  to convert  tax-exempt income  to a  taxable-equivalent  basis,
assuming a 34% effective income tax rate.                                       

                                                        [Enlarge/Download Table]

                                                                   Three Months Ended                                    
Summary of Interest-Earning    ------------------------------------------------------------------------------------------
Assets and Interest-Bearing           September 30, 1995                    June 30, 1995             September 30, 1994 
Liabilities                    ---------------------------------  ---------------------------------  --------------------
Taxable-Equivalent Basis        AVERAGE                            Average                            Average            
(Dollars in Thousands)          BALANCE   Interest      Rate*      Balance   Interest      Rate*      Balance   Interest 
                                                                                                                         
-------------------------------------------------------------------------------------------------------------------------
Interest-Earning Assets                                                                                                  
  Loans                                                                                                                  
    Commercial                 $ 117,378  $   2,950        9.97%  $ 122,127  $   3,070       10.08%  $ 104,423  $   2,165
    Real Estate                  215,052      5,505       10.16     196,642      5,047       10.29     174,637      4,287
    Consumer                      40,081        997        9.87      32,696        794        9.74      29,156        674
-------------------------------------------------------------------------------------------------------------------------
      Total Loans                372,511      9,452       10.07     351,465      8,911       10.17     308,216      7,126
-------------------------------------------------------------------------------------------------------------------------
  Investment Securities                                                                                                  
    Taxable                      130,504      1,837        5.58     118,675      1,591        5.38     126,900      1,503
    Tax-Exempt                     4,797        105        8.68       4,919        106        8.64       3,717         84
-------------------------------------------------------------------------------------------------------------------------
      Total Investment                                                                                                   
       Securities                135,301      1,942        5.69     123,594      1,697        5.51     130,617      1,587
-------------------------------------------------------------------------------------------------------------------------
Federal Funds Sold                34,971        510        5.79      17,821        272        6.12      16,969        195
-------------------------------------------------------------------------------------------------------------------------
      Total Interest-Earning                                                                                             
       Assets                  $ 542,783  $  11,904        8.70%  $ 492,880  $  10,880        8.85%  $ 455,802  $   8,908
-------------------------------------------------------------------------------------------------------------------------
Interest-Bearing Liabilities                                                                                             
  Savings                      $  32,701  $     221        2.68%  $  27,364  $     181        2.65%  $  29,920  $     194
  Money Market Checking and                                                                                              
   Savings                       131,691        899        2.71     120,895        812        2.69     130,905        802
  Time Deposits                  263,407      3,727        5.61     235,609      3,280        5.58     196,932      2,011
-------------------------------------------------------------------------------------------------------------------------
      Total Savings and Time                                                                                             
       Deposits                  427,799      4,847        4.50     383,868      4,273        4.46     357,757      3,007
-------------------------------------------------------------------------------------------------------------------------
  Federal Funds Purchased and                                                                                            
   Securities Sold Under                                                                                                 
   Repurchase Agreements             997         10        3.98       1,228         14        4.57         314          2
  Short-Term Borrowings               75         --          --         429          8        7.48         431          8
-------------------------------------------------------------------------------------------------------------------------
      Total Interest-Bearing                                                                                             
       Liabilities             $ 428,871  $   4,857        4.49%  $ 385,525  $   4,295        4.47%  $ 358,502  $   3,017
-------------------------------------------------------------------------------------------------------------------------
Net Interest Income                       $   7,047                          $   6,585                          $   5,891
-------------------------------------------------------------------------------------------------------------------------
Net Yield on Total                                                                                                       
  Interest-Earning Assets                                  5.15%                              5.36%                      
-------------------------------------------------------------------------------------------------------------------------
* Annualized                                                                                                             


Assets and Interest-Bearing                                                                                              
Liabilities                                                                                                              
Taxable-Equivalent Basis                                                                                                 
(Dollars in Thousands)            Rate*                                                                                  
                                                                                                                         
-----------------------------                                                                                            
Interest-Earning Assets                                                                                                  
  Loans                                                                                                                  
    Commercial                       8.23%                                                                               
    Real Estate                      9.74                                                                                
    Consumer                         9.17                                                                                
-----------------------------                                                                                            
      Total Loans                    9.17                                                                                
-----------------------------                                                                                            
  Investment Securities                                                                                                  
    Taxable                          4.70                                                                                
    Tax-Exempt                       8.97                                                                                
-----------------------------                                                                                            
      Total Investment                                                                                                   
       Securities                    4.82                                                                                
-----------------------------                                                                                            
Federal Funds Sold                   4.56                                                                                
-----------------------------                                                                                            
      Total Interest-Earning                                                                                             
       Assets                        7.75%                                                                               
-----------------------------                                                                                            
Interest-Bearing Liabilities                                                                                             
  Savings                            2.57%                                                                               
  Money Market Checking and                                                                                              
   Savings                           2.43                                                                                
  Time Deposits                      4.05                                                                                
-----------------------------                                                                                            
      Total Savings and Time                                                                                             
       Deposits                      3.33                                                                                
-----------------------------                                                                                            
  Federal Funds Purchased and                                                                                            
   Securities Sold Under                                                                                                 
   Repurchase Agreements             2.53                                                                                
  Short-Term Borrowings              7.36                                                                                
-----------------------------                                                                                            
      Total Interest-Bearing                                                                                             
       Liabilities                   3.34%                                                                               
-----------------------------                                                                                            
Net Interest Income                                                                                                      
-----------------------------                                                                                            
Net Yield on Total                                                                                                       
  Interest-Earning Assets            5.13%                                                                               
-----------------------------                                                                                            
* Annualized                                                                                                             

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                                                        [Enlarge/Download Table]

                                                                          Nine Months Ended                          
                                                 --------------------------------------------------------------------
Summary of Interest-Earning Assets                      September 30, 1995                 September 30, 1994        
and Interest-Bearing Liabilities                 ---------------------------------  ---------------------------------
Taxable-Equivalent Basis                          AVERAGE                            Average                         
(Dollars in Thousands)                            BALANCE   Interest      Rate*      Balance   Interest      Rate*   
                                                                                                                     
---------------------------------------------------------------------------------------------------------------------
Interest-Earning Assets                                                                                              
  Loans                                                                                                              
    Commercial                                   $ 120,272  $   8,919        9.91%  $ 106,699  $   6,466        8.10%
    Real Estate                                    200,994     15,350       10.21     170,045     11,911        9.37 
    Consumer                                        34,819      2,538        9.75      27,984      1,921        9.18 
---------------------------------------------------------------------------------------------------------------------
      Total Loans                                  356,085     26,807       10.07     304,728     20,298        8.91 
---------------------------------------------------------------------------------------------------------------------
  Investment Securities                                                                                              
    Taxable                                        121,552      4,945        5.44     124,448      4,211        4.52 
    Tax-Exempt                                       4,913        324        8.82       3,977        268        9.01 
---------------------------------------------------------------------------------------------------------------------
      Total Investment Securities                  126,465      5,269        5.57     128,425      4,479        4.66 
---------------------------------------------------------------------------------------------------------------------
Federal Funds Sold                                  20,871        926        5.93      11,051        349        4.22 
---------------------------------------------------------------------------------------------------------------------
        Total Interest-Earning Assets            $ 503,421  $  33,002        8.76%  $ 444,204  $  25,126        7.56%
---------------------------------------------------------------------------------------------------------------------
Interest-Bearing Liabilities                                                                                         
  Savings                                        $  29,361  $     585        2.66%  $  29,952  $     567        2.53%
  Money Market Checking and Savings                127,991      2,585        2.70     131,733      2,311        2.35 
  Time Deposits                                    237,293      9,657        5.44     189,578      5,420        3.82 
---------------------------------------------------------------------------------------------------------------------
      Total Savings and Time Deposits              394,645     12,827        4.35     351,263      8,298        3.16 
---------------------------------------------------------------------------------------------------------------------
  Federal Funds Purchased and Securities                                                                             
    Sold Under Repurchase Agreements                 1,191         38        4.27         502         12        3.20 
  Short-Term Borrowings                                311         16        6.88         438         24        7.33 
  Note Payable                                          --         --          --         345         16        6.20 
---------------------------------------------------------------------------------------------------------------------
      Total Interest-Bearing Liabilities         $ 396,147  $  12,881        4.35%  $ 352,548  $   8,350        3.17%
---------------------------------------------------------------------------------------------------------------------
Net Interest Income                                         $  20,121                          $  16,776             
---------------------------------------------------------------------------------------------------------------------
Net Yield on Total                                                                                                   
  Interest-Earning Assets                                                    5.34%                              5.05%
---------------------------------------------------------------------------------------------------------------------
* Annualized                                                                                                         

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EX-19 18th Page of 28 TOC 1st Previous Next ↓Bottom Just 18th
The  following  table  presents  the  effects of  changes  in  volume,  rate and
rate/volume on  interest income  and interest  expense for  major categories  of
interest-earning  assets  and interest-bearing  liabilities  for the  nine month
period ended  September 30,  1995 as  compared to  the nine  month period  ended
September  30, 1994. Nonaccrual  loans are included  in assets, thereby reducing
yields. See "NONPERFORMING ASSETS". The  allocation of the rate/volume  variance
has  been made pro rata on the percentage that volume and rate variances produce
in each category.                                                               

                                                        [Enlarge/Download Table]

Analysis of Changes in Net Interest Income                                                                    
Taxable-Equivalent Basis                                                                                      
Nine Months Ended September 30,                                                    Due to Change in           
1995 Compared to 1994                                                    -------------------------------------
(Dollars in Thousands)                                      Net Change     Volume       Rate      Rate/Volume 
                                                                                                              
--------------------------------------------------------------------------------------------------------------
Interest Income                                                                                               
  Loans, Including Fees                                      $   6,509    $   3,423   $   2,644    $     442  
  Investment Securities                                                                                       
    Taxable                                                        734          (98)        856          (24) 
    Tax-Exempt                                                      56           63          (6)          (1) 
  Federal Funds Sold                                               577          310         141          126  
--------------------------------------------------------------------------------------------------------------
      Total Interest Income                                      7,876        3,698       3,635          543  
--------------------------------------------------------------------------------------------------------------
Interest Expense                                                                                              
  Deposits                                                       4,529        1,025       3,126          378  
  Federal Funds Purchased and Securities Sold Under                                                           
   Repurchase Agreements                                            26           16           4            6  
  Short-Term Borrowings                                             (8)          (7)         (1)          --  
  Note Payable                                                     (16)         (16)         --           --  
--------------------------------------------------------------------------------------------------------------
      Total Interest Expense                                     4,531        1,018       3,129          384  
--------------------------------------------------------------------------------------------------------------
Net Interest Income Before Allocation of Rate/Volume             3,345        2,680         506          159  
--------------------------------------------------------------------------------------------------------------
Allocation of Rate/Volume                                           --          234         (75)        (159) 
--------------------------------------------------------------------------------------------------------------
Changes in Net Interest Income                               $   3,345    $   2,914   $     431    $      --  
--------------------------------------------------------------------------------------------------------------

PROVISION FOR LOAN LOSSES                                                       

The provision for loan losses for the  three months ended September 30, 1995  of
$372,000  reflects an increase of $152,000 or 69.1% compared to $220,000 for the
three months ended  September 30, 1994.  The provision for  loan losses for  the
nine  months ended September  30, 1995 of  $1.1 million reflects  an increase of
$430,000 or 68.3% compared to $630,000  for the nine months ended September  30,
1994  and was primarily  attributable to charged-off loans  and new loan growth.
See "ALLOWANCE FOR LOAN LOSSES."                                                

In January 1995, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 114,  "Accounting by Creditors  for Impairment of  a Loan" and  the
amendment  thereof, SFAS No.  118, "Accounting by Creditors  for Impairment of a
Loan-Income Recognition and Disclosures". In management's opinion, the  adoption
of SFAS No. 114 and SFAS No. 118 is not anticipated to have a material effect on
the Company's results of operations.                                            

NONINTEREST INCOME                                                              

Noninterest income for the three months ended September 30, 1995 of $1.6 million
increased  $213,000 or 15.1% compared to $1.4 million for the three months ended
September 30, 1994. All categories  on noninterest income, except Other  Service
Charges,  for the three months ended September 30, 1995 reflect increased income
when compared to the three months ended September 30, 1994. The decline in Other
Service Charges  is primarily  attributable  to a  decline in  foreign  currency
exchange  fees. The recent events in Mexico, primarily the peso devaluation, has
resulted in a lower volume and spread on peso exchange fee activity. Noninterest
income for the nine  months ended September 30,  1995 of $4.8 million  increased
$531,000  or 12.5% compared to $4.3 million  for the nine months ended September
30, 1994. All  categories of  noninterest income,  except Investment  Securities
Gains  (Losses), for the nine months  ended September 30, 1995 reflect increased
income compared to  the nine months  ended September 30,  1994. The increase  in
Service Charges on Deposit Accounts and Other Service Charges were both impacted
by an increase in activity levels and                                           

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EX-19 19th Page of 28 TOC 1st Previous Next ↓Bottom Just 19th
additional  volume. Trust  Service Fees  of $917,000  for the  nine months ended
September 30, 1995 reflect a  net increase of $51,000  or 5.9% when compared  to
$866,000  for the nine  months ended September  30, 1994. The  increase in Trust
Service Fees is attributable to increases  in both the number of trust  accounts
and the book value of assets managed.                                           

The following table summarizes the major noninterest income categories:         

                                                        [Enlarge/Download Table]

                                                    1995                             1994             Nine Months Ended  
                                    -------------------------------------  ------------------------     September 30,    
Noninterest Income                     THIRD       Second        First       Fourth        Third     --------------------
(Dollars in Thousands)                QUARTER      Quarter      Quarter      Quarter      Quarter      1995       1994   
                                                                                                                         
-------------------------------------------------------------------------------------------------------------------------
Service Charges on Deposit                                                                                               
 Accounts                            $     899    $     837    $     781    $     784    $     791   $   2,517  $   2,251
Other Service Charges                      192          223          273          234          204         688        670
Trust Service Fees                         314          316          287          295          277         917        866
Investment Securities Gains                                                                                              
 (Losses)                                   --           --          (13)           8           --         (13)        --
Data Processing Service Fees               112           85           73           68           65         270        187
Other Operating Income                     106          115          189          125           73         410        284
-------------------------------------------------------------------------------------------------------------------------
    Total                            $   1,623    $   1,576    $   1,590    $   1,514    $   1,410   $   4,789  $   4,258
-------------------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSE                                                             

Noninterest  expense  for the  three  months ended  September  30, 1995  of $4.7
million increased $673,000 or 16.7% compared to the three months ended September
30, 1994 of $4.0 million.                                                       

Noninterest expense  for the  nine  months ended  September  30, 1995  of  $13.9
million  increased  $1.2  million or  9.6%  compared  to the  nine  months ended
September 30, 1994 of $12.7 million. The increase in noninterest expense for the
nine months ended September 30, 1995 compared to nine months ended September 30,
1994 was primarily attributable to the increased volume of business conducted by
the Company.                                                                    

Other Real Estate (Income) Expense, Net includes rental income, gain or loss  on
sale  of other  real estate  properties and  direct expenses  of foreclosed real
estate,  including   property  taxes,   maintenance  costs,   and   write-downs.
Write-downs  of other real estate acquired in a loan foreclosure are required if
the fair value of an asset, less estimated closing costs, subsequently  declines
below  its carrying value.  The increase in Other  Real Estate (Income) Expense,
Net for the nine  months ended September  30, 1995 compared  to the nine  months
ended September 30, 1994 is primarily attributable to the net loss recognized on
the  sale  of Other  Real Estate  during  1995 and  an increase  in write-downs.
Management is actively seeking buyers  for all Other Real  Estate and is of  the
opinion  that the carrying value of  said real estate approximates the estimated
fair value less estimated closing costs.                                        

FDIC insurance refund for the three  months ended September 30, 1995 of  $29,000
reflects  a net decrease of $279,000 or 111.6% when compared to $250,000 expense
for three months ended September 30, 1994. On August 8, 1995, the FDIC Board  of
Directors voted to reduce the deposit insurance premiums paid by most members of
the Bank Insurance Fund, effective as of June 1, 1995. As a result, the overpaid
assessments  for  the  period June  1  to  September 30  and  interest (totaling
$297,000) was refunded on September 15,  1995. The Company continues to  receive
the  most favorable risk  classification for purposes  of determining the annual
deposit insurance assessment rate.                                              

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EX-19 20th Page of 28 TOC 1st Previous Next ↓Bottom Just 20th
The following table displays the major noninterest expense categories:          

                                                        [Enlarge/Download Table]

                                                  1995                             1994             Nine Months Ended   
                                  -------------------------------------  ------------------------     September 30,     
Noninterest Expense                  THIRD       Second        First       Fourth        Third     -------------------- 
(Dollars in Thousands)              QUARTER      Quarter      Quarter      Quarter      Quarter      1995       1994    
                                                                                                                        
----------------------------------------------------------------------------------------------------------------------- 
Salaries and Employee Benefits                                                                                          
  Salaries                         $   1,954    $   1,808    $   1,767    $   1,606    $   1,588   $   5,529  $   4,728 
  Employee Benefits                      500          484          491          400          415       1,475      1,281 
----------------------------------------------------------------------------------------------------------------------- 
    Total Salaries and Employee                                                                                         
     Benefits                          2,454        2,292        2,258        2,006        2,003       7,004      6,009 
----------------------------------------------------------------------------------------------------------------------- 
Net Occupancy Expense                    277          260          253          267          253         790        694 
----------------------------------------------------------------------------------------------------------------------- 
Equipment Expense                        535          498          431          426          418       1,464      1,222 
----------------------------------------------------------------------------------------------------------------------- 
Other Real Estate (Income)                                                                                              
 Expense, Net                                                                                                           
  Rent Income                            (27)         (26)         (71)         (49)         (30)       (124)       (88)
  (Gain) Loss on Sale                     (6)          (1)          81          (19)          14          74         21 
  Expenses                                34           27           22           16           30          83         82 
  Write-Downs                             59           60           --           67           15         119         45 
----------------------------------------------------------------------------------------------------------------------- 
    Total Other Real Estate                                                                                             
     (Income) Expense, Net                60           60           32           15           29         152         60 
----------------------------------------------------------------------------------------------------------------------- 
Other Noninterest Expense                                                                                               
  Advertising and Public                                                                                                
   Relations                             203          144          238          297          127         585        396 
  Amortization of Intangibles             88           56           56           56           56         200        168 
  Data Processing and Check                                                                                             
   Clearing                              147          104          108           78           81         359        282 
  Director Fees                           74           67           68           68           68         209        199 
  Franchise Tax                           50           49           50           39           39         149        120 
  Insurance                               38           67           84           72           82         189        242 
  FDIC Insurance                         (29)         261          261          250          250         493        723 
  Legal and Professional                 221          207          191          266          145         619        740 
  Stationery and Supplies                182          170          122          122          102         474        416 
  Telephone                               66           58           49           54           45         173        148 
  Other (Gains) Losses                   117          124          144         (499)         104         385        637 
  Other                                  211          237          249          270          219         697        664 
----------------------------------------------------------------------------------------------------------------------- 
    Total Other Noninterest                                                                                             
     Expense                           1,368        1,544        1,620        1,073        1,318       4,532      4,735 
----------------------------------------------------------------------------------------------------------------------- 
    Total                          $   4,694    $   4,654    $   4,594    $   3,787    $   4,021   $  13,942  $  12,720 
----------------------------------------------------------------------------------------------------------------------- 

BALANCE SHEET ANALYSIS                                                          

The Company continues to  experience growth as is  reflected by the increase  in
total  average assets presented  below. The growth  is primarily attributable to
the Acquisition.  Average interest-earning  assets for  the three  months  ended
September  30, 1995 of $542.8 million  increased $87.0 million or 19.1% compared
to the  three  months  ended  September 30,  1994  of  $455.8  million.  Average
interest-earning  assets for the nine months  ended September 30, 1995 of $503.4
million increased  $59.2 million  or 13.3%  compared to  the nine  months  ended
September  30, 1994 of $444.2 million. The  increase in total average assets was
funded primarily by deposit growth from the Acquisition.                        

Average total deposits for the three  months ended September 30, 1995 of  $535.7
million  increased $84.8  million or  18.8% compared  to the  three months ended
September 30, 1995 of $451.0 million  primarily due to the Acquisition.  Average
total  deposits for the nine  months ended September 30,  1995 of $495.4 million
increased $51.3 million or 11.6% compared to the nine months ended September 30,
1994 of $444.1 million.                                                         

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EX-19 21st Page of 28 TOC 1st Previous Next ↓Bottom Just 21st
The following table presents the consolidated average balance sheets:           

                                                        [Enlarge/Download Table]

                                        1995                        1994           Nine Months Ended   
                           -------------------------------  --------------------     September 30,     
Average Balance Sheets       THIRD     Second      First     Fourth      Third    -------------------- 
(Dollars in Thousands)      QUARTER    Quarter    Quarter    Quarter    Quarter     1995       1994    
                                                                                                       
------------------------------------------------------------------------------------------------------ 
Assets                                                                                                 
  Loans                    $ 372,511  $ 351,465  $ 344,279  $ 321,968  $ 308,216  $ 356,085  $ 304,728 
  Investment Securities                                                                                
    Taxable                  130,504    118,675    115,477    130,304    126,900    121,552    124,448 
    Tax-Exempt                 4,797      4,919      5,023      4,525      3,717      4,913      3,977 
  Federal Funds Sold          34,971     17,821      9,821     12,807     16,969     20,871     11,051 
------------------------------------------------------------------------------------------------------ 
      Total                                                                                            
       Interest-Earning                                                                                
       Assets                542,783    492,880    474,600    469,604    455,802    503,421    444,204 
  Cash and Due from Banks     31,538     29,871     31,675     30,977     28,813     31,028     30,197 
  Bank Premises and                                                                                    
   Equipment, Net             16,535     15,573     15,613     15,361     15,535     15,907     15,357 
  Other Assets                14,419     11,845     11,797     11,715     11,903     12,687     11,511 
  Allowance for Loan                                                                                   
   Losses                     (4,331)    (4,211)    (3,743)    (3,630)    (3,852)    (4,095)    (3,674)
------------------------------------------------------------------------------------------------------ 
      Total Assets         $ 600,944  $ 545,958  $ 529,942  $ 524,027  $ 508,201  $ 558,948  $ 497,595 
------------------------------------------------------------------------------------------------------ 
Liabilities and                                                                                        
 Shareholders'                                                                                         
  Equity                                                                                               
    Demand Deposits                                                                                    
      Commercial and                                                                                   
       Individual          $ 105,812  $  92,804  $  92,612  $  93,793  $  90,407  $  97,076  $  90,121 
      Public Funds             2,109      5,582      3,208      3,053      2,789      3,633      2,673 
------------------------------------------------------------------------------------------------------ 
      Total Demand                                                                                     
       Deposits              107,921     98,386     95,820     96,846     93,196    100,709     92,794 
------------------------------------------------------------------------------------------------------ 
  Savings                     32,701     27,364     28,018     29,308     29,920     29,361     29,952 
  Money Market Checking                                                                                
   and Savings Accounts                                                                                
    Commercial and                                                                                     
     Individual              104,128     95,042    101,856    110,481    109,411    100,342    109,425 
    Public Funds              27,563     25,853     29,531     28,580     21,494     27,649     22,308 
  Time Deposits                                                                                        
    Commercial and                                                                                     
     Individual              246,797    218,479    193,461    180,065    176,745    219,579    169,545 
    Public Funds              16,610     17,130     19,402     18,741     20,187     17,714     20,033 
------------------------------------------------------------------------------------------------------ 
      Total                                                                                            
       Interest-Bearing                                                                                
       Deposits              427,799    383,868    372,268    367,175    357,757    394,645    351,263 
------------------------------------------------------------------------------------------------------ 
        Total Deposits       535,720    482,254    468,088    464,021    450,953    495,354    444,057 
------------------------------------------------------------------------------------------------------ 
Federal Funds Purchased                                                                                
 and Securities Sold                                                                                   
 Under Repurchase                                                                                      
 Agreements                      997      1,228      1,348      1,098        314      1,191        502 
Short-Term Borrowings             75        429        429        430        431        311        438 
Note Payable                      --         --         --         --         --         --        345 
Other Liabilities              4,231      3,626      3,168      3,188      3,237      3,675      2,807 
Shareholders' Equity          59,921     58,421     56,909     55,290     53,266     58,417     49,446 
------------------------------------------------------------------------------------------------------ 
      Total Liability and                                                                              
       Shareholders'                                                                                   
       Equity              $ 600,944  $ 545,958  $ 529,942  $ 524,027  $ 508,201  $ 558,948  $ 497,595 
------------------------------------------------------------------------------------------------------ 

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EX-19 22nd Page of 28 TOC 1st Previous Next ↓Bottom Just 22nd
RISK ANALYSIS OF THE LOAN PORTFOLIO                                             

The  Company manages its credit risk by establishing and implementing strategies
and guidelines  appropriate to  the  characteristics of  borrowers,  industries,
geographic  locations and risk products. Diversification  of risk within each of
these areas is  a primary objective.  Policies and procedures  are developed  to
ensure  that  loan commitments  conform  to current  strategies  and guidelines.
Management continues to refine the  Company's credit policies and procedures  to
address  the risks  in the  current and  prospective environment  and to reflect
management's current  strategic focus.  The credit  process is  controlled  with
continuous  review  and  analysis  by independent  credit  review,  internal and
external auditors and regulatory authorities.                                   

The  Company  has  collateral  management  policies  in  place  to  ensure  that
collateral  lending of all types  is approached on a  basis consistent with safe
and sound standards. Valuation analysis  is utilized to take into  consideration
the potentially adverse economic conditions under which liquidation could occur.
Collateral  accepted  against the  commercial  loan portfolio  includes accounts
receivable and  inventory, marketable  securities, equipment,  and  agricultural
products.  Autos, deeds of trust, life  insurance, and marketable securities are
accepted as collateral for the installment loan portfolio.                      

Total loans at September 30, 1995  of $394.6 million increased $79.7 million  or
25.3%  compared to  September 30,  1994 levels  of $314.9  million and increased
$44.1 million or 12.6% compared to June  30, 1995 levels of $350.5 million.  The
increase  in loans is  partially attributable to  the Acquisition. The Company's
commercial loans are widely diversified by borrower and industry group.         

The following table presents the composition of the loan portfolio for the  last
five quarters:                                                                  

                                                        [Enlarge/Download Table]

                                                            1995                        1994        
                                               -------------------------------  --------------------
Loan Portfolio Composition                       THIRD     Second      First     Fourth      Third  
(Dollars in Thousands)                          QUARTER    Quarter    Quarter    Quarter    Quarter 
                                                                                                    
----------------------------------------------------------------------------------------------------
Commercial                                     $ 105,792  $  99,961  $ 106,655  $ 101,866  $  91,828
Agricultural                                      19,247     17,325     19,982     17,199     12,872
Real Estate                                                                                         
  Construction                                    25,998     23,228     20,720     18,809     16,913
  Commercial Mortgage                            128,979    114,232    113,120    113,677    107,531
  Agricultural Mortgage                           15,284     12,771     12,277     10,263     10,043
  1-4 Family Mortgage                             54,836     49,704     49,524     47,425     45,415
Consumer                                          44,471     33,242     32,132     30,700     30,344
----------------------------------------------------------------------------------------------------
    Total                                      $ 394,607  $ 350,463  $ 354,410  $ 339,939  $ 314,946
----------------------------------------------------------------------------------------------------

NONPERFORMING ASSETS                                                            

Nonperforming  assets are comprised  of loans for which  the accrual of interest
has been discontinued,  loans for which  the interest rate  has been reduced  to
less  than normal rates due  to a serious weakening  in the borrower's financial
condition, and other  assets which  consist of  real estate  and other  property
which have been acquired in partial or full satisfaction of loan obligations and
which  are awaiting disposition. A loan is generally placed on nonaccrual status
when payment of  principal or  interest is contractually  past due  90 days,  or
earlier  when  concern exists  as to  the ultimate  collection of  principal and
interest. At the time a loan is placed on nonaccrual status, interest previously
accrued but uncollected is reversed and charged against current income.         

Loans which are  contractually past  due 90  days or  more which  are both  well
secured  or  guaranteed  by financially  responsible  third parties  and  in the
process of collection generally are not placed on nonaccrual status. The  amount
of  such  loans past  due 90  days or  more  at September  30, 1995  of $244,000
reflects a decrease of $98,000 or 28.7% compared to the September 30, 1994 level
of $342,000.                                                                    

Nonperforming assets  at  September 30,  1995  of $3.0  million  decreased  $2.2
million  or 41.9%  compared to  $5.2 million  at September  30, 1994. Management
continues to  emphasize maintaining  a  low level  of nonperforming  assets  and
returning nonperforming assets to an earning status.                            

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EX-19 23rd Page of 28 TOC 1st Previous Next ↓Bottom Just 23rd
The  Company's classification of nonperforming  loans includes those loans where
management believes  collection is  doubtful.  Management is  not aware  of  any
specific  borrower relationships  that are  not reported  as nonperforming where
management has serious doubts as to the ability of such borrowers to comply with
the present  loan repayment  terms  which would  cause nonperforming  assets  to
increase materially.                                                            

An analysis of the components of nonperforming assets for the last five quarters
is presented in the following table:                                            

                                                        [Enlarge/Download Table]

                                                                 1995                          1994         
                                                  ----------------------------------  ----------------------
Nonperforming Assets                                THIRD       Second      First       Fourth      Third   
(Dollars in Thousands)                             QUARTER     Quarter     Quarter     Quarter     Quarter  
                                                                                                            
------------------------------------------------------------------------------------------------------------
Nonaccrual Loans                                  $   1,519   $   1,490   $   1,753   $   2,435   $   2,787 
Renegotiated Loans                                        8           9          11          13          14 
------------------------------------------------------------------------------------------------------------
  Nonperforming Loans                                 1,527       1,499       1,764       2,448       2,801 
Other Nonperforming Assets                                                                                  
  (Primarily Other Real Estate)                       1,502       1,762       1,700       2,364       2,415 
------------------------------------------------------------------------------------------------------------
    Total Nonperforming Assets                        3,029       3,261       3,464       4,812       5,216 
Accruing Loans 90 Days or More Past Due                 244         879         306         226         342 
------------------------------------------------------------------------------------------------------------
    Total Nonperforming Assets Plus Accruing                                                                
     Loans 90 Days or More Past Due               $   3,273   $   4,140   $   3,770   $   5,038   $   5,558 
------------------------------------------------------------------------------------------------------------
Nonperforming Loans as a % of Total Loans              0.39%       0.43%       0.50%       0.72%       0.89%
Nonperforming Assets as a % of Total Loans and                                                              
 Other Nonperforming Assets                            0.76        0.93        0.97        1.41        1.64 
Nonperforming Assets as a % of Total Assets            0.49        0.60        0.64        0.90        1.02 
Nonperforming Assets Plus Accruing Loans 90 Days                                                            
 or More Past Due as a % of Total Loans And                                                                 
 Other Nonperforming Assets                            0.83        1.18        1.06        1.47        1.75 
------------------------------------------------------------------------------------------------------------

ALLOWANCE FOR LOAN LOSSES                                                       

The  allowance for loan losses  at September 30, 1995  of $4.1 million increased
$350,000 or 9.3% compared to the September 30, 1994 balance of $3.8 million  and
increased  $141,000  or 3.5%  compared  to the  June  30, 1995  balance  of $4.0
million. The  allowance  for loan  losses  at  September 30,  1995  compared  to
September  30, 1994 reflects a reserve which was increased by management for the
Acquisition, charge-offs  and loan  growth.  The allowance  for loan  losses  at
September  30, 1995 is 1.04% of loans outstanding, net of unearned discount. The
allowance for loan  losses is maintained  at a level  considered appropriate  by
management  and is based on  the ongoing assessment of  the risk inherent in the
loan portfolio,  as well  as  the possible  impact  of uncertain  events.  While
management  uses available information  to recognize losses  on loans, there can
be no assurance that future additions to the allowance will not be necessary.   

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EX-19 24th Page of 28 TOC 1st Previous Next ↓Bottom Just 24th
The following  table  summarizes the  transactions  in the  allowance  for  loan
losses:                                                                         

                                                        [Enlarge/Download Table]

                                             1995                             1994               Nine Months Ended    
Allowance for Loan           -------------------------------------  ------------------------       September 30,      
Loss Activity                   THIRD       Second        First       Fourth        Third     ------------------------
(Dollars in Thousands)         QUARTER      Quarter      Quarter      Quarter      Quarter        1995         1994   
                                                                                                                      
----------------------------------------------------------------------------------------------------------------------
Balance at Beginning of                                                                                               
 Period                       $   3,980    $   3,995    $   3,511    $   3,771    $   3,754     $   3,511    $   3,435
Balance of Purchased                                                                                                  
 Branches                           450           --           --           --           --           450           --
Provision for Loan Losses           372          322          366          455          220         1,060          630
Charge-Offs                                                                                                           
  Commercial                        236          420           64           25          115           720          194
  Agricultural                      405           11           --          744           37           416           37
  Real Estate                        --           12           49           --           50            61          103
  Consumer                           85           66           30           27           46           181          105
----------------------------------------------------------------------------------------------------------------------
    Total Charge-Offs               726          509          143          796          248         1,378          439
----------------------------------------------------------------------------------------------------------------------
Recoveries                                                                                                            
  Commercial                         30           81          248           62           36           359          101
  Agricultural                       --           64            1           --           --            65            4
  Real Estate                         2            2           --            4            1             4            6
  Consumer                           13           25           12           15            8            50           34
----------------------------------------------------------------------------------------------------------------------
    Total Recoveries                 45          172          261           81           45           478          145
----------------------------------------------------------------------------------------------------------------------
Net Charge-Offs                                                                                                       
 (Recoveries)                       681          337         (118)         715          203           900          294
----------------------------------------------------------------------------------------------------------------------
Balance at End of Period      $   4,121    $   3,980    $   3,995    $   3,511    $   3,771     $   4,121    $   3,771
----------------------------------------------------------------------------------------------------------------------
Ratio of Allowance for Loan                                                                                           
 Losses to Loans                                                                                                      
 Outstanding, Net of                                                                                                  
 Unearned Discount                 1.04%        1.14%        1.13%        1.03%        1.20%                          
Ratio of Allowance For Loan                                                                                           
 Losses to Nonperforming                                                                                              
 Assets                          136.05       122.05       115.33        72.96        72.30                           
Ratio of Net Charge-Offs to                                                                                           
 Average Total Loans                                                                                                  
 Outstanding, Net of                                                                                                  
 Unearned Discount                 0.18         0.09        (0.03)        0.22         0.07                           
----------------------------------------------------------------------------------------------------------------------

DEPOSITS                                                                        

Total  deposits at September 30, 1995  of $553.7 million increased $99.4 million
or 21.9%  compared to  the September  30,  1994 balance  of $454.3  million  and
increased  $73.2 million or 15.2%  compared to June 30,  1995 of $480.5 million.
The increase in  total deposits  from June  30, 1995  to September  30, 1995  is
primarily attributable to the Acquisition.                                      

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The  following table  presents the  composition of  total deposits  for the last
five quarters:                                                                  

                                                        [Enlarge/Download Table]

                                                            1995                        1994        
                                               -------------------------------  --------------------
Total Deposits                                   THIRD     Second      First     Fourth      Third  
(Dollars in Thousands)                          QUARTER    Quarter    Quarter    Quarter    Quarter 
                                                                                                    
----------------------------------------------------------------------------------------------------
Demand Deposits                                                                                     
  Commercial and Individual                    $ 102,733  $  97,593  $  94,735  $  97,597  $  92,133
  Public Funds                                     5,407      4,395      2,661      2,046      2,925
----------------------------------------------------------------------------------------------------
      Total Demand Deposits                      108,140    101,988     97,396     99,643     95,058
----------------------------------------------------------------------------------------------------
Interest-Bearing Deposits                                                                           
  Savings                                         36,924     27,346     27,520     28,689     29,598
  Money Market Checking and Savings                                                                 
    Commercial and Individual                    103,704     94,096     97,728    106,062    109,999
    Public Funds                                  24,078     20,540     23,886     34,688     21,843
  Time Deposits                                                                                     
    Commercial and Individual                    265,728    221,100    211,123    184,177    177,808
    Public Funds                                  15,128     15,462     18,332     18,849     19,958
----------------------------------------------------------------------------------------------------
      Total Interest-Bearing Deposits            445,562    378,544    378,589    372,465    359,206
----------------------------------------------------------------------------------------------------
        Total Deposits                         $ 553,702  $ 480,532  $ 475,985  $ 472,108  $ 454,264
----------------------------------------------------------------------------------------------------

CAPITAL AND LIQUIDITY                                                           

Shareholders' equity  at September  30,  1995 of  $60.7 million  increased  $6.6
million  or 12.2% compared to the September 30, 1994 level of $54.2 million. The
increase was attributable  to earnings and  the decrease in  unrealized loss  on
securities  available  for sale,  reduced by  dividends paid  on Class  A Voting
Common Stock.                                                                   

On March  21, 1994,  the Board  of Directors  adopted a  resolution calling  for
redemption  on April  22, 1994  of all  issued and  outstanding Preferred Stock,
including the Company's  First Series Convertible  Preferred Stock, Series  1990
Convertible  Preferred Stock and Series 1991 Convertible Preferred Stock (herein
collectively called the  "Preferred Stock") at  a redemption price  of $104  per
share  plus  all  accrued  and  unpaid  dividends  through  the  date  fixed for
redemption. The Preferred  Stock was  convertible into  13.2 shares  of Class  A
Voting  Common Stock for each share of Preferred Stock held. Effective April 22,
1994, 356  shares  of  Preferred  Stock  were  redeemed  and  74,172  shares  of
Preferred  Stock were  converted into  979,009 shares  of Class  A Voting Common
Stock.                                                                          

The risk-based capital  standards as  established by the  Federal Reserve  Board
require  all bank holding companies to meet  a minimum ratio of qualifying Total
Capital to weighted risk  assets of 8.0%,  of which at least  4.0% should be  in
the  form  of  Tier  I  Capital.  Under  these  regulations,  a well-capitalized
institution is defined as having a Tier  1 ratio of 6.0%, a Total Capital  ratio
of  10.0% and a  Leverage ratio of  5.0%. At September  30, 1995 the approximate
ratios were 12.6% for  Tier 1 Capital,  13.6% for Total Capital  and 8.0% for  a
Leverage ratio.                                                                 

Asset  liquidity is provided by cash and assets which are readily marketable, or
which can be pledged,  or which will  mature in the  near future. These  include
cash,  federal funds  sold and  U.S. Government-backed  securities. At September
30,   1995,   the   Company's   liquidity   ratio,   defined   as   cash,   U.S.
Government-backed  securities,  and  federal  funds  sold  as  a  percentage  of
deposits was 34.1% compared  to 34.1% at  June 30, 1995  and 37.1% at  September
30, 1994.                                                                       

Liability  liquidity is provided by access  to core funding sources, principally
various customers' interest bearing and noninterest bearing deposit accounts  in
the  Company's natural trade area. The Company does not have or solicit brokered
deposits. Federal  funds  purchased  and short-term  borrowings  are  additional
sources  of liquidity. These  sources of liquidity are  short-term in nature and
are not used to fund asset growth.                                              

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For the nine  months ended  September 30, 1995,  liquidity was  enhanced by  net
cash  provided by operating activities of $5.4  million and net cash provided by
financing activities of  $79.0 million.  The increase  in net  cash provided  by
financing  activities  was  primarily  attributable  to  the  $81.6  million net
increase in deposits which  was primarily attributable  to the Acquisition.  The
increase  in cash and cash equivalents was offset by $90.5 million net cash used
in  investing  activities.  The  investing  activities  consisted  primarily  of
funding  $55.9  million of  purchases, originations  and  advances of  loans and
purchasing $3.4 million  of premises and  equipment. As a  result, net cash  and
cash  equivalents at September 30, 1995  of $35.7 million decreased $6.1 million
or 14.7% compared to net cash and cash equivalents at December 31, 1994 of $41.8
million.                                                                        

SELECTED FINANCIAL DATA                                                         

                                                        [Enlarge/Download Table]

                                              Three Months Ended    Nine Months Ended                 
                                                                September 30,         September 30,   
                                                            --------------------  --------------------
Ratio Analysis (Annualized)                                    1995       1994       1995       1994  
                                                                                                      
----------------------------------------------------------------------------------------------------- 
Return on Average Assets                                        1.50%      1.54%      1.51%      1.32%
Return on Average Equity                                       15.08      14.70      14.43      13.26 
Dividend Payout Ratio                                          27.78      50.00      29.70      20.25 
Net Interest Income to Total Average Earning Assets*            5.15       5.13       5.34       5.05 
Efficiency Ratio*                                              53.45      54.68      55.33      60.19 
Total Average Loans to Total Average Deposits                  69.53      68.35      71.88      68.62 
Average Equity to Average Assets                                9.97      10.48      10.45       9.94 
----------------------------------------------------------------------------------------------------- 

* Taxable-Equivalent Basis Assuming a 34% Tax Rate.                             

                                                        [Enlarge/Download Table]

COMMON STOCK TRADING DATA                                   (NASDAQ National Market System)         
                                                                                                    
----------------------------------------------------------------------------------------------------
                                                                               Trading Volume (1995)
Price                                                                                               
  September 30, 1995            $16.50 Book Value             $9.81       July     60,354     shares
  1995 price range     $11.25 - $16.50 Price/Book Value       168.2%    August    134,245     shares
                                                                     September     53,857     shares
----------------------------------------------------------------------------------------------------

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              Investor Inquiries
                                   Analysts, investors and others desiring
                                 additional financial data about Texas
                                 Regional Bancshares, Inc. may contact
                        George R. Carruthers, Jr. at
           (210) 632-7613.

                        Transfer Agent and Registrar
                           Texas Regional Bancshares, Inc.
                   3700 N. 10th, Suite 300
                McAllen, Texas 78501
            Attn: Ann Sefcik

               NASDAQ Symbol: TRBS
                                     Shares of Texas Regional Bancshares, Inc.
                                 common stock are traded on the NASDAQ
                            National Market System under the
  symbol
 TRBS.

EX-19 Last Page of 28 TOC 1st Previous Next ↓Bottom Just 28th
                                                            --------------
                                                           BULK RATE
                                                            U.S. POSTAGE
                                                            PAID
                                                           MCALLEN, TX
                                                            PERMIT NO. 171
                                                            --------------

[logo] TEXAS REGIONAL                                                           
BANCSHARES, INC.                                                  

P.O. BOX 5910                                             
3700 NORTH 10TH                                           
MCALLEN, TEXAS 78502

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Dates Referenced Herein

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	5/10/00	12		None on these Dates
Filed on:	11/1/95
	10/12/95	11
	10/2/95	11
For Period End:	9/30/95	5	26
	9/15/95	19
	9/12/95	11
	8/8/95	19
	6/30/95	16	25
	6/1/95	19
	5/10/95	12
	2/14/95	11
	1/1/95	10
	12/31/94	6	26
	9/30/94	5	25
	5/10/94	12
	4/22/94	11	25
	4/15/94	11
	3/21/94	11	25
	3/16/94	11
	1/1/94	12
	12/31/93	8
				List all Filings

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Filing Submission 0000912057-95-009189 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Texas Regional Bancshares Inc – ‘10-Q’ for 9/30/95 – EX-19

As of: Wednesday, 11/1/95 · For: 9/30/95 · Accession #: 912057-95-9189 · File #: 0-14517

Previous ‘10-Q’: None · Next: ‘10-Q’ on 4/23/96 for 3/31/96 · Latest: ‘10-Q’ on 11/9/06 for 9/30/06

Quarterly Report — Form 10-QFiling Table of Contents

EX-19 — Exhibit 19 Quarterly ReportExhibit Table of Contents

Dates Referenced Herein

Quarterly Report — Form 10-Q
Filing Table of Contents

EX-19 — Exhibit 19 Quarterly Report
Exhibit Table of Contents