Cullen/Frost Bankers, Inc. 1993 Annual Report Summary
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 1993. Cullen/Frost Bankers, Inc. is a Texas-based bank holding company headquartered in San Antonio. As of year-end 1993, the company operated 27 offices across five major Texas markets (San Antonio, Houston/Galveston, Corpus Christi, Austin, and Dallas). The company's principal assets consist of the capital stock of three national banks, with The Frost National Bank of San Antonio accounting for approximately 92% of consolidated assets. The company also operates non-banking subsidiaries providing real estate, insurance, and discount brokerage services.
Key Financial Metrics
Based on the text provided, the following consolidated figures are reported for December 31, 1993:
- Total Assets: $3,639,047,000
- Total Deposits: $3,149,428,000
- Total Loans: $1,247,113,000 (Sum of subsidiary loans: $1,138,655,000 + $58,252,000 + $50,206,000)
- Trust Assets Administered: Approximately $11.1 billion
- Market Value of Voting Stock (Non-Affiliates): $384,304,372 (as of March 25, 1994)
- Shares Outstanding: 11,031,723 (as of March 25, 1994)
Note: Specific revenue, net income, cash flow, and margin figures are not provided in the text of this filing; they are incorporated by reference to the Annual Report to Shareholders.
Capital Adequacy and Liquidity
All three subsidiary banks were classified as "well capitalized" under FDICIA standards as of December 31, 1993. The capital ratios were as follows:
| Subsidiary Bank | Tier 1 Capital Ratio | Total Capital Ratio | Leverage Ratio |
|---|---|---|---|
| Frost Bank | 13.11% | 14.85% | 5.76% |
| Cullen/Frost Bank | 23.52% | 24.36% | 10.25% |
| U.S. National Bank | 13.84% | 14.85% | 9.26% |
Under the most restrictive interpretation of dividend regulations, subsidiary banks had approximately $23,951,000 available for payment of dividends to the holding company at year-end.
Material Changes and Strategic Developments
- Acquisitions and Mergers: In 1993, the company converted its Houston subsidiary bank into branches of Frost Bank. An agreement was reached in August 1993 to acquire Texas Commerce Bank in Corpus Christi in exchange for Cullen/Frost Bank of Dallas, N.A. This transaction was expected to close early in 1994.
- Regulatory Changes: The FDIC implemented a risk-based assessment system in 1993. Cullen/Frost's assessment rate decreased to 23 cents per $100 of domestic deposits from 29 cents under the previous flat-rate system, though management noted this did not materially impact operations.
- Real Estate Lending Standards: New federal regulations effective March 19, 1993, established loan-to-value limitations on real estate lending. Management stated these standards would not have a significant effect on the company.
Outlook, Risks, and Management Commentary
Management indicated that earnings are influenced by general economic conditions and Federal Reserve policies regarding credit supply and interest rates. The company faces intense competition from other banks, insurance companies, and financial institutions within its service areas and nationally.
Risks and Contingencies:
- Regulatory Capital: Regulators continue to indicate a desire to raise capital requirements beyond current levels, though the timing and extent are unpredictable.
- Legal Proceedings: Subsidiaries are involved in ordinary course litigation, which management believes will not have a material effect on the financial position.
- Dividend Restrictions: Dividend payments from subsidiaries to the holding company are subject to regulatory limits based on net profits and retained earnings.
Key Facts for Investor Verification
- Verify the financial impact of the pending exchange of Cullen/Frost Bank of Dallas for Texas Commerce Bank in Corpus Christi, expected to close in 1994.
- Review the "Selected Financial Data" and "Consolidated Statements of Operations" in the 1993 Annual Report to Shareholders (incorporated by reference) for specific revenue, net income, and earnings per share figures not detailed in this 10-K text.
- Confirm the company's continued compliance with "well capitalized" status under FDICIA as it expands through the proposed acquisition.
- Monitor the impact of the new FDIC risk-based assessment system on future operating expenses, despite the initial rate reduction.