EX-99.1 3 a2101137zex-99_1.htm EXHIBIT 99.1
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Exhibit 99.1

FOR IMMEDIATE RELEASE
January 21, 2003


TEXAS REGIONAL BANCSHARES, INC. REPORTS
RECORD ANNUAL EARNINGS

        McAllen, Texas—Texas Regional Bancshares, Inc. ("Texas Regional") (NASDAQ: TRBS), bank holding company for Texas State Bank, today reported net income for fourth quarter 2002 of $13.9 million, or $0.52 per diluted common share compared to $10.3 million, or $0.42 per diluted common share for the same period in 2001. All per share amounts for prior periods have been adjusted for the three-for-two stock split effected as a 50 percent stock dividend distributed to shareholders of Texas Regional during second quarter 2002. Return on assets and return on shareholders' equity averaged 1.49 percent and 14.97 percent, respectively, compared to 1.60 percent and 15.21 percent, respectively, for the same period last year. Beginning in 2002, new accounting standards eliminated the amortization of goodwill. The impact of goodwill amortization, net of tax, decreased net income by $550,000 or $0.02 per diluted common share for fourth quarter 2001. No transitional impairment losses were recognized or expected.

        For the year ended December 31, 2002, net income totaled $53.8 million, or $2.05 per diluted common share compared to $39.4 million, or $1.62 per diluted common share for the year ended December 31, 2001. Return on assets and return on shareholders' equity averaged 1.58 percent and 16.05 percent, respectively, for the year ended December 31, 2002, compared to 1.58 percent and 15.75 percent, respectively, for the year ended December 31, 2001. The impact of goodwill amortization, net of tax, for the year ended December 31, 2001 decreased net income by $2.2 million or $0.09 per diluted common share.

        "Texas Regional set significant high points during 2002: net income rose 37 percent to $53.8 million, assets surged 48 percent to $3.8 billion and total market value of company stock outstanding rose 53 percent to $941 million at December 31, 2002," said Glen E. Roney, Chairman of the Board. "We are pleased to report that total return on Texas Regional common stock surpassed 40 percent for 2002."

        On February 22, 2002, Texas Regional completed the acquisition of Riverway Holdings, Inc. ("Riverway") and Riverway Bank, Riverway's subsidiary bank, merged with and into Texas State Bank. Texas Regional completed the acquisition of San Juan Bancshares, Inc. ("San Juan"), on November 18, 2002 and Texas Country Bank, San Juan's subsidiary bank, merged with and into Texas State Bank. The results of operations for Riverway and San Juan have been included in the consolidated financial statements since the respective dates of acquisition.


FINANCIAL HIGHLIGHTS

        Net interest income totaled $34.3 million for fourth quarter 2002, reflecting an $8.8 million or 34.4 percent increase from the comparable prior year period. The increase in net interest income resulted largely from an increase of 46.5 percent in average interest-earning assets to $3.4 billion for the three months ended December 31, 2002 compared to $2.3 billion for the same period in 2001. The net yield, on a taxable equivalent basis, on average interest-earning assets decreased by thirty-six basis points to 4.05 percent for the three months ended December 31, 2002 compared to 4.41 percent for the comparable period in 2001.

        For the year ended December 31, 2002, net interest income totaled $129.7 million, reflecting a $30.2 million or 30.3 percent increase from the comparable prior year period. The increase in net interest income resulted largely from an increase of 37.9 percent in average interest-earning assets to $3.1 billion for the year ended December 31, 2002 compared to $2.3 billion for the same period in 2001. The net yield, on a taxable equivalent basis, on average interest-earning assets decreased by


twenty-five basis points to 4.19 percent for the year ended December 31, 2002 compared to 4.44 percent for the comparable period in 2001.

        Provision for loan losses increased $718,000 to $3.7 million and net charge-offs rose $591,000 to $2.8 million for fourth quarter 2002 compared to fourth quarter 2001. For the year ended December 31, 2002, provision for loan losses increased 42.3 percent to $12.3 million and net charge-offs rose 41.3 percent to $10.0 million compared to the comparable prior year period. Provision for loan losses totaled 0.59 percent of average loans for the year ended December 31, 2002 compared to 0.53 percent for the same period in 2001.

        Noninterest income of $9.8 million for fourth quarter 2002 increased by $1.6 million or 20.1 percent compared to $8.2 million for the same 2001 period. Total service charges increased 20.8 percent to $7.0 million for fourth quarter 2002 compared to $5.8 million for fourth quarter 2001 mainly due to an increase in item charges resulting from deposit growth. Net realized gains on sales of securities available for sale of $1.8 million for fourth quarter 2002 increased $1.2 million compared to $590,000 for fourth quarter 2001. Texas Regional continued to sell securities with unrealized gains that were considered likely to be called in the near future. The rapid decline in mortgage rates during the latter half of 2002 resulted in a decline in the carrying value of the mortgage servicing rights ("MSR") asset. Consequently, loan servicing loss of $2.3 million for the period included accelerated MSR amortization of $2.3 million during fourth quarter 2002. Noninterest income for fourth quarter 2002 increased 36.1 percent to $10.3 million from $7.6 million for fourth quarter 2001, after excluding net realized gains on sales of securities available for sale of $1.8 million and $590,000 in 2002 and 2001, respectively, and loan servicing loss of $2.3 million in 2002.

        For the year ended December 31, 2002, noninterest income totaled $40.0 million compared to $29.2 million for the same period in 2001, increasing by $10.8 million or 36.9 percent. Total service charges increased 25.2 percent to $25.6 million for the year ended December 31, 2002 compared to $20.5 million for same period in 2001 mainly due to higher item charges resulting from deposit growth, primarily resulting from the acquisition of Riverway during first quarter 2002, and the introduction of two new products in June 2001. Trust service fees of $2.7 million for 2002 increased by 9.5 percent, or $236,000 compared to the same prior year period. The fair value of assets managed increased 11.36 percent during 2002 to $491.1 million at December 31, 2002. Net realized gains on sales of securities available for sale of $4.8 million increased $3.3 million during the year ended December 31, 2002 compared to the same prior year period. Data processing fees totaled $6.4 million for 2002, increasing by $3.2 million or 100.5 percent compared to the same period in 2001. Certain data processing contracts acquired from a third party processor during first quarter 2002 increased the number of data processing clients to 23 as of December 2002 compared to 8 as of December 31, 2001.

        Noninterest expense increased to $19.9 million for fourth quarter 2002 compared to $14.8 million for the fourth quarter in 2001, representing an increase of $5.1 million or 34.3 percent. Operating expenses generally reflect higher business volumes associated with the Riverway, San Juan and data processing acquisitions previously mentioned. Salaries and employee benefits increased 57.6 percent to $10.1 million for fourth quarter 2002 compared to $6.4 million for fourth quarter 2001 due to higher staffing levels, salary increases and employee medical plan increases. The number of full-time equivalent employees of 1,155 at December 31, 2002 increased 21.6 percent from 950 at December 31, 2001.

        During the year ended December 31, 2002, noninterest expense totaled $76.2 million, representing an increase of $16.8 million or 28.3 percent compared to the same period in 2001. Salaries and employee benefits increased to $38.0 million for 2002 compared to $27.9 million for the same prior year period, reflecting an increase of $10.1 million or 36.0 percent due to higher staffing volumes. Amortization of goodwill, eliminated due to adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", decreased $2.3 million to $0 compared to the same

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period in 2001. Other noninterest expense of $20.2 million for 2002 increased $5.2 million or 34.8 percent compared to $14.9 million for the same 2001 period. The efficiency ratio was 45.9 percent for the year ended December 31, 2002, compared to 45.8 percent for 2001.

        Assets totaled $3.8 billion at December 31, 2002, up from $2.6 billion at December 31, 2001, reflecting a 48.0 percent increase. Loans of $2.3 billion at December 31, 2002 increased $557.5 million or 32.6 percent compared to $1.7 billion at December 31, 2001. Deposits totaled $3.1 billion at December 31, 2002, up from $2.2 billion a year ago, reflecting a 40.1 percent increase. Excluding volumes acquired from business combinations, loans increased 11.0 percent and deposits increased 15.5 percent since December 31, 2001. Shareholders' equity at December 31, 2002 totaled $377.5 million. The total risk-based, tier 1 risk-based and leverage capital ratios of 13.77 percent, 12.67 percent and 8.89 percent at period end, respectively, substantially exceeded regulatory requirements for a well-capitalized bank holding company.


ASSET QUALITY

        At December 31, 2002, total loans of $2.3 billion included $14.8 million, or 0.65 percent, classified as nonperforming. The allowance for loan losses of $28.1 million represented 1.2 percent of loans and 190.0 percent of nonperforming loans at December 31, 2002. Net charge-offs for the year ended December 31, 2002 averaged 0.48 percent of average loans. Total nonperforming assets at December 31, 2002 of $25.4 million represented 1.1 percent of total loans compared to 1.3 percent of total loans at December 31, 2001. Accruing loans 90 days or more past due decreased by $7.8 million to $4.4 million at December 31, 2002 compared to $12.2 million at December 31, 2001.


OTHER INFORMATION

        As previously announced, Texas Regional completed a definitive agreement to acquire through merger Corpus Christi Bancshares, Inc. ("Corpus Christi Bancshares"). Corpus Christi Bancshares is the privately held bank holding company for The First State Bank of Bishop ("First State Bank"), located at 203 East Main Street, Bishop, Texas with one additional banking location in Corpus Christi, Texas. As of September 30, 2002, Corpus Christi Bancshares had total assets of $36.1 million, loans of $19.0 million, deposits of $31.6 million and shareholders' equity of $2.7 million. The definitive agreement calls for the exchange of 37,146 shares of Texas Regional common stock, subject to adjustment under specified conditions, for all of the outstanding shares of Corpus Christi Bancshares not presently owned by Texas Regional. The transaction is subject to approval by the appropriate regulatory authorities and other customary closing conditions and it is expected to close during the first quarter of 2003. Texas Regional presently owns approximately 67,174 shares or 32% of the shares of Corpus Christi Bancshares.

        Texas Regional is a McAllen-based bank holding company whose stock trades on The Nasdaq Stock Market® under the symbol TRBS. Texas State Bank, its wholly owned subsidiary, conducts a commercial banking business through 29 full-service banking offices, including 28 in the Rio Grande Valley of Texas and 1 in metropolitan Houston.


ADDITIONAL INFORMATION AND WHERE TO FIND IT

        Texas Regional has filed with the SEC a registration statement on Form S-4 concerning the transaction between Texas Regional and Corpus Christi Bancshares and a proxy statement/prospectus has been mailed to the Corpus Christi Bancshares shareholders in connection with the transaction. Investors and security holders of Texas Regional and Corpus Christi Bancshares are urged to read the proxy statement/prospectus because it contains important information about Texas Regional, Corpus Christi Bancshares and the transaction. Investors and security holders may obtain a free copy of the proxy statement/prospectus at the SEC's web site at http://www.sec.gov. A free copy of the proxy

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statement/prospectus may also be obtained from Texas Regional or Corpus Christi Bancshares. Texas Regional and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the shareholders of Corpus Christi Bancshares in favor of the transaction. Information regarding the interests of Texas Regional's officers and directors, and the interests of Corpus Christi Bancshares' officers and directors, in the transaction is included in the proxy statement/prospectus.

        In addition to the registration statement on Form S-4 filed by Texas Regional in connection with the Corpus Christi Bancshares transaction, and the related proxy statement/prospectus mailed to the shareholders of Corpus Christi Bancshares, Texas Regional files annual, quarterly and special reports, proxy and information statements, and other information with the SEC. Investors may read and copy any of these reports, statements and other information at the SEC's public reference rooms located at 450 5th Street, N.W., Washington, D.C 20549, or any of the SEC's other public reference rooms located in New York and Chicago. Investors should call the SEC at 1-800-SEC-0330 for further information on these public reference rooms. The reports, statements and other information filed by Texas Regional with the SEC are also available free at the SEC's web site at http://www.sec.gov. You can also obtain a free copy of these reports, statements and other information from Texas Regional.

        Additional financial, statistical and business-related information, as well as business trends, is included in a Financial Supplement. The Financial Supplement and other information are available on Texas Regional's web site.

        The Financial Supplement and other information is available through Texas Regional's web site at http://www.trbsinc.com and can also be obtained by calling R.T. Pigott, Jr., Chief Financial Officer, at (956) 631-5400.

        This document and information on Texas Regional's web site may contain forward-looking information (including information related to plans, projections or future performance of Texas Regional and its subsidiaries and planned market opportunities, employment opportunities and synergies from the merger with Corpus Christi Bancshares), the occurrence of which involve certain risks, uncertainties, assumptions and other factors which could materially affect future results. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Texas Regional's results could differ materially from Texas Regional's expectations in these statements. Texas Regional assumes no obligation and does not intend to update these forward-looking statements. For further information please see Texas Regional's reports filed with the SEC pursuant to the Securities Exchange Act of 1934, which are available at the SEC's web site at http://www.sec.gov.

CONTACT: Glen E. Roney, Chief Executive Officer, or R. T. Pigott, Jr., Chief Financial Officer, (956) 631-5400, both of Texas Regional.

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Texas Regional Bancshares, Inc. and Subsidiaries
Financial Highlights (Unaudited)
(Dollars in Thousands,
Except Per Share Data)
   At/For Three Months Ended
  
  Dec 31,
2002
   Sep 30,
2002
   Jun 30,
2002
   Mar 31,
2002
   Dec 31,
2001
  
Condensed Income Statements                                
  Loans Held for Investment   $ 39,815   $ 39,714   $ 39,087   $ 35,754   $ 33,791  
  Securities     11,576     11,521     12,088     9,723     8,694  
  Other Interest-Earning Assets     815     672     671     269     126  
   
 
 
 
 
 
    Total Interest Income     52,206     51,907     51,846     45,746     42,611  
   
 
 
 
 
 
  Deposits     15,738     16,673     16,882     15,380     16,544  
  Other Borrowed Money     2,132     2,101     1,964     1,116     512  
   
 
 
 
 
 
    Total Interest Expense     17,870     18,774     18,846     16,496     17,056  
   
 
 
 
 
 
    Net Interest Income     34,336     33,133     33,000     29,250     25,555  
  Provision for Loan Losses     3,676     2,950     3,023     2,682     2,958  
   
 
 
 
 
 
  Service Charges—Deposits     5,717     5,261     4,982     4,470     4,947  
  Other Service Charges     1,294     1,229     1,203     1,484     856  
  Trust Service Fees     690     743     649     648     628  
  Net Realized Gains on Sales of Securities Available for Sale     1,824     1,885     618     458     590  
  Data Processing Service Fees     1,620     1,676     1,626     1,482     829  
  Loan Servicing Income (Loss), Net     (2,334 )   84     444     133     —  
  Other Operating Income     1,018     435     25     639     335  
   
 
 
 
 
 
    Total Noninterest Income     9,829     11,313     9,547     9,314     8,185  
   
 
 
 
 
 
  Salaries and Employee Benefits     10,118     9,412     9,793     8,670     6,420  
  Net Occupancy Expense     1,290     1,481     1,488     1,188     1,037  
  Equipment Expense     2,314     2,362     2,192     1,772     1,613  
  Other Real Estate Expense, Net     177     152     81     81     744  
  Amortization—Goodwill     —     —     —     —     573  
  Amortization—Identifiable Intangibles     906     961     896     669     533  
  Other Noninterest Expense     5,126     5,134     5,283     4,613     3,923  
   
 
 
 
 
 
    Total Noninterest Expense     19,931     19,502     19,733     16,993     14,843  
   
 
 
 
 
 
    Income Before Income Tax Expense     20,558     21,994     19,791     18,889     15,939  
  Income Tax Expense     6,640     7,732     6,535     6,478     5,653  
   
 
 
 
 
 
    Net Income   $ 13,918   $ 14,262   $ 13,256   $ 12,411   $ 10,286  
   
 
 
 
 
 
Per Common Share Data(1)                                
  Net Income—Basic   $ 0.53   $ 0.54   $ 0.51   $ 0.49   $ 0.42  
  Net Income—Diluted     0.52     0.54     0.50     0.49     0.42  
  Adjusted Net Income(2)—Basic     0.53     0.54     0.51     0.49     0.44  
  Adjusted Net Income(2)—Diluted     0.52     0.54     0.50     0.49     0.44  
  Market Value at Period End     35.54     33.49     32.44     29.11     25.23  
  Book Value at Period End     14.25     13.68     12.82     11.95     10.89  
  Cash Dividends Declared(1)     0.120     0.110     0.110     0.107     0.100  
Share Data(1) (in Thousands)                                
  Basic     26,407     26,283     26,224     25,120     24,353  
  Diluted     26,678     26,632     26,576     25,402     24,433  
  Shares Outstanding at Period End(1)     26,488     26,327     26,249     26,162     24,354  
   
 
 
 
 
 
Selected Financial Data                                
  Return on Average Assets     1.49 %   1.58 %   1.55 %   1.71 %   1.60 %
  Return on Average Equity     14.97 %   16.26 %   16.43 %   16.83 %   15.21 %
  Leverage Capital Ratio     8.89 %   8.82 %   8.73 %   9.84 %   9.05 %
  Expense Efficiency Ratio     46.7 %   45.5 %   46.9 %   44.4 %   42.5 %
  Net Interest Income(3)   $ 34,974   $ 33,730   $ 33,486   $ 29,731   $ 26,017  
  Net Interest Margin(3)     4.05 %   4.06 %   4.25 %   4.49 %   4.41 %
  Net Charge-Offs   $ 2,786   $ 2,617   $ 2,553   $ 2,041   $ 2,195  
  Net Charge-Offs to Average Loans     0.50 %   0.48 %   0.48 %   0.44 %   0.52 %
  Full-Time Equivalent Employees     1,155     1,099     1,106     1,077     950  
   
 
 
 
 
 

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Texas Regional Bancshares, Inc. and Subsidiaries
Financial Highlights (Unaudited)
(Dollars in Thousands,
Except Per Share Data)
   At/For Three Months Ended
  
  Dec 31,
2002
   Sep 30,
2002
   Jun 30,
2002
   Mar 31,
2002
   Dec 31,
2001
  
Condensed Balance Sheets                                
  Loans Held for Investment   $ 2,267,530   $ 2,189,039   $ 2,149,013   $ 2,097,488   $ 1,710,001  
  Securities     1,196,079     1,079,450     1,046,282     945,258     655,635  
  Other Interest-Earning Assets     70,888     53,376     38,656     72,687     591  
   
 
 
 
 
 
    Total Interest-Earning Assets     3,534,497     3,321,865     3,233,951     3,115,433     2,366,227  
  Cash and Due from Banks     124,125     107,175     99,271     92,998     95,606  
  Premises and Equipment, Net     89,500     88,168     88,596     83,219     75,576  
  Other Assets     115,181     113,469     114,425     111,833     74,453  
  Allowance for Loan Losses     (28,116 )   (26,827 )   (26,494 )   (26,024 )   (21,050 )
   
 
 
 
 
 
      Total Assets   $ 3,835,187   $ 3,603,850   $ 3,509,749   $ 3,377,459   $ 2,590,812  
   
 
 
 
 
 
  Savings and Time Deposits   $ 2,686,213   $ 2,558,075   $ 2,559,683   $ 2,435,105   $ 1,905,013  
  Other Borrowed Money     293,518     234,490     185,353     210,972     70,709  
   
 
 
 
 
 
    Total Interest-Bearing Liabilities     2,979,731     2,792,565     2,745,036     2,646,077     1,975,722  
  Demand Deposits     445,978     422,701     399,402     391,940     330,864  
  Other Liabilities     32,023     28,466     28,872     26,777     18,967  
   
 
 
 
 
 
    Total Liabilities     3,457,732     3,243,732     3,173,310     3,064,794     2,325,553  
  Shareholders' Equity     377,455     360,118     336,439     312,665     265,259  
   
 
 
 
 
 
      Total Liabilities and Equity   $ 3,835,187   $ 3,603,850   $ 3,509,749   $ 3,377,459   $ 2,590,812  
   
 
 
 
 
 
Condensed Average Balance Sheets                                
  Loans Held for Investment   $ 2,206,784   $ 2,166,902   $ 2,124,720   $ 1,874,165   $ 1,662,876  
  Securities     1,150,803     1,082,642     989,561     784,643     655,611  
  Other Interest-Earning Assets     71,341     48,075     48,750     25,976     22,403  
   
 
 
 
 
 
    Total Interest-Earning Assets     3,428,928     3,297,619     3,163,031     2,684,784     2,340,890  
  Cash and Due from Banks     100,333     98,741     103,562     106,457     79,694  
  Premises and Equipment, Net     88,582     88,249     86,421     77,944     75,398  
  Other Assets     113,859     115,302     111,916     89,742     77,503  
  Allowance for Loan Losses     (27,642 )   (27,411 )   (27,251 )   (24,005 )   (20,716 )
   
 
 
 
 
 
      Total Assets   $ 3,704,060   $ 3,572,500   $ 3,437,679   $ 2,934,922   $ 2,552,769  
   
 
 
 
 
 
  Savings and Time Deposits   $ 2,621,609   $ 2,553,835   $ 2,484,937   $ 2,145,513   $ 1,897,520  
  Other Borrowed Money     255,640     238,142     213,400     112,505     50,445  
   
 
 
 
 
 
    Total Interest-Bearing Liabilities     2,877,249     2,791,977     2,698,337     2,258,018     1,947,965  
  Demand Deposits     429,236     404,447     397,783     356,340     314,229  
  Other Liabilities     28,664     28,048     17,885     21,455     22,241  
   
 
 
 
 
 
    Total Liabilities     3,335,149     3,224,472     3,114,005     2,635,813     2,284,435  
  Shareholders' Equity     368,911     348,028     323,674     299,109     268,334  
   
 
 
 
 
 
      Total Liabilities and Equity   $ 3,704,060   $ 3,572,500   $ 3,437,679   $ 2,934,922   $ 2,552,769  
   
 
 
 
 
 
Nonperforming Assets, Past Due Loans                                
  Nonaccrual Loans   $ 14,800   $ 17,154   $ 13,211   $ 14,484   $ 14,034  
  Foreclosed and Other Assets     10,610     10,246     9,266     9,120     7,796  
   
 
 
 
 
 
    Total Nonperforming Assets     25,410     27,400     22,477     23,604     21,830  
  Accruing Loans 90 Days or More Past Due     4,411     3,524     4,038     3,790     12,164  
   
 
 
 
 
 
(1)
Restated to retroactively give effect for the three-for-two stock split declared and distributed by Texas Regional during second quarter 2002, effected as a 50% stock dividend.
(2)
Net income adjusted for the exclusion of goodwill amortization, net of taxes.
(3)
For analytical purposes, income from tax-exempt assets, primarily securities issued by state and local governments or authorities, is adjusted by an increment that equates tax-exempt income to interest from taxable assets (assuming 35% federal income tax rate). Income on a tax equivalent basis is not considered GAAP.

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Texas Regional Bancshares, Inc. and Subsidiaries
Financial Highlights (Unaudited)
(Dollars in Thousands,
Except Per Share Data)
   At/For Year Ended
  
  Dec 31,
2002
   Dec 31,
2001
  
Condensed Income Statements              
  Loans Held for Investment   $ 154,370   $ 146,017  
  Securities     44,909     36,661  
  Other Interest-Earning Assets     2,426     624  
   
 
 
    Total Interest Income     201,705     183,302  
   
 
 
  Deposits     64,673     81,292  
  Other Borrowed Money     7,313     2,484  
   
 
 
    Total Interest Expense     71,986     83,776  
   
 
 
    Net Interest Income     129,719     99,526  
  Provision for Loan Losses     12,331     8,667  
   
 
 
  Service Charges—Deposits     20,430     16,965  
  Other Service Charges     5,210     3,507  
  Trust Service Fees     2,730     2,494  
  Net Realized Gains on Sales of Securities Available for Sale     4,785     1,496  
  Data Processing Service Fees     6,404     3,194  
  Loan Servicing Loss, Net     (1,673 )   —  
  Other Operating Income     2,117     1,557  
   
 
 
    Total Noninterest Income     40,003     29,213  
   
 
 
  Salaries and Employee Benefits     37,993     27,933  
  Net Occupancy Expense     5,447     4,358  
  Equipment Expense     8,640     6,565  
  Other Real Estate Expense, Net     491     1,113  
  Amortization—Goodwill     —     2,294  
  Amortization—Identifiable Intangibles     3,432     2,134  
  Other Noninterest Expense     20,156     14,947  
   
 
 
    Total Noninterest Expense     76,159     59,344  
   
 
 
    Income Before Income Tax Expense     81,232     60,728  
  Income Tax Expense     27,385     21,306  
   
 
 
    Net Income   $ 53,847   $ 39,422  
   
 
 
Per Common Share Data(1)              
  Net Income—Basic   $ 2.07   $ 1.63  
  Net Income—Diluted     2.05     1.62  
  Adjusted Net Income(2)—Basic     2.07     1.72  
  Adjusted Net Income(2)—Diluted     2.05     1.71  
  Market Value at Period End     35.54     25.23  
  Book Value at Period End     14.25     10.89  
  Cash Dividends Declared(1)     0.447     0.400  
Share Data(1) (in Thousands)              
  Basic     26,013     24,207  
  Diluted     26,258     24,381  
Shares Outstanding at Period End(1)     26,488     24,354  
   
 
 
Selected Financial Data              
  Return on Average Assets     1.58 %   1.58 %
  Return on Average Equity     16.05 %   15.75 %
  Leverage Capital Ratio     8.89 %   9.05 %
  Expense Efficiency Ratio     45.9 %   45.8 %
  Net Interest Income(3)   $ 131,921   $ 101,285  
  Net Interest Margin(3)     4.19 %   4.44 %
  Net Charge-Offs   $ 9,997   $ 7,075  
  Net Charge-Offs to Average Loans     0.48 %   0.43 %
  Full-Time Equivalent Employees     1,155     950  
   
 
 

7

Texas Regional Bancshares, Inc. and Subsidiaries
Financial Highlights (Unaudited)
(Dollars in Thousands,
Except Per Share Data)
   At/For Year Ended
  
  Dec 31,
2002
   Dec 31,
2001
  
Condensed Balance Sheets              
  Loans Held for Investment   $ 2,267,530   $ 1,710,001  
  Securities     1,196,079     655,635  
  Other Interest-Earning Assets     70,888     591  
   
 
 
    Total Interest-Earning Assets     3,534,497     2,366,227  
  Cash and Due from Banks     124,125     95,606  
  Premises and Equipment, Net     89,500     75,576  
  Other Assets     115,181     74,453  
  Allowance for Loan Losses     (28,116 )   (21,050 )
   
 
 
      Total Assets   $ 3,835,187   $ 2,590,812  
   
 
 
  Savings and Time Deposits   $ 2,686,213   $ 1,905,013  
  Other Borrowed Money     293,518     70,709  
   
 
 
    Total Interest-Bearing Liabilities     2,979,731     1,975,722  
  Demand Deposits     445,978     330,864  
  Other Liabilities     32,023     18,967  
   
 
 
    Total Liabilities     3,457,732     2,325,553  
  Shareholders' Equity     377,455     265,259  
   
 
 
      Total Liabilities and Equity   $ 3,835,187   $ 2,590,812  
   
 
 
Condensed Average Balance Sheets              
  Loans Held for Investment   $ 2,094,256   $ 1,627,901  
  Securities     1,003,137     636,257  
  Other Interest-Earning Assets     48,659     17,350  
   
 
 
    Total Interest-Earning Assets     3,146,052     2,281,508  
  Cash and Due from Banks     102,207     74,054  
  Premises and Equipment, Net     85,336     75,669  
  Other Assets     107,935     78,469  
  Allowance for Loan Losses     (26,590 )   (20,551 )
   
 
 
      Total Assets   $ 3,414,940   $ 2,489,149  
   
 
 
  Savings and Time Deposits   $ 2,453,058   $ 1,860,683  
  Other Borrowed Money     205,405     50,972  
   
 
 
    Total Interest-Bearing Liabilities     2,658,463     1,911,655  
  Demand Deposits     397,158     305,423  
  Other Liabilities     23,768     21,840  
   
 
 
    Total Liabilities     3,079,389     2,238,918  
  Shareholders' Equity     335,551     250,231  
   
 
 
      Total Liabilities and Equity   $ 3,414,940   $ 2,489,149  
   
 
 
Nonperforming Assets, Past Due Loans              
  Nonaccrual Loans   $ 14,800   $ 14,034  
  Foreclosed and Other Assets     10,610     7,796  
   
 
 
    Total Nonperforming Assets     25,410     21,830  
  Accruing Loans 90 Days or More Past Due     4,411     12,164  
   
 
 
(1)
Restated to retroactively give effect for the three-for-two stock split declared and distributed by Texas Regional during second quarter 2002, effected as a 50% stock dividend.
(2)
Net income adjusted for the exclusion of goodwill amortization, net of taxes.
(3)
For analytical purposes, income from tax-exempt assets, primarily securities issued by state and local governments or authorities, is adjusted by an increment that equates tax-exempt income to interest from taxable assets (assuming 35% federal income tax rate). Income on a tax equivalent basis is not considered GAAP.

8



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