1991 Thrift Incentive Stock Purchase Plan for Employees of
Cullen/Frost Bankers, Inc.
Financial Statements
Years Ended December 31, 2001, 2000, and 1999 with Report of Independent
Auditors
1991 Thrift Incentive Stock Purchase Plan
for Employees of Cullen/Frost Bankers, Inc.
Financial Statements
Years Ended December 31, 2001, 2000, and 1999
Contents
Report of Independent Auditors 1
Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
1
Report of Independent Auditors
Compensation and Benefits Committee of
Cullen/Frost Bankers, Inc.
We have audited the accompanying statements of net assets available for
benefits of the 1991 Thrift Incentive Stock Purchase Plan for Employees
of Cullen/Frost Bankers, Inc. as of December 31, 2001 and 2000, and the
related statements of changes in net assets available for benefits for
each of the three years in the period ended December 31, 2001. These
financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits
of the 1991 Thrift Incentive Stock Purchase Plan for Employees of
Cullen/Frost Bankers, Inc. at December 31, 2001 and 2000, and the
changes in its net assets available for benefits for each of the three
years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
/s/Ernst & Young LLP
San Antonio, Texas
February 22, 2002
2
1991 Thrift Incentive Stock Purchase Plan
for Employees of Cullen/Frost Bankers, Inc.
Statements of Net Assets Available for Benefits
December 31
2001 2000
-----------------
Assets $ - $ -
Liabilities - -
-----------------
Net assets available for benefits $ - $ -
=================
See accompanying notes.
3
1991 Thrift Incentive Stock Purchase Plan
for Employees of Cullen/Frost Bankers, Inc.
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31
2001 2000 1999
----------------------------
Additions:
Employer contributions $163,519 $104,284 $ 83,456
Employee contributions 163,519 104,284 83,456
Dividend income 2,156 1,265 743
Interest income 187 150 142
Other income 1,658 - -
Net realized (loss) gain on sale of
Investments (29) 46 22
Net unrealized appreciation
(depreciation) in fair value of
investments 15,313 50,831 (7,727)
-----------------------------
Total additions 346,323 260,860 160,092
Deductions:
Benefit payments 346,323 260,860 160,092
-----------------------------
Total deductions 346,323 260,860 160,092
Net assets available for benefits at
beginning of year - - -
-----------------------------
Net assets available for benefits at
end of year $ - $ - $ -
See accompanying notes.
4
1991 Thrift Incentive Stock Purchase Plan
for Employees of Cullen/Frost Bankers, Inc.
Notes to Financial Statements
December 31, 2001 and 2000
1. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the 1991 Thrift Incentive Stock Purchase
Plan for Employees of Cullen/Frost Bankers, Inc. (the Plan) are
presented on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States.
Participating entities include: Cullen/Frost Bankers, Inc. (CFBI); Frost
National Bank; Frost Securities, Inc.; and Frost Insurance Agency, all
of which are referred to herein as "the Company."
The cost of a specific security sold is used to compute realized gains
and losses on the sale of investments.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates that affect amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
2. DESCRIPTION OF THE PLAN
The Plan, amended and restated on January 1, 1991, is a nonqualified
contributory plan. In addition to the Plan, the Company maintains the
401(k) Stock Purchase Plan for Employees of Cullen/Frost Bankers, Inc.
and its Affiliates (the 401(k) Plan). The Plan covers substantially all
eligible employees who are restricted on retirement plan contributions
by the limitations imposed by Sections 401(a)(11), 401(k), 401(m),
402(g), and 415 of the Internal Revenue Code.
For each plan year, each active participant is eligible to contribute an
amount not to exceed the total of:
i) the amount by which the active participant's 401(k) Plan
contributions have been limited by IRS regulations not to exceed
the difference between
a) six percent of the participant's compensation for the
respective plan year, and
5
1991 Thrift Incentive Stock Purchase Plan
for Employees of Cullen/Frost Bankers, Inc.
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
b) the total before- and after-tax contributions allocated
under the 401(k) Plan, and
ii) the amount by which the participant's contributions to
the 401(k) Plan have been limited by IRS regulations.
For each plan year, the Company makes contributions equal to 100% of the
participants' before- and after-tax contributions to the Plan and the
401(k) Plan, up to six percent of the participants' compensation for the
respective plan year.
Participants are immediately vested 100% in their accounts which are
distributed to them as of the date the distribution is made.
With respect to each plan year, all contributions under the Plan, from
both the participants and the Company, are invested in common stock of
CFBI.
All net assets available for benefits of the Plan are distributed on an
annual basis by the end of each plan year, including dividend and
interest income and net unrealized appreciation (depreciation) in fair
value of investments earned during the year. All assets of the Plan at
December 31, 2001 and 2000 have been transferred into Frost National
Bank brokerage accounts in the names of each individual participant.
3. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Company may pay for certain or all expenses incurred in administering the
provisions of the Plan. During 2001 and 2000, all such expenses were paid by
the Company.
4. INCOME TAX STATUS
The Plan is not subject to federal income taxes as all contributions to the
Plan and earnings are fully vested and treated as taxable to the employee. All
employee contributions to the Plan are made on an after-tax basis. Employer
contributions to the Plan are not deferred and therefore are included in the
employee's taxable income.