CULLEN/FROST BANKERS, INC. I consider it an accomplishment that our net interest income for the year was basically flat, down just $2.1 million from the previous year. Margins were squeezed throughout the year due to our asset-sensitive balance  sheet, and loans were essentially flat. However, when adjusted for the run-off of indirect lending, which we no longer offer, and mortgages, which are now provided through a  co-branding arrangement with GMAC Mortgage, our average loan growth was 2.8  percent. Strong deposit growth of 5.2 percent produced higher earning assets, which helped mitigate the margin squeeze. Non-interest income rose 9.4 percent in 2002, led by increases in commercial service charges and insurance commissions. Throughout the year, we made a conscious effort to manage and control expenses company-wide, which resulted in an 8.1 percent decrease in non-interest expense. To  help put this into perspective, the 2001 expense base included a restructuring charge  and goodwill amortization. New accounting rules no longer require the amortization of goodwill, and we did not take a restructuring charge in 2002. Excluding these two items from last year’s expenses, non-interest expense would have been flat, a validation of our efforts to control expenses and the result of the tough decisions we made at the end of the previous year. Our Frost Insurance Agency subsidiary doubled insurance referral income over the previous year, fueling insurance revenue growth of 39 percent over 2001. Frost Insurance Agency is now one of the 15 largest bank-owned insurance agencies in the country. We take pride in all of our subsidiaries’ contributions to the bottom line. But we never lose sight of the fact that our success is also due to strong execution in basic  banking services, including loans, deposits and related banking products. In fact, ★ 3 ANNUAL REPORT