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58 percent of our non-interest income comes from core banking activities. One example is our Frost ATM & Checkcard, which brought in revenues of $5.8 million.We understand the importance of offering new products to raise the level of cross-selling, while driving home our core banking business.We have $7.6 billion in deposits on our balance sheet, more than 40 percent of which is in demand deposits.This, in turn, reduces our cost of funds to extremely low levels and gives us a better net interest margin than most banks. We expect the margin squeeze to improve when interest rates eventually increase. 

For more than a century, we have provided basic check clearing, payment processing and related services to other banks. Correspondent Banking continues to be a strong segment of our business, most of it coming from relationships we’ve built over the years. 

Our consumer banking business continues to grow with the addition of two locations in 2002, one in Harlingen in the fast-growing Rio Grande Valley market and the other in Northwest San Antonio. Our newest San Antonio location incorporates an inviting customer-friendly approach and is the prototype for new financial centers. In 2003, we plan to open three new locations, one in North Austin and two in San Antonio in the Medical Center and the Southwest area of the city. We continue to explore better ways to serve our core customer base through a variety of products and delivery channels. In the process of staying in regular contact with our customers, we have developed a strategic program that enables us to anticipate and respond to their financial needs. 

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The Internet continues to be an important delivery channel for us. More than 50,000 customers had registered for our Internet Banking service, My Frost , by year-end, and we now average one million logins each quarter.We increased the functionality and created greater efficiencies by moving our Bill Pay service from an external vendor to one that is 

