2003 Nominating Charter: CFR

CULLEN/ FROST BANKERS, INC.


CORPORATE GOVERNANCE AND NOMINATING COMMITTEE CHARTER
(Effective March 27, 2003)

I. PURPOSE OF COMMITTEE

The purpose of the Corporate Governance and Nominating Committee (the "Committee") of the Board of Directors (the "Board") of Cullen/ Frost Bankers, Inc. ("Cullen/ Frost") is (i) to maintain a set of corporate governance principles applicable to Cullen/ Frost and (ii) to identify and recommend individuals to the Board for nomination as members of the Board. In exercising its duties and responsibilities, the Committee shall consider and take into account Cullen/ Frost's mission statement and core values (known as the "Frost Philosophy"), which have been developed over Cullen/ Frost's existence, beginning in 1868, and the long-standing culture and traditions of Cullen/ Frost and its way of doing business. The Frost Philosophy is set forth in a brochure entitled "Relationship Banking".

II. COMMITTEE MEMBERSHIP

The Committee shall consist of three members of the Board, each of whom the Board has determined is "independent" under the then-existing rules of the New York Stock Exchange, Inc.

The members of the Committee shall be appointed by the Board. Members shall serve at the pleasure of the Board and for such term or terms as the Board may determine.

III. COMMITTEE STRUCTURE AND OPERATIONS

The Committee shall designate one member of the Committee as its chairperson. The Committee shall meet in person or telephonically at least twice a year at a time and place determined by the Committee chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its chairperson. The Committee recognizes and expects that management's involvement and views will play an important role in the Committee's exercise of its duties and responsibilities.

IV. COMMITTEE DUTIES AND RESPONSIBILITIES

The following are the duties and responsibilities of the Committee, which may be supplemented from time to time by any duties and responsibilities expressly delegated to the Committee by the Board:


A. With respect to corporate governance,



1. To maintain a set of corporate governance principles applicable to Cullen/ Frost, review those principles on an annual basis and recommend to the Board any changes thereto that the Committee deems necessary or appropriate.

2. To establish procedures for the Committee to exercise oversight of the evaluation of the Board and management.

3. To discuss with Cullen/ Frost's Chief Executive Officer ("CEO") a succession plan, developed in conjunction with the CEO.

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B. With respect to nominating,



1. To identify individuals believed to be qualified to become members of the Board, and to recommend to the Board the nominees to stand for election as Directors at the annual meeting of shareholders or, if applicable, at a special meeting of shareholders. In the case of a vacancy in the office of a Director (including a vacancy created by an increase in the size of the Board), the Committee shall recommend to the Board an individual to fill such vacancy either through appointment by the Board or through election by shareholders. In recommending candidates, the Committee shall take into consideration the criteria set forth under "Selection of Directors" in Cullen/ Frost's Corporate Governance Guidelines.

2. To review the continuation on the Board of any Director who has tendered a letter of proposed resignation from the Board and recommend to the Board whether, in light of all the circumstances, the Board should accept such proposed resignation or request that the Director continue to serve.


V. COMMITTEE REPORTS

The Committee shall produce the following reports and provide them to the Board:


A. An annual performance evaluation of the Committee, which evaluation must compare the performance of the Committee with the requirements of this Charter. The performance evaluation should also recommend to the Board any improvements to this Charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the chairperson of the Committee or any other member of the Committee designated by the Committee to make this report.



B. A summary of the actions taken at each Committee meeting, which shall be presented to the Board at the next Board meeting.


VI. RESOURCES AND AUTHORITY OF THE COMMITTEE

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, without seeking approval of the Board or management.


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