<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to the
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the transition period __ to __.
Commission File No. 0-6919
------
UNION PLANTERS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-0859007
--------- ----------
(State of incorporation) ( I.R.S. Employer Identification No.)
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018
- -------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (901) 383-6000
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at April 30, 1994
------------------------- -------------------------------
Common stock $5 par value 21,767,202
<PAGE> 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1994
<TABLE>
<CAPTION>
INDEX
Page
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheet - March 31, 1994,
March 31, 1993, and December 31, 1993 3
b) Consolidated Statement of Earnings -
Three Months Ended March 31, 1994 and 1993 4
c) Consolidated Statement of Changes in
Shareholders' Equity - Three Months Ended
March 31, 1994 5
d) Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1994 and 1993 6
e) Notes to Unaudited Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 16
Part II. Other Information
Item 1. Legal Proceedings 33
Item 2. Changes in Securities 33
Item 3. Defaults Upon Senior Securities 33
Item 4. Submission of Matters to a Vote of Security Holders 33
Item 5. Other Information 33
Item 6. Exhibits and Reports on Form 8-K 33
Signatures 34
</TABLE>
-2-
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31
---------------------------
DECEMBER 31,
1994 1993 1993
----------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 278,116 $ 225,382 $ 225,626
Interest-bearing deposits at financial
institutions 9,898 69,199 26,647
Federal funds sold and securities purchased
under agreements to resell 105,818 68,794 53,149
Trading account securities, at market 157,171 97,487 153,482
Loans held for resale 20,223 27,788 56,053
Investment securities
Available for sale (Amortized cost March 31, 1994: $2,259,247;
Fair value March 31, 1993 and December 31, 1993: $579,123
and $600,491, respectively) 2,259,419 567,973 595,090
Held to maturity (Fair value: $562,892; $2,204,275;
and $2,060,769; respectively) 548,498 2,154,908 2,021,963
Loans 3,110,439 2,768,044 2,951,885
Less: Unearned income (17,801) (17,506) (16,670)
Allowance for losses on loans (87,099) (79,674) (80,442)
----------- ----------- ------------
Net loans 3,005,539 2,670,864 2,854,773
Premises and equipment 145,528 127,621 135,511
Accrued interest receivable 55,093 51,551 49,953
Goodwill and other intangibles 40,341 37,728 40,794
Other assets 99,136 113,587 105,145
----------- ----------- ------------
TOTAL ASSETS $ 6,724,780 $ 6,212,882 $ 6,318,186
=========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 815,335 $ 722,850 $ 750,093
Certificates of deposit of $100,000 and over 340,949 339,305 334,173
Other interest-bearing 4,455,613 4,270,836 4,167,100
----------- ----------- ------------
Total deposits 5,611,897 5,332,991 5,251,366
Short-term borrowings 234,235 270,511 244,995
Federal Home Loan Bank advances 169,410 4,968 157,954
Long-term debt 117,161 81,435 117,276
Accrued interest, expenses, and taxes 50,591 54,105 41,893
Other liabilities 28,072 41,657 27,402
----------- ----------- ------------
TOTAL LIABILITIES 6,211,366 5,785,667 5,840,886
----------- ----------- ------------
Commitments and contingent liabilities - - -
Shareholders' equity
Preferred stock
Convertible 87,298 72,893 87,298
Nonconvertible 17,250 17,250 17,250
Common stock, $5 par value; 50,000,000 shares authorized;
21,522,749 issued and outstanding (19,500,544 at March 31,
1993 and 19,656,924 at December 31, 1993) 107,614 97,503 98,285
Additional paid-in capital 85,560 77,859 86,385
Net unrealized gain - available for sale securities 103 - -
Retained earnings 215,589 161,710 188,082
----------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY 513,414 427,215 477,300
----------- ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,724,780 $ 6,212,882 $ 6,318,186
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 4
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------------------
1994 1993
------------------ ------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 63,792 $ 58,775
Interest on investment securities
Taxable 27,080 30,862
Tax-exempt 6,843 5,237
Interest on deposits at financial institutions 122 699
Interest on federal funds sold and securities
purchased under agreements to resell 861 1,054
Interest on trading account securities 1,759 1,599
Interest on loans held for resale 581 519
----------- -----------
Total interest income 101,038 98,745
----------- -----------
INTEREST EXPENSE
Interest on deposits 36,622 37,356
Interest on short-term borrowings 1,884 1,780
Interest on Federal Home Loan Bank advances and long-term debt 3,639 2,028
----------- ----------
Total interest expense 42,145 41,164
----------- -----------
NET INTEREST INCOME 58,893 57,581
Provision for losses on loans - 2,823
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS 58,893 54,758
----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 7,515 6,507
Bank card income 2,004 1,773
Mortgage servicing income 1,630 2,032
Trust service income 1,555 1,503
Profits and commissions from trading activities 1,489 1,633
Investment securities gains 100 880
Other income 5,621 5,458
----------- -----------
Total noninterest income 19,914 19,786
----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 24,521 23,565
Net occupancy expense 4,298 3,943
Equipment expense 4,339 3,881
Other expense 21,076 23,248
----------- -----------
Total noninterest expense 54,234 54,637
----------- -----------
EARNINGS BEFORE INCOME TAXES AND ACCOUNTING
CHANGES 24,573 19,907
Applicable income taxes 7,233 6,413
----------- -----------
EARNINGS BEFORE ACCOUNTING CHANGES 17,340 13,494
Accounting changes, net of taxes - 5,001
----------- -----------
NET EARNINGS $ 17,340 $ 18,495
=========== ===========
EARNINGS PER COMMON SHARE
Earnings before accounting changes
Primary $ 0.70 $ 0.60
Fully diluted 0.65 0.57
Net earnings
Primary $ 0.70 $ 0.85
Fully diluted 0.65 0.78
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Primary 21,636 19,198
Fully diluted 26,117 23,009
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 5
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL UNREALIZED
PREFERRED COMMON PAID-IN GAIN (LOSS) RETAINED
STOCK STOCK CAPITAL ON SECURITIES EARNINGS TOTAL
--------- -------- --------- ------------- --------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 104,548 $ 98,285 $ 86,385 $ - $ 188,082 $ 477,300
Net earnings - - - - 17,340 17,340
Cash dividends
Common Stock, $.21 per share - - - - (4,306) (4,306)
Series B Preferred Stock, $2.00 per share - - - - (88) (88)
Series C Preferred Stock, $ .65 per share - - - - (451) (451)
Series D Preferred Stock, $ .49 per share - - - - (124) (124)
Series E Preferred Stock, $ .50 per share - - - - (1,554) (1,554)
Common shares issued under employee benefit
plans and dividend reinvestment plan,
net of shares repurchased - 257 886 - (39) 1,104
Issuance of 1,814,428 shares of Common
Stock for acquisitions (Note 2) - 9,072 (1,711) - 16,696 24,057
Net unrealized gain on securities
available for sale, net of taxes - - - 103 - 103
Other - - - - 33 33
--------- --------- --------- --------- --------- ---------
BALANCE, MARCH 31, 1994 $ 104,548 $ 107,614 $ 85,560 $ 103 $ 215,589 $ 513,414
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1994 1993
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 17,340 $ 18,495
Reconciliation of net earnings to net cash provided by operating activities
Cumulative effect of accounting changes - (5,001)
Provision for losses on loans and other real estate 45 3,689
Depreciation and amortization 3,374 3,063
Amortization and write-off of intangibles 1,604 3,941
Net accretion of investment securities 1,621 1,557
Net realized gains on sale of investment securities (100) (880)
Deferred income taxes 503 (825)
Decrease in assets
Trading account securities and loans held for resale 32,141 75,852
Accrued interest receivable and other assets 9,452 24,395
(Decrease) increase in accrued interest, expenses, taxes, and other liabilities 3,114 (18,384)
Other, net (269) (60)
---------- ---------
Net cash provided by operating activities 68,825 105,842
---------- ---------
INVESTING ACTIVITIES
Net decrease in short-term investments 17,968 31,903
Proceeds from sales and maturities of investment securities available for sale 277,050 160,143
Purchases of investment securities available for sale (288,736) (160,476)
Proceeds from maturities of investment securities 15,870 226,673
Purchase of investment securities (55,691) (379,158)
Net decrease in loans 40,216 72,095
Net cash received for purchases of financial institutions 24,863 66,233
Purchases of premises and equipment, net (6,680) (5,774)
--------- ---------
Net cash provided by investing activities 24,860 11,639
--------- ---------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 20,914 (131,320)
Net decrease in short-term borrowings (11,433) (30,844)
Proceeds from long-term debt 13,555 668
Repayment of long-term debt (6,210) (207)
Proceeds from issuance of common stock, net 1,268 15,647
Purchase and retirement of common stock, net (61) (38)
Cash dividends paid (6,519) (4,845)
--------- ---------
Net cash provided (used) by financing activities 11,514 (150,939)
--------- ---------
Net increase (decrease) in cash and cash equivalents 105,199 (33,458)
Cash and cash equivalents at the beginning of the period 278,735 327,634
--------- ---------
Cash and cash equivalents at the end of the period $ 383,934 $ 294,176
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest $ 39,211 $ 38,602
Taxes 176 4,521
Other real estate transferred from loans $ 569 $ 1,438
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 7
UNION PLANTERS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. PRINCIPLES OF ACCOUNTING
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles. The foregoing financial
statements are unaudited; however, in the opinion of management, all
adjustments, including normal recurring adjustments, necessary for a fair
presentation of the consolidated financial statements have been included. March
31, 1993 interim financial statements and financial information have been
restated for 1993 acquisitions accounted for as poolings of interests.
As discussed in the Corporation's 1993 Annual Report to Shareholders,
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," was adopted effective January 1,
1994.
The accounting policies followed by Union Planters Corporation and its
subsidiaries (the Corporation) for interim financial reporting are consistent
with the accounting policies followed for annual financial reporting except as
noted below. The notes included herein should be read in conjunction with the
notes to the consolidated financial statements included in the Corporation's
1993 Annual Report to Shareholders. Certain 1993 amounts have been reclassified
to be consistent with the 1994 financial reporting presentation.
NOTE 2. MERGERS AND ACQUISITIONS
POOLINGS OF INTERESTS
During the first quarter of 1994, the Corporation completed two
acquisitions and in 1993 completed four acquisitions which were accounted for
using the pooling of interests method of accounting. The table below summarizes
these acquisitions.
<TABLE>
<CAPTION>
1993 ACQUISITIONS
- -----------------
TOTAL ASSETS AT TOTAL EQUITY AT
DATE SHARES JANUARY 1, JANUARY 1,
INSTITUTION ACQUIRED ISSUED 1993 1993
- ----------------------------- ---------- -------- --------------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Garrett Bancshares, Inc. (GBI) 5/31/93 613,088 $173.7 $ 4.8
Hogue Holding Company, Inc. (HHC) 9/1/93 219,274 38.5 4.4
Central State Bancorp, Inc. (CSB) 9/1/93 630,355 107.8 10.7
First Financial Services, Inc. (FFS) 10/1/93 447,906 86.0 8.4
--------- ------ -----
1,910,623 $406.0 $28.3
========= ====== =====
</TABLE>
<TABLE>
<CAPTION>
1994 ACQUISITIONS
- -----------------
TOTAL ASSETS AT TOTAL EQUITY AT
DATE SHARES JANUARY 1, JANUARY 1,
INSTITUTION ACQUIRED ISSUED 1994 1994
- ----------------------------- ----------- -------- --------------- ----------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Mid-South Bancorp, Inc. (MSB) 1/1/94 839,542 $184.6 $11.8
First National Bancorp of
Shelbyville, Inc. (FNB) 3/1/94 974,886 170.0 12.3
--------- ------ -----
1,814,428 $354.6 $24.1
========= ====== =====
</TABLE>
-7-
<PAGE> 8
The consolidated financial statements for 1993 and 1994 include the
results of the institutions acquired in 1993. The results of institutions
acquired in 1994 are included in the consolidated financial statements for
1994; however, prior year amounts have not been restated due to immateriality.
Eliminations have been made for material intercompany transactions with the
pooled companies. The 1994 acquisitions contributed approximately $1.0 million,
$.1 million and $.2 million to 1994 net interest income, noninterest income,
and net earnings, respectively, of the Corporation through their respective
dates of acquisition.
PURCHASE ACQUISITIONS
The Corporation acquired eight institutions in 1993 and one in the first
quarter of 1994 which were accounted for using the purchase method of
accounting. The table below summarizes these acquisitions:
<TABLE>
<CAPTION>
TOTAL ASSETS
DATE PURCHASE RESULTING AT DATE OF
INSTITUTION ACQUIRED CONSIDERATION PRICE INTANGIBLES ACQUISITION
- ---------------------- -------- ------------- -------- ----------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Bank of East Tennessee (BOET) (a) 1/1/93 648,786 Shares of $25.3 $7.0 $231
Series E Preferred
Stock
Security Trust Federal Savings
and Loan Association and
SaveTrust Federal Savings Bank
(Security Trust/SaveTrust) 1/1/93 Cash 22.0 3.0 261
First Federal Savings Bank 2/26/93 625,000 Shares of NM (b) - 187
(Maryville) (b) Common Stock
(Conversion/
Acquisition)
First State Bancshares, Inc. 3/12/93 Cash and Common 3.9 .4 34
(FSB) (c) Stock (90,162 Shares)
First Cumberland Bank (FCB) (d) 3/15/93 Cash .2 - 20
Farmers Union Bank 4/1/93 Cash 9.5 4.2 78
(Farmers Union)
Erin Bank & Trust Company 6/1/93 259,736 Shares of 8.3 2.1 43
(Erin) Series E Preferred
Stock
Anderson County Bank (ACB) 3/1/94 Cash 2.0 (e) .3 22
------ -----
Total $ 17.0 $ 876
====== =====
</TABLE>
(a) The Corporation previously held 17.93% of the common stock of BOET ($3.4
million). On January 1, 1993, the Corporation purchased an additional
43.93% of the common stock of BOET in exchange for the Corporation's
Series E Preferred Stock ($11.1 million). Effective May 3, 1993, the
Corporation acquired the remaining common stock of BOET in exchange for
the Corporation's Series E Preferred Stock ($10.8 million).
(b) Maryville was a mutual savings bank which, pursuant to a conversion
acquisition, converted to a federal stock charter. All of the stock of
Maryville was acquired by the Corporation in exchange for a capital
contribution equalling approximately $14.1 million derived in part from
the proceeds of a public offering of the Corporation's Common Stock made
in connection with the conversion/acquisition.
(c) FSB is the parent company of First State Bank of Fayette County
(Somerville).
(d) Merged into UPNB.
(e) Subject to adjustment.
NM -- Not meaningful.
-8-
<PAGE> 9
Intangibles are being amortized primarily using the straight line method
over periods ranging from 10 to 15 years. The recording of the acquisition of
Maryville resulted in negative goodwill of approximately $9.4 million, $8.1
million of which was deducted from noncurrent, nonmonetary assets (premises and
equipment, fair value adjustment of loans, prepaid software, and mortgage
servicing rights). The remaining negative goodwill of $1.3 million was recorded
in other liabilities and is being accreted over seven years.
The following unaudited pro forma information summarizes the pro forma
impact of the purchase acquisition completed during the first three months of
1994 and the pro forma impact of the purchase acquisitions completed in 1993
assuming consummation of all such transactions on January 1, 1993. The
unaudited pro forma results are not necessarily representative of the actual
results that would have occurred or which may occur in the future.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
---------------------------
THREE MONTHS ENDED
MARCH 31,
---------------------------
1994 1993
------- --------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net interest income $ 59,051 $ 60,128
Provision for losses on loans 167 (5,876)
Noninterest income 19,937 20,205
Noninterest expense (54,384) (57,158)
-------- ---------
Earnings before income taxes
and accounting changes 24,771 17,299
Applicable income taxes (7,234) (6,509)
-------- ---------
Earnings before accounting changes 17,537 10,790
Accounting changes, net of taxes - 5,001
-------- ---------
Net earnings $ 17,537 $ 15,791
======== =========
Earnings per common share
Earnings before accounting changes
Primary $ .71 $ .44
Fully diluted .65 .43
Net earnings
Primary .71 .69
Fully diluted .65 .63
</TABLE>
The following details the net cash received from purchases of financial
institutions:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1994 1993
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Fair value of assets acquired $ 376,704 $ 1,119,385
Liabilities assumed (350,595) (1,050,478)
Issuance of Common Stock (24,103) (30,618)
Issuance of Preferred Stock - (11,137)
Less previous investment - (3,387)
--------- -----------
Cash paid for purchase of other
financial institutions 2,006 23,765
Cash and cash equivalents acquired (26,869) (89,998)
--------- -----------
Net cash received from purchases
of financial institutions $ (24,863) $ (66,233)
========= ===========
</TABLE>
-9-
<PAGE> 10
PENDING ACQUISITIONS
The Corporation has signed definitive agreements pursuant to which it
would acquire the entities listed below; and, subject to various approvals and
satisfaction of certain contractual conditions precedent, all are expected to
be consummated in 1994. The number of shares of Common Stock to be issued in
connection with these acquisitions is subject to change depending on the price
of the Corporation's Common Stock.
<TABLE>
<CAPTION>
ANTICIPATED APPROXIMATE
METHOD OF TOTAL
INSTITUTION CONSIDERATION ACCOUNTING ASSETS
- ----------------------------- ----------------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Clin-Ark Bancshares, Inc., Parent Company 227,768 shares of Pooling of Interests $ 50
of First National Bank of Clinton Common Stock
in Clinton, Arkansas (CBI) (a)
Tennessee Bancorp, Inc., Parent Company Cash equal to 1.5 Purchase 92
of Tennesse National Bank in times net book value
Columbia, Tennessee (TBI) (b) at closing (approximately
$13.5 million)
Liberty Bancshares, Inc., Parent Company Approximately 1,322,000 Pooling of Interests 170
of Liberty Federal Savings Bank in shares of Common Stock
Paris, Tennessee (LBI)
Earle Bankshares, Inc., Parent Company of Approximately 350,000 Pooling of Interests 40
First Southern Bank in Earle, shares of Common Stock
Arkansas (EBI)
BNF BANCORP, Inc. (formerly BANKFIRST Approximately 2,054,000 Pooling of Interests 262
Corporation), Parent Company of shares of Common Stock ----
BANKFIRST, a federal savings bank in
Decatur, Alabama (BNF)
Total $614
====
</TABLE>
(a) Acquisition consummated April 1, 1994.
(b) Acquisition consummated May 1, 1994 and merged into Union Planters National
Bank.
NOTE 3. LOANS
Loans are summarized by type as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial, financial, and agricultural $ 625,022 $ 664,362
Real estate - construction 96,669 82,971
Real estate - mortgage
Secured by 1-4 family 1,151,795 1,022,263
Other mortgage loans 563,292 517,886
Consumer
Credit cards and other related plans 98,653 99,103
Home equity 88,800 86,356
Other consumer 456,439 450,780
Foreign
Government 1,750 2,250
Direct lease financing, net 28,019 25,914
----------- -----------
Total Loans $ 3,110,439 $2,951,885
=========== ==========
</TABLE>
-10-
<PAGE> 11
Nonperforming loans and loans 90 days or more past due are summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $ 16,983 $ 14,646
Restructured loans 7,329 7,525
----------- -----------
Total nonperforming loans $ 24,312 $ 22,171
=========== ===========
90 days or more past due and not
on nonaccrual status $ 4,365 $ 4,771
=========== ===========
</TABLE>
NOTE 4. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans for the three months ended
March 31, 1994, are summarized as follows (dollars in thousands):
<TABLE>
<S> <C>
Balance, January 1, 1994 $ 80,442
Provision charged to expense -
Allowances of banks acquired 5,575
Recoveries 2,685
Amounts charged off (1,603)
-----------
Balance, March 31, 1994 $ 87,099
===========
</TABLE>
NOTE 5. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31, 1994
----------------------------------------------------------
UNREALIZED
AMORTIZED ---------------------- FAIR
COST GAINS LOSSES VALUE
----------- -------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Government obligations
U.S. Treasury securities $ 861,793 $ 3,267 $ 5,498 $ 859,562
Securities of U.S. Government agencies
Collateralized mortgage obligations 359,178 715 3,286 356,607
Mortgage-backed securities 740,931 6,754 2,705 744,980
Other 214,805 1,719 308 216,216
Other stocks and securities 82,540 121 607 82,054
----------- -------- -------- -----------
Total investment securities
available for sale $ 2,259,247 $ 12,576 $ 12,404 $ 2,259,419
=========== ======== ======== ===========
HELD TO MATURITY
U.S. Government obligations
U.S. Treasury securities $ 81,899 $ 211 $ 878 $ 81,232
Securities of U.S. Government agencies
Collateralized mortgage obligations 16,859 174 189 16,844
Other 50 1 - 51
----------- -------- -------- -----------
Total U.S. Government obligations 98,808 386 1,067 98,127
Obligations of states and political
subdivisions 449,318 17,634 2,559 464,393
----------- -------- -------- -----------
Other securities
Federal Reserve Bank/Federal Home
Loan Bank stock 357 - - 357
Other 15 - - 15
----------- -------- -------- -----------
Total other securities 372 - - 372
----------- -------- -------- -----------
Total investment securities
held to maturity $ 548,498 $ 18,020 $ 3,626 $ 562,892
=========== ======== ======== ===========
</TABLE>
-11-
<PAGE> 12
NOTE 5. INVESTMENT SECURITIES (continued)
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------------------------------------------
UNREALIZED
AMORTIZED ---------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Government obligations
U.S. Treasury securities $ 110,739 $ 514 $ 3 $ 111,250
Securities of U.S. Government agencies
Collateralized mortgage obligations 141,853 694 105 142,442
Mortgage-backed securities 233,961 3,516 74 237,403
Other 91,058 823 8 91,873
Other stocks and securities 17,479 88 44 17,523
----------- -------- -------- -----------
Total investment securities
available for sale $ 595,090 $ 5,635 $ 234 $ 600,491
=========== ======== ======== ===========
HELD TO MATURITY
U.S. Government obligations
U.S. Treasury securities $ 693,612 $ 7,222 $ 244 $ 700,590
Securities of U.S. Government agencies
Collateralized mortgage obligations 341,645 767 992 341,420
Mortgage-backed securities 356,140 4,188 152 360,176
Other 121,691 1,732 37 123,386
----------- -------- -------- -----------
Total U.S. Government obligations 1,513,088 13,909 1,425 1,525,572
----------- -------- -------- -----------
Obligations of states and political
subdivisions 441,509 27,064 845 467,728
----------- -------- -------- -----------
Other securities
Federal Reserve Bank/Federal Home
Loan Bank stock 25,134 - - 25,134
Bonds, notes, and debentures 1,896 10 - 1,906
Collateralized mortgage obligations 39,036 177 114 39,099
Other 1,300 30 - 1,330
----------- -------- -------- -----------
Total other securities 67,366 217 114 67,469
----------- -------- -------- -----------
Total investment securities
held to maturity $ 2,021,963 $ 41,190 $ 2,384 $ 2,060,769
=========== ======== ======== ===========
</TABLE>
For the three month periods ended March 31, 1994 and 1993, the Corporation
had gross realized gains on investment securities available for sale of
$279,000 and $535,000, respectively, and gross realized losses of $199,000 and
$14,000, respectively. For investment securities held to maturity, gross
realized gains for the three months ended March 31, 1994 and 1993 were $20,000
and $362,000, respectively, and gross realized losses were zero in 1994 and
$4,000 in 1993. In the first quarter of 1994, the gross realized gains for held
to maturity securities resulted from "calls" of securities.
Investment securities having a carrying value of approximately $511
million and $591 million at March 31, 1994 and December 31, 1993, respectively,
were pledged to secure public and trust funds on deposit and securities sold
under agreements to repurchase.
As of January 1, 1994 and in connection with the adoption of SFAS No. 115,
$1.7 billion of held to maturity securities were transferred to the available
for sale category of securities.
-12-
<PAGE> 13
NOTE 6. OTHER NONINTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1994 1993
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Other noninterest income
VSIBG partnership earnings $ 706 $ 880
Credit life insurance commissions 699 607
Brokerage fee income 376 400
Sale of servicing 218 38
Other 3,622 3,533
-------- --------
Total other noninterest income $ 5,621 $ 5,458
======== ========
Other noninterest expense
Amortization of mortgage servicing rights $ 397 $ 1,169
FDIC assessments 3,148 3,078
Amortization of goodwill and other intangibles 1,252 2,659
Legal fees 437 935
Other contracted services 1,549 1,592
Advertising and clearing fees 1,201 1,193
Brokerage and clearing fees 758 887
Postage and carrier 1,442 1,299
Stationery and supplies 1,367 1,185
Merchant credit card charges 1,093 1,017
Communications 995 1,064
Other real estate expense 101 1,014
Other personnel services 619 570
Federal Reserve fees 427 423
Dues, subscriptions, and contributions 508 617
Travel 410 384
Miscellaneous charge-offs 282 186
Insurance 344 379
Servicing foreclosure expense 105 210
Consultant fees 173 270
Taxes other than income taxes 493 403
Other 3,975 2,714
-------- --------
Total other noninterest expense $ 21,076 $ 23,248
======== ========
</TABLE>
NOTE 7. INCOME TAXES
Applicable income taxes for the three months ended March 31, 1994, were
$7.2 million, resulting in an effective tax rate of 29.4%. Applicable income
taxes for the same period in 1993 were $6.4 million, resulting in an effective
tax rate of 32.2%. The tax expense applicable to investment securities gains
for the three months ended March 31, 1994 and 1993 was $39,000 and $296,000,
respectively.
At March 31, 1994, the Corporation had a net deferred tax asset of $42.3
million recorded in other assets compared to $37.4 million at March 31, 1993,
and $39.6 million at December 31, 1993.
-13-
<PAGE> 14
NOTE 8. FEDERAL HOME LOAN BANK (FHLB) ADVANCES
The Corporation's subsidiaries have obtained various advances from the
Federal Home Loan Bank (FHLB) totaling $169.4 million at March 31, 1994, under
Blanket Agreements for Advances and Security Agreements (the Agreements). The
Agreements entitle the Corporation's subsidiaries to borrow funds from the FHLB
to fund mortgage loan programs and satisfy other funding needs. Interest rates
on the advances vary from fixed rate advances to variable rate advances. The
majority of the advances at March 31, 1994, had variable rates tied to the
three-month LIBOR rate. Maturity dates for the advances range from 1994 to
2014. Collateral (mortgage loans) under the Agreements must be 150% of the
$169.4 million advances outstanding at March 31, 1994.
NOTE 9. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Corporation's outstanding preferred stock is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Preferred stock, without par value,
10,000,000 shares authorized
CONVERTIBLE
Series A Preferred Stock,
250,000 shares authorized,
none issued $ - $ -
Series B, $8 Nonredeemable,
Cumulative, Convertible
Preferred Stock (stated at
liquidation value of $100),
44,000 shares issued and
outstanding 4,400 4,400
Series D, 9.5% Redeemable,
Cumulative, Convertible
Preferred Stock (stated at
liquidation value of $20.50),
253,655 shares issued and
outstanding 5,200 5,200
Series E, 8% Cumulative,
Convertible, Preferred Stock
(stated at liquidation value
of $25), 3,107,922 shares issued and
outstanding at March 31, 1994 and
December 31, 1993 77,698 77,698
-------- --------
Total convertible preferred stock 87,298 87,298
NONCONVERTIBLE
Series C, 10 3/8%, Increasing
Rate, Redeemable, Cumulative
Preferred Stock (stated at
liquidation value of $25), and
690,000 shares issued and
outstanding 17,250 17,250
-------- --------
Total nonconvertible preferred stock 17,250 17,250
-------- --------
Total Preferred Stock $104,548 $104,548
======== ========
</TABLE>
-14-
<PAGE> 15
NOTE 10. CONTINGENT LIABILITIES
Management is of the opinion that the Corporation has accrued
liabilities sufficient to cover the estimated costs associated with the
ultimate resolution of various pending legal matters. Except as discussed
below, there were no significant developments during the first quarter of 1994
in any of the described pending or threatened actions which affected
management's opinion that the effect of these matters on the Corporation's
financial position is not material.
The Corporation and/or various subsidiaries are parties to certain
pending or threatened civil actions which are described in Item 3, Part I of
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1993 (1993 10-K) and in Note 19 to the Corporation's consolidated financial
statements on page 33 of the 1993 Annual Report to Shareholders (1993 Annual
Report). The seventh paragraph of Item 3, Part 1 of the 1993 10-K describes
certain pending litigation in the U. S. District Court for the Western District
of Tennessee against UPNB and eight other banks alleging violations of the
Sherman Act, the federal anti-trust statute prohibiting the fixing of prices by
competitors, as well as the Tennessee Consumer Protection Act. During the
first quarter of 1994, the court granted the defendants' motion for summary
judgment on the Sherman Act claim (the Tennessee Consumer Protection Act claim
having been previously dismissed), and the plaintiffs filed a motion for
reconsideration.
Various other legal proceedings pending against the Corporation and/or
its subsidiaries have arisen in the ordinary course of business. Management is
of the opinion the Corporation's financial position will not be materially
affected by the ultimate resolution of these other legal matters.
-15-
<PAGE> 16
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following provides a narrative discussion and analysis of significant
changes in results of operations and financial condition. This discussion
should be read in conjunction with the consolidated financial statements and
related financial analysis set forth in the Corporation's 1993 Annual Report,
the interim unaudited financial statements and notes for the three months ended
March 31, 1994 included in Part I hereof, and the other supplemental financial
data included in this discussion.
The following table presents selected financial highlights for the
three-month periods ended March 31, 1994 and 1993.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------- PERCENTAGE
1994 1993 CHANGE
------ ------ ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Earnings before accounting changes $17,340 $13,494 29 %
Net earnings 17,340 18,495 (6)
Earnings before accounting changes
Primary earnings per common share $ .70 $ .60 17
Fully diluted earnings per common share .65 .57 14
Return on average assets 1.05 % .90 % 17
Return on average common equity 15.44 14.61 6
Net earnings
Primary earnings per common share $ .70 $ .85 (18)
Fully diluted earnings per common share .65 .78 (17)
Return on average assets 1.05 % 1.24 % (15)
Return on average common equity 15.44 20.93 (26)
Dividends per common share $ .21 $ .18 17
Net interest margin (FTE) 4.13 4.42 (7)
Interest rate spread (FTE) 3.72 4.02 (7)
Book value per common share 19.00 17.28 10
Book value assuming conversion of
convertible preferred stock 19.08 17.63 8
</TABLE>
Net interest margin = Net interest income as a percentage of earning assets
Interest rate spread = Difference in the yield on average earning assets and
the rate on average interest-bearing liabilities
FTE = Fully taxable-equivalent basis
-16-
<PAGE> 17
ACQUISITIONS
During the first three months of 1994, the Corporation consummated three
acquisitions. Additionally, two acquisitions have been consummated subsequent
to March 31, 1994. The following table presents at March 31, 1994, the balances
at the respective dates of acquisition for the institutions acquired through
March 31, 1994. Reference is made to Note 2 to the interim financial statements
and the Corporation's Current Reports on Form 8-K dated January 10, 1994,
February 8, 1994, April 14, 1994, and April 15, 1994 for additional information
regarding the pending and completed acquisitions.
UNION PLANTERS CORPORATION
CONSUMMATED ACQUISITIONS
BALANCES AT RESPECTIVE DATES OF ACQUISITION
MARCH 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL IMPACT
MSB (A) FNB (A) ACB ON UPC
--- --- --- ------------
<S> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions $ - $ 1,179 $ - $ 1,179
Loans, net of unearned income 114,234 66,753 16,139 197,126
Allowance for losses on loans (2,123) (2,834) (618) (5,575)
--------- --------- -------- ---------
Net loans 112,111 63,919 15,521 191,551
Investment securities 47,572 92,317 755 140,644
Intangible assets 479 - 261 740
Cash and cash equivalents 16,847 5,490 4,532 26,869
Other real estate owned, net 510 66 - 576
Premises and equipment 4,185 2,250 194 6,629
Other assets 2,946 4,828 742 8,516
--------- --------- -------- ---------
Total assets $ 184,650 $ 170,049 $ 22,005 $ 376,704
========= ========= ======== =========
LIABILITIES
Deposits $ 166,082 $ 153,918 $ 19,617 $ 339,617
Other interest-bearing
liabilities 4,670 - - 4,670
Other liabilities 2,076 3,850 382 6,308
--------- --------- -------- ---------
Total liabilities $ 172,828 $ 157,768 $ 19,999 $ 350,595
========= ========= ======== =========
Purchase price/capital
contribution/equity at
respective dates of
acquisition for poolings $ 11,822 $ 12,281 $ 2,006 $ 26,109
========= ========= ======== =========
</TABLE>
(a) Amounts are as of January 1, 1994, for MSB and FNB which were accounted for
as poolings of interests.
-17-
<PAGE> 18
PENDING ACQUISITIONS
The Corporation is continuing its efforts to acquire other financial
institutions in selected markets. Reference is made to Note 2 to the interim
financial statements for information regarding pending acquisitions.
Negotiations with other institutions are ongoing.
OPERATING RESULTS - THREE MONTHS ENDED MARCH 31, 1994
The two tables which follow present the contributions to fully diluted
earnings per common share and a summary of the first quarter results by major
operating units of the Corporation. A discussion of the operating results
follows these tables.
UNION PLANTERS CORPORATION
CONTRIBUTIONS TO FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 EPS
------------------ INCREASE
1994 1993 (DECREASE)
------ ------ ----------
<S> <C> <C> <C>
Net interest income-FTE $ 2.40 $ 2.62 $ (.22)
Provision for losses on loans - (.12) .12
------ ------ -----
Net interest income after provision
for losses on loans-FTE 2.40 2.50 (.10)
------ ------ ------
Noninterest income
Service charges on deposits .29 .28 .01
Profits and commissions from
trading activities .06 .07 (.01)
Investment securities gains - .04 (.04)
Other income .41 .47 (.06)
------ ------ ------
Total noninterest income .76 .86 (.10)
------ ------ ------
Noninterest expense
Salaries and benefits .94 1.02 .08
Net occupancy expense .16 .17 .01
Equipment expense .17 .17 -
Other expense .81 1.01 .20
------ ------ ------
Total noninterest expense 2.08 2.37 .29
------ ------ ------
Earnings before income taxes and
accounting changes-FTE 1.08 .99 .09
Applicable income taxes-FTE .42 .40 (.02)
------ ------ -------
Earnings before accounting changes .66 .59 .07
Accounting changes - .21 (.21)
------ ------ ------
Net earnings .66 .80 (.14)
Less preferred stock dividends .01 .02 .01
------ ------ ------
Fully diluted earnings per share $ .65 $ .78 $ (.13)
====== ====== ======
Change in net earnings applicable
to common shares using previous
year average shares outstanding $ (.05)
Change in average shares outstanding (.08)
------
Change in net earnings $ (.13)
======
</TABLE>
-18-
<PAGE> 19
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SUMMARY OF CONSOLIDATED RESULTS (A)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1994 1993 VARIANCE
------ ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Commercial Banking
Union Planters National Bank
Net interest income $ 29,066 $ 29,632 $ (566)
Provision for losses on loans 351 (1,442) 1,793
Noninterest income 12,580 12,095 485
Noninterest expense (29,082) (28,977) (105)
-------- -------- -------
Operating earnings 12,915 11,308 1,607
Investment securities gains (losses) (4) 620 (624)
Accelerated amortization of mortgage servicing rights - (500) 500
Accelerated amortization of intangibles - (329) 329
-------- -------- -------
Earnings before income taxes 12,911 11,099 1,812
-------- -------- -------
Community Bank Subsidiaries:
Net interest income 31,065 29,499 1,566
Provision for losses on loans (351) (1,381) 1,030
Noninterest income 6,167 5,639 528
Noninterest expense (24,733) (22,305) (2,428)
--------- -------- -------
Operating earnings 12,148 11,452 696
Investment securities gains 175 260 (85)
Accelerated amortization of intangibles - (55) 55
Write-off of intangibles - (1,181) 1,181
-------- -------- -------
Earnings before income taxes 12,323 10,476 1,847
-------- -------- -------
Parent Company and Other:
Net interest income (expense) (1,238) (1,550) 312
Noninterest income, excluding dividends
from subsidiaries (b) 1,114 1,196 (82)
Noninterest expense (c) (466) (1,314) 848
-------- --------- -------
Operating loss (590) (1,668) 1,078
Investment securities losses (71) - (71)
-------- -------- -------
Loss before income taxes (661) (1,668) 1,007
-------- -------- -------
Earnings before income taxes and
accounting changes 24,573 19,907 4,666
Applicable income taxes (7,233) (6,413) (820)
-------- -------- -------
Earnings before accounting changes 17,340 13,494 3,846
Accounting changes - 5,001 (5,001)
-------- -------- -------
Net earnings $ 17,340 $ 18,495 $(1,155)
======== ======== =======
</TABLE>
(a) Individual line items may not total to the consolidated statement of
earnings amounts due to eliminations.
(b) Net of intercompany dividends from bank subsidiaries of $12.0 million and
$3.5 million for the three months ended March 31, 1994 and 1993,
respectively.
(c) Management fees charged to subsidiaries of $4.5 million and $1.6 million
for the three months ended March 31, 1994 and 1993, respectively, have
been netted against noninterest expense.
-19-
<PAGE> 20
FIRST QUARTER EARNINGS OVERVIEW
For the first quarter of 1994, the Corporation had net earnings and record
earnings before accounting changes (operating earnings) of $17.3 million, an
increase of 29% over the same period in 1993. Operating earnings for the first
quarter last year were $13.5 million. Net earnings for the first quarter last
year were $18.5 million and included a $5.0 million benefit from the cumulative
effect of adopting Statements of Financial Accounting Standards (SFAS) Nos. 106
and 112 which relate to postretirement and postemployment benefits, and SFAS
No. 109 which relates to the accounting for income taxes.
Fully diluted earnings per common share for the first quarter of 1994 was
$.65 compared to fully diluted operating earnings per common share of $.57 for
the first quarter of 1993, an increase of 14%. Fully diluted net earnings per
common share was $.78 in 1993. Fully diluted earnings per common share for the
first quarter of 1994 is based on 3.1 million more shares than for the same
period in 1993, primarily as a result of shares issued in effecting
acquisitions.
For the first quarter of 1994, returns on average assets and average
common equity were 1.05% and 15.44%, respectively. This compares to returns of
.90% and 14.61%, respectively, for the same period in 1993 based on operating
earnings.
The growth of net interest income, the decline in the provision for losses
on loans, and the decrease in noninterest expenses were the primary factors
that contributed to the improved earnings. The following is a more complete
discussion and analysis of the results for the first quarter of 1994 compared
to the same period in 1993.
EARNINGS ANALYSIS
Net interest income (FTE) for the first quarter of 1994 was $62.6 million,
4% higher than the first quarter of 1993 which was $60.4 million, and 3% higher
than the fourth quarter of 1993 which was $60.9 million. Acquisitions effected
in 1994 contributed approximately $3.4 million to first quarter net interest
income.
The net interest margin for the first quarter of 1994 was 4.13% which
compares to 4.42% for the same quarter last year and 4.19% in the fourth
quarter of 1993. The interest rate spread also narrowed during the first
quarter and was 3.72% for the first quarter compared to 4.02% a year ago and
3.77% for the fourth quarter of 1993. Both the net interest margin and interest
rate spread have been declining over the last four quarters. However, these
ratios are expected to begin to show some improvement as loan volumes increase
and interest rates increase.
During the first quarter of 1994, the Corporation reclassified certain
interchange fees arising from credit card loans (formerly included in interest
income) to bank card income, a component of noninterest income, to be
consistent with industry practice. Prior period amounts have been restated to
reflect this change. For the first quarters of 1994 and 1993 and the fourth
quarter of 1993, these fees totaled $512,000, $382,000, and $628,000,
respectively.
Interest income (FTE) for the first quarter was $104.7 million, an
increase of $3.2 million over the same quarter last year. The increase was
primarily in loans which, excluding the impact of acquisitions, increased on
average approximately 9% from the same quarter a year ago and 2% from the
fourth quarter of 1993. Interest income on investment securities decreased $1.3
million between the first quarter of 1994 and 1993. Average investment
securities increased $242 million between the two quarters, primarily due to
acquisitions. The increase was offset by a declining interest rate environment
which resulted in lower yields on investment securities as they matured or
repriced. The taxable-equivalent yield on earning assets for the first quarter
was 6.92% compared to 7.43% a year ago, a decline of 51 basis points.
Interest expense increased 2% to $42.1 million for the first quarter of
1994. The increase related primarily to an increase in average Federal Home
Loan Bank advances of $159 million between the first quarter of 1994 and the
same period in 1993. These advances were
-20-
<PAGE> 21
obtained to lock in interest rate spreads by borrowing variable-rate funds with
specific term maturities and investing the proceeds in variable-rate earning
assets with specific matched maturities. Interest expense on deposits decreased
$734,000 between the two quarters due primarily to the declining interest rate
environment over the twelve month period. Average interest-bearing deposits
increased $241 million, with acquisitions accounting for an increase of
approximately $395 million offset by a decline of approximately $154 million in
other interest-bearing deposits.
In the last quarter of 1993, the Corporation entered into interest rate
swaps as hedging transactions to lessen the Corporation's sensitivity to
interest rate fluctuations. The impact of these instruments on net interest
income for the first quarter of 1994 accounted for approximately $1.0 million
of the increase.
Reference is made to the average balance sheet which follows for detailed
yields and rates on the components of net interest income.
PROVISION FOR LOSSES ON LOANS
A reduction in nonperforming assets, strong reserve coverage of
nonperforming loans, and net recoveries of loans previously charged off
resulted in the Corporation not recording a provision for losses on loans for
the first quarter of 1994 compared to a $2.8 million provision for losses on
loans for the first quarter of 1993. For the first quarter of 1994, the
Corporation had net recoveries of $1.1 million compared to net charge-offs of
$2.8 million in 1993. At March 31, 1994, the allowance for losses on loans as a
percentage of nonperforming loans was 358% compared to 191% a year ago and
compared to 363% at December 31, 1993. Reference is made to the "Allowance for
Losses on Loans", "Nonperforming Assets", and "Potential Problem Assets"
discussions for additional information regarding items that impact the
provision for losses on loans in the future. The trend of lower provisions for
losses on loans is expected to continue for the remainder of 1994.
NONINTEREST INCOME
Noninterest income for the first quarter of 1994 was $19.9 million,
approximately a 1% increase over the same period in 1993, and compared to $21.3
million for the fourth quarter of 1993. 1994 acquisitions contributed
approximately $696,000 to noninterest income for the first quarter of 1994.
Investment securities gains declined $780,000 between the first quarters of
1994 and 1993, and declined $542,000 between the first quarter of 1994 and the
fourth quarter of 1993.
The increase in noninterest income between the first quarter of 1994 and
1993 is due primarily to service charges on deposit accounts which increased
$1.0 million between the two quarters. Partially offsetting this increase were
declines in mortgage servicing income of $402,000, profits and commissions from
trading activities of $144,000 (primarily SBA trading activity), and VSIBG
Limited Partnership earnings of $174,000. The decline between the fourth
quarter of 1993 and the first quarter of 1994 was due to declines in profits
and commissions from trading activities of $503,000 (primarily SBA trading
activity), mortgage servicing income of $129,000, and bank card income of
$405,000. The decline in bank card income from the fourth quarter is seasonal,
and the decline in mortgage servicing income is due primarily to the high level
of refinancing activity over the last two years.
Due to the continued decline in revenues from the Capital Markets
operations, management decided to discontinue these operations in the second
quarter of 1994. The discontinuance is not expected to have a significant
impact on operating results. In 1993, the Capital Markets operations had total
revenues of approximately $3.3 million and total expenses of approximately $2.8
million. For the first quarter of 1994, total revenues and expenses were
$400,000 and $596,000, respectively.
NONINTEREST EXPENSE
Noninterest expense for the first quarter of 1994 decreased $403,000 to
$54.2 million which compares to $54.6 million for the same period in 1993 and
$55.1 million for the fourth quarter of 1993. Acquisitions completed in the
first quarter of 1994 increased first quarter 1994 noninterest expenses by
approximately $2.8 million.
-21-
<PAGE> 22
The most significant component of noninterest expense, salaries and
employee benefits, increased 4% to $24.5 million for the first quarter of 1994,
primarily due to acquisitions. Total full-time-equivalent employees at March
31, 1994 were 3,228 compared to 2,902 at March 31, 1993. Excluding the impact
of acquisitions, total full-time-equivalent employees decreased approximately
130 between the two quarters.
Offsetting the increase in expenses due to acquisitions were declines in
the following expenses: (i) accelerated amortization of intangibles declined
$2.0 million; (ii) other real estate expense declined $913,000 due to improving
asset quality; and (iii) legal fees declined $453,000 as litigation activity
declined.
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
Nos. 106 and 112 related to postretirement and postemployment benefits. The
Corporation recorded the cumulative obligation for postretirement and
postemployment benefits upon adoption which was $9.6 million ($5.9 million
after taxes). The ongoing impact on earnings is not significantly different
from previous practice.
Management is continuing to consider ways to reduce noninterest expenses
while maintaining quality customer service. Management expects to recognize
expense savings from the conversion of its subsidiaries to a common data
processing system which is expected to be completed by the end of 1994.
Reference is made to the "Noninterest Expense" discussion on page 41 of the
1993 Annual Report to Shareholders.
TAXES
Applicable income taxes for the first quarter of 1994 were $7.2 million,
resulting in an effective tax rate of 29.4%, which compares to $6.4 million,
or an effective tax rate of 32.2% for the first quarter of 1993. Federal income
taxes were provided at statutory rates of 35% and 34% for the quarters ended
March 31, 1994 and 1993, respectively, as a result of a retroactive tax rate
increase which did not become effective until the third quarter of 1993. The
decrease in the effective rate in the first quarter of 1994, as compared to the
first quarter of 1993, is due primarily to the deductibility in 1994 of
intangible assets amortization not previously deductible and to an increase in
non-taxable municipal bond interest. These amounts were partially offset by a
one percent increase in the federal statutory tax rate to 35%.
The Corporation adopted SFAS No. 109 effective January 1, 1993 and
recorded a benefit in the first quarter of 1993 of $10.9 million from the
cumulative effect of the accounting change.
-22-
<PAGE> 23
UNION PLANTERS CORPORATION
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------
1994 1993
------------------------------------------------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- --------- ------ ----------- --------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions $ 9,534 $ 122 5.19 % $ 75,378 $ 699 3.76 %
Federal funds sold and securities
purchased under agreements to resell 101,277 861 3.45 % 142,317 1,054 3.00 %
Trading account securities, at market 152,753 1,759 4.67 % 112,827 1,599 5.75 %
Loans held for resale 31,583 581 7.46 % 29,266 519 7.19 %
Investment securities (1 and 2) 2,751,849 37,321 5.50 % 2,509,693 38,593 6.24 %
Loans, net of unearned income (1) 3,093,789 64,073 8.40 % 2,670,174 59,050 8.97 %
----------- --------- ----------- ---------
TOTAL EARNING ASSETS (1 AND 2) 6,140,785 104,717 6.92 % 5,539,655 101,514 7.43 %
--------- ---------
Cash and due from banks 278,387 249,014
Premises and equipment 143,002 127,898
Allowance for losses on loans (86,940) (77,530)
Other assets 235,010 221,402
----------- -----------
TOTAL ASSETS $ 6,710,244 $ 6,060,439
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts $ 1,328,263 7,550 2.31 % $ 1,325,698 7,865 2.41 %
Savings deposits 977,188 5,307 2.20 % 735,682 4,609 2.54 %
Certificates of Deposit of
$100,000 and over 342,292 3,249 3.85 % 335,401 3,365 4.07 %
Other time deposits 2,143,984 20,516 3.88 % 2,134,322 21,517 4.05 %
Short-term borrowings
Federal funds purchased and securities
sold under agreements to repurchase 256,507 1,779 2.81 % 252,203 1,718 2.76 %
Other 7,293 105 5.84 % 5,440 62 4.62 %
Federal Home Loan Bank advances 167,556 1,575 3.81 % 8,257 49 2.41 %
Long-term debt
Subordinated capital notes and debentures 114,743 1,992 7.04 % 74,292 1,830 9.99 %
Other 3,391 72 8.61 % 7,237 149 8.35 %
----------- --------- ----------- --------
TOTAL INTEREST-BEARING LIABILITIES 5,341,217 42,145 3.20 % 4,898,532 41,164 3.41 %
Demand Deposits 772,510 654,758
----------- --------- ----------- --------
TOTAL SOURCES OF FUNDS 6,113,727 42,145 5,553,290 41,164
--------- --------
Other liabilities 94,664 95,885
Shareholders' equity (2) 501,853 411,264
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,710,244 $ 6,060,439
=========== ===========
NET INTEREST INCOME $ 62,572 $ 60,350
======== ========
INTEREST RATE SPREAD 3.72 % 4.02 %
==== ====
NET INTEREST MARGIN 4.13 % 4.42 %
==== ====
(1) Taxable-equivalent adjustment:
Loans $ 281 $ 275
Investment securities 3,398 2,494
-------- --------
$ 3,679 $ 2,769
======== ========
</TABLE>
(2) Excludes the impact of the net unrealized gain on available for sale
securities.
-23-
<PAGE> 24
FINANCIAL CONDITION
The Corporation's total assets grew $512 million to $6.7 billion at March
31, 1994 compared to March 31, 1993, and increased $407 million from December
31, 1993 due primarily to acquisitions. Certain financial information in 1993
has been restated to reflect acquisitions accounted for using the pooling of
interests method of accounting (see Note 2 to the financial statements). The
table at the beginning of this discussion presents the impact of the 1994
acquisitions on the balance sheet as of the date of acquisition. Average assets
for the first quarter of 1994 were $6.7 billion compared to $6.1 billion for
the first quarter of 1993.
MONEY MARKET INVESTMENTS
At March 31, 1994, money market investments were $293 million. Average
money market investments during the quarter were $295 million with an average
yield of 4.57% compared to $360 million with an average yield of 4.36% during
the first quarter of 1993. These investments provide the Corporation with a
ready source of liquidity. The increase in yield between the two periods is
reflective of the increase in short-term interest rates over the last few
months.
INVESTMENT SECURITIES
The Corporation's investment portfolio during the first quarter of 1994
represented 45% of average earning assets. The portfolio is managed to maximize
yield over the interest rate cycle while minimizing market exposure to rising
rates. The average taxable-equivalent yield of the investment portfolio was
5.50% for the first quarter of 1994 compared to 6.24% for the same period in
1993. The difference in the fair value of the investment portfolio compared to
its amortized cost has declined from $44.2 million at December 31, 1993 to
$14.6 million at March 31, 1994, primarily due to the changing interest rate
environment.
The Corporation adopted SFAS No. 115 "Accounting for Certain Investments
in Debt and Equity Securities" as of January 1, 1994. In adopting SFAS No.
115, the Corporation chose to initially classify all investment securities,
except obligations of states and political subdivisions, as "Available for
Sale" securities.
AVAILABLE FOR SALE SECURITIES
Available for sale securities were $2.3 billion at March 31, 1994 compared
to $600 million at December 31, 1993. At the end of the period, the portfolio
had unrealized gains of $12.6 million and unrealized losses of $12.4 million,
which resulted in an adjustment to the carrying value of available for sale
securities of $172,000 ($103,000 net of taxes). At December 31, 1993, these
securities had unrealized gains of $5.6 million and unrealized losses of
$234,000.
HELD TO MATURITY SECURITIES
Held to maturity securities at March 31, 1994 were $548 million,
consisting primarily of obligations of states and political subdivisions
totaling $449 million. The held to maturity portfolio as of March 31, 1994 had
unrealized gains of $18.0 million and unrealized losses of $3.6 million. At
December 31, 1993, these securities totaled $2.0 billion having unrealized
gains and losses of $41.2 million and $2.4 million, respectively.
LOANS
Loans at March 31, 1994 were $3.1 billion compared to $2.8 and $2.9
billion at March 31, 1993 and December 31, 1993, respectively. Average loans
for the first quarter of 1994 were higher than both periods, and, excluding the
impact of acquisitions, increased 9% over the same quarter in 1993 and 2% over
the fourth quarter of 1993. Average loans represented 50% of the Corporation's
earning assets for the first quarter of 1994 compared to 48% for the first
quarter of 1993. Loan activity has been increasing as the economy improves and
this growth is expected to continue.
-24-
<PAGE> 25
ALLOWANCE FOR LOSSES ON LOANS
The following table provides a reconciliation of the allowance for losses
on loans (the allowance) at the dates indicated and certain key ratios for the
three month periods ended March 31, 1994 and 1993 and for the year ended
December 31, 1993.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------------------- FOR THE YEAR ENDED
1994 1993 DECEMBER 31, 1993
---- ---- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at the beginning
of the period $ 80,442 $ 64,290 $ 64,290
Provision charged to expense - 2,823 9,689
Allowances of banks acquired (a) 5,575 15,328 16,607
Recoveries 2,685 1,869 8,681
Charge-offs (1,603) (4,636) $ (18,825)
----------- ----------- -----------
Balance at the end of the period $ 87,099 $ 79,674 $ 80,442
=========== =========== ===========
Loans outstanding at period end $ 3,092,638 $ 2,750,538 $ 2,935,215
=========== =========== ===========
Average loans during the period $ 3,093,789 $ 2,670,174 $ 2,777,032
=========== =========== ===========
Ratios:
Allowance/period end loans 2.82% 2.90% 2.74%
Charge-offs/average loans (b) .21 .70 .68
Recoveries/average loans (b) .35 .28 .31
Net charge-offs (recoveries)/average
loans (b) (.14) .42 .37
Provision/average loans (b) (NM) .43 .35
</TABLE>
(a) At date of acquisition for acquisitions accounted for using the purchase
method of accounting and as of January 1 for acquisitions accounted for
using the pooling of interests method of accounting.
(b) Amounts annualized for March 31, 1994 and 1993
(NM) not meaningful
The allowance at March 31, 1994, was $87.1 million, an increase of $6.7
million over December 31, 1993, and compared to $79.7 million at March 31,
1993. The increase in the allowance over December 31, 1993 primarily reflects
the allowances of banks acquired which totaled $5.6 million for the first
quarter of 1994.
The Corporation had net recoveries for the first quarter of 1994 of $1.1
million compared to net charge-offs of $2.8 million and $3.7 million,
respectively, for the same quarter a year ago and for the fourth quarter of
1993. Charge-offs declined to $1.6 million for the first quarter compared to
$4.6 million for the same period last year. Recoveries of $2.7 million exceed
the first quarter of 1993 by $816,000.
-25-
<PAGE> 26
NONPERFORMING ASSETS
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
MARCH 31,
----------------- DECEMBER 31,
1994 1993 1993
------- ------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual loans $16,983 $39,908 $14,646
Restructured loans 7,329 1,702 7,525
------- ------- -------
Total nonperforming loans 24,312 41,610 22,171
------- ------- -------
Foreclosed property
Other real estate owned,
net of reserve for losses 4,314 8,304 4,358
Other foreclosed properties 227 188 434
------- ------- -------
Total foreclosed properties 4,541 8,492 4,792
------- ------- -------
Total nonperforming assets $28,853 $50,102 $26,963
======= ======= =======
Loans 90 days or more past due
and not on nonaccrual status $ 4,365 $ 4,776 $ 4,771
======= ======= =======
Nonperforming loans as a
percentage of loans .79% 1.65% .76%
Nonperforming assets as a
percentage of loans and
foreclosed properties .93 1.97 .92
Allowance for losses on loans
as a percentage of
nonperforming loans 358.26 176.51 362.83
Loans 90 days or more past
due and not on nonaccrual
status as a percentage of
loans .14 .19 .16
</TABLE>
Nonperforming assets at March 31, 1994, declined $21.2 million from $50.1
million at March 31, 1993 and increased $1.9 million from December 31, 1993 due
to acquisitions. The financial institutions acquired in the first quarter of
1994 accounted for $2.6 million of the total nonperforming assets and $2.1
million of total nonperforming loans (nonaccrual and restructured loans).
Management does not expect any significant changes in nonperforming assets with
one exception. One $6.0 million loan that was renegotiated in the second
quarter of 1993 has performed in compliance with the renegotiated terms and has
demonstrated the ability to make payments over a period of time. It is expected
that this loan will be removed from restructured loans in the second quarter of
1994; however, there are no assurances that this will be the case.
-26-
<PAGE> 27
The following table details the composition of nonaccrual loans and loans
90 days or more past due.
<TABLE>
<CAPTION>
MARCH 31, 1994
----------------------------
NONACCRUAL LOANS 90 DAYS OR
LOANS MORE PAST DUE
---------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Real estate loans
Construction and land development $ 866 $ 1
Secured by farmland 1,237 253
Secured by 1-4 family residential
properties 6,241 819
Secured by nonfarm nonresidential
properties 3,023 853
Secured multifamily residential
properties 196 -
-------- -------
Total real estate 11,563 1,926
Commercial, financial, and
agricultural loans 3,469 329
Consumer loans 1,951 2,103
Direct lease financing - 7
-------- -------
Total $ 16,983 $ 4,365
======== =======
</TABLE>
The following table details the composition of the Corporation's other
real estate owned, net of the reserve for losses on other real estate of $1.5
million.
<TABLE>
<CAPTION>
MARCH 31, 1994
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Type of Property
- ----------------
Construction and land development $ 596
Farmland 28
1-4 family residential properties 972
Multifamily residential properties 886
Commercial properties 1,832
--------
Total other real estate owned,
net of the reserve for losses $ 4,314
========
</TABLE>
POTENTIAL PROBLEM ASSETS
Potential problem assets consist of assets which are generally secured and
not currently considered nonperforming, and include those assets where
information about possible credit problems has caused management to have
serious doubts as to the ability of such borrowers to comply with present
repayment terms. Historically, these assets have been loans which have become
nonperforming. At March 31, 1994, the Corporation had potential problem assets
(all of which were loans) of $6.3 million.
-27-
<PAGE> 28
ASSET LIABILITY MANAGEMENT
The following table presents the Corporation's interest rate sensitivity
analysis at March 31, 1994. The analysis is at a point-in-time and could change
significantly on a daily basis. This analysis alone cannot be used to predict
how the Corporation is positioned to react to changing interest rates. Other
factors such as the mix of earning assets and interest-bearing liabilities,
interest rate spreads, and the level of interest rates impact the Corporation's
net interest income.
Balance sheet simulation analysis is conducted to determine the impact on
net interest income for the next twelve months under several interest rate
scenarios. One such scenario uses current rates at March 31, 1994 and holds the
rates and volumes constant for the simulation. When this projection is
subjected to immediate and parallel shifts in interest rates ("rate shocks") of
200 basis points, first rising and then falling, the annual impact of the "rate
shock" at March 31, 1994 on the Corporation's net interest income was a
negative $378,000 and $4.8 million pretax, respectively, which is well within
the Corporation's policy limits.
OFF-BALANCE-SHEET INSTRUMENTS
The Corporation, on a limited basis, uses off-balance-sheet financial
instruments to manage interest rate risk. Since December 31, 1993, there has
been no significant change in off-balance-sheet instruments. Reference is made
to Note 17 to the audited financial statements in the Corporation's 1993 Annual
Report to Shareholders for additional information regarding these instruments.
-28-
<PAGE> 29
UNION PLANTERS CORPORATION AND SUBSIDIARIES
RATE SENSITIVITY ANALYSIS AT MARCH 31, 1994
<TABLE>
<CAPTION>
INTEREST-SENSITIVE WITHIN
----------------------------------------------------------------------------------------
NON-
0-30 31-90 91-180 181-365 1-2 2-5 OVER INTEREST-
DAYS DAYS DAYS DAYS YEARS YEARS 5 YEARS BEARING TOTAL
-------- -------- ------- ------- ------- ------- -------- --------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans $ 751 $ 305 $ 232 $ 489 $ 260 $ 669 $ 388 $ 17 $ 3,111
Investment securities 402 292 172 659 533 407 343 - 2,808
Other earning assets 182 55 56 - - - - - 293
Other assets - - - - - - - 513 513
------- ------- ------- ------- ------- ------- ------- ------- ------
Total assets $ 1,335 $ 652 $ 460 $ 1,148 $ 793 $ 1,076 $ 731 $ 530 $6,725
======= ======= ======= ======= ======= ======= ======= ======= ======
SOURCES OF FUNDS
Money market deposits $ 75 $ 342 $ - $ 357 $ 29 $ 455 $ 22 $ - $ 1,280
Other savings and time deposits 522 672 480 350 250 864 39 - 3,177
Time deposits over $100,000 60 88 74 49 24 45 1 - 341
Short-term borrowings 232 2 - - - - - - 234
Federal Home Loan Bank
advances 113 7 1 2 5 19 22 - 169
Long-term debt - - - - - - 117 - 117
Noninterest-bearing deposits - - - - - - - 815 815
Other liabilities - - - - - - - 79 79
Shareholders' equity - - - - - - - 513 513
------- ------- ------- ------- ------- ------- ------- ------- ------
Total sources of funds $ 1,002 $ 1,111 $ 555 $ 758 $ 308 $ 1,383 $ 201 $ 1,407 $6,725
======= ======= ======= ======= ======= ======= ======= ======= ======
Interest rate swap $ (150) $ (50) $ (100) $ - $ 100 $ 200 $ - $ - $ -
Interest rate sensitivity gap $ 183 $ (509) $ (195) $ 390 $ 585 $ (107) $ 530 $ (877) $ -
Cumulative interest rate
sensitivity gap $ 183 $ (326) $ (521) $ (131) $ 454 $ 347 $ 877 $ - $ -
Cumulative gap as a percentage
of total assets 3% (5%) (8%) (2%) 7% 5% 13% -% -%
</TABLE>
Management has made the following assumptions in the above analysis:
(a) Assets and liabilities are generally scheduled according to their earliest
repricing period when the repricing is less than the contractual maturity.
(b) Nonaccrual loans are included in the noninterest-bearing category.
(c) Fixed-rate mortgage loan maturities are based on the principal prepayment
patterns of comparable mortgage-backed securities.
(d) The scheduled maturities of mortgage-backed securities and CMOs
incorporate principal prepayment of these securities using current and
consensus interest rate forecasts in conjunction with the latest three
month historical prepayment speeds.
(e) Securities available for sale are currently treated in the same manner as
comparable securities in the Investment Securities Portfolio in that they
are scheduled according to their contractual maturities or earliest
repricing period if sooner; however, the maturities of callable agencies
are scheduled according to their call date when valued at a premium or
par.
(f) Money market deposits and savings deposits that have no contractual
maturities are scheduled according to the Corporation's best estimate of
their repricing to changes in market rates. This varies by product type
and market.
(g) If all money market, NOW, and savings deposits had been included in the
0-30 Days category above, the cumulative gap as a percentage of earning
assets would have been negative (30%), (28%), (31%), (20%), (10%), and
positive 5%, respectively, for the 0-30 Days, 31-90 days, 91-180 Days,
181-365 Days, 1-2 years, and 2-5 Years categories at March 31, 1994.
-29-
<PAGE> 30
LIQUIDITY
The Corporation's core deposit base is its most important and stable
funding source. These deposits, along with money market assets, provide
liquidity for the Corporation. The Corporation's deposit base is almost
entirely comprised of "in-market" deposits, as the Corporation has no known
brokered deposits. Certificates of deposits of $100,000 or more represent only
6% of total deposits at March 31, 1994. The following table presents an
analysis of the Corporation's deposits.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, DECEMBER 31,
------------------ ------------
1994 1993 1993
------ ------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Demand deposits $ 773 $ 655 $ 757
Money market accounts (a) 1,328 1,326 1,321
Savings deposits (b) 977 736 817
Other time deposits (c) 2,144 2,154 2,032
------ ------ ------
Total core deposits 5,222 4,871 4,927
Certificates of deposit
of $100,000 and over 342 335 339
------ ------ ------
Total deposits $5,564 $5,206 $5,266
====== ====== ======
</TABLE>
(a) Includes money market savings accounts, High Yield accounts, and super NOW
accounts.
(b) Includes regular and premium savings accounts and NOW accounts.
(c) Includes certificates of deposit under $100,000, investment savings
accounts, and other time deposits.
The Corporation's average deposits continued to grow during the first
quarter of 1994 primarily due to acquisitions. Excluding the impact of
acquisitions, average deposits declined approximately $74 million between the
first quarter of 1994 and 1993. The decline was primarily due to the low
interest-rate environment which has resulted in deposits leaving the banking
system.
The parent company's source of liquidity is management fees and dividends
from subsidiaries. The number of financial institutions owned by the
Corporation provides a diversified base for the payment of dividends should one
or more of the subsidiaries have capital needs and be unable to pay dividends
to the parent company. At March 31, 1994 the parent company had cash and cash
equivalents totaling $95.1 million and had working capital of $79.8 million. At
March 31, 1994, the parent company could have received dividends from
subsidiary banks without prior regulatory approval of $84.8 million.
Additional dividends will be available depending on the future earnings of
subsidiary banks.
SHAREHOLDERS' EQUITY
The Corporation's total shareholders' equity increased $36 million from
December 31, 1993 to $513 million at March 31, 1994. The increase was due
primarily to the issuance of Common Stock in connection with acquisitions which
increased shareholders' equity $24 million. The balance, $12 million of the
increase, was due primarily to retained net earnings. Dividends on Common Stock
for the first quarter of 1994 totaled $4.3 million, or $.21 per share, while
Preferred Stock dividends totaled $2.2 million. Shareholders' equity is
expected to continue to steadily increase during 1994 from the retention of
earnings and as stock is issued for acquisitions.
-30-
<PAGE> 31
CAPITAL ADEQUACY
The following table presents capital adequacy information regarding the
Corporation and the table on the following page presents the calculation of the
Corporation's risk-based capital.
<TABLE>
<CAPTION>
MARCH 31,
-------------------- DECEMBER 31,
1994 1993 1993
--------- --------- ------------
<S> <C> <C> <C>
CAPITAL ADEQUACY DATA
- ---------------------
Total shareholders' equity/
total assets (at period end) 7.63% 6.88% 7.55%
Average shareholders' equity/
average total assets 7.63 6.79 7.15
Tier 1 capital/unweighted
assets (leverage ratio) (a) 7.22 6.72 7.10
Parent company long-term
debt/equity 22.35 17.39 24.04
Dividend payout ratio 37.62 26.80 34.07
</TABLE>
(a) Based on period-end capital and quarterly adjusted average assets
At March 31, 1994, total shareholders' equity was 7.63% of total assets,
and the Tier 1 leverage ratio was 7.22% compared to 6.88% at December 31, 1993
and 6.72% at March 31, 1993. The following table presents the Corporation's
risk-based capital and ratios. The capital ratios improved from March 31, 1993
and declined slightly from December 31, 1993 due to the impact of acquisitions.
The regulatory capital ratios qualify the Corporation for the
"well-capitalized" regulatory classification. Since a majority of the
Corporation's acquisitions involve the issuance of stock, the acquisitions are
not expected to adversely impact the capital ratios significantly.
RISK-BASED CAPITAL
<TABLE>
<CAPTION>
MARCH 31,
---------------------- DECEMBER 31,
1994 1993 1993
---------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Tier 1 capital
Shareholders' equity $ 513,414 $ 427,215 $ 477,300
Minority interest in
consolidated subsidiaries 1,588 7,544 1,588
Less goodwill, other
intangibles, and one-half
of investment in
unconsolidated subsidiaries (30,935) (27,066) (31,097)
Deferred tax asset not
qualifying for
regulatory capital (1,803) (2,034) (1,861)
----------- ---------- ---------
Total Tier 1 capital 482,264 405,659 445,930
Tier 2 capital
Allowance for losses on loans (a) 41,013 38,544 38,067
Qualifying long-term debt 74,500 32,000 74,479
Less one-half of investment
in unconsolidated
subsidiaries (20) (107) (136)
---------- ---------- ----------
Total capital $ 597,757 $ 476,096 $ 558,340
========== ========== ==========
Risk-weighted assets (b) $3,234,961 $3,042,383 $3,003,001
========== ========== ==========
Ratios as a percent of end of
period risk-weighted assets
Tier 1 capital 14.91% 13.33% 14.85%
Total capital 18.48 15.65 18.59
</TABLE>
(a) Limited as required by regulatory guidelines.
(b) Based on risk-weighted assets as defined by regulatory guidelines.
-31-
<PAGE> 32
IMPACT OF PROPOSED ACCOUNTING STANDARDS
Reference is made to page 48 of the Corporation's 1993 Annual Report to
Shareholders for a discussion of proposed accounting standards. Management is
not aware of any additional standards that have been issued that might have a
significant impact on the Corporation.
-32-
<PAGE> 33
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The information called for by this item is incorporated by reference to
Item 3, Part I of the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1993, Note 19 to the Corporation's consolidated financial
statements on page 33 of the 1993 Annual Report to Shareholders, and Note 10 to
the Corporation's unaudited financial statements included herein.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 - Computation of Per Share Earnings
(b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Date of Current
Report Subject
--------------- ------------------------------
<S> <C>
1. January 10, 1994 Financial statements of entities being acquired
2. January 11, 1994 Pro forma financial statements for September 30, 1993
3. February 8, 1994 Financial statements and merger agreement related to an entity being acquired that is
considered to be a significant subsidiary
4. April 14, 1994 Financial statements of entities being acquired
5. April 15, 1994 Pro forma financial statements for December 31, 1993
6. April 28, 1994 First quarter 1994 earnings press release
</TABLE>
-33-
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION PLANTERS CORPORATION
--------------------------
(Registrant)
Date: May 10, 1994
By: /s/ Benjamin W. Rawlins, Jr.
---------------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and
Chief Executive Officer
By: /s/ John W. Parker
---------------------------------
John W. Parker
Executive Vice President and
Chief Financial Officer
By: /s/ M. Kirk Walters
---------------------------------
M. Kirk Walters
Senior Vice President, Treasurer
and Chief Accounting Officer
-34-
