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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________ to _________
Commission File No. 0-6919
UNION PLANTERS CORPORATION
(Exact name of registrant as specified in its charter)
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Tennessee 62-0859007
(State of incorporation) (I.R.S. Employer Identification No.)
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7130 Goodlett Farms Parkway, Memphis, Tennessee 38018
(address of principal executive offices and zip code)
Registrant's telephone number, including area code: (901) 383-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Common Stock having a par New York Stock Exchange
value of $5 per share (name of each exchange
(title of class) on which registered)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
8% Cumulative, Convertible Preferred Stock,
Series E having a stated value of $25 per share
(title of class)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
The aggregate market value of the voting stock held by nonaffiliates of the
registrant at February 28, 1994 was approximately $440,285,000.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE
REGISTRANT'S CLASSES OF COMMON STOCK.
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CLASS OUTSTANDING AT FEBRUARY 17, 1994
Common Stock having a par 20,505,885
value of $5 per share
(title of class)
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DOCUMENTS INCORPORATED BY REFERENCE
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Part of Form 10-K
Documents Incorporated into which Incorporated
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1. Certain parts of the Annual Report to Items 1, 2, 5, 6, 7, and 8
Shareholders for the year ended December
31, 1993
2. Certain parts of the Definitive Proxy Part III
Statement for the Annual Shareholders
Meeting to be held April 28, 1994
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FORM 10-K CROSS REFERENCE INDEX
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Page Number
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PART I
Item 1. Business 4
Item 1a. Executive Officers of the Registrant 20
Item 2. Properties 22
Item 3. Legal Proceedings 23
Item 4. Submission of Matters to a Vote of
Security Holders *
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder
Matters 27
Item 6. Selected Financial Data 27
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 27
Item 8. Financial Statements and
Supplementary Data 27
Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure *
PART III
Item 10. Directors and Executive Officers
of the Registrant 27
Item 11. Executive Compensation 28
Item 12. Security Ownership of Certain
Beneficial Owners and Management 28
Item 13. Certain Relationships and Related
Transactions 28
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PART IV
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Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K 28
SIGNATURES 30
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* Not Applicable
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PART I
ITEM 1. BUSINESS
GENERAL
Union Planters Corporation (the Corporation) is a registered bank
holding company and savings and loan holding company incorporated under the
laws of Tennessee in 1971 and headquartered in Memphis, Tennessee. The
Corporation's activities are conducted primarily through its 32 (38 including
acquisitions consummated subsequent to December 31, 1993 and through March 1,
1994) bank and savings and loan subsidiaries headquartered in Tennessee,
Mississippi, Arkansas, Kentucky, and Alabama. The largest subsidiary of the
Corporation is Union Planters National Bank (UPNB), a financial services
company which provides commercial banking services and products in Tennessee
and other selected markets, primarily in the Mid-South and the Southeastern
United States. Reference is made to Table 15 in Part II, Item 7, of
Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) for a listing of the Corporation's subsidiaries owned at
December 31, 1993, showing their respective total assets, total loans, total
deposits, and total shareholders' equity.
The Corporation serves its customers through 234 banking offices.
Reference is made to page 59 of the 1993 Annual Report to Shareholders for a
listing of the cities and communities served and the number of banking offices
for each of the Corporation's banking subsidiaries.
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UNION PLANTERS NATIONAL BANK (UPNB)
UPNB offers a full range of traditional commercial banking services and
products to individuals, businesses, and public and private entities. In
addition to commercial loans, UPNB offers cash management and depository
services, correspondent banking services, real estate and construction lending
services, secured or asset-based lending, agri-business lending, leasing, and
international trade services. Retail banking services include demand, savings
and time deposit accounts, money market accounts, small commercial loans,
personal loans, real estate and installment loans, credit cards, safe deposit
facilities, trust and discount brokerage services, and other ancillary
financial services normally furnished by full-service banks. Special private
banking centers offer a complete range of personal financial services including
credit and special investment services suitable to individuals having complex
financial services needs.
Trust services offered by UPNB include investment of funds, financial
planning, estate and trust administration, and other trust services to
individuals, businesses, government, and nonprofit organizations. UPNB acts in
various corporate trust and agency capacities in connection with living trusts,
retirement plans, and wills. Trust services are offered through UPNB's branch
system, an office in Jackson, Tennessee, and its principal trust office in
Memphis, Tennessee. Trust revenues for 1993 were $5.0 million compared to $4.5
million in 1992.
UPNB is a major residential mortgage and construction lender in Shelby
County, Tennessee. UPNB acts as a mortgage loan originator, processor, and
servicer and its revenues are derived from brokerage, origination, and
servicing fees. For 1993, these business activities had total revenues of
approximately $13.2 million compared to $15.3 million in 1992.
Commercial banking services also include providing data processing for
correspondent banks and a computerized remote data- processing system to both
correspondent and non-affiliated small and medium-sized banks. Management has
decided to discontinue its data-processing services and the wind-down should be
completed by mid-year 1994. Gross revenues from this operation were $482,000 in
1993 compared to $786,000 in 1992.
Union Planters Brokerage Services (UPBS), an unincorporated division of
UPNB, offers discount securities brokerage services to retail customers,
primarily individuals. Revenues from this operation were $1.5 million in 1993
compared to $1.2 million in 1992.
Through its Capital Markets Operation, UPNB purchases, pools, and
securitizes portfolios of whole mortgage loans, consumer loans, and other
financial instruments. The UPNB SBA Loan Trading
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Operation is similar to the Capital Markets Operations except that it involves
the purchasing, pooling, and securitization of the government-guaranteed
portions of SBA loans. The Capital Markets and SBA Loan Trading Operations
contributed approximately $474,000 and $4.1 million, respectively, to the
pretax earnings of UPNB in 1993 and had gross revenues of $4.0 million and
$12.7 million, respectively. In 1992, these operations generated pretax
earnings of $2.5 million and $3.8 million, respectively, on gross revenues of
$8.6 million and $11.2 million, respectively.
In 1993, UPNB had net earnings of $35.6 million, which represented a
return on average assets (ROA) of 1.07%, compared to net earnings of $27.1
million and an ROA of .89% for 1992.
COMMUNITY BANKING SUBSIDIARIES
The Corporation's Community Bank Group consists of 28 (34 including
acquisitions consummated subsequent to December 31, 1993 and through March 1,
1994) bank and three savings and loan subsidiaries headquartered in Tennessee,
Mississippi, Arkansas, Kentucky, and Alabama, and offers full retail banking
services in the market areas served. These services include checking and
savings accounts, money market accounts, various types of time deposits, safe
deposit facilities, 24-hour service for certain banking transactions through
automated teller machines, limited trust services, and money transfers.
Services also include financing of commercial transactions and making and
servicing both secured and unsecured loans to individuals, partnerships, and
corporations. The installment loan departments of the Community Banks make
direct loans to individuals for personal, automobile, real estate, home
improvement, business, and similar needs.
In 1993, the Community Bank Group had net earnings of $30.2 million which
represented a 1.01% ROA. This compares to net earnings of $24.4 million in 1992
which represented a 1.36% ROA. The decline in ROA between 1992 and 1993 was
due primarily to one-time charges related to institutions acquired in 1993 and
provisions for conversion to a new data processing system.
Reference is made to the MD&A discussion incorporated herein by reference
in Part II, Item 7, and to Note 2 to the financial statements for information
regarding the Corporation's completed and pending acquisitions.
UNION PLANTERS INVESTMENT BANKERS CORPORATION (UPIBC)
In the fourth quarter of 1990, the broker/dealer operations conducted by
UPIBC and its subsidiaries were discontinued, and on January 2, 1991, the
Corporation acquired an interest as a limited partner in Vining-Sparks IBG,
Limited Partnership (VSIBG), the general partner of which is
Memphis-headquartered broker/dealer, Vining Sparks Securities, Inc. (VSS).
VSIBG engages in certain
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broker/dealer activities of the types formerly carried on separately by VSS and
UPIBC. As discussed above, the activities of the Capital Markets and SBA Loan
Trading Operations which were formerly part of UPIBC have been transferred to
UPNB and are now part of UPNB's banking operations.
The revenues of the broker/dealer operations are now limited to the
Corporation's proportionate share (29%) of net earnings from its passive
investment as a limited partner in VSIBG, which amounted to $3.7 million in
1993 and $3.9 million in 1992.
The Corporation's investment in VSIBG at December 31, 1993 was $5.5
million. The only significant accounting transactions related to UPIBC in 1993
and 1992 were expenses related to pending litigation and some expenses related
to winding down the former operations. Reference is made to Notes 13 and 19 to
the financial statements found on pages 25 and 33, respectively, of the 1993
Annual Report to Shareholders. Reference is also made to Table 1, "Summary of
Consolidated Results" on page 49 of the 1993 Annual Report to Shareholders for
the impact of the broker/dealer operations on 1993 operating results. The
material specifically referred to is incorporated by reference as a part of
this response.
SUPERVISION AND REGULATION
Bank holding companies, banks, savings and loan holding companies, savings
and loan associations, and many of their non-bank subsidiaries are extensively
regulated under both federal and state law. Compliance with these laws,
including the Federal Deposit Insurance Corporation Improvement Act of 1991,
continues to increase the regulatory burden on depository institutions,
including the banking and thrift subsidiaries of the Corporation. The following
description of statutory and regulatory provisions is not intended to be
exhaustive and is qualified in its entirety by reference to such provisions.
Any significant change in applicable law or regulations may have a material
effect on the businesses and prospects of the Corporation.
GENERAL
As a bank holding company ("BHC"), the Corporation is subject to the
regulation and supervision of the Board of Governors of the Federal Reserve
System (the "Federal Reserve"). In addition, as a savings and loan holding
company, the Corporation is registered with the Office of Thrift Supervision
(the "OTS") and is subject to OTS regulations, supervision, and reporting
requirements under the Home Owners Loan Act. The Corporation's subsidiaries
which are national banking associations, including UPNB, are subject to
supervision and examination by the Office of the Comptroller of the Currency
(the "Comptroller") and the Federal Deposit Insurance Corporation (the "FDIC").
State bank subsidiaries of the
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Corporation which are members of the Federal Reserve System are subject to
supervision and examination by both the Federal Reserve and the state banking
authorities of the states in which their headquarters are located. State bank
subsidiaries which are not members of the Federal Reserve System are subject to
supervision and examination both by the FDIC and the state banking authorities
of the states in which they are located. The Corporation's savings and loan and
savings bank subsidiaries are subject to supervision and examination by the
OTS. The Corporation's "Banking Subsidiaries" (which term, as used herein,
shall be deemed to include its savings and loan and savings bank subsidiaries)
are subject to various requirements and restrictions, including requirements to
maintain reserves against deposits, restrictions on the types and amounts of
loans that may be granted and the rate of interest that may be charged thereon,
and limitations on the types and amounts of investments which may be made and
the types of services that may be offered. Various consumer-protection laws and
regulations also affect the operations of the Corporation's Banking
Subsidiaries. In addition to the impact of regulation, the Banking
Subsidiaries are affected significantly by the actions of the Federal Reserve
as it attempts to control the money supply and credit availability in order to
influence the economy.
The Bank Holding Company Act of 1956, as amended (the "BHCA") generally
requires the prior approval of the Federal Reserve where a BHC proposes to
acquire direct or indirect ownership or control of more than 5% of the voting
shares of any bank or otherwise to acquire control of a bank or to merge or
consolidate with any other BHC. The BHCA generally prohibits the Federal
Reserve from approving an application by a BHC to acquire a bank located in
another state, unless such an acquisition is specifically authorized by statute
of the state in which the bank to be acquired is located. Tennessee and certain
other states, including most states contiguous to Tennessee, have adopted
reciprocal interstate banking legislation permitting Tennessee-based bank
holding companies to acquire banks and bank holding companies in such other
states and allowing bank holding companies located in such states other than
Tennessee to acquire banks and bank holding companies headquartered in
Tennessee.
A BHC is generally prohibited under the BHCA from acquiring voting
shares of any company which is not a bank and from engaging in any activities
other than those of banking or of managing or controlling banks or furnishing
services to, or performing services for its subsidiaries. An exception to these
prohibitions permits a BHC to engage in, or to acquire an interest in a
company, such as a thrift institution, which engages in activities which the
Federal Reserve has determined are so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
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CAPITAL ADEQUACY
The Federal Reserve has adopted risk-based capital guidelines for bank
holding companies. The minimum requirement of the guidelines for the ratio of a
BHC's total capital to risk-weighted assets, including certain
off-balance-sheet activities such as standby letters of credit (the "Total
Capital Ratio") is 8%. At least one-half of a BHC's total capital must be
composed of Tier 1 Capital which consists of common shareholders' equity,
minority interests in the equity accounts of consolidated subsidiaries,
non-cumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill ("Tier 1 Capital"). The remainder of
total capital is classified as "Tier 2 Capital," which may consist of
subordinated debt (or certain other qualifying debt issued prior to March 12,
1988), other preferred stock, and a limited amount of loan loss reserves.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average total assets, less goodwill (the "Leverage
Ratio") of 3% for bank holding companies that meet certain specified criteria,
including those having the highest regulatory rating. All other bank holding
companies generally are required to maintain a Leverage Ratio of at least 3%
plus an additional cushion of 100 to 200 basis points. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions are expected to maintain strong capital positions substantially
above the minimum prescribed supervisory levels without significant reliance on
intangible assets. Moreover, the Federal Reserve has indicated that it will
consider a tangible Tier 1 Capital leverage ratio (arrived at by deducting all
intangibles) and other indicia of capital strength in evaluating proposals for
expansion or new activities. The Federal Reserve has not advised the
Corporation of any specific minimum Leverage Ratio which would be applied to
the Corporation.
In addition to those applicable to BHCs, there are capital guidelines
which must also be met by each of a BHC's depository-institution subsidiaries.
The Federal Reserve, the FDIC, the Comptroller, and the OTS have adopted
substantially similar minimum capital guidelines with which each of the
Corporation's Banking Subsidiaries regulated by them is expected to comply.
State-chartered banks are also required to meet minimum capital requirements
prescribed by their respective state bank regulatory authorities.
Failure to meet minimum capital requirements could subject a depository
institution to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, and a
prohibition on the taking of brokered deposits. As described below, under the
"Prompt Corrective Action" regulations, substantial additional restrictions can
be imposed upon FDIC-insured institutions which fail to meet
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applicable capital requirements. See " -- Prompt Corrective Action."
At December 31, 1993, the Corporation's Total (risk-based) Capital Ratio
was 18.59%, its Tier 1 Capital ratio was 14.85% and its Leverage Ratio was
7.10%. In addition, each of the Corporation's Banking Subsidiaries satisfied
the minimum capital requirements applicable to it and had the requisite capital
levels to qualify as a "well-capitalized" institution under the prompt
corrective action provisions discussed below.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") enacted in December 1991 requires the appropriate federal bank
regulatory authorities to take "prompt corrective action" with respect to
depository institutions which do not meet their minimum capital requirements.
FDICIA establishes five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." Under the capital regulations, a bank is defined
to be well capitalized if it maintains a Leverage Ratio of at least 5%, a Tier
1 Capital ratio of at least 6% and a Total Capital ratio of at least 10% and
has not been determined to be in a "troubled condition" by its appropriate
federal regulatory authority. A bank is defined to be adequately capitalized if
it meets all of its minimum capital requirements as described above under " --
Capital Adequacy." A bank will be considered to be undercapitalized if it
should fail to meet any minimum required measure, significantly
undercapitalized if it should fall significantly below such measure, and
critically undercapitalized if it should fail to maintain a level of tangible
equity equal to not less than 2% of its total assets. A bank may be deemed to
be in a capitalization category which is lower than is indicated by its actual
capital position if it should receive an unsatisfactory examination rating.
All institutions, regardless of their capital levels, are restricted
from making any capital distributions or paying any management fees if, as a
result thereof, the institution would fail to satisfy the minimum levels
required in order to be considered adequately capitalized. An undercapitalized
institution is: (i) subject to increased monitoring by the appropriate federal
banking regulator; (ii) required to submit to its regulator an acceptable
capital restoration plan within 45 days; (iii) subject to asset growth
limitations; and (iv) required to obtain prior regulatory approval for
acquisitions, branching, and new lines of business. The capital restoration
plan must include a guarantee by the institution's holding company that the
institution will comply with the plan until it has been adequately capitalized
on average for four consecutive quarters. Pursuant to the guarantee, the
institution's holding company would be liable up to the lesser of
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5% of the institution's total assets or the amount necessary to bring the
institution into capital compliance as of the date it failed to comply with its
capital restoration plan. If the controlling BHC should fail to fulfill its
obligations under the guarantee and should file (or have filed against it) a
petition under the federal Bankruptcy Code, the appropriate federal banking
regulator could have a claim as a general creditor of the BHC, and, if the
guarantee were deemed to be a commitment to maintain capital under the federal
Bankruptcy Code, the claim would be entitled to a priority position in such
bankruptcy proceeding over third-party creditors of the BHC.
The regulatory agencies have discretionary authority to reclassify
well-capitalized institutions as adequately capitalized or to impose on
adequately capitalized institutions requirements or actions specified for
undercapitalized institutions if the agency should determine, after notice and
an opportunity for hearing, that the institution is in an unsafe or unsound
condition or is engaging in an unsafe or unsound practice, which may consist of
its receipt of an unsatisfactory examination rating if the deficiencies cited
are not corrected. A significantly undercapitalized institution, as well as any
undercapitalized institution which fails to submit an acceptable capital
restoration plan, may be subject to regulatory demands for recapitalization,
broader application of restrictions on transactions with affiliates,
limitations upon interest rates paid on deposits, asset growth and other
activities, possible replacement of directors and officers and restrictions on
capital distributions by any BHC controlling the institution. Any company
controlling the institution could also be required to divest the institution or
the institution could be required to divest subsidiaries. The senior executive
officers of a significantly undercapitalized institution may not receive
bonuses or increases in compensation without prior regulatory approval and the
institution would be prohibited from making payments of the principal of, or
interest on its subordinated debt. If an institution should become critically
undercapitalized, the institution will be subject to conservatorship or
receivership within 90 days unless periodic determinations are made that
forbearance from such action would better protect the deposit insurance fund.
Unless appropriate findings and certifications are made by the appropriate
federal bank regulatory agencies, a critically undercapitalized institution
must be placed in receivership if it should remain critically undercapitalized
on average during the calendar quarter beginning 270 days after the date on
which it became critically undercapitalized.
DIVIDEND RESTRICTIONS
The Corporation is a legal entity which is separate and distinct from
its Subsidiary Banks as well as its non-bank subsidiaries. The Corporation's
revenues (on a parent company only basis) result, in significant part, from
dividends and management
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fees paid to the Corporation by its subsidiaries. The right of the Corporation,
and consequently the right of creditors and shareholders of the Corporation, to
participate in any distribution of the assets or earnings of any subsidiary,
through the payment of such dividends or otherwise, is necessarily subject to
the prior claims of creditors of the subsidiary (including its depositors, in
the case of the Banking Subsidiaries) except to the extent that claims of the
Corporation in its capacity as a creditor may be recognized.
There are statutory and regulatory requirements applicable to the
payment of dividends by the Corporation's Banking Subsidiaries to the
Corporation. Each subsidiary of the Corporation which is a national banking
association, including UPNB, is required by federal law to obtain the prior
approval of the Comptroller for the payment of dividends if the total of all
dividends declared by the board of directors of such bank in any year would
exceed the total of (i) such bank's net profits (as defined and interpreted by
regulation) for that year plus (ii) the retained net profits (as defined and
interpreted by regulation) for the preceding two years, less any required
transfers to surplus. In addition, national banks may only pay dividends to the
extent that their retained net profits (including the portion transferred to
surplus) exceed statutory bad debts (as defined by regulation). The
Corporation's state-chartered Depository Subsidiaries are subject to similar
restrictions on the payment of dividends by the respective state laws under
which they are organized. Moreover, as noted above under " -- Prompt Corrective
Action," all depository institutions are prohibited from paying any dividends,
making other distributions or paying any management fees if, after such
payment, the depository institution would fail to satisfy its minimum capital
requirements. At December 31, 1993, UPNB and the Corporation's other
Depository Subsidiaries had, in the aggregate, approximately $74.3 million
available for distribution to the Corporation without obtaining prior
regulatory approval. The actual amount of dividends paid will be limited to a
lesser amount by management of the Corporation in order to maintain compliance
with the Corporation's own internal capital guidelines and to maintain strong
capital positions in each of the Banking Subsidiaries of the Corporation.
Future dividends will essentially depend upon the level of earnings of the
Banking Subsidiaries of the Corporation.
It is the policy of the Federal Reserve that bank holding companies
should pay dividends only out of current earnings. The federal bank regulatory
authorities may also prohibit banks and bank holding companies from paying a
dividend if they should deem such payment to be an unsafe or unsound practice.
Furthermore, it is the position of the Federal Reserve that as a BHC, the
Corporation is expected to act as a source of financial strength to each of its
subsidiary banks. See " -- Support of Banking Subsidiaries" below.
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SUPPORT OF BANKING SUBSIDIARIES
Under Federal Reserve policy, the Corporation is expected to act as a
source of financial strength to its Banking Subsidiaries and, where required,
to commit resources to support each of such Subsidiaries. This support may be
required at times when, absent such Federal Reserve policy, the Corporation
might not be inclined to provide it. Moreover, if one of its subsidiary banks
should become undercapitalized, the Corporation would be required by FDICIA to
guarantee the subsidiary bank's compliance with its capital plan in order for
such plan to be accepted by the appropriate federal regulatory authority. See
"-- Prompt Corrective Action."
Under the "cross guarantee" provisions of the Federal Deposit Insurance
Act, any FDIC-insured subsidiary of the Corporation (which includes all of the
Corporation's Banking Subsidiaries) may be held liable for any loss incurred
by, or reasonably expected to be incurred by the FDIC in connection with (i)
the "default" of any other commonly controlled FDIC-insured subsidiary or (ii)
any assistance provided by the FDIC to any commonly controlled FDIC-insured
subsidiary "in danger of default." "Default" is defined generally as the
appointment of a conservator or receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
Because it is a bank holding company, any capital loans made by the
Corporation to any of its Banking Subsidiaries are subordinate in right of
payment to the claims of depositors and to certain other indebtedness of such
Banking Subsidiary. In the event of a BHC's bankruptcy, any commitment by the
BHC to a federal bank regulatory agency to maintain the capital of a subsidiary
bank will be assumed by the bankruptcy trustee and entitled to priority of
payment over certain other creditors of the BHC.
TRANSACTIONS WITH AFFILIATES
Provisions of the Federal Reserve Act impose restrictions and
limitations upon the type, amount, quantity, and quality of transactions
between an "affiliate" (as defined below) of an FDIC-insured bank and the
insured bank (including transactions with its bank holding company and its
nonbank subsidiaries). The purpose of these restrictions and limitations is to
prevent misuse of the resources of an FDIC-insured institution by its uninsured
affiliates. An exception to most of these restrictions is provided for
transactions between two insured banks which are subsidiaries of the same bank
holding company where the holding company owns 80% or more of each of these
banks (the "sister bank" exception). The restrictions are also inapplicable to
transactions between an insured bank and its wholly-owned subsidiaries. These
restrictions include limitations on the purchase and sale of assets and
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extensions of credit by the insured bank to its BHC or its BHC's nonbank
subsidiaries. An insured bank and its subsidiaries are limited in engaging in
"covered transactions" with their nonbank or non-savings bank affiliates to the
following amounts: (i) in the case of any one such affiliate, the aggregate
amount of covered transactions of the insured bank and its subsidiaries may not
lawfully exceed 10% of the capital stock and surplus of the insured bank and
(ii) in the case of all affiliates of such insured bank, the aggregate amount
of covered transactions of the insured bank and its subsidiaries may not
lawfully exceed 20% of the capital stock and surplus of the bank. "Covered
transactions" are defined by statute to include a loan or extension of credit,
as well as a purchase of securities issued by an affiliate, a purchase of
assets (unless otherwise exempted by the Federal Reserve), the acceptance of
securities issued by the affiliate as collateral for a loan and the issuance of
a guarantee, acceptance, or letter of credit for, or on behalf of, an
affiliate. An "affiliate" of an insured bank is a person or entity which
controls, is controlled by or is under common control with, such insured bank.
The BHCA also prohibits a BHC and its subsidiaries from engaging in certain
tie-in arrangements in connection with any extension of credit, lease or sale
of property or furnishing of services.
FDIC INSURANCE ASSESSMENTS
The Banking Subsidiaries of the Corporation are subject to FDIC deposit
insurance assessments. The FDIC has adopted a risk-based premium schedule which
has increased the assessment rates for most FDIC-insured depository
institutions. Under the new schedule, the annual premiums initially range from
$.23 to $.31 for every $100 of deposits. Each financial institution is assigned
to one of three capital classifications -- well capitalized, adequately
capitalized or undercapitalized -- and further assigned to one of three
subgroups within its capital classification based upon supervisory evaluations
by the institution's primary federal and, if applicable, state supervisory
authorities and on the basis of other information relevant to the institution's
financial condition and the risk posed to the applicable insurance fund. The
actual assessment rate applicable to a particular institution will, therefore,
depend in part upon the risk assessment classification so assigned to the
institution by the FDIC.
RECENT BANKING LEGISLATION
In addition to the matters noted above, FDICIA made other significant
changes to the federal banking laws. FDICIA institutes certain changes to the
supervisory process, including provisions that mandate certain regulatory
agency actions against undercapitalized institutions within specified time
limits.
STANDARDS FOR SAFETY AND SOUNDNESS. FDICIA required the federal bank
regulatory agencies to prescribe, by regulation to become
-14-
<PAGE> 15
effective no later than December 1, 1993, standards for all insured depository
institutions and depository-institution holding companies relating to: (i)
internal controls, information systems and audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) interest-rate risk exposure; (v)
asset growth; and (vi) compensation, fees, and benefits. The compensation
standards must prohibit employment contracts, compensation or benefit
arrangements, stock option plans, fee arrangements or other compensatory
arrangements that would provide excessive compensation, fees or benefits or
could lead to material financial loss, but (subject to certain exceptions) may
not prescribe specific compensation levels or ranges for directors, officers or
employees. In addition, the federal bank regulatory agencies are required to
prescribe by regulation standards specifying: (i) maximum classified assets to
capital ratios; (ii) minimum earnings sufficient to absorb losses without
impairing capital; and (iii) to the extent feasible, a minimum ratio of market
value to book value for publicly traded shares of depository institutions and
depository-institution holding companies.
BROKERED DEPOSITS. The FDIC has adopted regulations governing the
receipt of brokered deposits. Under the regulations, a bank may not lawfully
accept, roll over or renew any brokered deposits unless (i) it is well
capitalized or (ii) it is adequately capitalized and receives a waiver from the
FDIC. A bank that may not receive brokered deposits also may not offer
"pass-through" insurance on certain employee benefit accounts. Whether or not
it has obtained such a waiver, an adequately capitalized bank may not pay an
interest rate on any deposits in excess of 75 basis points over certain
prevailing market rates specified by regulation. There are no such
restrictions on a bank that is well capitalized. Because UPNB and all of the
Community Banks had at December 31, 1993, the requisite capital levels to
qualify as well capitalized institutions, management of the Corporation
believes that the brokered deposits regulation will have no material effect on
the funding or liquidity of any of its Banking Subsidiaries. Moreover,
management does not believe that the Corporation now has, or at that date had
brokered deposits in any amount.
CONSUMER PROTECTION PROVISIONS. FDICIA seeks to encourage enforcement of
existing consumer-protection laws and enacted new consumer-oriented provisions
including a requirement of notice to appropriate regulatory authorities and
customers of any proposed branch closing and provisions intended to encourage
the offering of "lifeline" banking accounts and lending in distressed
communities. FDICIA also requires depository institutions to make additional
disclosures to depositors with respect to the rate of interest to be paid on,
and the terms of their deposit accounts.
INSTITUTIONAL EXPOSURE. FDICIA also required the Federal Reserve to
prescribe standards which limit the risks posed by an insured institution's
"exposure" to any other depository
-15-
<PAGE> 16
institution in order to limit the risks that the failure of a large depository
institution would pose to an insured depository institution. FDICIA broadly
defines "exposure" to include extensions of credit to the other institution;
purchases of, or investments in, securities issued by the other institution;
securities issued by the other institution and accepted as collateral for an
extension of credit to any person; and all similar transactions which the
Federal Reserve has defined by regulation to constitute exposure. The Federal
Reserve has adopted certain procedures and "benchmark" standards to limit an
insured depository institution's credit and settlement exposure to each of its
correspondent banks. The final rules were effective on December 19, 1992, but
provided for a two-year transition period.
MISCELLANEOUS. FDICIA also made extensive changes in the applicable
rules regarding audit, examinations, and accounting. FDICIA generally requires
annual, on-site, full-scope examinations by each bank's primary federal
regulatory authority. FDICIA also imposes new responsibilities on management,
the independent audit committee and outside accountants to develop, approve or
attest to reports regarding the effectiveness of internal controls, legal
compliance, and off-balance-sheet liabilities and assets.
DEPOSITOR PREFERENCE. Legislation recently enacted by Congress
establishes a nationwide depositor preference rule in the event of a bank
failure. Under this arrangement, all deposits and certain other claims against
a bank, including the claim of the FDIC as subrogee of insured depositors,
would receive payment in full before any general creditor of the bank would be
entitled to any payment in the event of an insolvency or liquidation of the
bank.
SECURITIES ACTIVITIES
The Securities Exchange Act of 1934 and in some instances state securities
statutes impose supervisory and regulatory requirements on the various
securities activities conducted by banks and non-banking subsidiaries of bank
holding companies.
GOVERNMENT POLICIES
The earnings of the Corporation may be significantly affected by the
policies of various regulatory authorities, including the domestic monetary
policies of the Federal Reserve regulating credit, United States fiscal policy,
and policies implemented by regulations affecting interest rates payable on
deposits. The effect of such changes in policies upon the future earnings of
the Corporation cannot be predicted.
COMPETITION
The Corporation and its subsidiaries are subject to substantial
competition in all aspects of their businesses. They
-16-
<PAGE> 17
compete directly with numerous other financial services firms, a significant
number of which have substantially greater capital and other resources, higher
lending limits, larger advertising budgets, and which offer a wider range of
financial services. In addition to the competition from commercial banks and
securities firms, there is increasing competition from other sources such as
savings and loans, insurance companies, consumer finance companies, credit
unions, mortgage companies, money market funds, and lending agencies of the
United States Government. In the five-county Memphis market alone, there were
approximately 45 banks and savings and loan associations (excludes credit
unions) at June 30, 1993, as well as numerous other competing financial
institutions. There is significant competition with respect to interest rates
paid on deposits, interest rates charged on loans, and fees charged for
services.
PERSONNEL
As of February 28, 1994, the Corporation, including all subsidiaries, had
3,457 employees (including 517 part-time employees).
STATISTICAL DISCLOSURES
The statistical information required by Item 1 may be found in the 1993
Annual Report to Shareholders, and, to the extent indicated, is incorporated
herein by reference, as follows:
<TABLE>
<CAPTION>
Page in the Corporation's
1993 Annual Report to
Guide 3 Disclosure Shareholders
------------------ -------------------------
<S> <C>
I. Distribution of Assets, Liabilities,
and Shareholders' Equity; Interest
Rates and Interest Differential
A. Average Balance Sheet 51
B. Net Interest Earnings Analysis 51
C. Rate/Volume Analysis 52
II. Investment Portfolio
A. Book Value of Investment Securities 14, 15, and 56
B. Maturities of Investment Securities 15 and 16
C. Investment Securities Concentrations Not applicable
III. Loan Portfolio
A. Types of Loans 53
B. Maturities and Sensitivity of
Loans to Changes in Interest Rates Follows this table
</TABLE>
-17-
<PAGE> 18
<TABLE>
<CAPTION>
Page in the Corporation's
1993 Annual Report to
Guide 3 Disclosure Shareholders
------------------ -------------------------
<S> <C>
C. Risk Elements
1. Nonaccrual, Past Due 90 Days
or More, and Restructured Loans 54
2. Potential Problem Loans 44
3. Foreign Outstandings Not significant
4. Loan Concentrations --
D. Other Interest-Bearing Assets Not significant
IV. Summary of Loan Loss Experience
A. Analysis of Allowance for Loan Losses 54
B. Allocation of the Allowance for Loan
Losses 53
V. Deposits
A. Average Balances 51 and 52
B. Maturities of Large Denomination
Certificates of Deposit Follows this table
C. Foreign Deposit Liability Disclosure Not significant
VI. Return on Equity and Assets
A. Return on Assets 35
B. Return on Equity 35
C. Foreign Deposit Liability Disclosure Not significant
D. Equity to Assets Ratio 35
VII. Short-Term Borrowings 18
</TABLE>
The following table presents the maturities and sensitivities of the
Corporation's loans to changes in interest rates at December 31, 1993:
<TABLE>
<CAPTION>
Due Due After One Due After
Within But Within Five
One Year Five Years Years
-------- ------------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
Commercial $410,209 $166,083 $ 90,320
Real Estate-Construction 66,318 11,726 4,927
-------- -------- --------
Total $476,527 $177,809 $ 95,247
======== ======== ========
Fixed Rate $107,564 $ 24,601
======== ========
Variable Rate $ 70,245 $ 70,646
======== ========
</TABLE>
-18-
<PAGE> 19
The following table presents maturities of certificates of deposit of $100,000
and over and other time deposits of $100,000 and over:
<TABLE>
<CAPTION>
December 31,
1993
------------
(Dollars in thousands)
<S> <C>
Under 3 Months $153,576
3 to 6 Months 85,835
6 to 12 Months 46,968
Over 12 Months 81,216
--------
Total $367,595
========
</TABLE>
-19-
<PAGE> 20
ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of executive officers of the Corporation.
Information regarding the executive officers, their ages, their present
positions held with the Corporation and its subsidiaries, and their principal
occupations for the last five years are as follows:
<TABLE>
<CAPTION>
Position of Executive Officers
Name with the Corporation and UPNB Age
---- ------------------------------ ---
<S> <C> <C>
Benjamin W. Rawlins, Jr. Chairman of the Board and 56
Chief Executive Officer of the
Corporation; Chairman of the Board
and Chief Executive Officer of UPNB
J. Armistead Smith Vice Chairman of the Corporation 58
Jackson W. Moore President of the Corporation 45
Jack W. Parker Executive Vice President and 47
Chief Financial Officer of
the Corporation; Executive
Vice President and Chief
Financial Officer of UPNB
M. Kirk Walters Senior Vice President, Treasurer, 53
and Chief Accounting Officer
of the Corporation; Senior Vice
President and Chief Accounting
Officer of UPNB
J. F. Springfield Secretary and General Counsel of 64
the Corporation; Executive Vice
President, Secretary, and General
Counsel of UPNB
James A. Gurley Executive Vice President of the 60
Corporation; Executive Vice
President of UPNB
</TABLE>
Mr. Rawlins has been Chairman of the Board of the Corporation and UPNB since
April, 1989 and January, 1986, respectively. He has also served as Chief
Executive Officer of the Corporation and UPNB since September, 1984. Mr.
Rawlins was President of the Corporation from September, 1984 until he was
elected Chairman.
Mr. Smith has been Vice Chairman of the Corporation since 1989. Effective
March, 1994, Mr. Smith became Chairman of the East Tennessee Region of the
Corporation. He was President of the
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<PAGE> 21
Corporation's Community Bank Group from April of 1992 until February, 1994. Mr.
Smith was President of UPNB from 1988 to April, 1992. Prior to becoming a Vice
Chairman of the Corporation, Mr. Smith was an Executive Vice President of the
Corporation from 1987 until elected Vice Chairman. He was a Vice Chairman of
UPNB from 1985 until he was elected President.
Mr. Moore has been President of the Corporation since April, 1989. Since 1977,
he had been a partner in the law firm of Wildman, Harrold, Allen, Dixon &
McDonnell (and its predecessor Canada, Russell & Turner), the Corporation's
outside legal counsel and had served on its Management Committee and as
Chairman of its Administrative Committee for five years. He is also Chairman of
PSB Bancshares, Inc. and is a Vice President and Director of its subsidiary,
The Peoples Savings Bank, located in Clanton, Alabama. He has served on the
Boards of the Corporation and UPNB since 1986.
Mr. Parker has been Executive Vice President and Chief Financial Officer of the
Corporation since March, 1990. He has been an Executive Vice President and
Chief Financial Officer of UPNB since March, 1990. From 1987 until being
elected to these positions with the Corporation, he was an Executive Vice
President of UPNB and President of the Mortgage Banking Group of UPNB.
Mr. Walters was elected Senior Vice President of the Corporation in November,
1990 and has been Chief Accounting Officer since February, 1990. He has been
Treasurer of the Corporation since 1985. He was a Vice President of the
Corporation from 1975 until he was elected to his current position. Mr. Walters
has been an officer of UPNB for more than twenty years and is currently a
Senior Vice President.
Mr. Springfield has been Secretary and General Counsel of the Corporation and
Secretary and General Counsel of UPNB since December, 1985. He has been an
officer of UPNB for more than thirty-seven years, and is currently an Executive
Vice President.
Mr. Gurley was elected Executive Vice President of the Corporation in November,
1990. He was a Vice President of the Corporation from 1980 until he was elected
Executive Vice President. He has been an officer of UPNB for more than twenty
years and is currently an Executive Vice President.
-21-
<PAGE> 22
ITEM 2. PROPERTIES
The Corporation's corporate headquarters are located in the company-owned
UPNB Administrative Center at 7130 Goodlett Farms Parkway, Memphis, Tennessee,
a two-building complex located near the center of Shelby County. In addition to
being the corporate headquarters, it contains approximately 250,000 square feet
of space and houses Retail Branch Administration, Bank Cards, Mortgage
Servicing and Origination, Funds Management, Data Processing, Operations,
Marketing, Human Resources, Financial, Legal, Insurance Services, and Community
Bank Group Administration.
UPNB's headquarters is located in a 70,000 square foot company-owned
building in East Memphis. In addition to being its headquarters, the building
also houses UPNB's Commercial Group, Trust Group, Credit and Review, and
Brokerage Services.
As of December 31, 1993, UPNB and other subsidiaries of the Corporation
operated 170 banking offices in Tennessee, 25 in Mississippi, 22 in Arkansas,
and 2 in Alabama. Of these, 150 are owned and 69 are leased by the
subsidiaries. The subsidiaries also operate 167 twenty-four hour automated
teller locations. The acquisitions completed subsequent to December 31, 1993
and through March 1, 1994 increased by 15 the number of banking offices to 234,
of which 10 were added in Tennessee and five in Kentucky.
There are no material encumbrances on any of the company-owned properties.
-22-
<PAGE> 23
ITEM 3. LEGAL PROCEEDINGS
The Corporation and/or various subsidiaries are parties to various
pending civil actions, all of which are being defended vigorously. Management
is of the opinion that the Corporation has accrued liabilities sufficient to
cover the estimated costs associated with the ultimate resolution of all
pending matters, including those discussed below. While additional provisions
for litigation are possible, management is of the opinion, based on current
information, including evaluations of outside counsel, that no additional
provisions will be necessary for the foreseeable future. Any such additional
provisions would obviously impact earnings in the operating periods in which
such provisions were made. Nevertheless, management's view is that such
additional provisions, if any, would not materially affect the financial
condition of the Corporation. Various other legal proceedings against the
Corporation and its subsidiaries have arisen in the ordinary course of
business. Management is of the opinion that the Corporation's financial
position will not be materially affected by the ultimate resolution of these
other legal matters.
UPNB and one of its officers are co-defendants in two civil actions seeking
$29 million (after trebling) filed on or about July 25, 1985 in the U.S.
Bankruptcy Court for the Eastern District of Missouri by the trustee for a
failed grocery and its shareholders purportedly predicated upon an August, 1981
$115,000 loan by the First National Bank of Gibson County, Tennessee, later
acquired by UPNB, to finance the shareholders' acquisition of the grocery
business from other defendants unrelated to UPNB. The actions allege that the
defendants subsequently conspired to defraud the plaintiffs of their rights in
the grocery. This matter has been dormant since UPNB filed a motion for summary
judgment in 1985.
In 1988, the Corporation rescinded and terminated a purported agreement for
the acquisition of a Louisiana bank holding company, Great American Corporation
(GAC). The Corporation and a subsidiary were made parties to several civil
actions relating to the failed acquisition alleging damages estimated at $66
million and founded essentially upon theories that the Corporation had breached
the acquisition agreement and committed wrongful acts under state law and a
separate confidentiality agreement. In November, 1992, the Corporation
completed the negotiation and signing of definitive agreements for the
settlement of all the pending civil actions. A class consisting of all outside
GAC shareholders between January 22 and October 4, 1988 was certified for
purposes of consummating the settlement and the number of share owners excluded
from that class was immaterial. Early in the second quarter of 1993
consummation of the settlement of all pending civil actions involving the
Corporation and a subsidiary arising from the attempted acquisition
-23-
<PAGE> 24
of GAC was effected. The costs of such settlement did not exceed amounts
previously reserved for such purpose.
UPNB, a member of the MasterCard and VISA organizations, was a
co-defendant or cross-claim defendant in two related civil actions arising out
of its previous utilization of a third party, Electronic Transaction Network,
Inc.(E-Net), to solicit and assist in the administration of credit card
transaction processing arrangements with several thousand consumer merchants
located throughout the United States. The plaintiff sought compensatory damages
said to exceed $10 million (trebled to exceed $30 million) and other relief
based on various alleged wrongdoing by UPNB and two co-defendants. During the
third quarter of 1993, a definitive agreement was entered into for the
settlement of all pending litigation against UPNB in connection with its former
relationship with E-Net, without the payment of any sum by UPNB.
The Corporation's broker/dealer subsidiaries (now inactive) are among
the more than eighty defendants in various actions brought by purchasers of
$400 million in housing revenue bonds issued by the Health, Educational, and
Housing Facility Board of the City of Memphis, Tennessee and by purchasers of
bonds that were part of seven other taxable municipal issues. These actions
have been transferred to the United States District Court for the Eastern
District of Louisiana for pretrial proceedings captioned In Re: Taxable
Municipal Bond Securities Litigation, Multi-district Litigation ("MDL" 863).
Focusing upon the fact that the bond sale proceeds were initially invested and
remain in "guaranteed investment contracts" ("GICs") with Executive Life
Insurance Company ("ELIC"), whose own investments were allegedly concentrated
in so-called "junk bonds" of declining value, the lawsuits in MDL 863 allege
that the offering materials failed to make adequate disclosures and that the
bonds represented a scheme among the Executive Life organization, Drexel
Burnham Lambert, Inc., and the other defendants to raise money for "junk bond"
purchases, rather than for public purposes. ELIC is in conservatorship,
interest on the bonds is in default, and Drexel is in Chapter 11
reorganization. The complaint for the Memphis issue requests certification of a
plaintiff class including substantially all persons who purchased a Memphis
bond through April 9, 1990, either in the original $400 million Memphis bond
underwriting, in which a broker/dealer subsidiary of the Corporation
participated, or in the secondary market, wherein such subsidiary sold a total
of approximately $120 million par value in Memphis bonds. The class claims in
respect of the Memphis issue seek to impose joint and several liability upon,
among others, numerous defendants who participated in the underwriting,
including such subsidiary. In addition, a number of individual actions naming
the Corporation's broker/dealer subsidiaries have been brought by secondary
market purchasers. The class and individual plaintiffs predicate their claims
upon Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5
promulgated thereunder, the Investment Company Act, the
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<PAGE> 25
Investment Advisors Act, common law fraud, negligent misrepresentation, gross
and ordinary negligence, breach of fiduciary duty, the Tennessee Securities
Act, and other laws. For relief, the various complaints seek a declaratory
judgment that the Memphis bonds were void from their inception, rescission of
all of plaintiffs' purchases, punitive damages, prejudgment interest, and other
relief. While the actions originally included Investment Company Act,
Investment Advisers Act, and racketeering (RICO) claims, most of these have
been dismissed, and the current complaints do not assert any such claims
against the UPC parties. On January 28, 1993, the California Supreme Court
declined to review a lower court ruling to the effect that claims to ELIC
assets by policyholders, annuitants, and holders of GICs are to be treated as
equal in priority in the distribution of such assets. The Corporation's
broker/dealer subsidiaries have joined in a common defense with other members
of the syndicate which underwrote the bonds which are the subject of the
litigation.
On May 30, 1991, in an action originally filed by UPNB in the Circuit
Court of Cook County, Illinois, Chancery Division, seeking to foreclose on a
single parcel of mortgaged residential property, the defendant debtors filed a
counterclaim against UPNB and the Corporation individually and on the purported
behalf of a requested class which would have consisted essentially of all
persons who had a mortgage loan serviced by UPNB at any time during the past 10
years. The counterclaim alleged that UPNB, like other participants in the
mortgage loan industry, engaged in a regular practice of charging mortgage
debtors greater amounts to escrow for estimated property taxes and insurance
than is allowed by law and applicable loan agreements. The counterclaim sought
recovery of all excess charges and/or interest thereon, and other relief. The
class action aspects of this counterclaim have been dismissed, leaving only a
setoff claim by the defendant debtors with respect to the foreclosure. On
February 16, 1993, an action was filed in the Circuit Court of Choctaw County,
Alabama as an individual action and as a purported class action against UPNB
and UPC with theories of recovery and relief requested similar to the Illinois
counterclaim.
On or about July 10, 1991, UPNB was joined with nine other banks as
defendants in a civil action in the Circuit Court of Shelby County, Tennessee.
The suit as originally filed alleges that the banks unlawfully conspired to fix
the charges for checks drawn on insufficient funds. The suit seeks compensatory
and punitive damages of $25 million against each defendant and certification of
a class of plaintiffs comprised of all depositors who have been charged the NSF
fees. The suit was amended on or about July 12, 1991, August 2, 1991 and again
on November 25, 1991 to add plaintiffs and to include claims of unfair and
deceptive trade practices, breach of contract, tortious conduct, violation of
provisions of the UCC, treble damages under the Tennessee Consumer Protection
Act, and usury. The amendments also broadened the class
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<PAGE> 26
and the claims to seek recovery for fees charged for deposited third-party
checks which were returned uncollected. In March, 1992 the state court
proceeding was dismissed; plaintiffs subsequently appealed the dismissal, and
on February 23, 1993, the Tennessee Court of Appeals affirmed the dismissal of
five of the six counts in the state court action but reversed the dismissal of
the count alleging violation of the contractual duty of good faith and fair
dealing, holding that the plaintiffs met bare minimum pleading requirements to
permit that claim to go forward. During the third quarter of 1993, class
certification was granted by the state court, with the plaintiff class
apparently consisting of all persons in the United States who, in the six years
prior to the filing of the complaint were charged the fees described above.
However, on December 17, 1993, the defendants' motion for summary judgment was
granted on the remaining breach of contract claim. Plaintiffs have appealed
that ruling. Further, on May 22, 1992, substantially the same group of
plaintiffs filed a civil action 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. The
suit further requests certification of a similarly broad class, seeks
injunctive relief and damages for the class members in amounts, according to
the suit, "which are presently undetermined but believed to be more than $100
million." The complaint also seeks treble damages and a jury trial. On March
19, 1993 the federal court granted defendants' motion to dismiss the Tennessee
Consumer Protection Act claim, but permitted the Sherman Act claim to remain at
that stage of the proceedings. On September 15, 1993 the defendants filed a
motion for summary judgment seeking dismissal of the price fixing allegations
as well, and on March 11, 1994, the court granted that motion. Plaintiffs have
indicated they will appeal.
Certain subsidiaries of the Corporation and UPNB were threatened in 1989
with a civil action by the FDIC for the estate of a closed savings association.
If filed, the action would reportedly seek compensatory damages of at least $37
million, and other relief including an injunction against transferring or
encumbering any assets until any judgments were paid, based upon allegations of
wrongdoing in the sale of covered call options to the closed savings
association. A tolling and forbearance agreement, entered into by all parties
to the threatened action in 1989, continues in effect. The Corporation has
furnished the FDIC with information assertedly demonstrating the lack of merit
in the threatened action and believes that such action, if nevertheless filed,
can be resolved without material loss.
During 1993, agreements-in-principle and/or final settlements were
reached with plaintiffs to resolve a significant number of previously reported
legal claims, utilizing reserves previously
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<PAGE> 27
established in prior periods or otherwise having no material effect upon the
Corporation's financial position.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required by Item 5 is included in the Corporation's 1993
Annual Report to Shareholders on page 57 under the heading Table 14, "Selected
Quarterly Data," which is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is included in the Corporation's 1993
Annual Report to Shareholders on page 35 under the heading "Selected Financial
Data," and which is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by Item 7 is included in the Corporation's 1993
Annual Report to Shareholders on pages 36-58 under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition," and
which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is included in the Corporation's 1993
Annual Report to Shareholders on pages 4-34 and on page 57 under the heading
Table 14, "Selected Quarterly Data," and which is incorporated herein by
reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 as to the directors of the Corporation
is included on pages 3-5 and 15 of the definitive proxy statement of the
Corporation for the annual meeting of shareholders to be held on April 28, 1994
(Proxy Statement) and which is incorporated herein by reference.
The information concerning "Executive Officers of the Registrant" is
included in Part I (Item 1a) of this Form 10-K in accordance with Instruction 3
to paragraph (b) of Item 401 of Regulation S-K.
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<PAGE> 28
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 as to compensation of directors and
executive officers is included on pages 5 and 6 and 7-14 of the Proxy
Statement which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 12 as to certain beneficial owners and
management is included on pages 2-5 of the Proxy Statement which is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 as to transactions and relationships
with certain directors and executive officers of the Corporation and their
associates is included on page 13 of the Proxy Statement which is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) The following audited consolidated financial statements of Union
Planters Corporation and Subsidiaries, included in the
Corporation's 1993 Annual Report to Shareholders, are
incorporated herein by reference in Item 8:
<TABLE>
<CAPTION>
Page in
Annual Report
-------------
<S> <C>
Consolidated Balance Sheet - December 31,
1993 and 1992 4
Consolidated Statement of Earnings - Years
ended December 31, 1993, 1992, and 1991 5
Consolidated Statement of Changes in
Shareholders' Equity - Years ended
December 31, 1993, 1992, and 1991 6
Consolidated Statement of Cash Flows -
Years ended December 31, 1993, 1992, and 1991 7
Notes to Consolidated Financial Statements 8
Management's Responsibility for Financial
Reporting 34
</TABLE>
-28-
<PAGE> 29
<TABLE>
<CAPTION>
Page in
Annual Report
-------------
<S> <C>
Report of Independent Accountants 34
</TABLE>
(a) (2) All schedules have been omitted since the required information is
either not applicable, not deemed material, or is included in the
respective consolidated financial statements or in the notes
thereto.
(a) (3) Exhibits:
The exhibits listed on the Exhibit Index on pages i, ii, and iii,
following page 30 of this Form 10-K are filed herewith or are incorporated
herein by reference.
(b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Date of Current Report Subject
---------------------- ---------------------------
<S> <C>
October 14, 1993 Financial Statements of two
entities being acquired
October 21, 1993 Third Quarter Press Release announcing operating results
</TABLE>
-29-
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By: /s/ Benjamin W. Rawlins, Jr.
---------------------------------------------------
Benjamin W. Rawlins, Jr., Chairman of the Board and
Chief Executive Officer
Date: March 23, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 23rd of March, 1994
<TABLE>
<S> <C>
/s/Benjamin W. Rawlins, Jr. /s/John W. Parker
- ---------------------------------------------- --------------------------------------------------
Benjamin W. Rawlins, Jr. John W. Parker
Chairman of the Board, Chief Executive Officer, Executive Vice President and Chief Financial
and Director Officer
/s/J. Armistead Smith /s/M. Kirk Walters
- ---------------------------------------------- --------------------------------------------------
J. Armistead Smith M. Kirk Walters
Vice Chairman and Director Senior Vice President, Treasurer, and Chief
Accounting Officer
/s/Jackson W. Moore /s/R. Brad Martin
- ---------------------------------------------- --------------------------------------------------
Jackson W. Moore R. Brad Martin
President and Director Director
/s/Albert M. Austin
- ---------------------------------------------- --------------------------------------------------
Albert M. Austin Stanley D. Overton
Director Director
/s/Marvin E. Bruce
- ---------------------------------------------- --------------------------------------------------
Marvin E. Bruce C. Penn Owen, Jr.
Director Director
/s/Dr. V. Lane Rawlins
- ---------------------------------------------- --------------------------------------------------
George W. Bryan Dr. V. Lane Rawlins
Director Director
/s/Robert B. Colbert, Jr. /s/Donald F. Schuppe
- ---------------------------------------------- --------------------------------------------------
Robert B. Colbert, Jr. Donald F. Schuppe
Director Director
/s/Leslie M. Stratton, III
- ---------------------------------------------- --------------------------------------------------
Hanford F. Farrell, Jr. Leslie M. Stratton, III
Director Director
/s/Parnell S. Lewis, Jr.
- ---------------------------------------------- --------------------------------------------------
Parnell S. Lewis, Jr. Mike P. Sturdivant
Director Director
/s/C. J. Lowrance, III
- ---------------------------------------------- --------------------------------------------------
C. J. Lowrance, III Richard A. Trippeer, Jr.
Director Director
</TABLE>
-30-
<PAGE> 31
EXHIBIT INDEX
3 (a) Restated Charter of Incorporation, as amended December 17, 1992,
of Union Planters Corporation (Filed herewith)
3 (b) Amended and Restated By-Laws, as amended January 20, 1994, of
Union Planters Corporation (Filed herewith)
2 Amendment and Plan of Reorganization, along with the Plan of
Merger annexed thereto as Exhibit A, dated as of January 27, 1994
between Union Planters Corporation and BFC Acquisition Company,
Inc. and BANCFIRST Corporation and BANKFIRST, a federal savings
bank (incorporated by reference to Exhibit 2 to Union Planters
Corporation Current Report on Form 8-K dated February 8, 1994
filed on February 18, 1994).
4 (a) Rights Agreement, dated January 19, 1989 between Union Planters
Corporation and Union Planters National Bank, including Form of
Rights Certificate (Exhibit A), and a Form Summary of Rights
(Exhibit B) (Incorporated by reference to Exhibit 1 to Union
Planters Corporation's Current Report dated as of January 19,
1989 on Form 8-K filed February 1, 1989 Commission File No.
0-6919)
4 (b) Indenture dated April 1, 1989 between Union Planters Corporation
and LaSalle National Bank for $34,500,000 of 10 1/8% Subordinated
Capital Debentures due 1999 *
4 (c) Indenture dated October 1, 1992 between Union Planters
Corporation and The First National Bank of Chicago (Trustee) for
$40,250,000 of 8 1/2% Subordinated Notes due 2002 ***
4 (d) Subordinated Indenture dated October 15, 1993 between Union
Planters Corporation and The First National Bank of Chicago for
$75,000,000 of 6.25% Subordinated Notes due 2003 ****
10 (a) Employment Agreement between Union Planters Corporation and
Benjamin W. Rawlins, Jr. (incorporated by reference to Exhibit
10(a) to the Annual Report on Form 10-K dated December 31, 1992)
10 (b) Employment Agreement between Union Planters Corporation and J.
Armistead Smith (incorporated by reference to Exhibit 10(b) to
the Annual Report on Form 10-K dated December 31, 1992)
-i-
<PAGE> 32
10 (c) Employment Agreement between Union Planters Corporation and
Jackson W. Moore (incorporated by reference to Exhibit 10(c) to
the Annual Report on Form 10-K dated December 31, 1992)
10 (d) Deferred Compensation Agreements between Union Planters
Corporation and certain highly compensated officers (incorporated
by reference to Exhibit 10 (g) to the Annual Report on Form 10-K
dated December 31, 1989)
10 (e) Union Planters Corporation 1983 Stock Incentive Plan **
10 (f) (1) Amended Union Planters Corporation 1983 Stock Incentive
Plan *****
10 (g) Union Planters Corporation 1992 Stock Incentive Plan
(incorporated by reference to Exhibit 10(g) to the Annual Report
on Form 10-K dated December 31, 1992)
10 (h) Deferred Compensation Agreements between Union Planters
Corporation and Union Planters National Bank and certain outside
directors (Incorporated by reference to Exhibit 10(m) to the
Annual Report on Form 10-K dated December 31, 1989)
10 (i) Executive Deferred Compensation Agreement between Union Planters
Corporation and certain highly compensated officers (Incorporated
by reference to Exhibit 10 (n) to the Annual Report on Form 10-K
dated December 31, 1989)
10 (j) "Standard Form of Agreement Between Owner and Contractor" between
Union Planters National Bank and Martin, Cole, Dando, and
Robertson, Inc. (incorporated by reference to Exhibit 10(j) to
the Annual Report on Form 10-K dated December 31, 1992)
10 (k) "Standard Form of Agreement Between Owner and Architect" between
Union Planters National Bank and Hnedak Bobo Group, P.C.
(incorporated by reference to Exhibit 10(k) to the Annual Report
on Form 10-K dated December 31, 1992)
11 Computation of Per Share Earnings (Filed herewith)
13 Annual Report to Security Holders (Filed herewith)
21 Subsidiaries of the Registrant (Filed herewith)
23 Consent of Price Waterhouse (Filed herewith)
ii
<PAGE> 33
* Incorporated by reference to exhibit number 4 filed as part of
Registration Statement No. 33-27784
** Incorporated by reference to exhibit 10 (1) filed as part of
Registration Statement 2-97661
*** Incorporated by reference to exhibit number 4 filed as part of
Registration Statement No. 33-52434
**** Incorporated by reference to Exhibit Number 4(d) filed as part of
Registration Statement No. 33-50655
***** Incorporated by reference to Exhibit Number 4 filed as part of
Registration Statement No. 33-23306
-iii-
<PAGE> 1
RESTATED CHARTER
OF
UNION PLANTERS CORPORATION
__________________________
FIRST: CORPORATE NAME:
The name of the Corporation is:
* * * UNION PLANTERS CORPORATION * * *
(hereinafter sometimes referred to as the "Corporation").
SECOND: DURATION:
The duration of the Corporation is perpetual.
THIRD: PRINCIPAL OFFICE:
The address of the principal office of the Corporation in the State of
Tennessee shall be 7130 Goodlett Farms Parkway, in the City of Cordova, County
of Shelby. The registered agent is George V. Kinney, Cashier, 7130 Goodlett
Farms Parkway, Cordova, Shelby County, Tennessee 38018.
FOURTH: TYPE OF CORPORATION:
The corporation is for profit.
FIFTH: CORPORATE PURPOSES:
Subject to any limitations which may be imposed upon its activities by
applicable law, the Corporation is formed to engage in any lawful act or
activity for which corporations may be organized under the Tennessee Business
Corporation Act. Specifically, but not by way of limitation, the Corporation
is formed for the following purposes:
(a) To acquire by purchase; by subscription; by exchange; in exchange
for its Common Stock, Preferred Stock, bonds, debentures or other obligations;
or to acquire in any other manner; or to organize de novo; and to take,
receive, hold, own, sell, assign, transfer, exchange, pledge, hypothecate,
dispose of or otherwise deal with any interest in any business whether or not
represented by shares of stock, shares, bonds, debentures, notes, participation
certificates, warrants, rights, options, and without limitation any securities
or instruments evidencing rights or options to receive, purchase or subscribe
for any interest in any business (wherever located or organized) or any
securities, whether issued by or created by any person, firm, association,
corporation, national banking association, state-chartered bank, trust company,
savings bank, business trust, syndicate, limited partnership, organization, or
by any other entity; and to possess and exercise in respect thereof any and all
of the rights, powers and privileges of owners or holders who are natural
persons including, without limitation, the exercise of any voting rights
pertaining thereto;
(b) To purchase or otherwise acquire any property, tangible or
intangible, whether real, personal or mixed and wherever located and to
receive, hold, manage, use, dispose of and otherwise exercise all rights,
powers and privileges of ownership thereof;
(c) To promote, finance, advise, counsel and assist in any way, any
person or any business entity in which the Corporation shall have any interest
of any kind;
(d) To do all things necessary or desirable to enhance the value of
or to protect or preserve the interest of the Corporation in any business
entity, securities or other property of any type which it may own or in which
it may have any interest of any kind; and
(e) To render assistance, counsel and advice to any person or entity
and to serve or represent the same in any capacity whatsoever, whether or not
the Corporation shall have any ownership interest in such person or entity.
SIXTH: CAPITAL STOCK:
The total number of shares of all classes of stock to which the
Corporation shall have authority to issue is sixty million (60,000,000) shares,
which shall be divided into two classes as follows: ten million (10,000,000)
shares of Preferred Stock without par value (Preferred Stock) and fifty million
(50,000,000) shares of Common Stock of the par value of $5.00 per share (Common
Stock). The designations, voting powers, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions of the above classes of stock and other general provisions
relating thereto shall be as follows:
PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series at
such time or times and for such consideration or considerations as the Board of
Directors may determine. All shares of any
<PAGE> 2
one series shall be of equal rank and identical in all respects except the
dates from which dividends accrue or accumulate with respect thereto may vary.
(b) The Board of Directors is expressly authorized at any time, and
from time to time, to provide for the issuance of shares of Preferred Stock in
one or more series, with such voting powers, full or limited, but not to exceed
one vote per share, or without voting powers and with such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issuance thereof
adopted by the Board of Directors, and as are not stated and expressed in this
Charter, or any Amendment thereto, including, (but without limiting the
generality of the foregoing) the following:
(1) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise provided by
the Board of Directors in creating such series) be increased or decreased (but
not below the number of shares then outstanding) from time to time by action of
the Board of Directors;
(2) The dividend rate or rates on the shares of such series
and the relation which such dividends shall bear to the dividends payable on
any other class or classes of capital stock; the terms and conditions upon
which and the periods in respect of which dividends shall be payable; whether
and upon what conditions such dividends shall be cumulative, non-cumulative or
partially cumulative and, if cumulative or partially cumulative, the date or
dates from which dividends shall accumulate;
(3) Whether the shares of such series shall be callable or
redeemable, the limitations and restrictions with respect to such call or
redemption, the time or times when, the price or prices at which, and the
manner in which such shares shall be callable or redeemable, including the
manner of selecting shares of such series for call or redemption if less than
all shares are to be called or redeemed;
(4) The amount payable upon shares of such series upon the
voluntary or involuntary liquidation, dissolution, distribution of assets or
winding up of the Corporation;
(5) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund, and, if so, whether and
upon what conditions such purchase, retirement sinking fund shall be
cumulative, partially cumulative or non-cumulative, the extent to which and the
manner in which such fund shall be applied to the purchase, call or redemption
of the shares or such series for retirement or to other corporate purposes and
the terms and provisions relative to the operation thereof;
(6) Whether the shares of such series shall be convertible
into or exchangeable for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation, and, if so
convertible or exchangeable, the price or prices or the rate or rates of
conversion or exchange, and the method, if any, of adjusting the same, and any
other terms and conditions of such conversion or exchange, provided, however,
that no shares of any such series shall be convertible into shares of any other
class or series having prior or superior rights and preferences as to dividends
or distributions of assets upon liquidation, and provided further that shares
without par value shall not be convertible into shares with par value unless
that part of the stated capital of the Corporation represented by such shares
without par value is, at the time of conversion, at least equal to the
aggregate par value of the shares into which the shares without par value are
to be converted;
(7) The voting powers, full and/or limited, if any, of the
shares of such series; and whether and under what conditions the shares of such
series (alone or together with the shares of one or more other series having
similar provisions) shall be entitled to vote separately as a single class, for
the election of one or more additional directors of the Corporation in case of
dividend arrearage or other specified events, or upon other specified matters;
(8) Whether the issuance of any additional shares of such
series, or of any shares of any other series, shall be subject to restrictions
as to issuance, or as to the powers, preferences or rights of any such other
series; and
(9) Any other preferences, privileges and powers, and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions of such series, as the Board of Directors may deem
advisable and as shall be consistent with the provisions of the laws of the
State of Tennessee and of this Charter.
(c) No dividends shall be paid or declared or set apart on any
particular series of Preferred Stock in respect of any period unless
accumulated dividends shall be or shall have been paid, or declared and set
apart for payment, pro rata on all shares of Preferred Stock at the time
outstanding of each other series, so that the amount of dividends declared on
such particular series shall bear the same ratio to the amount declared on each
such other series as the dividend rate of such particular series shall bear to
the dividend rate of such other series.
(d) Unless and except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors creating
any series of Preferred Stock pursuant to this ARTICLE SIXTH, the holders of
the Preferred Stock shall have no voting power with respect to any matter
whatsoever.
Page 2 of Union Planters Corporation Charter
<PAGE> 3
(e) Shares of Preferred Stock called, redeemed, converted, exchanged,
purchased, retired or surrendered to the Corporation, or which have been issued
and reacquired in any manner, shall, upon compliance with any applicable
provisions of the Tennessee Business Corporation Act, have the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
Board of Directors as part of the series of which they were originally a part
or may be reclassified into and reissued as part of a new series or as a part
of any other series, all subject to the protective conditions or restrictions
of any outstanding series of Preferred Stock.
SERIES A PREFERRED STOCK
(f) Pursuant to the authority vested in the Board of Directors in
accordance with the provisions of this ARTICLE SIXTH of the Charter, the Board
of Directors does hereby create, authorize and provide for the issuance of
Series A Preferred Stock out of the class of 10,000,000 shares of preferred
stock, no par value (the "Preferred Stock"), having the voting powers,
designation, relative, participating, optional and other special rights,
preferences, and qualifications, limitations and restrictions thereof that are
set forth as follows:
(1) Designation and Amount. The shares of such series shall
be designated as Series A Preferred Stock ("Series A Preferred Stock") and the
number of shares constituting such series shall be 250,000. Such number of
shares may be adjusted by appropriate action of the Board of Directors.
(2) Dividends and Distributions.
(a) Subject to the prior and superior rights of the
holders of any shares of any other series of Preferred Stock or any other
shares of preferred stock of the Corporation ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, each holder of
one one-hundredth (1/100) of a share (a "Unit") of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for that purpose, (i) dividends
payable in cash on the 1st day of January, April, July and October in each year
(each such date being a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of such Unit of
Series A Preferred Stock, in an amount per Unit (rounded to the nearest cent)
equal to the greater of (x) $.01 or (y) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the common stock of the Corporation, par value $5.00 per
share, (the "Common Stock") since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of a Unit of Series A Preferred Stock, and (ii)
subject to the provision for adjustment hereinafter set forth, quarterly
distributions (payable in kind) on each Quarterly Dividend Payment Date in an
amount per Unit equal to the aggregate per share amount of all non-cash
dividends or other distributions (other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding share of Common Stock, by
reclassification or otherwise) declared on shares of Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or with respect to the
first Quarterly Dividend Payment Date, since the first issuance of a Unit of
Series A Preferred Stock. In the event that the Corporation shall at any time
after January 19, 1989 (the "Rights Declaration Date") (i) declare or pay any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock, or (ii) subdivide outstanding shares of Common Stock or (iii) combine
outstanding shares of Common Stock into a smaller number of shares, then in
each such case the amount to which the holder of a Unit of Series A Preferred
Stock was entitled immediately prior to such event pursuant to the preceding
sentence shall be adjusted by multiplying such amount of a fraction the
numerator of which shall be the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of which shall be
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend or
distribution on Units of Series A Preferred Stock as provided in paragraph (a)
above immediately after it declares a dividend or distribution on the shares of
Common Stock (other than a dividend payable in shares of Common Stock);
provided, however that, in the event no dividend or distribution shall have
been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend payment Date,
a dividend of $.01 per Unit on the Series A Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and shall be
cumulative on each outstanding Unit of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issuance of such
Unit of Series A Preferred Stock, unless the date of issuance of such Unit is
prior to the record date for the First Quarterly Dividend Payment Date, in
which case, dividends on such Unit shall begin to accrue from the date of
issuance of such Unit, or unless the date of issuance is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of Units of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on Units of Series A Preferred Stock in an amount
less than the aggregate amount of all such dividends at the time accrued and
payable on such Units shall be allocated pro rata on a unit-by-unit basis
amount all Units of Series A Preferred Stock at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
Units of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Page 3 of Union Planters Corporation Charter
<PAGE> 4
(3) Voting Rights. The holders of Units of Series A
Preferred Stock shall have the following voting rights.
(a) Subject to the provision for adjustment
hereinafter set forth, each Unit of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, then in each such case the number
of votes per Unit to which holders of Units of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided herein or by law,
the holders of Units of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(c) Except as set forth herein or required by
law, holders of Units of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of shares of Common Stock as set forth herein)
for the taking of any corporate action.
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other
dividends or distributions payable on Units of Series A Preferred Stock as
provided in paragraph 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on outstanding
Units of Series A Preferred Stock shall have been paid (or set aside for
payment) in full, the Corporation shall not:
(i) declare or pay dividends on, make any
other distributions or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make
any other distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, except for dividends paid ratably
on Units of Series A Preferred Stock and shares of all such parity stock on
which dividends are payable or in arrears in proportion to the total amounts to
which the holders of such Units and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, provided, however, that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock ranking junior (both as to dividends and upon
liquidation, dissolution or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any Units of Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such Units.
(b) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (a) of this paragraph 4, purchase or otherwise acquire such shares at
such time and in such manner.
(5) Reacquired Shares. Any Units of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
Units shall, upon their cancellation, become authorized but unissued Units of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (i)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless the holders of Units of Series A Preferred Stock shall have received,
subject to adjustment as hereinafter provided in paragraph (b), the greater of
either (y) $90.00 per Unit plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not earned or declared, to the date of
such payment, or (z) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of stock ranking on a parity upon liquidation, dissolution or winding up
with the Series A Preferred Stock, unless simultaneously therewith
distributions are made ratably on Units of Series A Preferred Stock and all
other shares of such parity stock in proportion to the total amounts to which
the holders
Page 4 of Union Planters Corporation Charter
<PAGE> 5
of Units of Series A Preferred Stock are entitled under Clause (i)(y) of this
sentence and to which the holders of such shares of such parity stock are
entitled, in each case upon such liquidation dissolution or winding up.
(b) in the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on outstanding
shares of Common Stock payable in shares of Common Stock, or (ii) subdivide
outstanding shares of Common Stock, or (iii) combine outstanding shares of
Common Stock into a smaller number of shares, then in each such case the
aggregate amount to which holders of Units of Series A Preferred Stock were
entitled immediately prior to such event pursuant to clause (i)(z) of paragraph
(1) of this paragraph 6 shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common Stock
that are outstanding immediately after such event and the denominator of which
shall be the number of shares of Common Stock that were outstanding immediately
prior to such event.
(7) Share Exchange, Merger, Etc. In case the Corporation
shall enter into any share exchange, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or converted into other
stock or securities, cash and/or any other property, then in any such case
Units of Series A Preferred Stock shall at the same time be similarly exchanged
for or converted into an amount per Unit (subject to the provision for
adjustment hereinafter set forth) equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is converted or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, or (ii) subdivide outstanding shares of
Common Stock, or (iii) combine outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the immediately
preceding sentence with respect to the exchange or conversion of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common Stock
that are outstanding immediately after such event and the denominator of which
shall be the number of shares of Common Stock that were outstanding immediately
prior to such event.
(8) Redemption. The Units of Series A Preferred Stock shall
not be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Units of Series A Preferred Stock in any other manner permitted by law
and the Charter or Bylaws of the Corporation.
(9) Ranking. The Units of Series A Preferred Stock shall
rank junior to all other series of the Preferred Stock and to any other class
of preferred stock that hereafter may be issued by the Corporation as to the
payment of dividends and the distribution of assets, unless the terms of any
such series or class shall provide otherwise.
(10) Amendment. The Charter, including without limitation
the provisions hereof, shall not hereafter be amended, either directly or
indirectly, or through merger or share exchange with another corporation, in
any manner that would alter or change the powers, preferences or special rights
of the Series A Preferred Stock so as to affect the holders thereof adversely
without the affirmative vote of the holders of a majority or more of the
outstanding Units of Series A Preferred Stock, voting separately as a class.
(11) Fractional Shares. The Series A Preferred Stock may be
issued in Units or other fractions of a share, which Units or fractions shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
SERIES B PREFERRED STOCK
(g) Pursuant to the authority vested in the Board of Directors in
accordance with the provisions of this Article VI of the Charter, the Board of
Directors of Union Planters Corporation (the "Corporation") does hereby create,
authorize and provide for the issuance of a new series of preferred stock out
of the authorized class of 10,000,000 shares of preferred stock, no par value
(the "Preferred Stock"), having the voting powers, designations, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions thereof that are set forth as follows:
1. Designation and Amount. The shares of such series
shall be designated as Series B $8.00 Nonredeemable Cumulative Convertible
Preferred Stock (the "Series B Preferred Stock") and the number of shares
constituting such series shall be 44,000. Such number of shares may be
adjusted by appropriate action of this Board of Directors.
2. Dividends and Distributions.
(a) Subject to the prior and superior rights of
the holders of any shares of any other series of Preferred Stock of the
Corporation ranking prior and superior to the shares of Series B Preferred
Stock with respect to dividends, the holders of the Series B Preferred Stock,
in preference to the holders of the $5.00 par value common stock of the
Corporation (the "UPC Common Stock"), and any other capital stock of the
Corporation ("Capital Stock") ranking junior to the Series B Preferred Stock as
to the payment of dividends, shall be entitled to receive as and if declared by
the Board of Directors out of funds legally available for that purpose,
cumulative cash dividends at, but not exceeding, $8.00 per share per annum and
no more.
Page 5 of Union Planters Corporation Charter
<PAGE> 6
(b) Dividends upon shares of Series B Preferred
Stock shall be cumulative so that if in respect of any past quarterly dividend
period or periods, full dividends accrued on the outstanding shares of Series B
Preferred Stock shall not have been paid, the aggregate deficiency shall be
fully paid or declared or set aside for payment before (i) any dividend shall
be declared and paid or set aside for payment on UPC Common Stock, or any other
Capital Stock ranking junior to the Series B Preferred Stock as to the payment
of dividends, (ii) any other distribution of assets shall be made with respect
to UPC Common Stock or any other Capital Stock ranking junior to the Series B
Preferred Stock as to the payment of dividends, and (iii) the redemption or
purchase of any shares of Series B Preferred Stock, UPC Common Stock, or any
other Capital Stock ranking on a parity with or junior to the Series B
Preferred Stock as to the payment of dividends by the Corporation.
(c) Cash dividends on the Series B Preferred
Stock shall commence to accrue and shall be cumulative from the Effective Date
of the Merger between Union Planters - Steiner Acquisition Company and Steiner
Holdings pursuant to that Merger Agreement dated June 9, 1989 between UPC,
Subsidiary, Steiner Bank, Arnold Steiner and Mary Steiner (the "Merger
Agreement"); and, otherwise, from the Quarterly Dividend Payment Date on which
cash dividends were paid on Series B Preferred Stock (in respect of a dividend
on Series B Preferred Stock) next preceding the date of issuance of such shares
of Series B Preferred Stock.
(d) Cash dividends on shares of Series B
Preferred Stock shall be payable quarterly on the third Friday of February,
May, August and November (a "Quarterly Dividend Payment Date") and will have
the same record date for the payment of dividends as the record date for
payment of dividends on UPC Common Stock, and, if there is no record date for
the payment of dividends on UPC Common Stock, then the record date for the
payment of dividends of the Series B Preferred Stock shall be that date which
is 15 days prior to a given Quarterly Dividend Payment Date.
3. No Preemptive Rights. No holders of Series B
Preferred Stock shall be entitled, as of right, to purchase or subscribe for
any part of the unissued Series B Preferred Stock, UPC Common Stock, or Capital
Stock, or to purchase or subscribe for any bonds, certificates of indebtedness,
debentures, or other securities convertible into or carrying options, warrants
or rights to purchase stock or other securities of the Corporation, or to
purchase or subscribe for any stock or any securities of the Corporation
purchased by the Corporation or by its nominee or nominees, or to have any
other preemptive rights now or hereafter defined by the laws of the State of
Tennessee; provided, however, that this section shall not be deemed to prohibit
the exercise by the holders of UPC Series B Preferred Stock of Rights issued
pursuant to the UPC Share Purchase Rights Agreement.
4. Liquidation. (a) In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Series B Preferred Stock shall be entitled to
receive, after payment or provision for payment of all debts, but before any
distribution of assets may be made to the holders of UPC Common Stock, or any
other Capital Stock of the Corporation ranking junior to the Series B Preferred
Stock as to liquidation, out of assets of the Corporation available for
distributions to its stockholders, $100 per share, plus, in each case, accrued
and unpaid dividends thereon to the date of payment thereof. After such
payment has been made in full to the holders of the outstanding shares of
Series B Preferred Stock (or funds necessary for the payment have been set
aside in trust for the account of such holders so as to be and continue to be
available therefor), the holders of Series B Preferred Stock shall be entitled
to no further distribution, and the remaining assets of the Corporation shall
be divided and distributed among the holders of UPC Common Stock (subject to
any prior rights of any holders of any other Capital Stock of the Corporation
entitled to participate with the UPC Common Stock as to the distribution of
assets) then outstanding according to their respective shares. If on
liquidation, dissolution or winding up, the net assets of the Corporation
available for distribution among the holders of Series B Preferred Stock are
insufficient to permit full payment to them, the entire net assets of the
Corporation so available for distribution shall be distributed ratably among
the holders of Series B Preferred Stock and the holders of any other Capital
Stock ranking on a parity with the Series B Preferred Stock as to liquidation
and distribution of assets. Nothing herein contained shall be construed to
prohibit the retirement of Series B Preferred Stock by purchase, and neither
the purchase of Series B Preferred Stock, the consolidation or merger of the
Corporation, nor the sale or transfer of all or substantially all of the assets
of the Corporation as an entirety shall be deemed a "liquidation, dissolution
or winding up of the Corporation" within the meaning of this paragraph 4.
5. Right to Vote. Except to the extent that the power
or right to vote is granted or required pursuant to the Tennessee Business
Corporation Act, as amended from time to time, the Series B Preferred Stock
shall have no power or right to vote.
6. Conversion of Series B Preferred Stock. The holders
of shares of Series B Preferred Stock shall have the right, at their option,
any time after that date which is five (5) years after the Effective Date of
the Merger, to convert such shares into shares of UPC Common Stock on the
following terms and conditions:
(a) Except as provided in subsection (c) of this
Section 6, each share of Series B Preferred Stock shall be convertible into
that number of shares of UPC Common Stock determined by dividing (i) the
product of the multiplication of the number of Series B Preferred Shares issued
in the Merger by $100, by (ii) $12.95, then dividing that number by the number
of Series B Preferred Shares issued in the Merger (the "Conversion Ratio").
Page 6 of Union Planters Corporation Charter
<PAGE> 7
(b) Except as provided in subsection (c) of this
Section 6, the estate of Arnold Steiner and the trustees of the trusts which
receive assets of the Estate of Bernard S. Steiner, Jr. pursuant to the
provisions of the last will and testament of Bernard S. Steiner, Jr., and which
shall have received Series B Preferred Stock pursuant to the Merger and such
last will and testament, shall have the right to convert the shares of Series B
Preferred Stock they own in accordance with the Conversion Ratio within five
(5) years from the Effective Date of the Merger, (i) as to the estate of Arnold
Steiner, upon the death of Arnold Steiner, and as to each such trust, upon the
death(s) of the oldest permissible income beneficiary of that particular trust;
(ii) should there be a change in control (as defined in Section 2(a) of the
Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841(a) of UPC;
and (iii) should UPC issue any other preferred stock having priority as to the
payment of dividends or as to liquidation preference over that of the Series B
Preferred Stock.
(c) If any Series B Preferred Stock shall be
converted into UPC Common Stock at a time when the UPC Common Stock into which
such Series B Preferred Stock is convertible has attached or attributable
thereto Rights issued pursuant to the UPC Share Purchase Rights Agreement, the
surrender of such Series B Preferred Stock shall effectively cancel all Rights
attached or attributable to the share(s) of Series B Preferred Stock so
converted.
(d) If at any time, or from time to time, the
Corporation shall (i) declare and pay, on or in respect of, UPC Common Stock
any dividend payable in shares of UPC Common Stock, (ii) subdivide the
outstanding shares of UPC Common Stock into a greater number of shares, or
contract the number of outstanding shares of Series B Preferred Stock by
combining such shares into a smaller number of shares, or (iii) contract the
number of outstanding shares of UPC Common Stock by combining such shares into
a smaller number of shares, or subdivide the outstanding shares of Series B
Preferred Stock into a greater number of shares of Series B Preferred Stock,
the Conversion Ratio shall be proportionately adjusted as of such time.
(e) If the Corporation consolidates with or
merges into any corporation or reclassifies outstanding shares of UPC Common
Stock (other than by way of subdivision or contraction of such shares) each
share of Series B Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property of the Corporation,
or of the entity resulting from such consolidation or merger, to which a holder
of the number of shares of UPC Common Stock deliverable upon conversion of such
share of Series B Preferred Stock would have been entitled upon such
consolidation, merger or reclassification, had the holder of such share of
Series B Preferred Stock exercised his right of conversion and had such shares
been issued and outstanding and had such holder been the holder of record of
such UPC Common Stock at the time of such consolidation, merger or
reclassification; and the Corporation shall make lawful provision therefor as a
part of such consolidation, merger or reclassification.
(f) Whenever the Conversion Ratio is required to
be adjusted, as herein provided, the Corporation shall promptly file with the
transfer agent for the UPC Common Stock and simultaneously provide to each
holder of record of Series B Preferred Stock a statement signed by the
President or a Vice President or the Secretary or the Treasurer setting forth
the adjusted Conversion Ratio, determined as so provided. Such statement shall
set forth in reasonable detail such facts as may be necessary to show the
reason for and the manner of computing such adjustment.
(g) On presentation and surrender to the
Corporation at any office or agency maintained for the transfer of Series B
Preferred Stock or the certificates of Series B Preferred Stock so to be
converted, duly endorsed for transfer, the holder of such Series B Preferred
Stock shall be entitled, subject to the limitations herein contained, to
receive in exchange therefor a certificate or certificates for fully paid and
nonassessable shares, and cash for fractional shares of UPC Common Stock or
other securities pursuant to subsection (e) above, on the basis aforesaid. The
Series B Preferred Stock shall be deemed to have been converted and the person
converting the same to have become the holder of record of UPC Common Stock,
for the purpose of receiving dividends and for all other purposes whatever as
of the date when the certificate or certificates for such Series B Preferred
Stock are surrendered to the Corporation as aforesaid. The Corporation shall
not be required to make any such conversion, and no surrender of the Series B
Preferred Stock shall be effective for such purposes, while the books for the
transfer of either class of stock are closed for any purpose, but the surrender
of such shares of Series B Preferred Stock for conversion during any period
while such books are closed shall become effective for all purposes of
conversion immediately upon the reopening of such books, as if the conversion
had been made on the date such shares of Series B Preferred Stock were
surrendered.
(h) The Corporation shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery of UPC
Common Stock upon the conversion of the Series B Preferred Stock as herein
provided. The Corporation shall not be required in any event to pay any
transfer or other taxes by reason of the issuance of such UPC Common Stock in
names other than those in which the Series B Preferred Stock surrendered for
conversion may stand, and no such conversion or issuance of UPC Common Stock
shall be made unless and until the person requesting such issuance has paid to
the Corporation the amount of any such tax, or has established to the
satisfaction of the Corporation and its transfer agent, if any, that such tax
has been paid or is not required. Upon any conversion of Series B Preferred
Stock as herein provided, no adjustment or allowance shall be made for
dividends on the Series B Preferred Stock so converted, and all rights to
dividends, if any, shall cease and be deemed satisfied; however, except as
provided in the next sentence hereof, nothing in this section shall be deemed
to relieve the Corporation from its obligation to pay any dividends which shall
have been declared and shall be payable to holders of Series B Preferred Stock
of record
Page 7 of Union Planters Corporation Charter
<PAGE> 8
as of a date prior to such conversion even though the payment date for such
dividend is subsequent to the date of conversion.
7. Reservation of UPC Common Stock. The Corporation
shall, so long as any of the Series B Preferred Stock is outstanding, reserve
and keep available out of its authorized and unissued UPC Common Stock, solely
for the purpose of effecting the conversion of the Series B Preferred Stock,
such number of shares of UPC Common Stock as shall, from time to time, be
sufficient to effect the conversion of all shares of the Series B Preferred
Stock then outstanding. The Corporation shall, from time to time, increase its
authorized UPC Common Stock and take such other actions as may be necessary to
permit the issuance from time to time of the shares of the UPC Common Stock, as
fully paid and nonassessable shares, upon the conversion of the Series B
Preferred Stock as herein provided.
8. Definitions. For purposes hereof:
(a) The term "outstanding", when used in reference
to shares of stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary thereof, and shares called for redemption, funds
for the redemption of which shall have been set aside by the Corporation or
deposited in trust;
(b) The amount of dividends "accrued" on any
share of Series B Preferred Stock as of any quarterly dividend date shall be
deemed to be the amount of any unpaid dividends accumulated thereon to and
including such quarterly dividend date, whether or not earned or declared, and
the amount of dividends "accrued" on any shares of Series B Preferred Stock as
at any date other than a quarterly dividend date shall be deemed to be (i) the
amount of any unpaid dividends accumulated thereon to and including the last
preceding quarterly dividend date, whether or not earned or declared, plus (ii)
an amount calculated on the basis of the annual dividend rate fixed for the
shares of Series B Preferred Stock (8%) for the period after such last
preceding quarterly dividend date to and including the date as of which the
calculation is made, based on a 360-day year or 12 consecutive 30-day months.
9. Redemption. The shares of Series B Preferred Stock
shall not be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Series B Preferred Stock in any other manner permitted by law and its
Charter or Bylaws.
10. Ranking. The Series B Preferred Stock shall rank
superior to that of the Corporation's Series A Preferred Stock as well as to
all other series of the Corporation's preferred stock, unless the designation
of rights and preferences for any other series of the Corporation's preferred
stock expressly provides otherwise.
11. Amendment. The Charter, including without
limitations the provisions hereof, shall not hereafter be amended, either
directly or indirectly, or through merger or share exchange with another
corporation, in any manner that would alter or change the powers, preferences
or special rights of the Series B Preferred Stock so as to affect the holders
thereof adversely without the affirmative vote of the holders of a majority or
more of the outstanding shares of Series B Preferred Stock, voting separately
as a class; provided, however, that this paragraph shall have no affect on the
ability of the Corporation to amend the Rights Agreement or redeem the UPC
Preferred Share Purchase Rights in accordance therewith.
12. Fractional Shares. The Series B Preferred Shares may
be issued in units or other fractions of a share, which units or fractions
shall entitle the holder, in proportion to such holder's fractional shares, to
exercise such rights, receive dividends, and participate in all distributions
and derive the benefit of all other rights of holders of Series B Preferred
Stock.
SERIES C PREFERRED STOCK
(h) Pursuant to the authority vested in the Board of Directors of
Union Planters Corporation (the "Corporation") by the provisions of this
Article Sixth of the Charter and by the provisions of the Tennessee Business
Corporation Act, the Board of Directors of the Corporation does hereby create,
authorize and provide for the issuance of a new series of preferred stock out
of the Corporation's authorized class of 10,000,000 shares of no par value
preferred stock (the "Preferred Stock"), having the designation, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions provided hereafter:
1. Designation and Amount. The shares of such series
shall be designated as 10 3/8% Increasing Rate, Redeemable, Cumulative
Preferred Stock, Series C (the "Series C Preferred Stock") and the number of
shares of Preferred Stock constituting such Series C Preferred Stock shall be
690,000. Such number of shares of Series C Preferred Stock may be adjusted
hereafter by appropriate action of the Board of Directors. The Series C
Preferred Stock shall have a stated value (the "Stated Value") of $25.00 per
share.
2. Dividends and Distributions.
(a) The holders of shares of Series C Preferred
Stock, in preference to the holders of the $5.00 par value common stock of the
Corporation (the "UPC Common Stock") shall be entitled to receive when and as
declared by the Board of Directors, out of funds legally available for the
purpose, cumulative cash dividends payable quarterly at the rate per share set
forth in
Page 8 of Union Planters Corporation Charter
<PAGE> 9
paragraph 2(c) below, on the fifteenth day (or, if such fifteenth day is not a
Business Day, on the next Business Day) of February, May, August and November
in each year (a "Quarterly Dividend Payment Date"), in respect of the Quarterly
Dividend Period next preceding such fifteenth day, and no other dividend or
dividends. Such dividends shall be payable to holders of the Series C
Preferred Stock on such date as is not more than 30 nor less than 10 days prior
to the particular Quarterly Dividend Payment Date. As used herein, a
"Quarterly Dividend Period" means a period of three months ending on the last
day of January, April, July or October. Subject to the provisions of paragraph
(c) of Section Sixth of the Charter, dividends on account of arrears for any
past Quarterly Dividend Period(s) may be declared and paid at any time, without
reference to any regular Quarterly Dividend Payment Date to holders of record
on such date not exceeding 30 or less than 10 days preceding the payment date
thereof as may be fixed by the Board of Directors. The amount of dividend per
share payable for any Quarterly Dividend Period less than a full Quarterly
Dividend Period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which
payable.
(b) Preferred dividends upon shares of Series
C Preferred Stock shall commence to accrue and be cumulative from (but not
including) the day upon which the initial issuance of shares of Series C
Preferred Stock occurs.
(c) For each Quarterly Dividend Period ending on
or before October 31, 1994, preferred dividends payable with respect to each
such Quarterly Dividend Period shall be $0.648438 per share. For each
Quarterly Dividend Period ending after November 1, 1994 and on or before
October 31, 1995, preferred dividends payable with respect to each such
Quarterly Dividend Period shall be $0.679688 per share. For each Quarterly
Dividend Period ending after November 1, 1995, and on or before October 31,
1996, preferred dividends payable with respect to each such Quarterly Dividend
Period shall be $0.710938 per share. For each Quarterly Dividend Period ending
after November 1, 1996, preferred dividends payable with respect to such
Quarterly Dividend Periods shall be $0.742188 per share. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments which may be in arrears.
(d) For purposes hereof, "Business Day" shall
mean any day upon which commercial banks in the City of Memphis, Tennessee, are
required to be open for the transaction of their general banking business.
3. No Preemptive Rights. Holders of shares of Series C
Preferred Stock shall not be entitled, as of right, to purchase or subscribe
for any part of the unissued Series C Preferred Stock, any UPC Common Stock, or
any other capital stock of the Corporation, or to purchase or subscribe for any
bonds, certificates of indebtedness, debentures, or other securities
convertible into or carrying options, warrants or rights to purchase any stock
or other securities of the Corporation, or to purchase or subscribe for any
stock or any securities of the Corporation purchased by the Corporation or by
its nominee or nominees, or to have any other preemptive rights now or
hereafter defined by the laws of the State of Tennessee.
4. Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Series C Preferred Stock shall be entitled to
receive, after payment or provision for payment of all debts, but before any
distribution of assets may be made to the holders of UPC Common Stock or any
other stock of the Corporation ranking junior to the Series C Preferred Stock
as to the distribution of assets on liquidation, dissolution or winding up of
the Corporation, out of assets of the Corporation available for distributions
to its shareholders, $25.00 per share (the "Liquidation Value"), plus, in each
case, accrued and unpaid dividends thereon from (but not including) the day of
initial issuance to the date of payment thereof. After such payment has been
made in full to the holders of the outstanding shares of Series C Preferred
Stock (or funds necessary for the payment have been set aside in trust for the
account of such holders so as to be and continue to be available therefor), the
holders of Series C Preferred Stock shall be entitled to no further
distributions, and the remaining assets of the Corporation shall be divided and
distributed among the holders of UPC Common Stock (subject to any prior rights
of any holders of any other capital stock of the Corporation entitled to
participate with the UPC Common Stock as to the distribution of assets) then
outstanding according to their respective rights as shareholders. If, upon any
liquidation, dissolution or winding up of the Corporation, the net assets of
the Corporation, or proceeds thereof available for distribution among the
holders of Series C Preferred Stock should be insufficient to permit payment in
full of the preferential amount aforesaid and liquidating payments on any other
Preferred Stock ranking, as to liquidation, dissolution or winding up, on a
parity with the Series C Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series C Preferred Stock and
the holders of any such other Preferred Stock ratably in accordance with the
respective amounts which would be payable on such shares of Series C Preferred
Stock and on any such other Preferred Stock if all amounts payable thereon were
paid in full. Neither the consolidation or merger of the Corporation with or
into any other corporation or corporations, nor a reorganization of the
Corporation alone, nor the sale or transfer by the Corporation of all or
substantially all of its assets shall be deemed a "liquidation, dissolution or
winding up of the Corporation" within the meaning of this paragraph 4.
5. Right to Vote.
(a) Except as hereinafter provided for and as
otherwise from time to time required by law, the Series C Preferred Stock shall
have no voting rights.
Page 9 of Union Planters Corporation Charter
<PAGE> 10
(b) So long as any shares of the Series C
Preferred Stock remain outstanding, the consents of the holders of at least
two-thirds (2/3ds) of the shares of Series C Preferred Stock outstanding at the
time (voting separately as a class together with all other series of Preferred
Stock of the Corporation ranking on a parity with the Series C Preferred Stock
either as to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up and upon which like voting rights have
been conferred and are exercisable) given in person or by proxy, either in
writing or at any special or annual meeting called for the purpose, shall be
necessary to permit, effect or validate any one or more of the following:
(i) the authorization, creation or
issuance of a new class or series of shares of capital stock having rights,
preferences or privileges prior to the Series C Preferred Stock, or any
increase in the number of authorized shares of any class or series having
rights, preferences or privileges prior to the Series C Preferred Stock; or
(ii) the amendment, alteration or repeal,
whether by merger, consolidation or otherwise, of any of the provisions of the
Corporation's Charter which would materially and adversely affect any right,
preference, privilege or voting power of the Series C Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized UPC Common Stock or Preferred Stock or the authorization, creation
or issuance of any other series of UPC Common Stock or Preferred Stock, in each
case ranking on a parity with or junior to the Series C Preferred Stock with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
(c) The foregoing voting provisions shall not
apply if, at or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding shares of Series
C Preferred Stock shall have been redeemed or called for redemption and funds
shall have been deposited in trust in an amount sufficient to effect such
redemption.
6. Redemption.
(a) The shares of Series C Preferred Stock shall be
redeemable, in whole or in part, only at the option of the Corporation by
resolution of its Board of Directors and with the prior written consent of the
Board of Governors of the Federal Reserve System, or of the appropriate Federal
Reserve Bank acting under delegated authority, or their successors, at any time
and from time to time on or after October 31, 1994 at $25.00 per share, plus
all dividends accrued and unpaid on such Series C Preferred Stock from (but not
including) the day of issuance up to the day fixed for redemption.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Series C Preferred Stock in any other manner permitted by law and its
Charter or Bylaws.
(b) In the event that less than the entire amount of
the Series C Preferred Stock outstanding is to be redeemed at any one time, the
shares to be redeemed shall be selected by lot or pro rata (as nearly as may
be) or by any other method determined by the Board of Directors of the
Corporation in its sole discretion to be equitable. Notice of any redemption
shall be given by first class mail, postage prepaid, mailed not less than 30
nor more than 60 days prior to the redemption date, to each holder of record of
the shares selected for redemption at such holders' respective addresses as the
same shall appear on the stock register of the Corporation. Each such notice
shall state: (1) the redemption date; (2) the number of shares of Series C
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the redemption price and the manner in which the redemption price
is to be paid and delivered; (4) the place or places where certificates for
such shares are to be surrendered for payment of the redemption price; and (5)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date. No failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the proceedings for
redemption. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the holder
receives the notice. Upon such redemption date, or upon such earlier date as
the Board of Directors shall designate for payment of the redemption price
(unless the Corporation shall default in the payment of the redemption price as
set forth in such notice), the holders of shares of Series C Preferred Stock
selected for redemption and to whom notice has been duly given shall cease to
be shareholders with respect to such shares of Series C Preferred Stock and
shall have no interest in or claim against the Corporation by virtue thereof
and shall have no dividend, voting or other rights with respect to such shares
except the right to receive the moneys payable upon such redemption from the
Corporation or otherwise, without interest thereon, upon surrender (and
endorsement, if required by the Corporation) of the certificates, and the
shares evidenced and represented thereby shall no longer be deemed to be
outstanding. The Corporation's obligation to provide funds for redemption
shall be deemed fulfilled if, on or before the redemption date, the Corporation
shall deposit with a bank or trust company (which may be an affiliate of the
Corporation), having an office or agency in Memphis, Tennessee and having a
capital and surplus of at least $50,000,000, or with any other such bank or
trust company located in the continental United States as may be designated
from time to time by the Corporation, funds necessary for such redemption, in
trust, with irrevocable instructions that such funds be applied to the
redemption of the shares of Series C Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time
to time. Any funds so deposited and unclaimed at the end of six years from
such redemption date shall be repaid or released to the Corporation, after
which the holder or holders of such shares of Series C Preferred Stock so
called for redemption shall look only to the Corporation for payment of the
redemption price. Upon redemption of Series C Preferred Stock in the manner
set out herein, or upon the purchase of Series C Preferred Stock by the
Corporation, the Series C Preferred Stock so acquired by the Corporation shall
be retired and
Page 10 of Union Planters Corporation Charter
<PAGE> 11
canceled and shall be restored to the status of authorized but unissued shares
of Preferred Stock, without designation as to series, and may thereafter be
issued, but not as shares of Series C Preferred Stock.
7. Ranking.
(a) Any class or series of stock of the
Corporation shall be deemed to rank:
(i) "prior to" the Series C Preferred Stock
if the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series C
Preferred Stock; and
(ii) "on a parity with" the Series C
Preferred Stock if the holders of such class or series of stock and the holders
of the Series C Preferred Stock shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective dividend rates or liquidation
prices, without preference or priority one over the other whether or not the
dividend rates, dividend payment dates or redemption or liquidation prices per
share of such other class or series of stock are different from those of the
Series C Preferred Stock.
(b) The Series C Preferred Stock shall rank on a
parity with both the Corporation's Series B Preferred Stock and the Series A
Preferred Stock, if and when such Series A Preferred Stock should be issued.
8. Debt Obligations. The Corporation, at any time and
from time to time, may authorize the issue of debt obligations, whether or not
subordinated, without the approval of the shareholders.
9. Conversion or Exchange. The holders of the Series C
Preferred Stock shall not have any rights herein to convert such shares into,
or exchange such shares for, shares of any other class or classes or any other
series of any class or classes of capital stock (or any other equity or debt
security) of the Corporation.
SERIES D PREFERRED STOCK
(i) Pursuant to the authority vested in the Board of Directors of
Union Planters Corporation (the "Corporation") by the provisions of this
Article Sixth of its Charter and by the provisions of the Tennessee Business
Corporation Act, the Board of Directors of the Corporation does hereby create,
authorize and provide for the issuance of a new series of preferred stock out
of the Corporation's authorized class of 10,000,000 shares of preferred stock
having no par value (the "Preferred Stock"), having the designation, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions provided hereafter:
1. Designation and Amount. The shares of such series
shall be designated as the: 9.5% REDEEMABLE, CUMULATIVE, CONVERTIBLE, PREFERRED
STOCK, SERIES D (the "Series D Preferred Stock") and the number of shares of
Preferred Stock constituting such Series D Preferred Stock shall be 253,659.
Such number of shares of Series D Preferred Stock may be adjusted hereafter by
appropriate action of the Board of Directors. The Series D Preferred Stock
shall have a stated value of $20.50 per share (the "Stated Value").
2. Dividends and Distributions. (a) The holders of
shares of Series D Preferred Stock, in preference to the holders of the $5.00
par value common stock of the Corporation (the "UPC Common Stock") shall be
entitled to receive when, as and if declared by the Board of Directors, out of
funds legally available for the purpose, cumulative cash dividends payable
quarterly at the annual rate of 9.5% of the Stated Value thereof on the
fifteenth day (or, if such fifteenth day should not be a Business Day, on the
next Business Day) of February, May, August and November in each year (a
"Quarterly Dividend Payment Date"), in respect of the Quarterly Dividend Period
next preceding such fifteenth day, and no other dividend or dividends. Such
dividends shall be payable to holders of record of the Series D Preferred Stock
on such date as may be fixed by the Board of Directors which date shall not be
more than 30 nor less than 10 days prior to the applicable Quarterly Dividend
Payment Date. As used herein, a "Quarterly Dividend Period" means a period of
three calendar months ending on the last day of January, April, July and
October. Subject to the provisions of paragraph (c) of Article Sixth of the
Charter, dividends on account of arrears for any past Quarterly Dividend
Period(s) may be declared and paid at any time designated by the Board of
Directors, without reference to any regular Quarterly Dividend Payment Date, to
holders of record on such date as may be fixed by the Board of Directors, which
date shall not be more than 30 nor less than 10 days preceding the designated
payment date. The amount of dividend per share payable for any Quarterly
Dividend Period less than a full Quarterly Dividend Period shall be computed on
the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in the period with respect to which it is payable.
(b) Preferred dividends upon shares of Series D
Preferred Stock shall commence to accrue and be cumulative from the day upon
which the original issuance of shares of Series D Preferred Stock shall occur
which shall be deemed to be the effective date of the merger of Southeastern
Bancshares, Inc. with and into Union Planters - SBI Acquisition Company, both
of which are Tennessee corporations.
Page 11 of Union Planters Corporation Charter
<PAGE> 12
(c) No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments which
may be in arrears.
(d) For purposes hereof, a "Business Day" shall
mean any day on which commercial banks in the City of Memphis, Tennessee, are
required to be open for the transaction of their general banking businesses.
3. No Preemptive Rights. The holders of shares of
Series D Preferred Stock shall not be entitled, as of right, to purchase or
subscribe for any part of the unissued Series D Preferred Stock, any UPC Common
Stock, or any other capital stock of the Corporation, or to purchase or
subscribe for any bonds, certificates of indebtedness, debentures, or other
securities convertible into, or carrying options, warrants or rights to
purchase, any stock or other securities of the Corporation, or to purchase or
subscribe for any stock or any securities of the Corporation purchased by the
Corporation or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of the State of Tennessee.
4. Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Series D Preferred Stock shall be entitled to
receive, after payment or provision for payment of all debts but before any
distribution of assets may be made to the holders of UPC Common Stock or any
other stock of the Corporation ranking junior to the Series D Preferred Stock
as to the distribution of assets on liquidation, dissolution or winding up of
the Corporation, out of assets of the Corporation available for distributions
to its shareholders, $20.50 per share (the "Liquidation Value"), plus, in each
case, accrued and unpaid dividends thereon from (but not including) the day of
original issuance to the date of payment thereof. After such payment has been
made in full to the holders of the outstanding shares of Series D Preferred
Stock (or funds necessary for such payment have been set aside in trust for the
account of such holders so as to be and to continue to be available therefor),
the holders of Series D Preferred Stock shall be entitled to no further
distributions, and the remaining assets of the Corporation shall be divided and
distributed among the holders of UPC Common Stock (subject to any senior rights
of any holders of any other capital stock of the Corporation entitled to
participate with the UPC Common Stock as to the distribution of assets) then
outstanding according to their respective rights as shareholders. If, upon any
liquidation, dissolution or winding up of the Corporation, the net assets of
the Corporation, or proceeds thereof available for distribution among the
holders of Series D Preferred Stock should be insufficient to permit payment in
full of the preferential amount aforesaid and liquidating payments on any other
Preferred Stock ranking, as to liquidation, dissolution or winding up, on a
parity with the Series D Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series D Preferred Stock and
the holders of any such other Preferred Stock ranking on a parity with the
Series D Preferred Stock ratably in accordance with the respective amounts
which would be payable on such shares of Series D Preferred Stock and on any
such other Preferred Stock ranking on a parity with the Series D Preferred
Stock if all amounts payable thereon were paid in full. Neither the
consolidation or merger of the Corporation with or into any other corporation
or corporations, nor a reorganization of the Corporation alone, nor the sale or
transfer by the Corporation of all or substantially all of its assets shall be
deemed a "liquidation, dissolution or winding up of the Corporation" within the
meaning of this paragraph 4.
5. Right of Holders of Series D Shares to Vote.
(a) Except as hereinafter provided for and as
otherwise from time to time required by law, the Series D Preferred Stock shall
have no voting rights except for those which may be required by the laws of the
State of Tennessee.
(b) So long as any shares of Series D Preferred
Stock remain outstanding, the consents of the holders of at least two-thirds
(2/3ds) of the shares of Series D Preferred Stock outstanding at the time
(voting separately as a class together with all other series of Preferred Stock
of the Corporation ranking on a parity with the Series D Preferred Stock either
as to dividends or the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable) given in person or by proxy, either in writing or at any special
or annual meeting called for the purpose, shall be necessary to permit, effect
or validate any one or more of the following actions:
(i) the authorization, creation or
issuance of a new class or series of shares of capital stock of the Corporation
having rights, preferences or privileges senior to the Series D Preferred
Stock, or any increase in the number of authorized shares of any class or
series having rights, preferences or privileges senior to the Series D
Preferred Stock; or
(ii) the amendment, alteration or
repeal, whether by merger, consolidation or otherwise, of any of the provisions
of the Corporation's Charter which would materially and adversely affect any
right, preference, privilege or voting power of the Series D Preferred Stock or
of the holders thereof; provided, however, that any increase in the amount of
authorized UPC Common Stock or Preferred Stock or the authorization, creation
or issuance of any other series of UPC Common Stock or Preferred Stock, in each
case ranking on a parity with, or junior to the Series D Preferred Stock with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to "materially and
adversely affect" such rights, preferences, privileges or voting powers of the
Series D Preferred Stock.
(c) The foregoing voting provisions shall not
apply if, at or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected (i)
Page 12 of Union Planters Corporation Charter
<PAGE> 13
all outstanding shares of Series D Preferred Stock shall have been redeemed or
called for redemption and (ii) funds shall have been deposited in trust in an
amount sufficient to effect such redemption as provided herein.
6. Redemption.
(a) The shares of Series D Preferred Stock shall be
redeemable, in whole or in part, only at the option of the Corporation by
resolution of its Board of Directors but only with the prior consent of the
Board of Governors of the Federal Reserve System, or of the appropriate Federal
Reserve Bank acting under delegated authority, or their successors, at any time
and from time to time on or after the third anniversary of the Effective Time
of the Merger of SBI with and into Union Planters - SBI Acquisition Company at
Twenty and 50/100 Dollars ($20.50) per share (the "Redemption Price"), plus all
dividends accrued and unpaid on such Series D Preferred Stock from (but not
including) the day of original issuance up to the Redemption Date (as defined
below). Notwithstanding the foregoing sentence of this Section, the
Corporation may acquire Series D Preferred Stock in any other lawful manner
permitted by its Charter or Bylaws.
(b) In the event that less than the entire amount of
Series D Preferred Stock outstanding is to be redeemed at any one time, the
shares to be redeemed shall be selected by lot or pro rata (as nearly as may
be) or by any other method determined by the Board of Directors of the
Corporation in its sole discretion to be equitable.
(c) Notice of any redemption, whether whole or
partial, shall be given by United States first class mail, postage prepaid,
deposited in the mail not less than 30 nor more than 60 days prior to the
Redemption Date, addressed to each holder of record of the shares selected for
redemption at such holders' respective addresses as the same shall appear on
the stock register of the Corporation. Each such notice shall state: (1) the
date designated by the Board of Directors as the "Redemption Date"; (2) the
number of shares of Series D Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the Redemption Price and the manner
in which the Redemption Price is to be paid and delivered; (4) the place or
places where certificates representing and evidencing such shares are to be
surrendered for payment of the Redemption Price; and (5) that dividends on the
shares to be redeemed will cease to accrue on such Redemption Date. No failure
to mail such notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for redemption. Any notice mailed in
the manner herein provided shall be conclusively presumed to have been duly
given whether or not the holder receives the notice. On the Redemption Date,
or on such earlier date as the Board of Directors shall designate for payment
of the Redemption Price (unless the Corporation shall default in the payment of
the Redemption Price as set forth in such notice), the holders of shares of
Series D Preferred Stock selected for redemption and to whom notice has been
duly given shall cease to be shareholders with respect to such shares of Series
D Preferred Stock and shall have no interest in, or claim against the
Corporation by virtue thereof and shall have no dividend, voting or other
rights with respect to such shares except the right to receive the moneys
payable upon such redemption from the Corporation or otherwise, without
interest thereon, upon surrender (and proper endorsement, if required by the
Corporation) of the certificates, and the shares represented thereby shall no
longer be deemed to be outstanding. The Corporation's obligation to provide
funds for redemption shall be deemed fulfilled if, on or before the Redemption
Date, the Corporation shall have deposited with a bank or trust company (which
may be an affiliate of the Corporation), having an office or agency in Memphis,
Tennessee, having a capital and surplus of at least $50,000,000, or with any
other such bank or trust company located in the continental United States as
may be designated from time to time by the Corporation, funds necessary for
such redemption, in trust, with irrevocable instructions that such funds be
applied to the redemption of the shares of Series D Preferred Stock so called
for redemption. Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any funds so deposited and unclaimed at the end
of six years from such Redemption Date shall be repaid or released to the
Corporation, after which the holder or holders of such shares of Series D
Preferred Stock so called for redemption shall look only to the Corporation for
payment of the Redemption Price. Upon redemption of Series D Preferred Stock
in the manner set out herein, or upon the purchase of Series D Preferred Stock
by the Corporation, the Series D Preferred Stock so acquired by the Corporation
shall be retired and canceled and shall be restored to the status of authorized
but unissued shares of Preferred Stock, without designation as to series, and
may thereafter be issued, but not as shares of Series D Preferred Stock.
7. Ranking.
(a) Any class or series of stock of the Corporation
shall be deemed to rank:
(i) "senior to" the Series D Preferred Stock
if the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series D
Preferred Stock; and
(ii) "on a parity with" the Series D
Preferred Stock if the holders of such class or series of stock and the holders
of the Series D Preferred Stock shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective dividend rates or liquidation
prices, without preference or priority one over the other whether or not the
dividend rates, dividend payment dates or redemption or liquidation prices per
share of such other class or series of stock are different from those of the
Series D Preferred Stock.
Page 13 of Union Planters Corporation Charter
<PAGE> 14
(b) The Series D Preferred Stock shall rank on a
parity with the Corporation's Series B Preferred Stock, the Corporation's
Series C Preferred Stock and the Corporation's Series A Preferred Stock, if and
when shares of such Series A Preferred Stock should be issued.
8. Conversion of Series D Preferred Stock. The
registered holders of shares of Series D Preferred Stock shall have the right,
at their option, to convert such shares into shares of UPC Common Stock (and,
upon the occurrence of a certain type of merger, into other assets) on the
following terms and conditions:
(a) The registered holders of the Series D
Preferred Stock shall have the right at any time after the date of its original
issuance but prior to the Redemption Date designated in the notice of
redemption given to such holders in accordance with the provisions of Section
6, to convert each share of the Corporation's Series D Preferred Stock
registered in the name of such holders into one (1) share of the Corporation's
Common Stock having a par value of $5.00 per share. The Series D Preferred
Stock shall not be convertible into any other class or classes or any other
series of any class or classes of capital stock (or any other equity or debt
security) of the Corporation.
(b) On presentation and surrender to the
Corporation at any office or agency maintained for the transfer of the Series D
Preferred Stock (the "Transfer Agent") of the certificates representing and
evidencing Series D Preferred Stock so to be converted, duly endorsed for
conversion, the holder of such Series D Preferred Stock shall be entitled,
subject to the limitations herein contained, to receive in exchange therefor a
certificate or certificates for fully paid and nonassessable shares, and cash
for fractional shares (if any) of UPC Common Stock or other securities pursuant
to subsection (d) below on the basis set forth. The Series D Preferred Stock
shall be deemed to have been converted and the person converting the same shall
be deemed to have become the holder of record of UPC Common Stock, for the
purpose of receiving dividends and for all other purposes whatsoever as of the
date when the certificate or certificates representing and evidencing such
Series D Preferred Stock shall have been surrendered to the Transfer Agent as
aforesaid. The holder of Series D Preferred Stock shall be responsible for
selection of the method of delivery to the Transfer Agent of any share
certificates intended to be surrendered for conversion and the Corporation
shall have no risk or liability for the loss or late delivery of certificates
for conversion. Properly endorsed certificates must be physically received by
the Transfer Agent no later than the close of business on the Business Day next
preceding the designated Redemption Date in order for the conversion to become
effective. The Corporation shall not be required to make any such conversion,
and no surrender of the Series D Preferred Stock shall be effective for such
purposes, while the books for the transfer of either class of stock are closed
for any purpose, but the surrender of such shares of Series D Preferred Stock
for conversion during any period while such books are closed shall become
effective for all purposes of conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such shares of Series D
Preferred Stock were surrendered.
(c) If at any time, or from time to time, the
Corporation should (i) declare and pay on, or in respect of, the UPC Common
Stock any dividend payable in shares of UPC Common Stock; or (ii) subdivide the
outstanding shares of UPC Common Stock into a greater number of shares, or
contract the number of outstanding shares of Series D Preferred Stock by
combining such shares into a smaller number of shares; or (iii) contract the
number of outstanding shares of the UPC Common Stock by combining such shares
into a smaller number of shares, or (iv) subdivide the outstanding shares of
Series D Preferred Stock into a greater number of shares of Series D Preferred
Stock, the Conversion Ratio shall be proportionately adjusted as of such time.
(d) If the Corporation should consolidate with,
or merge into any corporation or reclassify outstanding shares of UPC Common
Stock (other than by way of subdivision or contraction of such shares), each
share of Series D Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property of the Corporation,
or of the entity resulting from such consolidation or merger, to which a holder
of the number of shares of UPC Common Stock deliverable upon conversion of such
share of Series D Preferred Stock would have been entitled upon such
consolidation, merger or reclassification, had the holder of such share of
Series D Preferred Stock exercised his right of conversion and had such shares
been issued and outstanding and had such holder been the holder of record of
such UPC Common Stock at the time of such consolidation, merger or
reclassification and the Corporation shall make lawful provision therefor as a
part of such consolidation, merger or reclassification.
(e) Whenever the conversion ratio or the type of
consideration other than UPC Common Stock receivable by the holder upon
conversion of the Series D Preferred Stock is required to be adjusted, as
herein provided, the Corporation shall promptly file with the transfer agent
for the UPC Common Stock and simultaneously provide to each holder of record of
Series D Preferred Stock a statement signed by the President or a Vice
President or the Secretary or the Treasurer setting forth the adjusted
conversion ratio and, if applicable, a description of the consideration
receivable upon consummation, determined as so provided. Such statement shall
set forth in reasonable detail such facts as may be necessary to show the
reason for and the manner of computing such adjustments.
(f) The Corporation shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery of UPC
Common Stock upon the conversion of the Series D Preferred Stock as herein
provided. The Corporation shall not be required in any event to pay any
transfer or other taxes by reason of the issuance of such UPC Common Stock in
names other than those in which the Series D Preferred Stock surrendered for
conversion may stand, and no such conversion
Page 14 of Union Planters Corporation Charter
<PAGE> 15
or issuance of UPC Common Stock shall be made unless and until the person
requesting such issuance has paid to the Corporation the amount of any such
tax, or has established to the satisfaction of the Corporation and its transfer
agent, if any, that such tax has been paid or is not required. Upon any
conversion of Series D Preferred Stock as herein provided, no adjustment or
allowance shall be made for dividends on the Series D Preferred Stock so
converted, and all rights to dividends, if any, shall cease and be deemed
satisfied; provided, however, that nothing in this section shall be deemed to
relieve the Corporation from its obligation to pay any dividends which shall
have been declared and shall be payable to holders of Series D Preferred Stock
of record as of a date prior to such conversion even though the payment date
for such dividend may be subsequent to the date of conversion.
(g) If any shares of Series D Preferred Stock
should be converted into UPC Common Stock at a time when the UPC Common Stock
into which such Series D Preferred Stock is convertible has attached or
attributable thereto Rights issued pursuant to the UPC Share Purchase Rights
Agreement, the surrender of such Series D Preferred Stock shall effectively
cancel all Rights attached or attributable to the share(s) of Series D
Preferred Stock so converted.
9. Reservation of UPC Common Stock. The Corporation
shall, so long as any of the Series D Preferred Stock shall remain outstanding,
reserve and keep available out of its authorized and unissued UPC Common Stock,
solely for the purpose of effecting the conversion of the Series D Preferred
Stock, such number of shares of UPC Common Stock as shall, from time to time,
be sufficient to effect the conversion of all shares of the Series D Preferred
Stock then outstanding. The Corporation shall, from time to time, increase its
authorized UPC Common Stock and take such other actions as may be necessary to
permit the issuance from time to time of the shares of the UPC Common Stock, as
fully paid and nonassessable shares, upon the conversion of the Series D
Preferred Stock in the manner herein provided.
10. Debt Obligations. The Corporation, at any time and
from time to time, may authorize the issuance of debt obligations, whether or
not subordinated, without the approval of any of its shareholders.
11. Definitions. For purposes of subparagraph (i) of
Article Sixth of the Charter:
(a) The term "outstanding", when used in
reference to shares of stock, shall mean shares which are authorized and
issued, excluding shares held by the Corporation or by a subsidiary of the
Corporation (other than in a fiduciary capacity), and excluding shares called
for redemption, funds for the redemption of which shall have been set aside by
the Corporation or deposited in trust in the manner provided herein;
(b) The amount of dividends "accrued" on any
share of Series D Preferred Stock as of the last day of the applicable
Quarterly Dividend Period (the "Quarterly Dividend Date") shall be deemed to be
the amount of any unpaid dividends accumulated thereon to and including such
Quarterly Dividend Date, whether or not earned or declared, and the amount of
dividends "accrued" on any shares of Series D Preferred Stock as at any date
other than a Quarterly Dividend Date shall be deemed to be (i) the amount of
any unpaid dividends accumulated thereon to and including the last preceding
Quarterly Dividend Date, whether or not earned or declared, plus (ii) an amount
calculated on the basis of the annual dividend rate fixed for the shares of
Series D Preferred Stock (9.5%) for the period subsequent to such last
preceding Quarterly Dividend Date to and including the date as of which the
calculation is made, based on a 360-day year of 12 consecutive 30-day months
and the actual number of days elapsed in the latter period.
SERIES E PREFERRED STOCK
(j) Pursuant to the authority vested in the Board of Directors of
Union Planters Corporation (the "Corporation") by the provisions of this
Article Sixth of its Charter and by the provisions of the Tennessee Business
Corporation Act, the Board of Directors of the Corporation does hereby create,
authorize and provide for the issuance of a new series of preferred stock out
of the Corporation's authorized class of 10,000,000 shares of preferred stock
having no par value (the "Preferred Stock"), having the designation, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions provided hereafter:
1. Designation and Amount. The shares of such series
shall be designated as the: 8% CUMULATIVE, CONVERTIBLE, PREFERRED STOCK, SERIES
E (the "Series E Preferred Stock") and the number of shares of Preferred Stock
constituting such Series E Preferred Stock shall be 3,340,000. Such number of
shares of Series E Preferred Stock may be adjusted hereafter by appropriate
action of the Board of Directors. The Series E Preferred Stock shall have a
stated value of $25.00 per share (the "Stated Value").
2. Dividends and Distributions.
(a) The holders of shares of Series E Preferred
Stock, in preference to the holders of the $5.00 par value common stock of the
Corporation (the "UPC Common Stock") shall be entitled to receive when, as and
if declared by the Board of Directors, out of funds legally available for the
purpose, cumulative cash dividends payable quarterly at the annual rate of 8%
of the Stated Value thereof on the fifteenth day (or, if such fifteenth day
should not be a Business Day, on the next Business Day) of February, May,
August and November in each year (a "Quarterly Dividend Payment Date"), in
respect of the Quarterly Dividend Period next preceding such fifteenth day, and
Page 15 of Union Planters Corporation Charter
<PAGE> 16
no other dividend or dividends. Such dividends shall be payable to holders of
record of the Series E Preferred Stock on such date as may be fixed by the
Board of Directors which date shall not be more than 30 nor less than 10 days
prior to the applicable Quarterly Dividend Payment Date. As used herein, a
"Quarterly Dividend Period" means a period of three calendar months ending on
the last day of January, April, July and October. Subject to the provisions of
paragraph (c) of Article Sixth of the Charter, dividends on account of arrears
for any past Quarterly Dividend Period(s) may be declared and paid at any time
designated by the Board of Directors, without reference to any regular
Quarterly Dividend Payment Date, to holders of record on such date as may be
fixed by the Board of Directors, which date shall not be more than 30 nor less
than 10 days preceding the designated payment date. The amount of dividend per
share payable for any Quarterly Dividend Period less than a full Quarterly
Dividend Period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period with respect
to which it is payable.
(b) Preferred dividends upon shares of Series E
Preferred Stock shall commence to accrue and be cumulative from the day upon
which the original issuance of shares of Series E Preferred Stock shall occur.
(c) No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments which
may be in arrears.
(d) For purposes hereof, a "Business Day" shall
mean any day on which commercial banks in the City of Memphis, Tennessee, are
required to be open for the transaction of their general banking businesses.
3. No Preemptive Rights. The holders of shares of Series
E Preferred Stock shall not be entitled, as of right, to purchase or subscribe
for any part of the unissued Series E Preferred Stock, any UPC Common Stock, or
any other capital stock of the Corporation, or to purchase or subscribe for any
bonds, certificates of indebtedness, debentures, or other securities
convertible into, or carrying options, warrants or rights to purchase, any
stock or other securities of the Corporation, or to purchase or subscribe for
any stock or any securities of the Corporation purchased by the Corporation or
by its nominee or nominees, or to have any other preemptive rights now or
hereafter defined by the laws of the State of Tennessee.
4. Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Series E Preferred Stock shall be entitled to
receive, after payment or provision for payment of all debts but before any
distribution of assets may be made to the holders of UPC Common Stock or any
other stock of the Corporation ranking junior to the Series E Preferred Stock
as to the distribution of assets on liquidation, dissolution or winding up of
the Corporation, out of assets of the Corporation available for distributions
to its shareholders, $25.00 per share (the "Liquidation Value"), plus, in each
case, accrued and unpaid dividends thereon from (but not including) the day of
original issuance to the date of payment thereof. After such payment has been
made in full to the holders of the outstanding shares of Series E Preferred
Stock (or funds necessary for such payment have been set aside in trust for the
account of such holders so as to be and to continue to be available therefor),
the holders of Series E Preferred Stock shall be entitled to no further
distributions, and the remaining assets of the Corporation shall be divided and
distributed among the holders of UPC Common Stock (subject to any senior rights
of any holders of any other capital stock of the Corporation entitled to
participate with the UPC Common Stock as to the distribution of assets) then
outstanding according to their respective rights as shareholders. If, upon any
liquidation, dissolution or winding up of the Corporation, the net assets of
the Corporation, or proceeds thereof available for distribution among the
holders of Series E Preferred Stock should be insufficient to permit payment in
full of the preferential amount aforesaid and liquidating payments on any other
Preferred Stock ranking, as to liquidation, dissolution or winding up, on a
parity with the Series E Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series E Preferred Stock and
the holders of any such other Preferred Stock ranking on a parity with the
Series E Preferred Stock ratably in accordance with the respective amounts
which would be payable on such shares of Series E Preferred Stock and on any
such other Preferred Stock ranking on a parity with the Series E Preferred
Stock if all amounts payable thereon were paid in full. Neither the
consolidation or merger of the Corporation with or into any other corporation
or corporations, nor a reorganization of the Corporation alone, nor the sale or
transfer by the Corporation of all or substantially all of its assets shall be
deemed a "liquidation, dissolution or winding up of the Corporation" within the
meaning of this paragraph 4.
5. Right of Holders of Series E Shares to Vote.
(a) Except as hereinafter provided for and as
otherwise from time to time required by law, the Series E Preferred Stock shall
have no voting rights except for those which may be required by the laws of the
State of Tennessee.
(b) So long as any shares of Series E Preferred
Stock remain outstanding, the consents of the holders of at least two-thirds
(2/3ds) of the shares of Series E Preferred Stock outstanding at the time
(voting separately as a class together with all other series of Preferred Stock
of the Corporation ranking on a parity with the Series E Preferred Stock either
as to dividends or the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable) given in person or by proxy, either in writing or at any special
or annual meeting called for the purpose, shall be necessary to permit, effect
or validate any one or more of the following actions:
Page 16 of Union Planters Corporation Charter
<PAGE> 17
(i) the authorization, creation or
issuance of a new class or series of shares of capital stock of the Corporation
having rights, preferences or privileges senior to the Series E Preferred
Stock, or any increase in the number of authorized shares of any class or
series having rights, preferences or privileges senior to the Series E
Preferred Stock; or
(ii) the amendment, alteration or repeal,
whether by merger, consolidation or otherwise, of any of the provisions of the
Corporation's Charter which would materially and adversely affect any right,
preference, privilege or voting power of the Series E Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized UPC Common Stock or Preferred Stock or the authorization, creation
or issuance of any other series of UPC Common Stock or Preferred Stock, in each
case ranking on a parity with, or junior to the Series E Preferred Stock with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to "materially and
adversely affect" such rights, preferences, privileges or voting powers of the
Series E Preferred Stock.
(c) The foregoing voting provisions shall not
apply if, at or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected (i) all outstanding shares of
Series E Preferred Stock shall have been redeemed or called for redemption and
(ii) funds shall have been deposited in trust in an amount sufficient to effect
such redemption as provided herein.
6. Redemption.
(a) The shares of Series E Preferred Stock shall
be redeemable, in whole or in part, only at the option of the Corporation by
resolution of its Board of Directors but only with the prior consent of the
Board of Governors of the Federal Reserve System, or of the appropriate Federal
Reserve Bank acting under delegated authority, or their successors, at any time
and from time to time on or after March 1, 1997, at a price "Redemption Price"
of $25.00 per share, plus all dividends accrued and unpaid on such Series E
Preferred Stock from (but not including) the day of original issuance up to the
Redemption Date (as defined below). Notwithstanding the foregoing sentence of
this Section, the Corporation may acquire Series E Preferred Stock in any other
lawful manner permitted by its Charter or Bylaws.
(b) In the event that less than the entire amount
of Series E Preferred Stock outstanding is to be redeemed at any one time, the
shares to be redeemed shall be selected by lot or pro rata (as nearly as may
be) or by any other method determined by the Board of Directors of the
Corporation in its sole discretion to be equitable.
(c) Notice of any redemption, whether whole or
partial, shall be given by United States first class mail, postage prepaid,
deposited in the mail not less than 30 nor more than 60 days prior to the
Redemption Date, addressed to each holder of record of the shares selected for
redemption at such holders' respective addresses as the same shall appear on
the stock register of the Corporation. Each such notice shall state: (1) the
date designated by the Board of Directors as the "Redemption Date"; (2) the
number of shares of Series E Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the Redemption Price and the manner
in which the Redemption Price is to be paid and delivered; (4) the place or
places where certificates representing and evidencing such shares are to be
surrendered for payment of the Redemption Price; and (5) that dividends on the
shares to be redeemed will cease to accrue on such Redemption Date. No failure
to mail such notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for redemption. Any notice mailed in
the manner herein provided shall be conclusively presumed to have been duly
given whether or not the holder receives the notice. On the Redemption Date,
or on such earlier date as the Board of Directors shall designate for payment
of the Redemption Price (unless the Corporation shall default in the payment of
the Redemption Price as set forth in such notice), the holders of shares of
Series E Preferred Stock selected for redemption and to whom notice has been
duly given shall cease to be shareholders with respect to such shares of Series
E Preferred Stock and shall have no interest in, or claim against the
Corporation by virtue thereof and shall have no dividend, voting or other
rights with respect to such shares except the right to receive the moneys
payable upon such redemption from the Corporation or otherwise, without
interest thereon, upon surrender (and proper endorsement, if required by the
Corporation) of the certificates, and the shares represented thereby shall no
longer be deemed to be outstanding. The Corporation's obligation to provide
funds for redemption shall be deemed fulfilled if, on or before the Redemption
Date, the Corporation shall have deposited with a bank or trust company (which
may be an affiliate of the Corporation), having an office or agency in Memphis,
Tennessee, having a capital and surplus of at least $50,000,000, or with any
other such bank or trust company located in the continental United States as
may be designated from time to time by the Corporation, funds necessary for
such redemption, in trust, with irrevocable instructions that such funds be
applied to the redemption of the shares of Series E Preferred Stock so called
for redemption. Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any funds so deposited and unclaimed at the end
of six years from such Redemption Date shall be repaid or released to the
Corporation, after which the holder or holders of such shares of Series E
Preferred Stock so called for redemption shall look only to the Corporation for
payment of the Redemption Price. Upon redemption of Series E Preferred Stock
in the manner set out herein, or upon the purchase of Series E Preferred Stock
by the Corporation, the Series E Preferred Stock so acquired by the Corporation
shall be retired and canceled and shall be restored to the status of authorized
but unissued shares of Preferred Stock, without designation as to series, and
may thereafter be issued, but not as shares of Series E Preferred Stock.
7. Ranking.
Page 17 of Union Planters Corporation Charter
<PAGE> 18
(a) Any class or series of stock of the Corporation
shall be deemed to rank:
(i) "senior to" the Series E Preferred Stock
if the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series E
Preferred Stock; and
(ii) "on a parity with" the Series E
Preferred Stock if the holders of such class or series of stock and the holders
of the Series E Preferred Stock shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective dividend rates or liquidation
prices, without preference or priority one over the other whether or not the
dividend rates, dividend payment dates or redemption or liquidation prices per
share of such other class or series of stock are different from those of the
Series E Preferred Stock.
(b) The Series E Preferred Stock shall rank on a
parity with the Corporation's Series B Preferred Stock, the Corporation's
Series C Preferred Stock, the Corporation's Series D Preferred Stock and the
Corporation's Series A Preferred Stock, if and when shares of such Series A
Preferred Stock should be issued.
8. Conversion of Series E Preferred Stock. The
registered holders of shares of Series E Preferred Stock shall have the right,
at their option, to convert such shares into shares of UPC Common Stock (and,
upon the occurrence of a certain type of merger, into other assets) on the
following terms and conditions:
(a) The registered holders of the Series E Preferred
Stock shall have the right at any time after the date of its original issuance
but prior to the Redemption Date designated in the notice of redemption given
to such holders in accordance with the provisions of Section 6, to convert each
share of the Corporation's Series E Preferred Stock registered in the name of
such holders into 1.25 shares of the Corporation's Common Stock having a par
value of $5.00 per share. The Series E Preferred Stock shall not be
convertible into any other class or classes or any other series of any class or
classes of capital stock (or any other equity or debt security) of the
Corporation.
(b) On presentation and surrender to the
Corporation at any office or agency maintained for the transfer of the Series E
Preferred Stock (the "Transfer Agent") of the certificates representing and
evidencing Series E Preferred Stock so to be converted, duly endorsed for
conversion, the holder of such Series E Preferred Stock shall be entitled,
subject to the limitations herein contained, to receive in exchange therefor a
certificate or certificates for fully paid and nonassessable shares, and cash
for fractional shares (if any) of UPC Common Stock or other securities pursuant
to subsection (d) below on the basis set forth. The Series E Preferred Stock
shall be deemed to have been converted and the person converting the same shall
be deemed to have become the holder of record of UPC Common Stock, for the
purpose of receiving dividends and for all other purposes whatsoever as of the
date when the certificate or certificates representing and evidencing such
Series E Preferred Stock shall have been surrendered to the Transfer Agent as
aforesaid. The holder of Series E Preferred Stock shall be responsible for
selection of the method of delivery to the Transfer Agent of any share
certificates intended to be surrendered for conversion and the Corporation
shall have no risk or liability for the loss or late delivery of certificates
for conversion. Properly endorsed certificates must be physically received by
the Transfer Agent no later than the close of business on the Business Day next
preceding the designated Redemption Date in order for the conversion to become
effective. The Corporation shall not be required to make any such conversion,
and no surrender of the Series E Preferred Stock shall be effective for such
purposes, while the books for the transfer of either class of stock are closed
for any purpose, but the surrender of such shares of Series E Preferred Stock
for conversion during any period while such books are closed shall become
effective for all purposes of conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such shares of Series E
Preferred Stock were surrendered.
(c) If at any time, or from time to time, the
Corporation should (i) declare and pay on, or in respect of, the UPC Common
Stock any dividend payable in shares of UPC Common Stock; or (ii) subdivide the
outstanding shares of UPC Common Stock into a greater number of shares, or
contract the number of outstanding shares of Series E Preferred Stock by
combining such shares into a smaller number of shares; or (iii) contract the
number of outstanding shares of the UPC Common Stock by combining such shares
into a smaller number of shares, or (iv) subdivide the outstanding shares of
Series E Preferred Stock into a greater number of shares of Series E Preferred
Stock, the Conversion Ratio shall be proportionately adjusted as of such time.
(d) If the Corporation should consolidate with,
or merge into any corporation or reclassify outstanding shares of UPC Common
Stock (other than by way of subdivision or contraction of such shares), each
share of Series E Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property of the Corporation,
or of the entity resulting from such consolidation or merger, to which a holder
of the number of shares of UPC Common Stock deliverable upon conversion of such
share of Series E Preferred Stock would have been entitled upon such
consolidation, merger or reclassification, had the holder of such share of
Series E Preferred Stock exercised his right of conversion and had such shares
been issued and outstanding and had such holder been the holder of record of
such UPC Common Stock at the time of such consolidation, merger or
reclassification and the Corporation shall make lawful provision therefor as a
part of such consolidation, merger or reclassification.
Page 18 of Union Planters Corporation Charter
<PAGE> 19
(e) Whenever the conversion ratio or the type of
consideration other than UPC Common Stock receivable by the holder upon
conversion of the Series E Preferred Stock is required to be adjusted, as
herein provided, the Corporation shall promptly file with the transfer agent
for the UPC Common Stock and simultaneously provide to each holder of record of
Series E Preferred Stock a statement signed by the President or a Vice
President or the Secretary or the Treasurer setting forth the adjusted
conversion ratio and, if applicable, a description of the consideration
receivable upon consummation, determined as so provided. Such statement shall
set forth in reasonable detail such facts as may be necessary to show the
reason for and the manner of computing such adjustments.
(f) The Corporation shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery of UPC
Common Stock upon the conversion of the Series E Preferred Stock as herein
provided. The Corporation shall not be required in any event to pay any
transfer or other taxes by reason of the issuance of such UPC Common Stock in
names other than those in which the Series E Preferred Stock surrendered for
conversion may stand, and no such conversion or issuance of UPC Common Stock
shall be made unless and until the person requesting such issuance has paid to
the Corporation the amount of any such tax, or has established to the
satisfaction of the Corporation and its transfer agent, if any, that such tax
has been paid or is not required. Upon any conversion of Series E Preferred
Stock as herein provided, no adjustment or allowance shall be made for
dividends on the Series E Preferred Stock so converted, and all rights to
dividends, if any, shall cease and be deemed satisfied; provided, however, that
nothing in this section shall be deemed to relieve the Corporation from its
obligation to pay any dividends which shall have been declared and shall be
payable to holders of Series E Preferred Stock of record as of a date prior to
such conversion even though the payment date for such dividend may be
subsequent to the date of conversion.
(g) If any shares of Series E Preferred Stock
should be converted into UPC Common Stock at a time when the UPC Common Stock
into which such Series E Preferred Stock is convertible has attached or
attributable thereto Rights issued pursuant to the UPC Share Purchase Rights
Agreement, the surrender of such Series E Preferred Stock shall effectively
cancel all Rights attached or attributable to the share(s) of Series E
Preferred Stock so converted.
9. Reservation of UPC Common Stock. The Corporation
shall, so long as any of the Series E Preferred Stock shall remain outstanding,
reserve and keep available out of its authorized and unissued UPC Common Stock,
solely for the purpose of effecting the conversion of the Series E Preferred
Stock, such number of shares of UPC Common Stock as shall, from time to time,
be sufficient to effect the conversion of all shares of the Series E Preferred
Stock then outstanding. The Corporation shall, from time to time, increase its
authorized UPC Common Stock and take such other actions as may be necessary to
permit the issuance from time to time of the shares of the UPC Common Stock, as
fully paid and nonassessable shares, upon the conversion of the Series E
Preferred Stock in the manner herein provided.
10. Debt Obligations. The Corporation, at any time and
from time to time, may authorize the issuance of debt obligations, whether or
not subordinated, without the approval of any of its shareholders.
11. Definitions. For purposes of subparagraph (j) of
Article Sixth of the Charter:
(a) The term "outstanding", when used in reference
to shares of stock, shall mean shares which are authorized and issued,
excluding shares held by the Corporation or by a subsidiary of the Corporation
(other than in a fiduciary capacity), and excluding shares called for
redemption, funds for the redemption of which shall have been set aside by the
Corporation or deposited in trust in the manner provided herein;
(b) The amount of dividends "accrued" on any
share of Series E Preferred Stock as of the last day of the applicable
Quarterly Dividend Period (the "Quarterly Dividend Date") shall be deemed to be
the amount of any unpaid dividends accumulated thereon to and including such
Quarterly Dividend Date, whether or not earned or declared, and the amount of
dividends "accrued" on any shares of Series E Preferred Stock as at any date
other than a Quarterly Dividend Date shall be deemed to be (i) the amount of
any unpaid dividends accumulated thereon to and including the last preceding
Quarterly Dividend Date, whether or not earned or declared, plus (ii) an amount
calculated on the basis of the annual dividend rate fixed for the shares of
Series E Preferred Stock (8%) for the period subsequent to such last preceding
Quarterly Dividend Date to and including the date as of which the calculation
is made, based on a 360-day year of 12 consecutive 30-day months and the actual
number of days elapsed in the latter period.
COMMON STOCK
(a) Shares of Common Stock may be issued at such time or times and
for such consideration or considerations (not less than the par value thereof)
as the Board of Directors may deem advisable subject to such limitations as may
be set forth in the laws of the State of Tennessee or the Charter or the Bylaws
of the Corporation.
(b) Except as provided by law or this Charter, each holder of
Common Stock shall have one vote in respect of each share of stock held by him
of record on the books of the Corporation on all matters voted upon by the
shareholders.
Page 19 of Union Planters Corporation Charter
<PAGE> 20
(c) Subject to the preferential dividend rights, if any, applicable
to shares of Preferred Stock and subject to applicable requirements, if any,
with respect to the setting aside of sums for purchase, retirement or sinking
funds for Preferred Stock, the holders of Common Stock shall be entitled to
receive, to the extent permitted by law, such dividends as may be declared from
time to time by the Board of Directors.
(d) In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of Preferred Stock, holders of Common Stock shall be
entitled to receive all of the remaining assets of the Corporation of whatever
kind available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively. The Board of
Directors may distribute in kind to the holders of Common Stock such remaining
assets of the Corporation or may sell, transfer or otherwise dispose of all or
any part of such remaining assets to any other person, corporation, trust, or
other entity and receive payment therefor in cash, stock or obligations of such
other corporation, trust or entity, or any combination thereof, and may sell
all or any part of the consideration so received and distribute any balance
thereof in kind to holders of Common Stock. Neither the merger or
consolidation of the Corporation into or with any other corporation, nor the
merger of any other corporation into it, nor any purchase or redemption of
shares of stock of the Corporation of any class, shall be deemed to be a
dissolution, liquidation or winding up of the Corporation for the purposes of
this paragraph.
(e) Such numbers of shares of Common Stock as may from time to time
be required for such purpose shall be reserved for issuance (i) upon conversion
of any shares of Preferred Stock or any other obligation of the Corporation
convertible into shares of Common Stock which is at the time outstanding or
issuable upon exercise of any options or warrants at the time outstanding, and
(ii) upon exercise of any options or warrants at the time outstanding to
purchase shares of Common Stock.
SEVENTH: MINIMUM CAPITAL TO COMMENCE BUSINESS:
The Corporation will not commence business until consideration of one
thousand dollars ($1,000) has been received for the issuance of shares.
EIGHTH: NO PREEMPTIVE RIGHTS:
Neither the holders of Common Stock, nor the holders of Preferred
Stock nor the holders of any securities convertible into, exchangeable for or
carrying any rights to subscribe to any class of capital stock of the
Corporation shall, as such holders, have any right to acquire, purchase or
subscribe for any shares of the Common Stock or Preferred Stock of the
Corporation or any class of capital stock or any securities convertible into,
exchangeable for, or carrying any rights to subscribe to, shares of Common
Stock or any such other class of capital stock of the Corporation, which it may
hereafter issue or sell (whether out of the number of shares now or hereafter
authorized by this Charter, or out of any shares of the Common Stock or other
capital stock of the Corporation acquired by it after the issuance thereof, or
otherwise), other than such right, if any, as the Board of Directors of the
Corporation in its discretion may determine.
NINTH: DIRECTORS:
The number of directors of the Corporation shall be such number, not
less than seven (7) nor more than twenty-five (25), as shall be provided from
time to time in the Bylaws, provided that no amendment to the Bylaws decreasing
the number of directors shall have the effect of shortening the term of any
incumbent director, and provided further that no action shall be taken by the
directors (whether through amendment of the Bylaws or otherwise) to increase
the number of directors as provided in the Bylaws from time to time unless at
least sixty-six and two-thirds percent (66-2/3%) of the directors then in
office shall concur in said action. Directors need not be shareholders of the
Corporation nor need they be residents of Tennessee.
The Board of Directors shall be divided into three classes of
directors which shall be designated Class I, Class II and Class III. Such
classes shall be as nearly equal in number as the then total number of
directors constituting the entire board shall permit, with the terms of office
of all members of one class expiring each year. Should the number of directors
fixed by the Bylaws not be equally divisible by three, the excess director or
directors shall be assigned to Classes III or II as follows: (i) if there
shall be an excess of one directorship over a number equally divisible by
three, such extra directorship shall be classified in Class III; and (ii) if
there be an excess of two directorships over a number equally divisible by
three, one shall be classified in Class II and the other in Class III. At the
annual meeting of shareholders in 1981: directors of Class I shall be elected
to hold office for a term expiring at the next succeeding annual meeting;
directors of Class II shall be elected to hold office for a term expiring at
the second succeeding annual meeting; and directors of Class III shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. At each annual meeting of shareholders after 1981, the successors to
the members of the class of directors whose terms shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting, except that the successor to any director who shall have been elected
by the directors to fill a vacancy whose term shall expire at such meeting
shall be elected by the shareholders for a term expiring at the same time as
the terms of other members of the same class. Any director elected by the
Board of Directors to fill a vacancy (whether or not such vacancy shall have
been created by an increase in the number of directors) shall serve only until
the next annual meeting of the shareholders. Notwithstanding the foregoing,
any director whose term shall expire at any annual meeting shall continue to
serve until such time as his successor shall have been duly elected and shall
have qualified unless his position
Page 20 of Union Planters Corporation Charter
<PAGE> 21
on the Board shall have been abolished by action taken to reduce the size of
the Board prior to said meeting.
Should the number of members of the Corporation's Board as fixed by
the Bylaws be reduced by amendment thereof, the Board shall designate, by the
name of the incumbent(s), the position(s) to be abolished, the first being
selected from Class II should the number of members of that Class exceed the
number of members of Class I, the second being selected from Class III should
the number of its members exceed the number of members of Class I, and others,
in sequence from Classes I, II, III, I, II, III, etc. in that order. Should
additional directorships be created pursuant to amendment of the Bylaws, they
shall be allocated first to Class II and then to Class I as may be required to
make equal the number of directorships in each class. Should the number of
directorships be equal as among the three classes, newly created positions
shall be assigned first to Class III, then to Class II, then to Class I, etc.
Notwithstanding any other provisions of this Charter or the Bylaws
(and notwithstanding the fact that some lesser percentage may be specified by
law, the Charter or the Bylaws of this Corporation), the affirmative vote of
the holders of sixty-six and two-thirds percent (66 2/3%) or more of the
outstanding shares of capital stock of this Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) shall be required (a) to amend, alter, change or repeal this ARTICLE
NINTH of the Charter or (b) to remove from office any director of this
Corporation whether with or without cause.
TENTH: NO CUMULATIVE VOTING FOR DIRECTORS:
Directors shall be elected by a plurality of the votes cast in the
election. No cumulative voting shall be permitted with respect to the election
of directors.
ELEVENTH: CERTAIN POWERS DEFINED:
The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of its
directors and shareholders:
(a) All corporate powers of the Corporation shall be exercised by its
Board of Directors except as otherwise provided by law, provided, however, that
the Board of Directors, by a resolution adopted by a majority of the entire
Board, may designate an Executive Committee consisting of five (5) or more
directors, and other committees, consisting of five (5) or more directors, and
may delegate to such committee or committees all such authority of the Board
that it deems desirable, except that no such committee or committees, unless
specifically so authorized by the Board, shall have and exercise the authority
of the Board to:
(1) adopt, amend or repeal the Bylaws;
(2) submit to the shareholders of the Corporation any action
requiring shareholders' authorization under the Tennessee Business
Corporation Act;
(3) fill vacancies in the Board or in any committee;
(4) declare dividends or make other corporate distributions;
nor
(5) issue or reissue any Common Stock, or Preferred Stock, or
any obligation of the Corporation exchangeable for or convertible into
its capital stock of any class or any warrant, right or option to
acquire the same.
The Board may designate one or more directors as alternate members of
any such committee, who may replace any absent member or members at any meeting
of such committee. Each such committee shall serve at the pleasure of the
Board. The designation of any such committee shall serve at the pleasure of
the Board. The designation of any such committee and the delegation thereto of
authority shall not relieve any director of any responsibility imposed by law.
To the extent consistent with law, this Charter and the Bylaws of the
Corporation relating to the conduct of meetings of the Board shall govern
meetings of the Executive and other committees.
(b) Whenever under the Tennessee Business Corporation Act
shareholders are required or permitted to take any action by vote, such action
may be taken without a meeting on written consent, setting forth the action so
taken, signed by all of the persons or entities entitled to vote thereon.
Directors may take any action which they are required or permitted to take
under the Tennessee Business Corporation Act without a meeting in the same
manner.
(c) The Board of Directors shall have the power to adopt, amend or
repeal the Bylaws of the Corporation by a majority vote of the entire Board,
but any Bylaw so adopted by the Board may be further amended or repealed by
action of the shareholders of the Corporation. The Bylaws may contain any
provision for the regulation and management of the business or affairs of the
Corporation not inconsistent with law and this Charter.
(d) The Board of Directors shall have power from time to time to set
apart out of any funds of the Corporation available for dividends a reserve or
reserves for any proper purpose, and to abolish any such reserve.
Page 21 of Union Planters Corporation Charter
<PAGE> 22
(e) The Board of Directors from time to time shall determine
whether and to what extent and at what times and places and under what
conditions and regulations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the shareholders, and no shareholder
shall have any right to inspect any account, book or document of the
Corporation except as conferred by statute, the Bylaws or as authorized by
resolution of the Board of Directors.
(f) The Board of Directors of the Corporation, without the vote of
the shareholders, may distribute to its shareholders out of its capital surplus
a portion of its assets, in cash or in property, in accordance with and subject
to the limitations imposed by Section 48-16-401 of the Tennessee Business
Corporation Act, provided however, that no such distribution shall be made to
the holders of any class of shares until adequate provision shall be made for
any sinking fund requirements applicable to the retirement of Preferred Stock
of the Corporation.
(g) The Corporation shall have the right to purchase or otherwise
acquire its own shares in accordance with Section 48-16-302 of the Tennessee
Business Corporation Act to the extent of unreserved and unrestricted earned
surplus available therefor, or, if such unreserved and unrestricted earned
surplus is not available, to the extent of unreserved and unrestricted capital
surplus available therefor.
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the Corporation may
indemnify or purchase and maintain insurance to indemnify any of its directors,
officers, employees or agents and any persons who may serve at the request of
the Corporation as directors, officers, employees, trustees or agents of any
other corporation, firm, association, national banking association, state-
chartered bank, trust company, business trust, organization or any other type
of entity whether or not the Corporation shall have any ownership interest in
such entity. Such indemnification(s) may be provided for in the Bylaws, or by
resolution of the Board of Directors or by appropriate contract with the person
involved.
THIRTEENTH: CHARTER AMENDMENTS:
The Corporation reserves the right to amend, alter, change or repeal
any provision made in this Charter, in the manner now or hereafter prescribed
by the laws of the State of Tennessee, and all rights conferred herein upon
shareholders and the Board of Directors are granted subject to this
reservation.
FOURTEENTH: SPECIAL VOTE IN CERTAIN CASES:
(a) Except as otherwise expressly provided in Paragraph 4 of this
ARTICLE FOURTEENTH, the affirmative vote of the holders of sixty-six and
two-thirds percent (66 2/3%) or more of the outstanding shares of capital stock
of this Corporation entitled to vote generally in the election of directors,
considered for the purposes of this ARTICLE FOURTEENTH as one class, shall be
required to authorize:
(1) any merger or consolidation of this Corporation with
or into any other corporation, or other entity; or
(2) any sale, lease, exchange, or other disposition of
all or substantially all of the assets of this Corporation to or with any other
corporation, person, or other entity, if, as of the "Date of Determination" as
defined in this ARTICLE FOURTEENTH, such other corporation, person, or entity
is the "Beneficial Owner," directly or indirectly, of ten percent (10%) or more
of the outstanding shares of capital stock of this Corporation entitled to vote
generally in the election of directors, considered for the purposes of this
ARTICLE FOURTEENTH as one class. Such affirmative vote shall be required
notwithstanding the fact that some lesser percentage may be specified in law or
any agreement with any national securities exchange.
(b) For purposes of this ARTICLE FOURTEENTH, any corporation,
person, or other entity shall be deemed to be the "Beneficial Owner" of any
shares of capital stock of this Corporation (i) which it or any "Affiliate" or
"Associate" of it (as defined in this ARTICLE FOURTEENTH) has the right to
acquire pursuant to any agreement, or upon exercise of conversion rights,
warrants, or options, or otherwise, or (ii) which are "Beneficially Owned,"
directly or indirectly (including shares being owned through application of
clause (i) above), by any other corporation, person or entity which is its
"Affiliate" or "Associate" (as defined in this ARTICLE FOURTEENTH) or with
which it or any "Affiliate" or "Associate" or it has any agreement,
arrangement, or understanding for the purpose of acquiring, holding, voting, or
disposing of the capital stock of this Corporation. For the purposes of this
ARTICLE FOURTEENTH, the outstanding shares of any class of capital stock of
this Corporation shall include shares deemed owned through the application of
clauses (i) and (ii) above but shall not include any other shares which may be
issuable pursuant to any agreement, or upon exercise of conversion rights,
warrants, or options, or otherwise.
(c) The Board of Directors of this Corporation shall have the
power and duty to determine for the purposes of this ARTICLE FOURTEENTH, on the
basis of information then known to it, whether any corporation, person, or
other entity "Beneficially Owns" ten percent (10%) or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, or is an "Affiliate" or an "Associate" (as defined in
this ARTICLE FOURTEENTH) or another. Any such determination by the Board of
Directors made in good faith shall be conclusive and binding for all purposes
of this ARTICLE FOURTEENTH.
Page 22 of Union Planters Corporation Charter
<PAGE> 23
(d) The provisions of this ARTICLE FOURTEENTH shall not apply to
any merger or consolidation of this Corporation with or into, or any sale,
lease, exchange, or other disposition of any assets of this Corporation to, any
corporation or entity of which a majority of the outstanding shares of all
classes of capital stock entitled to vote generally in the election of
directors, considered for this purpose as one class, is owned of record or
beneficially by this Corporation and its subsidiaries.
(e) As used in this ARTICLE FOURTEENTH, the following terms shall
have the following meanings:
(1) Affiliate. An "Affiliate" of, or a person
"affiliated" with, a specific person, means a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified.
(2) Associate. The term "Associate" used to indicate a
relationship with any person, means (i) any corporation or organization (other
than this Corporation or a majority-owned subsidiary of this Corporation) of
which such person is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of equity
securities, (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, (iii) any relative or spouse of such person,
or any relative of such spouse, who has the same home as such person, or (iv)
any investment company registered under the Investment Company Act of 1940 for
which such person or any affiliate of such person serves as investment adviser.
(3) Date of Determination. The term "Date of
Determination" means (i) the date on which a binding agreement (except for the
fulfillment of conditions precedent, including, without limitation, votes of
shareholders to approve such transaction) is entered into by this Corporation,
as authorized by its Board of Directors, and another corporation, person or
other entity providing for any merger or consolidation of this Corporation or
any sale, lease, exchange or disposition of all or substantially all of the
assets of this Corporation, as referred to in Paragraph 1 in this ARTICLE
FOURTEENTH; or, (ii) if such an agreement as referred to in item (i) is amended
so as to make it less favorable to this Corporation and its shareholders, the
date on which such amendment is approved by the Board of Directors of this
Corporation, or, (iii) in cases where neither item (i) nor item (ii) shall be
applicable, the record date for the determination of shareholders of this
Corporation entitled to notice of and to vote upon the transaction in question.
The Board of Directors of this Corporation shall have the power and duty to
determine for the purposes of this ARTICLE FOURTEENTH the Date of Determination
as to any transaction. Any such determination by the Board of Directors made
in good faith shall be conclusive and binding for all purposes of this ARTICLE
FOURTEENTH.
(f) The provisions of this ARTICLE FOURTEENTH as to the vote
required for any action described herein, shall apply in addition to any other
provision for a vote required with respect to such action by law or otherwise.
Notwithstanding any other provisions of this Charter or the Bylaws (and
notwithstanding the fact that some lesser percentage may be specified in law,
the Charter, or the Bylaws), the affirmative vote of the holders of sixty-six
and two-thirds percent (66 2/3%) or more of the outstanding shares of capital
stock of this Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) shall be required to
amend, alter, or repeal this ARTICLE FOURTEENTH.
Page 23 of Union Planters Corporation Charter
<PAGE> 1
AMENDED AND RESTATED BYLAWS
OF
UNION PLANTERS CORPORATION
(A TENNESSEE CORPORATION)
_______________________________________
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of
the Corporation for the election of Directors and for the transaction of such
other business as may come before the meeting shall be held on the fourth
Thursday in April of each year (subsequent to the year 1972) if not a legal
holiday, and if a legal holiday at such time as shall be designated by the
Board. If the annual meeting shall not be held on the day hereinabove provided
for, the Board shall call a special meeting for the election of Directors as
soon thereafter as convenient, and in any event not later than 30 days after
said day.
Section 2. Special Meetings. Special meetings of the shareholders,
unless otherwise prescribed by law, may be called for any purpose or purposes
whatsoever at any time by the Chairman of the Board, the President, the
Secretary or the holders of not less than one tenth (1/10) of the shares
entitled to vote at such meeting.
Section 3. Notice of Meeting; Waiver of Notice. Written or printed
notice stating the place, day, hour, purpose or purposes for which the meeting
is called and the person or persons calling the meeting shall be delivered
either personally or by mail or at the direction of the Chairman of the Board,
the President, the Secretary or other person or persons calling the meeting to
each shareholder entitled to vote at the meeting. If mailed, such notice shall
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting and shall be deemed to be delivered when deposited in the
United States Mail addressed to the shareholder at his address as it appears on
the stock transfer records of the Corporation, with postage thereon prepaid.
If delivered personally, such notice shall be delivered not less than five (5)
nor more than sixty (60) days before the date of the meeting and shall be
deemed delivered when actually received by the shareholder. A certificate of
the Secretary or other person giving the notice, or of a transfer agent of the
Corporation, that the notice required by this Section has been given, in the
absence of fraud, shall be prima facie evidence of the facts therein stated.
Whenever the shareholders of this Corporation are authorized to take any action
after notice
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or after the lapse of a prescribed period of time, such action may be taken
without notice and without the lapse of such period of time, if at any time
before or after such action is completed each shareholder entitled to such
notice or entitled to participate in the action to be taken, (or his
attorney-in-fact or proxy holder), shall submit a signed waiver of notice of
such requirement. When a meeting is adjourned to another time or place, it
shall not be necessary to give any notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any business may
be transacted that might have been transacted on the original date of the
meeting. However, if after the adjournment the Board shall fix a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record on the new record date entitled to vote at
the meeting.
Section 4. Place of Meetings. Meetings of the shareholders may be
held at such place, either within or without the State of Tennessee, as may be
set by the Board. If the Board shall fail to set the place of the meeting, the
meeting shall be held at the principal office of the Corporation.
Section 5. Quorum. At all meetings of the shareholders, the holders
of a majority of the shares of stock of the Corporation entitled to vote,
present in person or by proxy, shall constitute a quorum for the transaction of
any business, except as otherwise provided by statute or by the Charter or
these Bylaws. When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any of those present. A meeting may be
adjourned despite the absence of a quorum. The absence from any meeting of
holders of the number of shares of stock of the Corporation in excess of a
majority thereof which may be required by the laws of the State of Tennessee or
other applicable statute, the Charter, or these Bylaws, for action upon any
given matter, shall not prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if there shall be present
thereat, in person or by proxy, holders of the number of shares of stock of the
Corporation required for action in respect of such other matter or matters.
Section 6. Organization. At each meeting of the shareholders, the
Chairman of the Board or in his absence or inability to act, the Vice chairman,
or in the absence or inability to act of the Chairman of the Board and the Vice
Chairman, the President, shall act as Chairman of the meeting. The Secretary,
or in his absence or inability to act, any person appointed by the Chairman of
the meeting shall act as Secretary of the meeting and keep the minutes thereof.
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Section 7. Order of Business. The order of business at all meetings
of the shareholders shall be as determined by the Chairman of the meeting.
Section 8. Voting; Consent of Shareholders in lieu of Meeting. Except
as otherwise provided by statute or the Charter, each holder of record of
shares of stock of the Corporation having voting power shall be entitled at
each meeting of the shareholders to one vote upon each matter submitted to a
vote for every share of such stock standing in his name on the record of
shareholders of the Corporation:
a. On the date fixed by the Board in accordance with
Section 6 of Article VI hereof as the record date for the
determination of the shareholders who shall be entitled to notice of
and to vote at such meeting; or
b. If such record date shall not have been fixed for the
determination of shareholders entitled to notice of or entitled to
vote at a meeting of shareholders, the date on which notice of the
meeting is mailed shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote
at any meeting of shareholders has been made as provided in this
Section, such determination shall apply to any adjournment thereof.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy. Every proxy must be signed by the shareholder
or his attorney-in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable prior to its use at the pleasure of the
shareholder executing it, except as otherwise provided in this Section or by
law. The authority of the holder of a proxy to act shall not be revoked by the
incompetence or the death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or the death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or written notice of such death is received by the corporate
officer responsible for maintaining the list of shareholders. A proxy
authorized by a shareholder which is entitled "irrevocable proxy" an which
states it is irrevocable is irrevocable when it is held by one of the following
or a nominee of any of the following:
(a) a pledge;
(b) a person who has purchased or agreed to purchase the
shares;
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(c) a person designated by or under an agreement
comporting with the law.
Notwithstanding a provision in a proxy stating that it is irrevocable,
the proxy becomes revocable after the pledge is redeemed or such agreement has
terminated.
A proxy may be revoked notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the existence of the
provision unless the existence of the proxy and its irrevocability is noted
conspicuously on the face or back of the certificate representing such shares.
Whenever shareholders are required or permitted to take any action by
vote, such action may be taken without a meeting on written consent, setting
forth the action so taken, signed by all of the persons or entities entitled to
vote thereon.
If a vote shall be taken on any question, then unless required by
statute, or determined by the Chairman of the meeting to be advisable, any such
vote need not be by ballot. On a vote by ballot, each ballot shall be signed
by the shareholder voting, or by his proxy, if there be such proxy, and shall
state the number of shares voted.
Section 9. List of Shareholders. A list of shareholders of the
Corporation as of the record date, certified by the officer responsible for the
preparation or by the Corporation's transfer agent, shall be open for
inspection at any meeting of the shareholders. If the right to vote at any
meeting is challenged, the Chairman of the meeting may rely on such list as
evidence of the right of the persons challenged to vote at such meeting.
Section 10. Inspectors of Election. The Board may, in advance of any
meeting of shareholders, appoint two or more inspectors to act at such meeting
or at any adjournment thereof. If the inspectors shall not be so appointed, or
if any of them shall fail to appear or act, the Chairman of the meeting may,
and on request of any shareholder entitled to vote thereat shall, appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the results, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the Chairman
of the meeting or any shareholder
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entitled to vote thereat, the inspectors shall make a report in writing of any
challenge, request or matter determined by them, and shall execute a
certificate of the facts found by them. No director or candidate for the
office of director shall act as inspector of an election of directors.
Inspectors need not be shareholders of the Corporation.
Section 11. Examination of Corporate Records by Shareholders. Any
person who shall have been a shareholder of record for at least six (6) months
immediately preceding his demand, or who shall be the holder of record of at
least five percent (5%) of all of the outstanding shares of the Corporation,
upon written demand stating the purpose thereof, shall have the right to
examine, in person, or by agent or attorney, at any reasonable time or times,
for any proper purpose, the Corporation's books and records of account and the
minutes and records of meetings of shareholders, the Board and the Committees o
the Board, and to make extracts therefrom. Notwithstanding the foregoing, upon
proof of proper purpose by a shareholder of the Corporation, irrespective of
the period of time during which such shareholder shall have been a shareholder
of record and irrespective of the percentage of outstanding shares held by him,
a court having equity jurisdiction in Shelby County, Tennessee, may compel the
production for examination by such shareholder of the books, documents and
records of the Corporation. By resolution the Board may adopt further policies
in respect of the right of the shareholders of the Corporation to inspect said
books and records provided that said policies shall not be more restrictive
than the provisions of applicable law at the time.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. Except as otherwise provided by law or by
the Charter, the business and affairs of the Corporation shall be managed by
the Board of Directors. The Board may exercise all such authority and powers
of the Corporation and do all such lawful acts and things as are not by statute
or the charter directed or required to be exercised or done by the
shareholders.
Section 2. Number, Classification, Election, etc. The number of
directors of the corporation shall be eighteen (18) who shall be divided into
three classes designated Class I, Class II and Class III as follows:
Class I consists of six (6) directors elected to hold office for a
term expiring at the 1994 Annual Meeting of Shareholders at which their
respective successors are to be elected for a term expiring at the 1997 Annual
Meeting;
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Class II consists of six (6) directors elected to hold office for a
term expiring at the 1995 Annual Meeting of Shareholders at which their
respective successors are to be elected for a term expiring at the 1998 Annual
Meeting; and
Class III consists of six (6) directors elected to hold office for a
term expiring at the 1996 Annual Meeting of shareholders at which their
respective successors are to be elected for a term expiring at the 1999 Annual
Meeting.
Thereafter, each class of directors shall be elected to hold office
for terms expiring on the third annual meeting succeeding the annual meeting at
which they were last elected. The successor to any director who shall have
been elected by the directors to fill a vacancy on the Board shall serve only
until the next annual meeting of shareholder for a term expiring at the same
time as the terms of the other members of the same class. Notwithstanding the
foregoing, any director whose term shall expire at any annual meeting shall
continue to serve until such time as his successor shall have been duly elected
and shall have qualified unless his position on the Board shall have been
abolished by action taken to reduce the size of the Board prior to said
meeting. No amendment of the Bylaws decreasing the number of directors shall
have the effect of shortening the term of any director. All directors shall be
at least 21 years of age. Mandatory retirement is established at age 70,
except as to persons who were Directors on February 21, 1985, to be effective
at the regular Annual Shareholders Meeting following the 70th birthday.
Directors need not be shareholders of the Corporation or need they be residents
of Tennessee. Except as otherwise provided by law or by the Charter, the
directors shall be elected by written ballot at annual meetings of
shareholders. Article NINTH of the Corporation's Charter, as amended by the
shareholders on April 16, 1981, provides that the number of directors of the
Corporation shall be as provided in these Bylaws from time to time but shall
not be less than 7 nor more than 25 and establishes guidelines for increasing
the number of directors by amendment of the Bylaws by two-thirds vote of the
directors then in office.
Section 3. Place of Meeting. Regular meetings of the Board shall be
held at such place within or without the State of Tennessee as the Board may
from time to time determine. Special meetings may be held at such place in
Shelby County, Tennessee, as may be determined by the person calling said
meeting. In all cases the place of the meeting shall be specified in the
notice thereof.
Section 4. Organization Meeting. The Board of Directors shall meet
for the purpose of organization, the election of officers, and the transaction
of other business as soon as practicable after each annual meeting of the
shareholders, on the same day and at the same place where such annual meeting
shall
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be held. Notice of such meeting need not be given if held at said time and
place. Such meeting may be held at any other time or place (within or without
the State of Tennessee) which shall be specified in a notice thereof given as
hereinafter provided in Section 7 of this ARTICLE II.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors of this Corporation shall be held on the third Thursday of each month
at 10:30 a.m., in the Second Floor Executive Conference Room, 67 Madison
Avenue, Memphis, Tennessee. If any day fixed for a regular meeting shall be a
legal holiday at the place where the meeting is to be held, then the meeting
which otherwise would be held on that day shall be held at the same hour on the
next succeeding business day. Notice of regular meetings of the Board need not
be given except as otherwise required by law.
Section 6. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board, the President, and Executive Vice
President, the Secretary or any three or more Directors of the Corporation.
Section 7. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary or by or under the supervision of the persons calling
the meeting as hereinafter provided in this Section 7, in which notice shall be
stated the time and place of the meeting. Notice of each such meeting shall be
delivered to each director, either personally or by telephone, telegraph, cable
or other method of communication, at least 24 hours before the time at which
such meeting is to be held, or by first-class mail, postage prepaid, addressed
to him at his residence or usual place of business, and deposited in the mail
at least two days before the day on which the meeting is to be held. Notice of
any such meeting need not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting (other than for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened). Neither
the business to be transacted at, nor the purpose of any regular or special
meeting of the Board, need be specified in the notice or waiver of notice of
such meeting unless otherwise required by law of the Bylaws.
Section 8. Quorum and Manner of Acting. A majority of the entire
Board shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting, and except
as otherwise expressly required by the Charter, these Bylaws or any applicable
statute, the act of a majority of the directors present at any meeting at which
a quorum is present shall be act of the Board. In the absence of a quorum at
any meeting of the Board, a majority of
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the directors present thereat may adjourn such meeting to another time and
place until a quorum shall be present thereat. Notice of the time and place of
any such adjourned meeting shall be given to the directors who were not present
at the time of the adjournment and, unless such time and place were announced
at the meeting at which the adjournment was taken, to the other directors. At
any adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 9. Organization. At each meeting of the Board, the Chairman
of the Board, or, in his absence or inability to act, the Vice Chairman, or, in
his absence or inability to act, the President, or in his absence or inability
to act, another director chosen by a majority of the directors present shall
act as Chairman of the meeting and preside thereat. The Secretary or, in his
absence or inability to act, any person appointed by the Chairman shall act as
Secretary of the meeting and keep the minutes thereof.
Section 10. Resignations. Any director of the Corporation may resign
at any time by giving written notice of his resignation to the Board or to the
Chairman of the Board, the Vice Chairman or to the President or to the
Secretary of the Corporation. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become effective shall not
be specified therein, immediately upon its receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 11. Vacancies. Newly created directorships resulting from an
increase in the number of directors and vacancies occurring in the Board for
any reason (other than the removal of directors without cause or for cause) may
be filled by vote of a majority of the directors then in office, although less
than a quorum exists. Vacancies occurring on the Board by reason of the
removal of directors without cause or for cause may be filled for the duration
of the term of the class by vote of the shareholders, provided, however, if the
shareholders shall fail to fill a vacancy so created, the vacancy shall be
filled by the directors in the manner specified in the preceding sentence. No
person who has attained the age of seventy (70) years shall be appointed to
fill any vacancy.
Section 12. Removal of Directors. Any or all of the directors of the
Corporation may be removed with or without cause by vote of the holders of
sixty-six and two-thirds percent (66 2/3%) or more of the outstanding shares of
the capital stock of the Corporation entitled to vote generally in the election
of directors.
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Section 13. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting on written consent, setting forth the action so taken, signed
by all of the directors entitled to vote thereon. The instrument of consent
shall be filed with the minutes of the proceedings of the Board of Directors.
ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive Committee. The Board may, by resolution adopted
by a majority of the entire Board, designate an Executive Committee consisting
of five (5) or more of the directors of the Corporation, which Committee shall
have and may exercise all of the authority of the Board of Directors with
respect to all matters other than:
(a) The adoption, amendment or repeal of any Bylaw;
(b) The submission to shareholders of any action
requiring shareholders' authorization;
(c) The filling of vacancies in the Board of Directors or
in any committee thereof;
(d) The declaration of dividends or making of other
corporate distributions;
(e) The issuance of Common Stock, Preferred Stock or any
other obligation of the Corporation exchangeable for or convertible
into its capital stock of any class or any warrant, right or option to
acquire the same; or
(f) the removal or replacement of any officer elected by
the Board or appointed by the Chairman of the Board or President
pursuant to authority conferred upon them or either of them by the
Board.
The Board may designate one or more directors as alternate members of
the Executive Committee, who may replace any absent member or members at any
meeting of such committee. The Executive Committee shall serve at the pleasure
of the Board. The Executive Committee shall keep written minutes of its
proceedings and shall report such minutes to the Board. All such proceedings
shall be subject to revision or alteration by the Board; provided, however,
that third parties shall not be prejudiced by such revision or alteration.
Section 2. Other Committees. The Board may, by resolution adopted by
a majority of the entire Board, designate other Committees, each consisting of
three or more of the directors
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of the Corporation, which Committees, except as otherwise proscribed by
statute, shall have and may exercise the authority of the Board to the extent
that such authority shall be conferred by resolutions designating such
Committee or Committees adopted by vote of a majority of the entire Board.
Section 3. General. A majority of any committee may determine its
action and fix the time and place of its meetings, unless the Board shall
otherwise provide. In the absence or disqualification of any member of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place and stead of any such absent or disqualified member. In
determining the existence of a quorum, the Secretary of the Corporation shall
not be counted unless he shall be a director of the Corporation and shall have
been duly appointed as a member of such committee. The Board shall have the
power at any time to change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any absent or disqualified
member, or to dissolve any such committee. Nothing herein shall be deemed to
prevent the Board from appointing one or more committees consisting in whole or
in part of persons who are not directors of the Corporation; provided, however,
that no such committee shall have or may exercise any authority or power of the
Board in the management of the business or affairs of the Corporation.
ARTICLE IV
OFFICERS
Section 1. Number and Qualifications. The officers of the Corporation
shall include the Chairman of the Board, the Vice Chairman, the President, one
or more Executive Vice Presidents, one or more Vice Presidents, the Treasurer
and the Secretary. Any two or more offices may be held by the same person,
except the offices of President and Secretary. Such officers shall be elected
by the Board of Directors each year at the organizational meeting held after
the Annual Meeting of shareholders, each to hold office until the meeting of
the Board following the next Annual Meeting of the shareholders and until his
successor shall have been duly elected and shall have qualified, or until his
death, or until he shall have resigned or have been removed in the manner
provided by law and these Bylaws. The Board may from time to time elect, or
delegate to the Chairman of the Board the power to appoint such other officers
(including one or more Assistant Vice Presidents, one or more Assistant
Treasurers, and one or more Assistant Secretaries) and such agents, as may be
necessary or desirable to carry on the business of the Corporation. Such other
officers and agents shall have such duties and shall
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hold their offices for such terms as may be prescribed by the Board or by the
appointing authority.
Section 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board, the Chairman
of the Board, the Vice Chairman, the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3. Removal. Any officer or agent of the Corporation may be
removed, either with or without cause, at any time, by the vote of the majority
of the entire Board at any meeting of the Board, or, except in the case of an
officer or agent elected or appointed by the Board, by the Chairman of the
Board or the President.
Section 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled by the Board at
any regular or special meeting for the unexpired portion of the term of the
office which shall be vacant, in the manner prescribed in these Bylaws for the
regular election or appointment to such office.
Section 5. The Chairman. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation and shall have the general and active
management of the business of the Corporation and shall have general and active
supervision and direction over the business and affairs of the Corporation and
over its several officers, agents and employees, subject, however, to the
control of the Board. He shall, if present, preside at each meeting of the
Shareholders and of the Board. He shall perform all duties incident to the
office of the Chairman of the Board and such other duties as may, from time to
time, be assigned to him by the Board. The Chairman of the Board shall be
authorized to do or cause to be done all things appropriate, including
preparation, execution and filing of any Registration Statements or other
documents to effectuate the registration of the Corporation's securities (when
necessary or desirable) with the Securities and Exchange Commission pursuant to
the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended,
and to effectuate the registration of the Corporation's securities as may be
necessary or desirable pursuant to the securities laws of any state. The
Chairman is also authorized to execute and cause to be filed on behalf of the
Corporation any reports which may be required by the securities laws or other
laws of the United States or of any state pursuant to any regulations adopted
with respect thereto.
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Section 5(a). The Vice Chairman. The Vice Chairman shall have those
duties assigned to him by the Chairman or the Board. In the case of the
absence of the Chairman or his inability to act, the Vice Chairman shall
perform the duties of the Chairman, and when so acting shall have all of the
powers of, and be subject to all the restrictions upon, the Chairman.
Section 6. The President. The President shall have general and
active supervision and direction over the other officers, agents and employees
and shall see that their duties are properly performed, subject, however, to
the control of the Board. Concurrently with the Chairman of the Board, the
president is hereby authorized to do or cause to be done all things
appropriate, including preparation, execution and filing of the registration of
the Corporation's securities (when necessary or desirable) with the Securities
and Exchange Commission pursuant to the Securities Act of 1933 and the
Securities Exchange Act of 1934, as amended, and to effectuate registration of
the Corporation's Securities as may be necessary or desirable pursuant to the
securities laws of any state. The President is also authorized to execute and
cause to be filed on behalf of the Corporation any reports which may be
required by the securities laws or other laws of the United States or any state
or pursuant to any regulations adopted with respect thereto. In the case of
the absence of the Chairman of the Board and the Vice Chairman or their
inability to act, the President shall perform the duties of the Chairman of the
Board, and when so acting, shall have all the powers of, and be subject to all
the restrictions upon, the Chairman of the Board. He shall perform all duties
incident to the office of the Chairman of the Board and such other duties as,
from time to time, may be assigned to him by the Board or these Bylaws.
Section 7. Executive Vice-President. At the request of the Chairman
of the Board, the Vice Chairman and the President, or in the case of their
absence or inability to act, the Executive Vice-President shall perform the
duties of the Chairman of the Board, the Vice Chairman and the President, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the Chairman of the Board, the Vice Chairman and the
President. The executive Vice-President shall perform all duties incident to
the office of Executive Vice-President and such other duties as from time to
time may be assigned to him by the Board, the Chairman of the Board, the Vice
Chairman, the President, or by these Bylaws. one Executive Vice-President
shall be the chief financial officer of the Corporation.
Section 8. Vice Presidents. Each Vice-President shall perform all
such duties as from time to time may be assigned to him by the Board, the
Chairman of the Board, the Vice Chairman or the president. Vice-Presidents
shall have seniority based upon length of service as Vice-President. Unless
the Board shall
12
<PAGE> 13
otherwise provide, the Senior Vice-President shall perform the duties of the
Executive Vice-President in case of his absence or inability to act, or if an
Executive Vice-President shall not have been appointed by the Board.
Section 9. The Treasurer. The Treasurer shall:
(a) Have charge and custody of, and be responsible for,
all the funds and securities of the Corporation;
(b) Keep full and accurate records of receipts and
disbursements in books belonging to the Corporation.
(c) Cause all monies and other valuables to be deposited
to the credit of the Corporation;
(d) Receive, and give receipts for, monies due and
payable to the Corporation from any source whatsoever;
(e) Disburse the funds of the Corporation and supervise
the investment of its funds as ordered or authorized by the proper
vouchers therefor; and
(f) In general, perform all the duties incident to the
office of Treasurer, and such other duties as from time to time may
assigned to him by the Board, the President, the Vice Chairman or the
Chairman of the Board.
Section 10. The Secretary. The Secretary shall:
(a) Keep or cause to be kept in one or more books
provided for the purpose, the minutes of all meetings of the Board,
the committees of the Board and the shareholders;
(b) See that all notices are duly given in accordance
with the provisions of these Bylaws and as required by law;
(c) Be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates of
the Corporation (unless the seal of the Corporation on such
certificates shall be facsimile as hereinafter provided) and affix and
attest the seal to all other documents to be executed on behalf of the
Corporation under its seal;
(d) See that the books, reports, statements, certificates
and other documents and records required by law to be kept and filed
are properly kept and filed;
(e) In general, perform all the duties incident to the
office of Secretary and such other duties as from time
13
<PAGE> 14
to time may be assigned to him by the Board, the Chairman of the
Board, the Vice Chairman or the President.
Section 11. Officers' Bond or Other Security. If required by the
Board, any officer of the Corporation shall give a bond or other security for
the faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
ARTICLE V
INDEMNIFICATION
The Corporation does hereby indemnify its directors and officers to
the fullest extent permitted by the laws of the State of Tennessee and by
ARTICLE TWELFTH of its Charter. The Corporation may indemnify any other person
to the extent permitted by the Charter and by applicable law.
ARTICLE VI
SHARES, ETC.
Section 1. Stock Certificates. Each shareholder of the Corporation
shall be entitled upon request to have a certificate in such form conforming to
law as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him. The certificates representing shares of
stock shall be signed in the name of the Corporation by the Chairman of the
Board or the President or a Vice-President or an Assistant Vice-President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and sealed with the seal of the Corporation (which seal may be a
facsimile engraved or printed); provided, however, that where any such
certificate is countersigned by a transfer agent and/or a registrar (other than
the Corporation or one of its employees), the signatures of the Chairman of the
Board, President, Vice-President, Secretary, or Treasurer upon such
certificates may be facsimiles, engraved or printed. In case any officer who
shall have signed such certificate shall have ceased to be such officer before
such certificates shall be issued, they may nevertheless be issued by the
Corporation with the same effect as if such officer were still in office at the
date of their issue.
Section 2. Books of Account and Record of Shareholders. There shall
be kept correct and complete books and records of account, minutes of the
proceedings of its shareholders, Board of Directors and the committees of the
Board, and of all the business and transactions of the Corporation. There
shall also be kept at the office of its transfer agent or at both, a record
containing the names and addresses of all shareholders of the Corporation, the
number of shares of stock held by each, and the
14
<PAGE> 15
dates when they became the owners of record thereof. Such shareholder records
may be in written form, on magnetic tape, disk pack storage, or in any other
form capable of being converted into written form within a reasonable time for
visual inspection.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent or transfer clerk, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of all applicable taxes with
respect to the transfer. Except as otherwise provided by law, the Corporation
shall be entitled to recognize the exclusive right of a person in whose name
any share or shares stand on the record of shareholders as the owner of such
shares or shares for all purposes, including, without limitation, the right to
receive dividends or other distributions, and to vote as such owner, and the
Corporation shall not be bound to recognize any equitable or legal claim to or
interest in any such share or shares on the part of any other person. Whenever
any transfers of shares shall be made for collateral security and not
absolutely, and written notice thereof shall be given to the Secretary or to
such transfer agent or transfer clerk, such facts shall be stated in the entry
of the transfer.
Section 4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with applicable law, the Charter or these Bylaws,
as it may deem expedient concerning the issue, transfer, and registration of
certificates for shares of stock of the Corporation. It may appoint one or
more transfer agents or one or more transfer clerks and one or more registrars,
and may require all certificates for shares of stock to bear the signature or
signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of
any certificate(s) representing shares of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate(s), and the corporation may issue a new certificate or certificates
of stock in the place of any certificate theretofore issued by it which the
owner thereof shall allege to have been lost or destroyed or which shall have
been mutilated. As a condition precedent to the issuance of replacement
certificates, such owner or his legal representative as principal shall give to
the Corporation a bond with "open" (unlimited) penalty and in such form and
with such surety or sureties as the person designated by the Board in his
absolute discretion shall determine to be sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate,
15
<PAGE> 16
need not be called to ratify or reject the selection by the Board of
independent auditors and accountants in the above manner to fill a vacancy
occurring between Annual Meeting as a result of the resignation of said
auditors and accountants. The employment of such accountants shall be
conditioned upon the right of the Corporation, either by the unanimous vote of
the entire Board of Directors or by vote of a majority of the outstanding
voting securities at any meeting called for the purpose, to terminate such
employment without penalty. If the selection of accountants shall be rejected
by the Shareholders or their employment be terminated by the Shareholders in
the manner provided above, the vacancy so occurring may be filled by the vote
of a majority of the outstanding voting securities either at the meeting at
which the rejection or termination by the Shareholders occurred or, if not so
filled, at a subsequent meeting which shall be called for the purpose.
ARTICLE XI
AMENDMENTS
These Bylaws may be amended or repealed, in whole or in part, or new
Bylaws may be adopted, by the Board of Directors at any meeting thereof by vote
of a majority of the entire Board, unless a greater affirmative vote is
required by the Charter; provided, however, that notice of such meeting shall
have been given as provided in these Bylaws, which notice shall mention that
amendment or repeal of the Bylaws, or the adoption of new Bylaws, is one of the
purposes of the meeting. Any such Bylaws adopted by the Board may be amended
or repealed, or new Bylaws may be adopted by vote of the shareholders of the
Corporation, at any annual or special meeting thereof; provided, however, that
notice of such meeting shall have been given as provided in these Bylaws, which
notice shall mention that amendment or repeal of these Bylaws, or the adoption
of new Bylaws, is one of the purposes of such meeting.
ARTICLE XII
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT ANNUAL MEETINGS
Any proposal of a shareholder which is to be presented at any annual
meeting of shareholders shall be sent so as to be received by the Corporation
at its principal offices not less than one hundred twenty (120) days in advance
of the date of the Corporation's proxy statement issued in connection with the
previous year's annual meeting of shareholders.
Updated January 20, 1994
18
<PAGE> 1
Exhibit 11
Page 1
Union Planters Corporation
Computation of Earnings per Share
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------
1993 1992 1991
---- ---- ----
(Dollars in thousands, except share and
per share data)
Primary Earnings Per Share
- --------------------------
Computation for Statement of Earnings
- -------------------------------------
<S> <C> <C> <C>
Reconciliation of earnings to amounts used
for primary earnings per share:
Net earnings $ 63,063 $ 41,439 $ 27,508
Less: Preferred stock dividends
Series B (352) (352) (352)
Series C (1,790) (1,790) (661)
Series D (494) (247) -
Series E (5,832) (3,777) -
----------- ----------- -----------
Net earnings applicable to primary
earnings per share $ 54,595 $ 35,273 $ 26,495
=========== =========== ===========
Reconciliation of weighted average number of
shares to amount used in primary earnings
per share computation:
Average shares outstanding 19,434,536 16,618,751 16,564,094
Average common equivalent shares:
Assumed exercise of options 187,286 145,851 67,963
----------- ----------- ----------
Primary average shares outstanding 19,621,822 16,764,602 16,632,057
=========== =========== ==========
Primary earnings per share $2.78 $2.10 $1.59
===== ===== =====
</TABLE>
<PAGE> 2
Exhibit 11
Page 2
Union Planters Corporation
Computation of Earnings per Share
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------
1993 1992 1991
---- ---- ----
(Dollars in thousands, except share and
per share data)
Fully Diluted Earnings Per Share
- --------------------------------
Computation for Statement of Earnings
- -------------------------------------
<S> <C> <C> <C>
Earnings used for fully diluted earnings
per share:
Net earnings $ 63,063 $ 41,439 $ 27,508
Less: Preferred stock dividends
Series C (1,790) (1,790) (661)
----------- ----------- ----------
Net earnings applicable to fully
diluted earnings per share $ 61,273 $ 39,649 $ 26,847
=========== =========== ==========
Reconciliation of weighted average number of
shares to amount used in fully diluted
earnings per share computation:
Average shares outstanding 19,434,536 16,618,751 16,564,094
Average common equivalent shares:
Assumed exercise of options 205,365 163,420 81,720
Assumed conversion of preferred stock:
Series B 339,768 339,768 339,768
Series D 235,655 127,521 -
Series E 3,618,515 2,359,290 -
----------- ---------- ----------
Fully diluted average shares
outstanding 23,851,839 19,608,750 16,985,582
=========== ========== ==========
Fully diluted earnings per share $2.57 $2.02 $1.58
===== ===== =====
</TABLE>
<PAGE> 1
[Logo]
UNION
PLANTERS
CORPORATION
1993
ANNUAL
REPORT
<PAGE> 2
(MAP)
<PAGE> 3
FINANCIAL HIGHLIGHTS
UNION PLANTERS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DECEMBER 31, 1993 1992 % CHANGE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
FOR THE YEAR
Earnings before extraordinary item and accounting changes $ 61,268 $ 41,439 47.9%
Extraordinary item, net of taxes (3,206) --
Accounting changes, net of taxes 5,001 --
Net earnings 63,063 41,439 52.2
PER COMMON SHARE
Primary
Earnings before extraordinary item and accounting changes $ 2.69 $ 2.10 28.1%
Extraordinary item, net of taxes (.16) --
Accounting changes, net of taxes .25 --
Net earnings 2.78 2.10 32.4
Fully diluted
Earnings before extraordinary item and accounting changes 2.49 2.02 23.3
Extraordinary item, net of taxes (.13) --
Accounting changes, net of taxes .21 --
Net earnings 2.57 2.02 27.2
Cash dividends .72 .60 20.0
Book value 18.96 16.34 16.0
Book value -- assuming conversion of convertible preferred
stock 19.06 16.84 13.2
AT YEAR END
Assets $6,318,186 $5,262,184 20.1%
Earning assets 5,841,599 4,807,627 21.5
Loans, net of unearned income 2,935,215 2,231,839 31.5
Allowance for losses on loans 80,442 64,290 25.1
Deposits 5,251,366 4,450,176 18.0
Shareholders' equity 477,300 356,211 34.0
RATIOS
Earnings before extraordinary item and accounting changes
Return on average assets .98% .87%
Return on average common equity 15.18 13.65
Net earnings
Return on average assets 1.01 .87
Return on average common equity 15.70 13.65
Net interest income (taxable-equivalent) as a percentage of
average earning assets 4.34 4.61
Allowance for losses on loans as a percentage of loans 2.74 2.88
Nonperforming loans as a percentage of loans .76 1.70
Nonperforming assets as a percentage of loans and foreclosed
properties .92 1.99
Allowance for losses on loans as a percentage of
nonperforming loans 362.83 168.97
Shareholders' equity to assets 7.55 6.77
Tier 1 capital to assets 7.10 6.85
- -----------------------------------------------------------------------------------------------
</TABLE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Letter to Shareholders................................................................ 2
Consolidated Financial Statements..................................................... 4
Notes to Consolidated Financial Statements............................................ 8
Report of Management.................................................................. 34
Report of Independent Accountants..................................................... 34
Selected Financial Data............................................................... 35
Management's Discussion and Analysis of Results of Operations and Financial
Condition........................................................................... 36
Financial Tables...................................................................... 49
Selected Quarterly Data............................................................... 57
Communities Served.................................................................... 59
Executive Officers and Directors...................................................... 60
</TABLE>
1
<PAGE> 4
TO OUR SHAREHOLDERS
FINANCIAL RESULTS
We are very pleased to report record earnings for 1993 of $63.1 million, or
$2.57 fully diluted earnings per share, compared to $41.4 million in 1992, or
fully diluted earnings per share of $2.02. Our 1993 results include a net
benefit of $.08 per share from accounting changes and an extraordinary item.
For the year our return on average assets improved to 1.01% versus .87% in
1992 and our return on average common equity improved to 15.70% versus 13.65%.
Our lead bank, Union Planters National Bank which will celebrate its 125th
anniversary this year, earned a record $35.6 million compared to $27.1 million
in 1992. The return on average assets for the year was 1.07%. Earnings benefited
from a decline in the provision for losses on loans as the Bank's asset quality
continued to improve. Our number of community banks increased from 20 to 31 in
1993 and the combined earnings of the group was $30.2 million compared to $24.2
million in the prior year. The return on average assets for the group was 1.01%.
Earnings also benefited from the absence of additional provisions for
litigation settlements and reduced legal expenses as most of the litigation
claims from the late 80's have been resolved.
At year end total assets were $6.3 billion compared to $5.3 billion a year
ago. Total loans were $2.9 billion versus $2.2 billion and total deposits were
$5.3 billion versus $4.5 billion. Total shareholders' equity at year end was
$477 million compared to $356 million at the end of 1992. Our equity to assets
ratio increased to 7.55% compared to 6.77% a year ago. We are in the
"well-capitalized" (the highest rating accorded) category according to all
regulatory definitions.
ASSET QUALITY
Asset quality measures for the Corporation are very strong. At year end
nonperforming assets had declined to $27 million, down from $45 million at year
end 1992. Nonperforming assets represented only .92% of total loans and
foreclosed properties at year end compared to 1.99% a year ago. Our allowance
for losses on loans at year end was $80.4 million compared to $64.3 million a
year ago. At year end reserve coverage of nonperforming loans was approximately
360%.
ACQUISITIONS
Growth through acquisition continues to be an integral part of the
Corporation's strategic plan. Since 1986 the Corporation has pursued a community
bank acquisition strategy focused on well-managed community banks with
significant market share in their local markets and a strategic fit with our
existing operations.
During 1993 we completed twelve acquisitions, assigning eleven of these to
our Community Bank Group and merging one of them into Union Planters National
Bank. Those joining the Community Bank Group were Bank of East Tennessee in
Morristown, Tennessee; SaveTrust Federal Savings Bank in Dyersburg, Tennessee;
Security Trust Savings & Loan Association in Knoxville, Tennessee; First Federal
Savings Bank in Maryville, Tennessee; First State Bancshares, Inc. in
Somerville, Tennessee; Farmers Union Bank in Ripley, Tennessee; Garrett
Banchares, Inc. in Goodlettsville, Tennessee; Erin Bank & Trust Company in Erin,
Tennessee; Hogue Holding Company, Inc. in Weiner, Arkansas; Central State
Bancorp, Inc. in Lexington, Tennessee; and First Financial Services, Inc. in
Brownsville, Tennessee. Merging into Union Planters National Bank were First
Cumberland Bank in Madison, Tennessee and the Knoxville offices of Bank of East
Tennessee.
Since year end we have completed three acquisitions: (1) Mid-South Bancorp,
Inc., the parent company of Simpson County Bank in Franklin, Kentucky;
Adairville Banking Company in Adairville, Kentucky; The Peoples Bank of Elk
Valley in Fayetteville, Tennessee; and First Citizens Bank in Franklin,
Tennessee; (2) First National Bancorp of Shelbyville, Inc., in Shelbyville,
Tennessee; and (3) Anderson County Bank in Clinton, Tennessee. These
acquisitions have increased the Corporation's assets approximately $370 million.
We currently have five pending acquisitions, all of which should be
completed this year. Generally, markets in the Mid-South and Southeast where we
currently operate are our primary areas of interest.
Our approach of retaining the community name of these banks and holding the
presidents and local boards of each bank accountable for their results has
served us well. We have prudently balanced a centralized loan review and audit
process with the need for customer decisions to be made in the local market.
2
<PAGE> 5
NEW CHARTERS
In November of 1993, the Board of Directors updated the three year
strategic plan for the Corporation. As part of the plan, the Board approved the
chartering of new banks in Chattanooga, Jackson, Knoxville, and Nashville,
Tennessee. UPC currently has operations in each of these markets. All loans,
deposits, and facilities in these markets, which are either a part of the branch
system of Union Planters National Bank or one of the community banks, will be
transferred to the newly chartered banks. These new banks will be no different,
except perhaps as to size, than any of UPC's other subsidiary banks. Each will
focus on its local market and have its own Board of Directors and management
structure. This organization change will carry less overhead than a statewide
community bank structure and a parallel statewide structure within Union
Planters National Bank. The primary reason for chartering the new banks was not
for cost benefits; however, but to maximize profits by providing better
community and customer focus. As a consequence of this change and the additional
board and committee meetings involved for the new banks, several of UPC's
directors will not stand for re-election to the corporate board, but will
instead serve on the Union Planters National Bank in Memphis Board and/or one or
more of the newly formed bank boards.
INCREASED COMMON DIVIDEND
On January 20, 1994, the Board of Directors declared a quarterly common
dividend of $.21 per share on Union Planters Common Stock outstanding, an
increase of 16.7% over the previous quarterly dividend of $.18 per share. We are
pleased to have had the opportunity to increase the dividend again this year.
OUTLOOK FOR 1994
The last three years have been very rewarding for the banking industry and
for Union Planters as the improving economy has helped asset quality and the
falling interest rate environment has helped net interest income. Banks in
general have enjoyed very high profitability levels and significant earnings
growth. We expect asset quality trends to continue to be favorable in 1994, but
margin trends are likely to be unfavorable for the industry. While we anticipate
that 1994 will be another year of solid earnings for the industry, growth in
earnings will likely be at a much slower rate. To offset net interest margin
trends, we will be focusing on increasing our loan volume, opportunities to
improve noninterest income, and controlling operating expenses. Throughout the
organization, we will be emphasizing quality service and more effective selling
to our existing customer base. The chartering of new banks in Chattanooga,
Jackson, Knoxville, and Nashville and the conversion of all banks to a common
data processing system should be completed during 1994. The former should
provide a larger revenue stream through greater customer and market focus, while
the latter should provide significant cost benefits. Taken together, they should
put in place the foundation for further improvement in earnings in the years
ahead.
I encourage you to review the Financial Statements and Management's
Discussion and Analysis for more details on our results and outlook. Thank you
for your continued support.
Yours very truly,
/s/ Benjamin W. Rawlins, Jr.
- ----------------------------
Benjamin W. Rawlins, Jr.
Chairman and Chief Executive Officer
3
<PAGE> 6
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
---------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Cash and due from banks..................................................... $ 225,626 $ 235,280
Interest-bearing deposits at financial institutions......................... 26,647 84,204
Federal funds sold and securities purchased under agreements
to resell................................................................. 53,149 92,354
Trading account securities, at market....................................... 153,482 109,584
Loans held for resale....................................................... 56,053 91,543
Investment securities
Held for sale (Market value: $600,491 and $485,581, respectively)......... 595,090 476,664
Held for investment (Market value: $2,060,769 and $1,753,953,
respectively)............................................................ 2,021,963 1,721,439
Loans....................................................................... 2,951,885 2,247,354
Less: Unearned income................................................... (16,670) (15,515)
Allowance for losses on loans....................................... (80,442) (64,290)
---------- ----------
Net loans............................................................ 2,854,773 2,167,549
Premises and equipment...................................................... 135,511 99,728
Accrued interest receivable................................................. 49,953 43,765
Goodwill and other intangibles.............................................. 40,794 32,638
Other assets................................................................ 105,145 107,436
---------- ----------
TOTAL ASSETS......................................................... $6,318,186 $5,262,184
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing....................................................... $ 750,093 $ 627,019
Certificates of deposit of $100,000 and over.............................. 334,173 281,120
Other interest-bearing.................................................... 4,167,100 3,542,037
---------- ----------
Total deposits....................................................... 5,251,366 4,450,176
Short-term borrowings....................................................... 244,995 296,312
Federal Home Loan Bank advances............................................. 157,954 --
Long-term debt.............................................................. 117,276 77,156
Accrued interest, expenses, and taxes....................................... 41,893 45,333
Other liabilities........................................................... 27,402 36,996
---------- ----------
TOTAL LIABILITIES.................................................... 5,840,886 4,905,973
---------- ----------
Commitments and contingent liabilities (Notes 7, 15, 17, and 19)............ -- --
Shareholders' equity
Preferred stock (Note 10)
Convertible............................................................. 87,298 64,600
Nonconvertible.......................................................... 17,250 17,250
Common stock, $5 par value; 50,000,000 shares authorized; 19,656,924
issued and outstanding (16,788,758 in 1992).............................. 98,285 83,944
Additional paid-in capital................................................ 86,385 60,589
Retained earnings......................................................... 188,082 129,828
---------- ----------
TOTAL SHAREHOLDERS' EQUITY........................................... 477,300 356,211
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................... $6,318,186 $5,262,184
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1993 1992 1991
----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................. $ 243,010 $ 199,881 $ 214,762
Interest on investment securities
Taxable................................................... 116,025 106,139 79,253
Tax-exempt................................................ 24,448 16,148 13,354
Interest on deposits at financial institutions.............. 1,634 3,999 7,525
Interest on federal funds sold and securities purchased
under agreements to resell................................ 4,602 4,280 6,606
Interest on trading account securities...................... 6,194 6,648 5,419
Interest on loans held for resale........................... 3,239 3,457 4,671
----------- ----------- -----------
Total interest income................................ 399,152 340,552 331,590
----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits........................................ 146,800 137,605 160,252
Interest on short-term borrowings........................... 6,287 6,942 12,809
Interest on Federal Home Loan Bank advances and long-term
debt...................................................... 11,460 4,868 4,974
----------- ----------- -----------
Total interest expense............................... 164,547 149,415 178,035
----------- ----------- -----------
NET INTEREST INCOME.................................. 234,605 191,137 153,555
PROVISION FOR LOSSES ON LOANS................................. 9,689 18,557 24,835
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON
LOANS.............................................. 224,916 172,580 128,720
----------- ----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts......................... 28,721 20,843 19,394
Profits and commissions from trading activities............. 8,720 10,168 14,707
Investment securities gains................................. 4,581 13,246 3,344
Other income................................................ 42,777 39,016 32,165
----------- ----------- -----------
Total noninterest income............................. 84,799 83,273 69,610
----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits.............................. 98,920 74,772 69,756
Net occupancy expense....................................... 15,909 13,136 10,556
Equipment expense........................................... 15,735 12,225 10,627
Other expense............................................... 93,916 99,085 73,832
----------- ----------- -----------
Total noninterest expense............................ 224,480 199,218 164,771
----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES, EXTRAORDINARY
ITEM, AND ACCOUNTING CHANGES....................... 85,235 56,635 33,559
Applicable income taxes....................................... 23,967 15,196 6,051
----------- ----------- -----------
EARNINGS BEFORE EXTRAORDINARY ITEM AND ACCOUNTING
CHANGES............................................ 61,268 41,439 27,508
Extraordinary item --defeasance of debt, net of taxes......... (3,206) -- --
Accounting changes, net of taxes.............................. 5,001 -- --
----------- ----------- -----------
NET EARNINGS......................................... $ 63,063 $ 41,439 $ 27,508
----------- ----------- -----------
----------- ----------- -----------
EARNINGS PER COMMON SHARE
PRIMARY
Earnings before extraordinary item and accounting
changes................................................. $ 2.69 $ 2.10 $ 1.59
Extraordinary item -- defeasance of debt, net of taxes.... (.16) -- --
Accounting changes, net of taxes.......................... .25 -- --
----------- ----------- -----------
NET EARNINGS......................................... $ 2.78 $ 2.10 $ 1.59
----------- ----------- -----------
----------- ----------- -----------
FULLY DILUTED
Earnings before extraordinary item and accounting
changes................................................. $ 2.49 $ 2.02 $ 1.58
Extraordinary item -- defeasance of debt, net of taxes.... (.13) -- --
Accounting changes, net of taxes.......................... .21 -- --
----------- ----------- -----------
NET EARNINGS......................................... $ 2.57 $ 2.02 $ 1.58
----------- ----------- -----------
----------- ----------- -----------
AVERAGE SHARES OUTSTANDING
Primary..................................................... 19,621,822 16,764,602 16,632,057
Fully diluted............................................... 23,851,839 19,608,750 16,985,582
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 8
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN RETAINED
STOCK STOCK CAPITAL EARNINGS TOTAL
--------- ------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
BALANCE, JANUARY 1, 1991.............................. $ 4,400 $85,456 $ 61,002 $ 86,177 $237,035
Net earnings........................................ -- -- -- 27,508 27,508
Cash dividends
Common, $.48 per share............................ -- -- -- (7,985) (7,985)
Series B Preferred, $8.00 per share............... -- -- -- (352) (352)
Series C Preferred, $ .96 per share............... -- -- -- (661) (661)
Purchase and retirement of 713,000 common shares.... -- (3,565) (2,538) (670) (6,773)
Common shares issued under employee benefit plans
and dividend reinvestment plan, net of shares
repurchased....................................... -- 744 1,012 (940) 816
Sale of 690,000 shares of Series C Preferred Stock,
net of issuance costs............................. 17,250 -- (840) -- 16,410
Net change in unrealized depreciation on marketable
equity securities................................. -- -- -- 3,448 3,448
--------- ------- ---------- -------- ---------
BALANCE, DECEMBER 31, 1991............................ 21,650 82,635 58,636 106,525 269,446
Net earnings........................................ -- -- -- 41,439 41,439
Cash dividends
Common, $.60 per share............................ -- -- -- (9,965) (9,965)
Series B Preferred,
$8.00 per share............... -- -- -- (352) (352)
Series C Preferred,
$2.59 per share............... -- -- -- (1,790) (1,790)
Series D Preferred,
$ .97 per share............... -- -- -- (247) (247)
Series E Preferred,
$1.72 per share............... -- -- -- (3,777) (3,777)
Common shares issued under employee benefit plans
and dividend reinvestment plan, net of shares
repurchased....................................... -- 1,309 4,603 (2,550) 3,362
Sale of 2,200,000 shares of Series E Preferred
Stock, net of issuance costs...................... 55,000 -- (2,650) -- 52,350
Issuance of 253,655 shares of Series D Preferred
Stock for the purchase of Southeastern Bancshares,
Inc............................................... 5,200 -- -- -- 5,200
Net change in unrealized depreciation on marketable
equity securities................................. -- -- -- 545 545
--------- ------- ---------- -------- ---------
BALANCE, DECEMBER 31, 1992............................ 81,850 83,944 60,589 129,828 356,211
Net earnings........................................ -- -- -- 63,063 63,063
Cash dividends
Common, $.72 per share............................ -- -- -- (13,015) (13,015)
Series B Preferred,
$8.00 per share............... -- -- -- (352) (352)
Series C Preferred,
$2.59 per share............... -- -- -- (1,790) (1,790)
Series D Preferred,
$1.95 per share............... -- -- -- (494) (494)
Series E Preferred,
$2.00 per share............... -- -- -- (5,832) (5,832)
Common shares issued under employee benefit plans
and dividend reinvestment plan, net of shares
repurchased....................................... -- 1,208 5,633 (1,949) 4,892
Issuance of 2,000,785 shares of Common Stock for
acquisitions (Note 2)............................. -- 10,004 2,318 18,296 30,618
Issuance of 908,522 shares of Series E Preferred
Stock for acquisitions, net of issuance costs of
$140,000 (Note 2)................................. 22,713 -- 7,274 -- 29,987
Issuance of 625,000 shares of Common Stock related
to the conversion/acquisition of First Federal
Savings Bank of Maryville, net of issuance costs
of $564,000 (Note 2).............................. -- 3,125 10,561 -- 13,686
Net change in unrealized depreciation on marketable
equity securities................................. -- -- -- 272 272
Other............................................... (15) 4 10 55 54
--------- -------- ---------- -------- ---------
BALANCE, DECEMBER 31, 1993............................ $104,548 $98,285 $ 86,385 $188,082 $477,300
--------- -------- ---------- -------- ---------
--------- -------- ---------- -------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 9
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING ACTIVITIES
Net earnings..................................................... $ 63,063 $ 41,439 $ 27,508
Reconciliation of net earnings to net cash provided by operating
activities
Cumulative effect of accounting changes, net of taxes........ (5,001) -- --
Provision for losses on loans and other real estate.......... 11,394 21,322 26,133
Depreciation and amortization................................ 12,484 9,978 8,297
Amortization and write-off of intangibles.................... 10,517 16,422 6,272
Provisions for abandoned property............................ -- 5,200 1,643
Provisions for litigation settlements........................ -- 9,000 7,600
Provisions for conversion of data processing systems......... 4,424 -- --
Net amortization (accretion) of investment securities........ 6,722 3,808 (2,444)
Net realized gains on sale of investment securities.......... (4,581) (13,246) (4,947)
Write-downs of investment securities......................... -- -- 1,603
Proceeds from sales and maturities of investment securities
held for sale............................................. 794,918 350,795 --
Purchases of investment securities held for sale............. (594,583) (128,885) --
Deferred income tax benefit.................................. (684) (7,349) (3,750)
(Increase) decrease in assets
Trading account securities and loans held for
resale.................................................. (8,408) (78,599) (68,604)
Accrued interest receivable and other assets.............. 38,421 705 68,221
Decrease in accrued interest, expenses, taxes, and other
liabilities............................................... (44,144) (19,236) (41,106)
Other, net................................................... 1,079 1,717 390
----------- ----------- ---------
Net cash provided by operating activities................. 285,621 213,071 26,816
----------- ----------- ---------
INVESTING ACTIVITIES
Net decrease (increase) in short-term investments................ 74,515 51,102 (39,185)
Proceeds from sales of investment securities..................... -- 76,218 231,891
Proceeds from maturities of investment securities................ 1,025,889 455,381 244,049
Purchases of investment securities............................... (1,228,343) (1,507,454) (463,675)
Net decrease (increase) in loans................................. (71,657) 244,175 176,792
Net cash received from purchases of financial
institutions (Note 2).......................................... 72,121 568,758 --
Purchases of premises and equipment, net......................... (21,077) (16,416) (29,802)
----------- ----------- ---------
Net cash provided (used) by investing activities.......... (148,552) (128,236) 120,070
----------- ----------- ---------
FINANCING ACTIVITIES
Net decrease in deposits......................................... (310,454) (218,197) (130,579)
Net (decrease) increase in short-term borrowings................. (63,605) 98,441 (80,499)
Proceeds from Federal Home Loan Bank advances and long-term debt,
net............................................................ 234,061 38,850 3,000
Repayment and defeasance of long-term debt....................... (42,615) (5,179) (9,680)
Proceeds from issuance of preferred stock, net................... -- 52,350 16,410
Proceeds from issuance of common stock, net...................... 19,611 7,673 3,275
Purchase and retirement of common stock, net..................... (1,786) (4,311) (9,232)
Cash dividends paid.............................................. (21,180) (15,315) (8,657)
----------- ----------- ---------
Net cash used by financing activities..................... (185,968) (45,688) (215,962)
----------- ----------- ---------
Net increase (decrease) in cash and cash equivalents............... (48,899) 39,147 (69,076)
Cash and cash equivalents at the beginning of the period........... 327,634 288,487 357,563
----------- ----------- ---------
Cash and cash equivalents at the end of the period................. $ 278,735 $ 327,634 $ 288,487
----------- ----------- ---------
----------- ----------- ---------
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest..................................................... $ 163,934 $ 150,947 $ 179,017
Taxes........................................................ 23,308 20,863 12,168
Loans transferred to other real estate through foreclosure....... 7,290 6,178 15,985
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 10
UNION PLANTERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Union Planters Corporation (the
Corporation) and its subsidiaries conform with generally accepted accounting
principles and general practices within the financial services industry. The
following is a summary of the more significant accounting policies of the
Corporation.
BASIS OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Corporation and its subsidiaries after elimination of
significant intercompany accounts and transactions. The Corporation's principal
subsidiary is Union Planters National Bank (UPNB).
BASIS OF PRESENTATION. Prior period financial statements are restated to
include the accounts of material acquisitions accounted for using the pooling of
interests method of accounting. Business combinations accounted for as purchases
are included in the consolidated financial statements from the respective dates
of acquisition. Assets and liabilities of banks accounted for as purchases are
adjusted to their fair market values at the dates of acquisition. Certain 1991
and 1992 amounts have been reclassified to conform with 1993 financial reporting
presentation.
STATEMENT OF CASH FLOWS. Cash and cash equivalents include cash and due from
banks and federal funds sold. Federal funds sold in the amounts of $53,109,000,
$92,354,000, and $59,570,000 at December 31, 1993, 1992, and 1991, respectively,
are included in cash and cash equivalents.
TRADING ACCOUNT SECURITIES. Trading account securities are stated at market and
consist primarily of securities backed by the government-guaranteed portion of
Small Business Administration (SBA) loans. Gains and losses on sales and market
value adjustments related to these securities are included in profits and
commissions from trading activities.
INVESTMENT SECURITIES
HELD FOR SALE. Investment securities held for sale consist of both debt and
equity securities that may be sold in response to, or in anticipation of,
changes in interest rates, prepayment risk, liquidity considerations, and other
factors. These securities are carried at the lower of aggregate cost, adjusted
for amortization of premiums and accretion of discounts, or market value
(LOCOM). Unrealized net valuation adjustments, if any, are included in
investment securities gains and losses.
HELD FOR INVESTMENT. Investment securities carried at amortized cost consist of
securities which management has the intent and ability to hold to maturity.
These securities are stated at cost, adjusted for amortization of premium and
accretion of discount, which are recognized as adjustments to interest income.
Gains and losses on securities are recorded when realized on a specific identity
basis or when, in the opinion of management, an unrealized loss is other than
temporary in nature.
All investment securities transactions are recorded using a method which
approximates trade-date accounting. Collateralized Mortgage Obligations (CMO)
and Mortgage-Backed Securities (MBS) represent a significant portion of the
investment securities portfolio. Premiums and discounts on CMO and MBS are
analyzed in relation to the corresponding prepayments rate, both historical and
estimated, using a method which approximates the effective yield method.
Effective January 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". This statement requires that securities be classified as
either held to maturity securities, which are reported at amortized cost;
trading securities, which are reported at fair value, with unrealized gains and
losses included in earnings; or available for sale securities, which are
reported at fair value, with unrealized gains and losses excluded from earnings
and reported as a separate component of shareholders' equity.
In connection with the adoption of this statement, the Corporation
transferred all of the securities currently in the held for investment category,
except for obligations of states and political subdivisions, to the available
for sale category. Had SFAS No. 115 been adopted at December 31, 1993,
shareholders' equity would have increased by approximately $11.0 million. There
was no impact on earnings upon the adoption of this statement.
LOANS. Loans are stated at the principal amount outstanding except for loans
held for resale which are stated at the lower of cost or market. Interest income
on loans is accrued using constant yield methods, except for unearned income
which is recorded as income using a method which approxi-
8
<PAGE> 11
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
mates the interest method. Loan origination fees and direct loan origination
costs are deferred and recognized over the life of the related loans as
adjustments to interest income.
NONPERFORMING LOANS. Nonperforming loans consist of nonaccrual loans and
renegotiated loans which have been restructured in accordance with the criteria
set forth in SFAS No. 15 "Accounting by Debtors and Creditors for Troubled Debt
Restructurings". Loans, other than installment and mortgage loans, are generally
placed on nonaccrual status and interest is not recorded if, in management's
opinion, payment in full of principal or interest is not expected or when
payment of principal or interest is more than 90 days past due, unless it is
both well-secured and in the process of collection. Upon adverse change in the
account status (e.g., loan is past due, filing of bankruptcy or wage earner,
repossession of collateral, foreclosure, or death of the borrower), installment
and mortgage loans (including accrued interest) are written down to the net
realizable value of the underlying collateral. Such loans are reviewed
periodically for further write-downs until fully liquidated. Income recognized
on revolving credit loans is discontinued upon adverse change, and the loans are
fully charged off if no payment is received in 180 days.
ALLOWANCE FOR LOSSES ON LOANS. The allowance for losses on loans represents
management's estimate of potential losses inherent in the existing loan
portfolio. The allowance for losses on loans is increased by the provision for
losses on loans charged to expense and reduced by loans charged off, net of
recoveries. The provision for losses on loans is determined based on
management's assessment of several factors: current and anticipated economic
conditions and the related impact on specific borrowers and industry groups,
historical loan loss experience, the level of classified and nonperforming
loans, reviews and evaluations of specific loans, changes in the nature and
volume of the loan portfolio, and the results of regulatory examinations.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation provisions are computed
using the straight-line method and are charged to operating expense over the
estimated useful lives of the assets. Leasehold improvements are amortized using
the straight-line method over the shorter of the initial term of the respective
lease or the estimated useful life of the improvement.
Costs of major additions and improvements are capitalized. Interest expense
incurred on funds expended on major construction projects is capitalized as a
cost of such projects during the construction period. Expenditures for
maintenance and repairs are charged to operations as incurred.
GOODWILL AND OTHER INTANGIBLES. The unamortized costs in excess of the fair
market value of acquired net tangible assets are included in goodwill and other
intangibles. Identifiable intangibles, including premiums on purchased deposits
and assets, are amortized over the estimated periods benefited. The remaining
costs (goodwill) are generally amortized on a straight-line basis over 15 years.
For acquisitions where the fair market value of net assets acquired exceeds the
purchase price, the resulting negative goodwill is allocated proportionally to
noncurrent, nonmonetary assets.
MORTGAGE SERVICING RIGHTS. Mortgage servicing rights represent the cost of
mortgage servicing purchased from others. These costs are amortized in
proportion to, and over the period of, estimated net servicing income based on
the historical and projected prepayments of the underlying loans. At December
31, 1993 and 1992, mortgage servicing rights were $3,563,000 and $4,892,000,
respectively.
OTHER REAL ESTATE. Property acquired through foreclosure is stated at the lower
of the recorded amount of the loan or the estimated net realizable value,
reduced by estimated selling costs. When a reduction of the recorded amount to
the net realizable value is required at the time of foreclosure, the difference
is charged to the allowance for losses on loans. Any subsequent reduction is
charged to other real estate expense, and a valuation reserve is established for
the potential declines in appraised values. Other real estate is recorded net of
the valuation reserve. Revenues and expenses associated with operating or
disposing of other real estate are recorded in the period in which they are
incurred. At December 31, 1993 and 1992, other real estate totaled $4,358,000
and $6,326,000, respectively.
EMPLOYEE BENEFIT PLANS. The Corporation sponsors two qualified employee benefit
plans for substantially all employees of the Corporation and its subsidiaries.
One is a 401K plan with matching employer contributions based on length of
service. Employer contributions, provided through a Flexible Benefits Plan, may
also be directed to the 401K plan at the election of the employee. The second is
a noncontributory employee stock ownership plan, which is funded by
discretionary employer contributions approved by the Board of Directors. All
costs of the plans are expensed as incurred.
9
<PAGE> 12
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
and SFAS No. 112, "Employers' Accounting for Postemployment Benefits". These
standards require that the expected costs of postretirement and postemployment
benefits be charged to expense during the years that the employee renders
service which is a change from the previous policy of recognizing these costs on
a cash basis. The Corporation elected to recognize the accumulated
postretirement and postemployment benefit obligation upon adoption which
approximated $8.3 million ($5.1 million after tax) and $1.3 million ($807,000
after tax), respectively.
INCOME TAXES. The Corporation files a consolidated federal income tax return
with its subsidiaries, with the exception of credit life insurance subsidiaries
which file separate returns. State income taxes are computed on either a
separate company basis or consolidated basis depending upon state laws. The
Corporation and its subsidiaries file a consolidated state return for all
business in the state of Tennessee.
Income tax expense is based on income reported for financial accounting
purposes, and includes deferred taxes resulting from the recognition of certain
transactions in different periods for tax reporting purposes in accordance with
SFAS No. 109, "Accounting for Income Taxes".
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
No. 109 and recorded the cumulative effect of the accounting change of $10.9
million.
INTEREST RATE SWAP AGREEMENTS. Interest rate swap agreements are used as part
of the Corporation's interest rate risk management strategy by hedging
on-balance-sheet financial instruments. To qualify as a hedge the following
criteria must be met: (i) the asset or liability to be hedged exposes the
institution, as a whole, to interest rate risk; (ii) the interest rate swap acts
to reduce the interest rate risk by moving the institution closer to being
insensitive to interest rate changes; and (iii) the interest rate swap is
designated and effective as a hedge. Fees related to swap agreements are
amortized on the interest method over the life of the swap. If the instrument
being hedged is disposed of, the swap agreement is marked to market with any
resulting gain or loss included in the determination of the gain or loss from
the disposition. If the interest rate swap agreement is terminated, the gain or
loss is deferred and amortized over the remaining life of the specific hedged
asset or liability.
EARNINGS PER SHARE. Primary earnings per common share are adjusted for all
preferred stock dividends. Primary earnings per common share is computed based
on the weighted average common shares outstanding and common stock equivalents
arising from the assumed exercise of outstanding stock options, unless their
effect would be antidilutive. Fully diluted earnings per common share is
computed using the weighted average common shares and equivalents. Common stock
equivalents are increased by the assumed conversion of convertible preferred
stock into common stock as if converted at the beginning of the period, unless
the effect would be antidilutive. Earnings for fully diluted earnings per common
share are adjusted for preferred stock dividends on nonconvertible preferred
stock.
NOTE 2. MERGERS AND ACQUISITIONS
CONSUMMATED ACQUISITIONS
Poolings of Interests
During 1993, the Corporation consummated four acquisitions which were
accounted for using the pooling of interests method of accounting. The table
below summarizes the acquisitions.
<TABLE>
<CAPTION>
TOTAL EQUITY
DATE SHARES TOTAL ASSETS AT AT
INSTITUTION ACQUIRED ISSUED JANUARY 1, 1993 JANUARY 1, 1993
- ----------------------------------------------- -------- --------- --------------- ---------------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
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>
The consolidated financial statements for 1993 include the results of
operations of the above entities. Prior year amounts have not been restated due
to immateriality. Eliminations have been made
10
<PAGE> 13
NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)
for material intercompany transactions with the pooled companies. During 1993,
the above pooled institutions contributed approximately $10.1 million, $1.5
million, and $2.1 million to net interest income, noninterest income and net
earnings, respectively, of the Corporation through their respective dates of
acquisition.
On January 1, 1994, the Corporation consummated the acquisition of
Mid-South Bancorp, Inc. (MSB), the parent company of Simpson County Bank in
Franklin, Kentucky; Adairville Banking Company in Adairville, Kentucky; General
Trust Company in Nashville, Tennessee; The Peoples Bank of Elk Valley in
Fayetteville, Tennessee; and First Citizens Bank in Franklin, Columbia, and Mt.
Pleasant, Tennessee. The Corporation issued 839,542 shares of its Common Stock
in this transaction which was accounted for as a pooling of interests. MSB had
total assets and total shareholders' equity of $185 million and $12 million,
respectively, at December 31, 1993. Prior period financial statements have not
been restated for this acquisition due to immateriality.
Purchase Acquisitions
The Corporation acquired four institutions in 1992 and eight institutions
in 1993 that were accounted for as purchases. The table below summarizes the
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>
Metropolitan Federal Savings and
Loan Association
(Metropolitan)(a) and (f)...... 3/27/92 Cash $ 16.5 $16.5 $603
Fidelity Bancshares, Inc.
(Fidelity)(f).................. 3/30/92 Cash 77.4 -- 822
Southeastern Bancshares, Inc.
(SBI)(b)....................... 7/1/92 253,655 Shares 5.2 1.1 77
of Series D
Preferred Stock
Bank of Commerce (BOC)........... 11/1/92 Cash 9.9 2.1 89
Bank of East Tennessee
(BOET)(c)...................... 1/1/93 648,786 Shares 25.3 7.0 231
of 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
(Maryville)(d)................. 2/26/93 625,000 Shares NM(d) -- 187
of Common Stock
(Conversion/
Acquisition)
First State Bancshares, Inc.
(FSB)(e)....................... 3/12/93 Cash and Common 3.9 .4 34
Stock (90,162
shares)
First Cumberland Bank............ 3/15/93 Cash .2 -- 20
Farmers Union Bank (Farmers
Union)......................... 4/1/93 Cash 9.5 4.2 78
Erin Bank & Trust
Company (Erin)................. 6/1/93 259,736 Shares 8.3 2.1 43
of Series E
Preferred Stock
</TABLE>
(a) The Corporation, through UPNB, assumed approximately $585 million in insured
deposit liabilities (including accrued interest payable) of the former
Metropolitan Federal Savings and Loan Association. The purchase and
assumption transaction was facilitated through the Resolution Trust
Corporation (RTC) which declared UPNB the successful bidder. UPNB also
acquired approximately $82 million in assets and received cash from the RTC
totaling approximately $487 million.
(b) SBI is the parent company of DeKalb County Bank and Trust Company (DeKalb).
(c) 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
<PAGE> 14
NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)
($11.1 million). Effective May 3, 1993, the Corporation acquired the
remaining outstanding common stock of BOET in exchange for the Corporation's
Series E Preferred Stock ($10.8 million).
(d) 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.
(e) FSB is the parent company of First State Bank of Fayette County
(Somerville).
(f) Merged into UPNB.
NM -- Not meaningful.
Intangibles are being amortized primarily using the straight line method
over periods ranging from 10 to 15 years. The amortization for the Metropolitan
intangibles was accelerated in both 1992 and 1993 due to unexpected deposit
run-off. The fair market value of the net assets of Fidelity at the date of
acquisition exceeded the purchase price resulting in negative goodwill of
approximately $16 million which was deducted from the noncurrent, nonmonetary
assets (primarily premises and equipment) of Fidelity. 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 effect of the
above described acquisitions assuming consummation of each transaction on
January 1, 1992. The unaudited pro forma results are not necessarily
representative of the actual results that would have occurred or which may occur
in the future had the transactions been effected on January 1, 1992. The pro
forma information does not include the historical results of Metropolitan since
it was a failed financial institution.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
YEARS ENDED DECEMBER 31,
-------------------------
1993 1992
--------- ---------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net interest income................................................ $ 237,237 $ 228,412
Provision for losses on loans...................................... (12,508) (35,642)
Noninterest income................................................. 85,178 96,946
Noninterest expense................................................ (226,917) (243,462)
--------- ---------
Earnings before income taxes, extraordinary item, and accounting
changes.......................................................... 82,990 46,254
Applicable income taxes............................................ (24,160) (14,894)
--------- ---------
Earnings before extraordinary item and accounting changes.......... 58,830 31,360
Extraordinary item and accounting changes, net of taxes............ 1,795 --
--------- ---------
Net earnings....................................................... $ 60,625 $ 31,360
--------- ---------
--------- ---------
Earnings per common share before extraordinary item and accounting
changes
Primary....................................................... $ 2.53 $ 1.32
Fully diluted................................................. 2.35 1.32*
Net earnings
Primary....................................................... 2.62 1.32
Fully diluted................................................. 2.43 1.32*
</TABLE>
* Assumed conversion is antidilutive; therefore, it is not presented.
12
<PAGE> 15
NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)
The following details the net cash received from purchases of financial
institutions:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1993 1992
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Fair value of assets acquired........................... $ 1,245,602 $ 1,589,540
Liabilities assumed..................................... (1,148,122) (1,480,572)
Issuance of Common Stock................................ (30,618) --
Issuance of Preferred Stock............................. (30,127) (5,200)
Less previous investment in entities acquired........... (3,387) (3,173)
----------- -----------
Cash paid for purchases of other financial
institutions.......................................... 33,348 100,595
Cash and cash equivalents acquired...................... (105,469) (669,353)
----------- -----------
Net cash received from purchases of financial
institutions..................................... $ (72,121) $ (568,758)
----------- -----------
----------- -----------
</TABLE>
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 the first half of 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>
Tennessee Bancorp, Inc., Parent Company of Cash equal to 1.5 Purchase $ 92
Tennessee National Bank in Columbia, times net book value
Tennessee (TBI) at closing
First National Bancorp of Shelbyville, Approximately 975,000 Pooling of 164
Inc., Parent Company of First National shares of Common Stock Interests
Bank of Shelbyville in Shelbyville,
Tennessee (FNB)(a)
Clin-Ark Bancshares, Inc., Parent Company Approximately 227,768 Pooling of 48
of First National Bank of Clinton in shares of Common Stock Interests
Clinton, Arkansas (CBI)
Anderson County Bank in Clinton, Tennessee Approximately $2.8 Purchase 19
(ACB)(a) million in cash
Liberty Bancshares, Inc., Parent Company of Approximately Pooling of 170
Liberty Federal Savings Bank in Paris, 1,322,000 shares of Interests
Tennessee (LBI) Common Stock
Earle Bankshares, Inc., Parent Company of Approximately 375,000 Pooling of 40
First Southern Bank in Earle, Arkansas shares of Common Stock Interests
(EBI)
BANCFIRST Corporation, Parent Company of Approximately Pooling of 262
BANKFIRST Federal Savings Bank in 2,054,000 shares of Interests
Decatur, Alabama(b) Common Stock
</TABLE>
(a) Consummated March 1, 1994.
(b) Signed January 27, 1994.
SALES OF BRANCHES
In the third quarter of 1993, the Corporation sold four of the Kentucky
branches (three in Paducah and one in Clinton) of its subsidiary, Security
Trust. The Corporation has also entered into a definitive agreement to sell the
two remaining Kentucky branches of Security Trust. The sales involved
approximately $105 million of deposits, approximately $3 million of loans, and
approximately $1 million of premises and equipment. The transactions are not
considered significant to the Corporation's
13
<PAGE> 16
NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED)
balance sheet or operating results and are expected to result in a reduction of
Security Trust's goodwill and purchased mortgage servicing rights.
NOTE 3. RESTRICTIONS ON CASH AND DUE FROM BANKS
The Corporation's banking subsidiaries are required to maintain
noninterest-bearing average reserve balances with the Federal Reserve Bank.
Average balances required to be maintained for such purposes during 1993 and
1992 were $41 million and $33 million, respectively.
NOTE 4. INVESTMENT SECURITIES
The carrying values and market values of investment securities are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993
------------------------------------------
UNREALIZED
CARRYING ---------------- MARKET
VALUE GAINS LOSSES VALUE
---------- ------- ------ ----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
HELD 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 held for sale...... $ 595,090 $ 5,635 $ 234 $ 600,491
---------- ------- ------ ----------
---------- ------- ------ ----------
HELD FOR INVESTMENT
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
Collateralized mortgage obligations................. 39,036 177 114 39,099
Other............................................... 3,196 40 -- 3,236
---------- ------- ------ ----------
Total other securities......................... 67,366 217 114 67,469
---------- ------- ------ ----------
Total investment securities held for
investment.................................. $2,021,963 $41,190 $2,384 $2,060,769
---------- ------- ------ ----------
---------- ------- ------ ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1992
------------------------------------------
UNREALIZED
CARRYING ---------------- MARKET
VALUE GAINS LOSSES VALUE
---------- ------- ------ ----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
HELD FOR SALE
U.S. Government obligations
U.S. Treasury securities............................ $ 51,196 $ 362 $ 69 $ 51,489
Securities of U.S. Government agencies
Collateralized mortgage obligations.............. 108,676 1,642 28 110,290
Mortgage-backed securities....................... 258,117 7,121 -- 265,238
Other............................................ 53,337 4 102 53,239
Other stocks and securities........................... 5,338 -- 13 5,325
---------- ------- ------ ----------
Total investment securities held for sale...... $ 476,664 $ 9,129 $ 212 $ 485,581
---------- ------- ------ ----------
---------- ------- ------ ----------
</TABLE>
14
<PAGE> 17
NOTE 4. INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1992
------------------------------------------
UNREALIZED
CARRYING ---------------- MARKET
VALUE GAINS LOSSES VALUE
---------- ------- ------ ----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
HELD FOR INVESTMENT
U.S. Government obligations
U.S. Treasury securities............................ $ 595,133 $10,323 $ 62 $ 605,394
Securities of U.S. Government agencies
Collateralized mortgage obligations.............. 572,621 5,114 378 577,357
Mortgage-backed securities....................... 168,650 2,812 131 171,331
Other............................................ 55,242 306 53 55,495
---------- ------- ------ ----------
Total U.S. Government obligations.............. 1,391,646 18,555 624 1,409,577
---------- ------- ------ ----------
Obligations of states and political subdivisions...... 294,507 15,265 909 308,863
---------- ------- ------ ----------
Other securities
Federal Reserve Bank/Federal Home Loan
Bank stock....................................... 11,680 -- -- 11,680
Collateralized mortgage obligations................. 20,699 299 95 20,903
Other............................................... 2,907 28 5 2,930
---------- ------- ------ ----------
Total other securities......................... 35,286 327 100 35,513
---------- ------- ------ ----------
Total investment securities held for
investment..................................... $1,721,439 $34,147 $1,633 $1,753,953
---------- ------- ------ ----------
---------- ------- ------ ----------
</TABLE>
For the years ended December 31, 1993 and 1992, the Corporation has gross
realized gains of $4,953,000 and $13,663,000, respectively, and gross realized
losses of $372,000 and $417,000, respectively.
Investment securities having a carrying value of approximately $591 million
and $505 million at December 31, 1993 and 1992, respectively, were pledged to
secure public and trust funds on deposit and securities sold under agreements to
repurchase.
During 1993, the Corporation transferred $240 million of securities held
for investment to the held for sale portfolio. The transfers were made because
of regulatory concerns regarding certain securities, the restructure of the
portfolios of certain financial institutions acquired, and in anticipation of
the adoption of SFAS No. 115.
The maturities and weighted yields of investment securities as of December
31, 1993 are as follows:
<TABLE>
<CAPTION>
MATURING
-------------------------------------------------------------------------
AFTER ONE BUT AFTER FIVE BUT
WITHIN ONE WITHIN FIVE WITHIN TEN
YEAR YEARS YEARS AFTER TEN YEARS
-------------- ---------------- --------------- ----------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- -------- ----- ------- ----- -------- -----
(TAXABLE-EQUIVALENT BASIS/DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HELD FOR SALE
U.S. Government obligations
U.S. Treasury securities..... $1,006 5.86 % $109,470 4.40 % $ 263 6.40 % $ -- -- %
Securities of U.S. Government
agencies
Collateralized mortgage
obligations............. -- -- -- -- -- -- 141,853 4.95
Mortgage-backed
securities.............. -- -- 14,517 8.50 16,018 6.26 203,426 5.22
Other..................... 6,907 4.24 26,447 5.62 9,161 6.38 48,543 4.50
------ -------- ------- --------
Total U.S. Government
obligations........ 7,913 4.45 150,434 5.01 25,442 6.31 393,822 5.03
Other stocks and securities.... 383 3.20 -- -- 8,636 6.21 8,460 3.88
------ -------- ------- --------
Total investment
securities held for
sale............... $8,296 4.39 % $150,434 5.01 % $34,078 6.28 % $402,282 5.01 %
------ -------- ------- --------
------ -------- ------- --------
</TABLE>
15
<PAGE> 18
NOTE 4. INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
MATURING
-----------------------------------------------------------------------------------
WITHIN ONE AFTER ONE BUT AFTER FIVE BUT
YEAR WITHIN FIVE YEARS WITHIN TEN YEARS AFTER TEN YEARS
----------------- ----------------- ----------------- -----------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
-------- ----- -------- ----- -------- ----- -------- -----
(TAXABLE-EQUIVALENT BASIS/DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HELD FOR INVESTMENT
U.S. Government obligations
U.S. Treasury securities...... $238,601 4.99% $454,511 4.70% $ 500 7.58 % $ -- -- %
Securities of U.S. Government
agencies
Collateralized mortgage
obligations............... -- -- 33,209 5.56 67,411 5.26 241,025 5.22
Mortgage-backed
securities............... 1,549 4.90 20,344 7.32 10,988 8.46 323,259 4.82
Other....................... 29,093 4.90 69,363 5.49 6,057 6.75 17,178 4.98
-------- -------- -------- --------
Total U.S. Government
obligations.......... 269,243 4.98 577,427 4.93 84,956 5.79 581,462 4.99
Obligations of states and
political subdivisions........ 23,493 8.59 94,427 9.86 54,486 9.64 269,103 9.00
Other securities
Federal Reserve Bank/Federal
Home Loan Bank stock........ -- -- -- -- -- -- 25,134 4.79
Collateralized mortgage
obligations................. 68 10.25 27 10.25 27,234 6.27 11,707 7.00
Other......................... 1,960 6.81 631 6.04 205 8.40 400 9.60
-------- -------- -------- --------
Total other
securities........... 2,028 6.93 658 6.22 27,439 6.28 37,241 5.54
-------- -------- -------- --------
Total investment
securities at
amortized cost....... $294,764 5.28% $672,512 5.63% $166,881 7.13 % $887,806 6.23 %
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The weighted average yields are calculated by dividing the sum of the
individual security yield weights (effective yield times book value) by the
total book value of the securities. The taxable-equivalent yield gives effect to
the disallowance of interest expense, for federal income tax purposes, related
to certain tax-free securities. The maturities of mortgage-backed securities and
collateralized mortgage obligations have not been adjusted for prepayments, and
generally represent obligations which are expected to have principal weighted
averages of five years or less or are variable rate instruments.
NOTE 5. LOANS
Loans are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial, financial, and agricultural............................. $ 664,362 $ 549,049
Real estate -- construction......................................... 82,971 54,353
Real estate -- mortgage
Secured by 1-4 family residential................................. 1,022,263 752,405
Other mortgage.................................................... 517,886 386,802
Home equity......................................................... 86,356 83,936
Consumer
Credit cards and other plans...................................... 99,103 71,115
Other consumer.................................................... 450,780 331,451
Foreign government.................................................. 2,250 1,750
Direct lease financing.............................................. 25,914 16,493
---------- ----------
Total loans.................................................... $2,951,885 $2,247,354
---------- ----------
---------- ----------
</TABLE>
16
<PAGE> 19
NOTE 5. LOANS (CONTINUED)
Nonperforming loans are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1993 1992
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Nonaccrual loans......................................................... $14,646 $36,698
Restructured loans....................................................... 7,525 1,351
------- -------
Total............................................................... $22,171 $38,049
------- -------
------- -------
</TABLE>
In the fourth quarter of 1992, UPNB consummated the restructuring of a
troubled loan to another financial institution. UPNB had previously received
certain notes, equity securities, and other rights from the borrower in exchange
for a nonaccrual and partially charged-off loan. Subsequently, UPNB liquidated
the notes and equity securities and exercised contractual rights which resulted
in a recovery of $7 million in principal previously charged-off and realized
pretax gains of approximately $901,000 and $3.5 million in 1993 and 1992,
respectively.
Total interest earned on nonaccrual and restructured loans in 1993 and 1992
was $1,238,000 and $2,233,000, respectively. Interest income that would have
been earned under the original terms of these loans in 1993 and 1992 was
$1,947,000 and $2,695,000, respectively. There were no significant outstanding
commitments related to the above restructured loans at December 31, 1993.
Certain of the Corporation's bank subsidiaries, principally UPNB, have
granted loans to the Corporation's directors, executive officers, and their
affiliates. These loans were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated persons and do not involve more than normal risks of
collectability. The aggregate dollar amount of these loans was $33,065,000 and
$35,145,000 at December 31, 1993 and 1992, respectively. During 1993,
$141,144,000 of new loans and advances under credit lines were made to
directors, executive officers, and their affiliates; repayments totaled
approximately $143,224,000.
NOTE 6. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans are summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance, January 1......................................... $ 64,290 $ 47,934 $ 50,921
Increase due to acquisitions............................. 16,607 15,678 --
Provision for losses on loans............................ 9,689 18,557 24,835
Recoveries of loans previously charged off............... 8,681 14,212 7,496
Loans charged off........................................ (18,825) (32,091) (35,318)
-------- -------- --------
Balance, December 31....................................... $ 80,442 $ 64,290 $ 47,934
-------- -------- --------
-------- -------- --------
</TABLE>
NOTE 7. PREMISES AND EQUIPMENT, LEASED ASSETS, AND LEASE COMMITMENTS
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Land................................................................... $ 27,167 $ 19,944
Buildings and improvements............................................. 88,578 76,533
Leasehold improvements................................................. 7,266 5,027
Equipment.............................................................. 72,539 59,882
Construction in progress............................................... 16,301 4,331
-------- --------
211,851 165,717
Less accumulated depreciation and amortization......................... 76,340 65,989
-------- --------
Total premises and equipment......................................... $135,511 $ 99,728
-------- --------
-------- --------
</TABLE>
Included in the above is approximately $14.2 million related to a new
headquarters building for UPNB. The total project cost is estimated to be
approximately $17.6 million, including land, construction costs, furniture,
fixtures and equipment, and site improvements.
17
<PAGE> 20
NOTE 7. PREMISES AND EQUIPMENT, LEASED ASSETS, AND LEASE COMMITMENTS
(CONTINUED)
A summary of rent expense for operating leases is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1993 1992 1991
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Operating lease rent expense..................................... $6,773 $4,822 $4,532
Less sublease rental income...................................... 365 286 176
------ ------ ------
Net rent expense............................................... $6,408 $4,536 $4,356
------ ------ ------
------ ------ ------
</TABLE>
At December 31, 1993, minimum future rental commitments for leases which
are being accounted for as operating leases were as follows:
<TABLE>
<CAPTION>
OPERATING
LEASES
----------------------
<S> <C>
(DOLLARS IN THOUSANDS)
1994..................................................................... $ 6,660
1995..................................................................... 4,932
1996..................................................................... 2,372
1997..................................................................... 2,051
1998..................................................................... 1,729
Later years.............................................................. 8,251
----------
Total minimum lease payments........................................... $ 25,995
----------
----------
</TABLE>
NOTE 8. SHORT-TERM BORROWINGS
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Year-end balance
Federal funds purchased and securities sold under agreements
to repurchase............................................. $234,031 $287,802 $185,898
Commercial paper............................................. 10,941 8,325 11,466
Other short-term borrowings.................................. 23 185 146
-------- -------- --------
Total short-term borrowings............................... $244,995 $296,312 $197,510
-------- -------- --------
-------- -------- --------
Federal funds purchased and securities sold under agreements to
repurchase
Daily average balance..................................... $222,136 $211,662 $235,662
Weighted average interest rate............................ 2.69% 3.13% 5.21%
Maximum outstanding at any month end...................... $277,833 $287,802 $299,098
Weighted average interest rate at December 31............. 2.83% 2.96% 3.90%
</TABLE>
NOTE 9. FEDERAL HOME LOAN BANK ADVANCES AND LONG-TERM DEBT
FEDERAL HOME LOAN BANK (FHLB) ADVANCES
The Corporation's banking and thrift subsidiaries obtained in 1993 various
advances from the FHLB totaling $158.0 million at December 31, 1993, 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. Of the amounts
borrowed at December 31, 1993, $118 million were at variable rates and $40
million were at fixed rates with interest rates ranging from 3.2% to 8.0% and
maturities ranging from 1997 to 2017. At December 31, 1993, FHLB advances that
mature within one year, one to five years, and after five years were $3.1
million, $22.0 million, and $132.9 million, respectively. The value of
collateral (primarily mortgage loans) under the Agreements must be 150% of the
$158.0 million outstanding at December 31, 1993.
18
<PAGE> 21
NOTE 9. FEDERAL HOME LOAN BANK ADVANCES AND LONG-TERM DEBT (CONTINUED)
LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1992
-------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
6.25% Subordinated Notes due 2003..................................... $ 74,479 $ --
8 1/2% Subordinated Notes due 2002.................................... 40,250 40,250
10 1/8% Subordinated Capital Debentures due 1999...................... -- 34,042
Obligations under capital leases...................................... 2,294 2,684
Mortgage indebtedness................................................. 105 --
Notes payable......................................................... 148 180
-------- -------
Total long-term debt................................................ $117,276 $77,156
-------- -------
-------- -------
</TABLE>
In October 1993, the Corporation filed a shelf registration statement for
$150 million of the Corporation's subordinated debt securities. On November 2,
1993, the Corporation issued $75 million of 6.25% Subordinated Capital Notes due
2003 (6.25% Notes) at 99.305%. Interest on the 6.25% Notes is payable
semiannually on May 1 and November 1. The 6.25% Notes are not redeemable prior
to maturity and will mature on November 1, 2003. The 6.25% Notes are
subordinated to all present and future senior indebtedness of the Corporation
and payment may be accelerated only in the case of the bankruptcy of the
Corporation. Debt issuance costs of $838,000 are included in other assets and
are being amortized over a ten year life. The 6.25% Notes qualify for Tier 2
capital under regulatory risk-based capital guidelines. The Corporation also
entered into an interest rate swap agreement with a notional amount of $50
million to convert a portion of its fixed-rate debt to a floating LIBOR rate for
two and one-half years.
In October 1992, the Corporation completed a public offering of $40.25
million of 8 1/2% Subordinated Notes (8 1/2% Notes). The 8 1/2% Notes mature on
October 1, 2002, and interest is payable quarterly. Debt issuance costs of $1.2
million and $1.4 million, respectively, at December 31, 1993 and 1992 are
included in other assets and are being amortized over a seven-year life. The
8 1/2% Notes are unsecured debt obligations of the Corporation and are
subordinated in right of payment to all senior indebtedness of the Corporation.
The Corporation, at its option, may redeem the 8 1/2% Notes on or after October
1, 1997, at par value plus accrued interest, upon 30 days notice. The
Corporation is obligated to repay 100% of the principal amount plus accrued
interest, up to an aggregate amount of $1 million, of 8 1/2% Notes tendered for
prepayment by the personal representatives of deceased holders in any one year.
The 10 1/8% Subordinated Capital Debentures (10 1/8% Debentures) were
issued in a public offering in 1989. In November 1993, the Corporation used
approximately $39 million of the net proceeds of the 6.25% Notes to in-substance
defease the 10 1/8% Debentures. Direct obligations of the U.S. Government were
purchased and placed in an irrevocable trust which provides cash flows matching
the principal and interest debt service required to retire the 10 1/8%
Debentures. At December 31, 1993, the outstanding balance of the 10 1/8%
Debentures totaled $34 million which is not reflected in the accompanying
financial statements. This transaction resulted in an extraordinary loss in the
fourth quarter of 1993 of $5.2 million ($3.2 million net of taxes).
Annual principal repayment requirements for long-term debt for the years
1994 through 1998 are $628,000, $466,000, $305,000, $273,000, and $296,000,
respectively.
Line of Credit
In June 1993, the Corporation entered into an unsecured $25 million credit
agreement which expires May 31, 1996. No borrowings were outstanding at December
31, 1993. The line of credit is for working capital purposes and as a commercial
paper backup. The credit agreement contains performance measurements and
restrictive covenants relating to dividends, acquisitions, sale of assets, and
indebtedness which the Corporation must meet. The Corporation's dividends are
restricted to no more than 60% of consolidated net earnings for the preceding
fiscal year.
19
<PAGE> 22
NOTE 10. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Corporation's preferred stock is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1992
-------- -------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
PREFERRED STOCK, WITHOUT PAR VALUE, 10,000,000 SHARES AUTHORIZED
CONVERTIBLE
Series A Preferred Stock, 250,000 shares authorized, none issued...... $ -- $ --
Series B, $8.00 Nonredeemable, Cumulative, Convertible Preferred Stock
(stated at liquidation value of $100 per share), 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 per share), 253,655 shares
issued and outstanding............................................. 5,200 5,200
Series E, 8% Cumulative, Convertible Preferred Stock (stated at
liquidation value of $25 per share), 3,107,922 and 2,200,000 shares
issued and outstanding at December 31, 1993 and 1992,
respectively....................................................... 77,698 55,000
-------- -------
Total convertible preferred stock............................. 87,298 64,600
-------- -------
NONCONVERTIBLE
Series C, 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred
Stock (stated at liquidation value of $25 per share), 690,000
shares issued and outstanding...................................... 17,250 17,250
-------- -------
Total nonconvertible preferred stock.......................... 17,250 17,250
-------- -------
Total preferred stock.................................... $104,548 $81,850
-------- -------
-------- -------
</TABLE>
SERIES A PREFERRED STOCK (SHARE PURCHASE RIGHTS PLAN). In 1989, the Board of
Directors of the Corporation adopted a Share Purchase Rights Plan and
distributed a dividend of one Preferred Share Purchase Right (Right) for each
outstanding share of the Corporation's $5 par value Common Stock and for each
share issued thereafter. The Rights are generally designed to deter coercive
takeover tactics and to encourage all persons interested in acquiring control of
the Corporation to deal with each shareholder on a fair and equal basis. Each
Right trades in tandem with its respective share of common stock until the
occurrence of certain events, in which case it would separate from the common
stock and entitle the registered holder, subject to the terms of the Rights
Agreement, to purchase certain equity securities at a price below their market
value. The Corporation has authorized 250,000 shares of Series A Preferred Stock
for issuance under the Share Purchase Rights Plan, none of which have been
issued.
SERIES B PREFERRED STOCK. The Corporation issued 44,000 shares of $8.00
Nonredeemable, Cumulative, Convertible Preferred Stock, Series B (Series B
Preferred Stock), $100 per share liquidation value, in a private transaction in
connection with the acquisition of Steiner Bank in 1989. Such shares bear a
dividend rate of $8.00 per share per annum; dividends are cumulative and are
payable quarterly. The holders of shares of Series B Preferred Stock have the
right, at their option, after November 30, 1994, (and in limited circumstances
prior thereto) to convert each share into 7.722 shares (339,768 shares in total)
of the Corporation's Common Stock. The Series B Preferred Stock is not subject
to any sinking fund provisions and has no preemptive rights. Holders of Series B
Preferred Stock have no voting rights except as may be required by law and in
certain other limited circumstances.
SERIES D PREFERRED STOCK. In July 1992, in connection with the acquisition of
SBI (see Note 2), the Corporation issued 253,655 shares of 9.5% Redeemable,
Cumulative, Convertible Preferred Stock, Series D (Series D Preferred Stock) in
a private offering. Such shares have no par value but have a stated value of
$20.50 per share on which dividends accrue at 9.5% per annum. Dividends are
cumulative and payable quarterly. Such shares have a liquidation preference of
$20.50 per share plus unpaid dividends accrued thereon and, at the Corporation's
option, with the prior approval of the Federal Reserve, are subject to
redemption by the Corporation at any time and from time to time on or after July
1, 1995. At any time prior to redemption, each share of Series D Preferred Stock
is convertible at the option of the holder into one share of the Corporation's
Common Stock. Holders of the Series D Preferred Stock have no voting rights
except as may be required by law and in certain other limited circumstances.
20
<PAGE> 23
NOTE 10. SHAREHOLDERS' EQUITY (CONTINUED)
SERIES E PREFERRED STOCK. In February 1992, the Corporation completed a public
offering of 2,200,000 shares of 8% Cumulative, Convertible Preferred Stock,
Series E (Series E Preferred Stock). Such shares have a stated value of $25 per
share, on which dividends accrue at a rate of 8% per annum; dividends are
cumulative and are payable quarterly. The Series E Preferred Stock is not
subject to any sinking fund provisions and has no preemptive rights. Such shares
have a liquidation preference of $25 per share plus unpaid dividends accrued
thereon, and with the prior approval of the Federal Reserve, may be redeemed by
the Corporation in whole or in part at any time after March 31, 1997 at $25.00
per share. At any time prior to redemption, each share of Series E Preferred
Stock is convertible, at the option of the holder, into 1.25 shares of the
Corporation's Common Stock. Holders of Series E Preferred Stock have no voting
rights except for those provided by law and in certain other limited
circumstances.
On January 1, 1993, the Corporation acquired an additional 43.93% of Bank
of East Tennessee (BOET) in exchange for 331,741 shares of the Corporation's
Series E Preferred Stock. The Corporation acquired the remaining outstanding
stock of BOET on May 3, 1993 in exchange for an additional 317,045 shares of
Series E Preferred Stock. The Corporation also acquired Erin Bank & Trust
Company in exchange for 259,736 shares of Series E Preferred Stock on June 1,
1993. See Note 2 for additional information regarding these acquisitions.
SERIES C PREFERRED STOCK. In August 1991, the Corporation completed a public
offering of 690,000 shares of 10 3/8% Increasing Rate, Redeemable, Cumulative
Preferred Stock, Series C (Series C Preferred Stock). The Series C Preferred
Stock has a stated value of $25 per share. Dividends are cumulative and payable
quarterly at a rate of $.648 per quarter increasing to $.680 beginning November
1, 1994, to $.711 beginning November 1, 1995, and to $.742 beginning November 1,
1996. The Series C Preferred Stock is not convertible, is not subject to any
sinking fund provisions, and has no preemptive rights. On or after October 31,
1994, the Corporation may, with the prior approval of the Federal Reserve,
redeem any or all outstanding Series C Preferred Stock at $25 per share plus all
dividends accrued and unpaid to the date fixed for redemption. Holders of the
Series C Preferred Stock have no voting rights except as may be required by law
and except in certain other limited circumstances.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Dividend Reinvestment and Stock Purchase Plan (the Plan) authorizes the
issuance of 500,000 shares of authorized but previously unissued common stock to
shareholders who choose to invest all or a portion of their cash dividends or
make optional cash purchases. On certain investment dates, shares may be
purchased with reinvested dividends and optional cash payments at a price of 95%
and 100%, respectively, of their fair market value, without brokerage
commissions. Shares issued under this Plan totaled 68,188, 93,407, and 95,029
shares in 1993, 1992, and 1991, respectively.
SUBSCRIPTION AGREEMENT
In 1987, the Corporation entered into an agreement with Santa Cruz
Resources, Inc. (SCR) under which SCR would acquire up to 21% of the
Corporation's Common Shares. SCR ultimately acquired 2,963,000 of the
Corporation's common shares. The agreement imposed several restrictions on SCR.
During 1990 and 1991, the Corporation repurchased 2.7 million of the shares and
released SCR from the agreement.
21
<PAGE> 24
NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
ASSETS
Noninterest-bearing cash in subsidiary bank.......................... $ 799 $ 623
Demand note receivable from subsidiary bank.......................... 101,356 57,971
Advances to and receivable from subsidiaries......................... 2,955 9,221
Investment securities held for sale.................................. 1,324 4,834
Investment in Union Planters National Bank........................... 251,583 216,024
Investment in other banking subsidiaries............................. 218,926 159,210
Investment in savings and loan subsidiaries.......................... 27,846 --
Investment in nonbank subsidiaries................................... 2,817 (2,802)
Other assets......................................................... 6,483 8,067
-------- --------
TOTAL ASSETS...................................................... $614,089 $453,148
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper..................................................... $ 10,941 $ 8,325
Long-term debt....................................................... 114,729 74,292
Loans from and payables to subsidiary banks.......................... 362 53
Other liabilities.................................................... 10,757 14,267
Shareholders' equity................................................. 477,300 356,211
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................ $614,089 $453,148
-------- --------
-------- --------
</TABLE>
22
<PAGE> 25
NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(CONTINUED)
CONDENSED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INCOME
Dividends from banking subsidiaries...................... $ 28,092 $ 20,656 $ 21,335
Management fees from subsidiaries........................ 7,198 5,902 5,682
Interest from banking subsidiaries....................... 1,358 1,523 791
Interest and dividends on investments, loans, and
interest-bearing deposits............................. 62 279 319
Investment securities gains (losses)..................... -- 38 (1,603)
Other income............................................. 1,283 43 266
-------- -------- --------
Total income.......................................... 37,993 28,441 26,790
-------- -------- --------
EXPENSES
Interest expense
Short-term borrowings................................. 235 306 375
Long-term debt........................................ 7,447 4,504 4,539
Loan from bank subsidiary............................. -- 28 172
Salaries and employee benefits........................... 6,029 4,973 5,264
Legal fees and provision for litigation settlements...... 321 3,924 (1,457)
Other expense............................................ 5,363 3,906 2,742
-------- -------- --------
Total expenses........................................ 19,395 17,641 11,635
-------- -------- --------
EARNINGS BEFORE INCOME TAXES, EXTRAORDINARY ITEM,
ACCOUNTING CHANGES, AND UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES........................................ 18,598 10,800 15,155
Tax benefit................................................ (4,092) (2,271) (2,885)
-------- -------- --------
EARNINGS BEFORE EXTRAORDINARY ITEM, ACCOUNTING
CHANGES, AND UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES........................................ 22,690 13,071 18,040
Extraordinary item-defeasance of debt, net of taxes........ (3,206) -- --
Accounting changes, net of taxes........................... 2,479 -- --
-------- -------- --------
EARNINGS BEFORE UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES........................................ 21,963 13,071 18,040
Undistributed earnings of subsidiaries..................... 41,100 28,368 9,468
-------- -------- --------
NET EARNINGS.......................................... $ 63,063 $ 41,439 $ 27,508
-------- -------- --------
-------- -------- --------
</TABLE>
23
<PAGE> 26
NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(CONTINUED)
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings............................................. $ 63,063 $ 41,439 $ 27,508
Equity in undistributed earnings of subsidiaries......... (41,100) (28,368) (9,468)
Cumulative effect of accounting changes.................. (2,479) -- --
Write-down of investment securities...................... -- -- 1,603
Deferred income tax benefit.............................. (1,898) -- (167)
Other, net............................................... 3,908 3,268 (581)
-------- -------- --------
Net cash provided by operating activities............. 21,494 16,339 18,895
-------- -------- --------
INVESTING ACTIVITIES
Net decrease (increase) in short-term investments........ -- 15,000 (11,223)
Proceeds from sales of investment securities............. 123 4,710 41
Net increase in investment in and receivables from
subsidiaries.......................................... (16,916) (48,624) (6,243)
Purchases of premises and equipment...................... -- (211) (29)
-------- -------- --------
Net cash used in investing activities................. (16,793) (29,125) (17,454)
-------- -------- --------
FINANCING ACTIVITIES
Net increase (decrease) in commercial paper.............. 2,616 (3,141) 4,163
Proceeds from issuance of long-term debt, net............ 73,641 38,850 3,000
Repayment and defeasance of long-term debt............... (34,042) (4,121) (9,499)
Net loan from bank subsidiary............................ -- (1,947) --
Proceeds from issuance of preferred stock, net........... -- 52,350 16,410
Proceeds from issuance of common stock, net.............. 19,611 7,673 3,275
Purchases and retirement of common stock, net............ (1,786) (4,311) (9,232)
Cash dividends paid...................................... (21,180) (15,315) (8,657)
-------- -------- --------
Net cash provided (used) by financing activities...... 38,860 70,038 (540)
-------- -------- --------
Net increase in cash and cash equivalents.................. 43,561 57,252 901
Cash and cash equivalents at the beginning of the year..... 58,594 1,342 441
-------- -------- --------
Cash and cash equivalents at the end of the year........... $102,155 $ 58,594 $ 1,342
-------- -------- --------
-------- -------- --------
</TABLE>
Non-Cash Investing Activities. See Note 2 regarding acquisitions in 1993 and
1992.
NOTE 12. RESTRICTIONS ON DIVIDENDS AND LOANS FROM SUBSIDIARIES
The amount of dividends which the Corporation's subsidiaries may pay is
limited by applicable laws and regulations. For the subsidiary national banks,
regulatory approval is required if dividends declared in any year exceed net
earnings of the current year (as defined under the National Bank Act) plus
retained net profits for the preceding two years. The payment of dividends by
state bank subsidiaries is regulated by applicable laws in Alabama, Arkansas,
Mississippi, Kentucky, and Tennessee and the regulations of the Federal Deposit
Insurance Corporation (FDIC). The payment of dividends by savings and loan
subsidiaries (see Note 2) is subject to the regulations of the Office of Thrift
Supervision (OTS).
The Corporation has adopted for its state-chartered bank subsidiaries
internal dividend policies that have received approval from the various state
banking commissioners, subject to restrictions. The current policy for Alabama,
Arkansas, and Mississippi subsidiary banks requires a minimum ratio of 7%
tangible equity capital (equity less goodwill and other intangibles) to tangible
assets and paying dividends only equal to the excess without prior approval. The
internal policy adopted for Tennessee banks requires a 6% tangible equity
capital to tangible assets ratio and a 7% tangible primary capital (tangible
equity plus the allowance for losses on loans) to tangible assets ratio be
maintained by the subsidiaries.
At January 1, 1994, the banking subsidiaries could have paid dividends to
the Corporation aggregating $74.3 million, excluding the MSB acquisition
consummated January 1, 1994, without prior
24
<PAGE> 27
NOTE 12. RESTRICTIONS ON DIVIDENDS AND LOANS FROM SUBSIDIARIES (CONTINUED)
regulatory approval. The actual amount of dividends paid will be limited to a
lesser amount by management in order to maintain compliance with capital
guidelines and to maintain strong capital positions in each of the banking
subsidiaries. Future dividends will be dependent on the level of earnings of the
subsidiary financial institutions.
The Corporation's banking subsidiaries are limited by Federal law in the
amount of credit which they may extend to their affiliates, including the
Corporation. Loans to a single affiliate may not exceed 10%, and loans to all
affiliates may not exceed 20% of an individual bank's net assets plus its
allowance for losses on loans. Such loans must be collateralized by assets
having market values of 100% to 130% of the loan amount depending on the nature
of the collateral.
NOTE 13. SIGNIFICANT OPERATING BUSINESS LINES
The Corporation is primarily engaged in the commercial and retail banking
business. Broker/dealer operations formerly constituted a significant portion of
the Corporation's business.
In the fourth quarter of 1990, the broker/dealer operations, formerly
conducted by Union Planters Investment Bankers Corporation and its subsidiaries
(UPIBC), were restructured, and on January 2, 1991, the Corporation became a
limited partner in Vining-Sparks IBG, Limited Partnership (VSIBG) with
Vining-Sparks Securities, Inc. (VSS). VSIBG engages in securities broker/dealer
activities of the types formerly carried on by VSS and UPIBC. The Corporation
transferred the Capital Markets and SBA Loan Trading Operations of UPIBC to
UPNB, and they now function as part of UPNB's banking operations. The
broker/dealer operations are now limited to the Corporation's passive investment
in VSIBG which is included in other assets at $5.5 million and $5.2 million,
respectively, at December 31, 1993 and 1992. The Corporation's proportionate
share of earnings (29%) from VSIBG is included in other noninterest income.
In 1992 and 1991, UPIBC incurred litigation expenses and provided for
litigation settlements totaling $8.6 million and $11.3 million, respectively,
arising from its restructured operations. A significant portion of that
litigation has now been settled.
Revenues from the broker/dealer operations were $3.6 million, $3.9 million,
and $2.0 million, respectively, in 1993, 1992, and 1991. In 1993, the
broker/dealer operations had pretax earnings of $3.4 million compared to pretax
losses of $4.7 million and $9.3 million, respectively, in 1992 and 1991.
25
<PAGE> 28
NOTE 14. OTHER NONINTEREST INCOME AND EXPENSE
The major components of other noninterest income and expense are summarized
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OTHER NONINTEREST INCOME
Mortgage servicing income..................................... $ 7,558 $ 8,458 $ 7,514
Merchant credit card fees..................................... 5,920 5,278 4,393
Trust service income.......................................... 5,661 5,079 5,278
VSIBG partnership earnings.................................... 3,652 3,920 2,031
Credit life insurance commissions............................. 2,749 2,468 2,313
Brokerage fee income.......................................... 1,520 1,288 977
Sale of servicing............................................. 1,035 639 941
Gain on troubled debt restructuring (Note 5).................. 901 3,513 --
Computer service income....................................... 482 786 1,217
Other......................................................... 13,299 7,587 7,501
------- ------- -------
Total other noninterest income............................. $42,777 $39,016 $32,165
------- ------- -------
------- ------- -------
OTHER NONINTEREST EXPENSE
FDIC insurance assessments.................................... $12,738 $ 9,127 $ 6,788
Amortization of goodwill and other intangibles................ 7,318 5,351 3,478
Other contracted services..................................... 6,537 5,042 4,556
Advertising and promotion..................................... 5,438 4,816 4,114
Postage and carrier........................................... 5,191 4,024 3,715
Stationery and supplies....................................... 5,126 3,974 3,606
Merchant credit card charges.................................. 4,611 3,929 3,130
Provisions for conversion of data processing systems(a)....... 4,424 -- --
Communications................................................ 4,226 3,454 2,907
Brokerage and clearing fees................................... 3,942 3,815 3,974
Amortization and write-offs of mortgage servicing rights(b)... 3,199 11,071 2,794
Other personnel services...................................... 2,504 2,118 1,232
Merger related expenses(c).................................... 2,113 -- --
Dues, subscriptions, and contributions........................ 2,309 1,616 1,681
Legal fees.................................................... 2,307 5,213 4,263
Other real estate expense..................................... 2,255 3,228 2,351
Travel........................................................ 1,791 1,394 1,587
Federal Reserve fees.......................................... 1,740 1,733 1,678
Taxes other than income taxes................................. 1,451 816 849
Insurance..................................................... 1,298 1,019 935
Miscellaneous charge-offs..................................... 1,206 1,112 760
Provisions for litigation settlements......................... -- 9,000 7,600
Provisions for abandoned property............................. -- 5,200 1,643
Other......................................................... 12,192 12,033 10,191
------- ------- -------
Total other noninterest expense............................ $93,916 $99,085 $73,832
------- ------- -------
------- ------- -------
</TABLE>
(a) During 1993, the Corporation entered into a contract for conversion of the
software systems used by its subsidiaries to a common system. A provision of
$4.4 million was recorded for the write-off of existing systems contracts as
well as conversion costs.
(b) In 1992, includes $8.2 million of accelerated amortization of purchased
mortgage servicing rights due to accelerated prepayments of the underlying
mortgage loans.
(c) One-time expenses related to acquisitions (primarily termination of an
acquired pension plan).
NOTE 15. EMPLOYEE BENEFIT PLANS
401K RETIREMENT SAVINGS PLAN. The Corporation's 401K Retirement Savings Plan
(401K Plan) is available to employees having one or more years of service who
work in excess of 1,000 hours a year. Employees may voluntarily contribute 1 to
16 percent of their gross compensation on a pretax basis up to a maximum of
$8,994 in 1993, subject to certain Internal Revenue Service restrictions (amount
may change from year to year based on cost of living index), and the Corporation
makes a matching
26
<PAGE> 29
NOTE 15. EMPLOYEE BENEFIT PLANS (CONTINUED)
contribution of 50 to 100 percent of the amounts contributed by the employee
depending upon his or her eligible years of service. The Corporation's matching
contribution is limited to employee contributions of up to 6% of their
compensation. The Corporation's Flexible Benefit Program allows employees to
allocate a portion of their available benefit dollars to the 401K Plan as
additional employer contributions. The Corporation's contributions to the 401K
Plan for 1993, 1992, and 1991 were $1.8 million, $1.6 million, and $1.5 million,
respectively.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Employee Stock Ownership Plan and
Trust (ESOP) is noncontributory and covers employees having one or more years of
service who work in excess of 1,000 hours a year. The amounts of contributions
to the ESOP are determined annually by the Board of Directors, and were $2
million, $1.6 million, and $1.6 million for 1993, 1992, and 1991, respectively.
At December 31, 1993, the ESOP held 1,068,469 shares of the Corporation's Common
Stock, all of which was allocated to participants.
STOCK INCENTIVE PLANS. Employees and directors of the Corporation and its
subsidiaries are eligible to receive options or restricted stock grants under
the 1992 Stock Incentive Plan (1992 Plan). A maximum of 1,600,000 shares of the
Corporation's Common Stock may be issued through the exercise of nonstatutory or
incentive stock options and as restricted stock awards. The option price is the
fair market value of the shares at the date of grant. Options granted generally
become exercisable in installments of 20% each year beginning one year from date
of grant. The 1992 Plan replaced the 1983 Stock Incentive Plan which had
essentially the same provisions as the 1992 Plan. The 1983 Plan expired March 9,
1993; however, options issued through that date continue to be outstanding and
exercisable under the terms of the grants. Additional information, with respect
to stock options issued under the 1983 and 1992 Plans, is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
Options
Outstanding, beginning of year..................... 479,419 627,878
Granted............................................ 287,532 206,756
Exercised.......................................... (165,104) (337,030)
Cancelled or surrendered........................... (14,237) (18,185)
--------- ---------
Outstanding, end of year........................... 587,610 479,419
--------- ---------
--------- ---------
Options becoming exercisable during the year......... 237,730 289,716
--------- ---------
--------- ---------
Options exercisable at end of year................... 432,310 369,139
--------- ---------
--------- ---------
</TABLE>
Exercise prices ranged from $6.88 to $28.00 in 1993 and from $6.88 to
$24.00 in 1992.
RETIREE HEALTH CARE AND LIFE INSURANCE. The Corporation provides certain health
care and life insurance benefits to retired employees who have completed twenty
years of unbroken full-time service immediately prior to retirement and who have
attained age 60 or more. Health care benefits are provided partially through an
insurance company (for retirees age 65 or more) and partially through direct
payment of claims. Prior to January 1, 1993, health care premiums and claims and
life insurance benefits ($2,500 per claim) were recognized as expense when paid.
In 1992 and 1991, retiree health care and life insurance costs were $390,000 and
$336,000, respectively.
Effective January 1, 1993, the Corporation adopted SFAS No. 106 which
requires that retiree health care and life insurance benefits be charged to
expense during the years in which the employee renders service. The Corporation
elected to recognize the accumulated benefit obligation in the first quarter of
1993 which approximated $8.3 million ($5.1 million after tax). The current
expense for 1993 was $632,000.
Postretirement benefit cost (in thousands) for 1993 was determined assuming
a discount rate of 8% and an expected return on plan assets of 5%:
<TABLE>
<S> <C>
Service cost......................................................... $ 170
Interest cost of accumulated postretirement benefit obligation....... 682
Return on plan assets................................................ (220)
-----
Total...................................................... $ 632
-----
-----
</TABLE>
27
<PAGE> 30
NOTE 15. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table sets forth the Plans' funded status and the amounts reported
in the Corporation's consolidated balance sheet:
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1993 1993
------------ ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Fair value of Plan assets........................................... $ 5,757 $ 4,200
Accumulated postretirement benefit obligation (APBO):
Retirees.......................................................... 7,061 6,149
Fully eligible plan participants.................................. 181 211
Other active plan participants.................................... 3,357 2,047
------------ ----------
Total APBO................................................ 10,599 8,407
------------ ----------
APBO in excess of Plan assets............................. $ (4,842) $ (4,207)
------------ ----------
------------ ----------
Reconciliation of fund's status to reported amounts:
Accrued liability included in balance sheet, including unfunded
portion of transition obligation............................... $ (3,190) $ (4,207)
Unrecognized net gain (loss)...................................... (1,652) --
------------ ----------
APBO in excess of plan assets............................. $ (4,842) $ (4,207)
------------ ----------
------------ ----------
</TABLE>
The assumed discount rate used to measure the APBO was 7% at December 31,
1993 and 8% at January 1, 1993. The weighted average health care cost trend rate
in 1993 is 13%, gradually declining to an ultimate rate in 2001 of 5%. A one
percentage point increase in the assumed health care cost trend rates for each
future year would have increased the aggregate of the service and interest cost
components of the 1993 net periodic postretirement benefit cost by $109,000 and
would have increased the APBO as of December 31, 1993 by $858,000.
The Corporation established a Voluntary Employees Beneficiary Association
(VEBA) and through December 31, 1993, has made contributions into such VEBA of
$5.7 million, the maximum amount deductible for federal income tax purposes. The
VEBA is expected to earn 5% on trust assets consisting of U.S. Government
obligations, bank obligations, commercial instruments, and repurchase agreements
secured by U.S. Treasury obligations. Additional contributions will be made to
the VEBA annually which will be the source of funding for future postretirement
benefits.
POSTEMPLOYMENT BENEFITS. The Corporation also adopted SFAS No. 112 as of
January 1, 1993, which requires that such costs be charged to expense over the
relevant service period. The Corporation's analysis determined this liability to
be $1.3 million ($807,000 net of tax benefit thereon) at January 1, 1993,
consisting primarily of postemployment medical claims and related administrative
expenses in excess of expected premiums to be paid by employees. The liability
amount was adjusted to $600,000 at December 31, 1993, due to a significant
decrease in 1993 claims. The liability amount will be reviewed annually and
adjusted as management may deem necessary based on actual experience. Annual
expenses for these benefits are not expected to vary significantly from the
amounts which have previously been expensed as incurred.
ACQUIRED INSTITUTIONS. Certain of the financial institutions acquired sponsor
various employee benefit and retirement plans. Such plans have been or are in
the process of being terminated and the employees now participate in the
aforementioned Corporation plans. At December 31, 1993, certain institutions
acquired in 1993 still have outstanding plans, including defined benefit pension
plans, 401K plans and ESOPs. The liabilities, if any, for such terminations have
been recorded as of December 31, 1993.
28
<PAGE> 31
NOTE 16. INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Current tax expense (benefit)
Federal....................................................... $ 18,170 $ 18,928 $ 9,870
State......................................................... 5,113 3,617 (69)
-------- -------- -------
Total current tax expense.................................. 23,283 22,545 9,801
-------- -------- -------
Deferred tax benefit
Federal....................................................... (11,677) (7,349) (3,750)
State......................................................... (4,231) -- --
-------- -------- -------
Total deferred tax benefit................................. (15,908) (7,349) (3,750)
-------- -------- -------
Total income tax expense.............................. $ 7,375 $ 15,196 $ 6,051
-------- -------- -------
-------- -------- -------
</TABLE>
For 1993, income tax expense (benefit) included in the financial statements
is summarized as follows:
<TABLE>
<S> <C>
Applicable income taxes........................................... $ 23,967
Tax benefit related to extraordinary item......................... (2,040)
Tax benefit related to the cumulative effect of changes in
accounting methods.............................................. (14,552)
--------
Total income tax expense................................ $ 7,375
--------
--------
</TABLE>
Deferred tax assets/liabilities are comprised of the following:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------
1993 1992
------- -------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Deferred tax assets
Losses on loans and other real estate................................ $27,022 $20,491
Provisions for litigation settlements................................ 1,349 3,427
Postretirement and postemployment benefits........................... 1,478 --
Amortization of intangibles.......................................... 1,547 27
Net operating loss carryforwards for tax purposes.................... 2,094 --
Depreciation......................................................... 3,129 2,022
Debt defeasance...................................................... 2,023 --
Unrecognized tax benefits............................................ -- (8,666)
Other deferred items................................................. 8,901 9,110
------- -------
Total deferred tax assets.................................... 47,543 26,411
------- -------
Deferred tax liabilities
Other deferred items................................................. 7,912 5,831
------- -------
Net deferred tax asset....................................... $39,631 $20,580
------- -------
------- -------
</TABLE>
The change in the deferred tax asset during the year is a result of the
changes in methods of accounting discussed in Note 1, the addition of deferred
tax assets of acquired companies, and current period deferred tax expense of
$684,000, which includes $805,000 deferred tax benefit attributable to the
increase in the federal income tax rate and $1,520,000 deferred tax benefit from
legislated changes in the treatment of intangible assets. The realization of a
portion of the deferred tax asset is based upon management's conclusion that
future operating profits will generate sufficient taxable income to offset the
related deductions and loss carryforwards.
29
<PAGE> 32
NOTE 16. INCOME TAXES (CONTINUED)
Income tax expense as a percent of earnings before income taxes is
reconciled with the statutory federal income tax rate of 35% for 1993 and 34%
for 1992 and 1991 as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Computed "expected" tax..................................... $29,833 $19,256 $11,410
State income taxes, net of net operating loss carryovers and
federal tax benefit....................................... 3,486 2,387 (46)
Separate subsidiary company prior year losses utilized...... -- (226) (294)
Tax-exempt interest, net.................................... (9,347) (5,821) (5,126)
Amortization of goodwill.................................... 1,466 1,626 1,170
Other, net.................................................. (1,471) (2,026) (1,063)
------- ------- -------
Applicable income tax............................. $23,967 $15,196 $ 6,051
------- ------- -------
------- ------- -------
</TABLE>
Income tax expense applicable to securities transactions was $1.8 million
for 1993, $5.0 million for 1992, and $1.9 million for 1991.
Effective January 1, 1993, the Corporation adopted SFAS No. 109. The impact
of the cumulative tax effect of this change in accounting method was $10.9
million. Reference is made to Note 1 for further discussion of accounting
changes.
NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Corporation is a party to various
types of financial instruments in order to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest rates.
These instruments involve, to varying degrees, elements of credit and interest
rate risk and are not reflected in the accompanying consolidated financial
statements. For certain instruments, the exposure to credit loss is limited to
the contractual amount of the instrument. The following table presents the
contractual amounts of this type of instrument.
<TABLE>
<CAPTION>
CONTRACT AMOUNT
DECEMBER 31,
-------------------
1993 1992
---- ----
<S> <C> <C>
(DOLLARS IN
MILLIONS)
FINANCIAL INSTRUMENTS WHOSE CONTRACT AMOUNTS REPRESENT CREDIT RISK
Commitments to extend credit (excluding credit card plans)......... $480 $400
Commitments to extend credit under credit card plans............... 207 152
Standby, commercial, and similar letters of credit................. 23 34
</TABLE>
Commitments to extend credit are legally binding agreements to lend to
customers for specific purposes, at specific rates, with fixed expiration and
review dates if the conditions in the agreement are met. Since many of the
commitments normally expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Corporation
subjects such activity to the same credit quality and monitoring controls as its
lending activities. Collateral held, if any, varies but may include accounts
receivable, inventory, property, plant and equipment, income producing
properties, or securities.
Letters of credit are conditional commitments issued by the Corporation to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Corporation in some cases holds
various types of collateral to support those commitments for which collateral is
deemed necessary.
Other off-balance-sheet instruments entered into are forward and futures
contracts, interest rate swap agreements, and commitments to purchase or sell
when-issued securities. The following table presents the notional amounts of
these types of instruments.
30
<PAGE> 33
NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)
<TABLE>
<CAPTION>
NOTIONAL AMOUNT
DECEMBER 31,
-------------------
1993 1992
---- ----
<S> <C> <C>
(DOLLARS IN
MILLIONS)
FINANCIAL INSTRUMENTS WHOSE NOTIONAL CONTRACT AMOUNTS EXCEED THE AMOUNTS
OF ACTUAL CREDIT RISK
Forward and futures contracts...................................... $ 38 $ 20
Interest rate swap agreements...................................... 300 --
When-issued securities
Commitments to sell.............................................. 56 44
Commitments to purchase.......................................... 87 73
</TABLE>
Forward and futures contracts are contracts for delayed delivery of
securities or money market instruments in which the seller agrees to make
delivery at a specified future date of a specified instrument, at a specified
price or yield. Risks arise from the possible inability of the counterparties to
meet the terms of their contracts and from movements in securities values and
interest rates.
An interest rate swap generally involves the exchange of fixed for floating
rate interest payment streams on a specified notional principal amount of assets
or liabilities for an agreed upon period of time without the exchange of the
underlying principal amounts. Notional principal amounts often are used to
express the volume of these transactions, but the amounts potentially subject to
credit risk are much smaller. During 1993, the Corporation entered into the
following interest rate swap agreements which are used to manage its
interest-rate risk. The Corporation receives fixed rate payments and pays
variable rate payments.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------
NOTIONAL VARIABLE RATE FIXED RATE MATURITY
INSTRUMENT HEDGED AMOUNT PAID RECEIVED DATE
- ----------------------------------------- -------------- ------------- ---------- --------
<S> <C> <C> <C> <C>
(IN MILLIONS)
Commercial loans......................... $150 3.31% 5.21% 1/99
Investment securities.................... 100 3.50 4.44 6/95
Long-term debt........................... 50 3.56 4.46 5/96
------
Total.......................... $300
------
------
</TABLE>
When-issued securities are commitments to either purchase or sell
securities that have not yet been issued. The trades are contingent upon the
actual issuance of the security. These transactions represent conditional
commitments made by the Corporation, and risk arises from the possible inability
of the counterparties to meet the terms of their contracts and from movements in
securities values and interest rates.
As part of its mortgage banking operations, the Corporation services
residential real estate loans. In its capacity as servicer of these loans, the
Corporation is responsible for foreclosure and the related costs of foreclosure.
These costs are expensed as incurred and are shown as servicing foreclosure
expense in other noninterest expense.
In the normal course of business, the Corporation sells mortgage loans and
makes certain limited representations and warranties to the purchaser.
Management does not expect any significant losses to arise from these
representations and warranties.
CONCENTRATIONS OF CREDIT RISK. Through its subsidiary banks in Tennessee,
Arkansas, Mississippi, and Alabama, the Corporation grants commercial,
agricultural, residential, and consumer loans to customers throughout those
states. The amount and percentage of total loans outstanding by the state in
which the subsidiaries were headquartered at December 31, 1993 were as follows:
Tennessee $2.4 billion (81%), Arkansas $281 million (10%), Mississippi $254
million (9%), and Alabama $12 million (less than 1%). Although the Corporation
has a diversified loan portfolio, the ability of its debtors to honor their
contracts is to some extent dependent upon economic conditions found throughout
the above states and the surrounding areas.
31
<PAGE> 34
NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and fair values of the Corporation's financial
instruments are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1992
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and cash equivalents................. $ 278,735 $ 278,735 $ 327,634 $ 327,634
Interest-bearing deposits at financial
institutions........................... 26,647 26,647 84,204 84,231
Trading account securities................ 153,482 153,482 109,584 109,584
Loans held for sale....................... 56,053 56,053 91,543 91,543
Investment securities..................... 2,617,053 2,661,260 2,198,103 2,239,534
Net loans................................. 2,854,773 2,904,139 2,167,549 2,196,944
FINANCIAL LIABILITIES
Demand deposits........................... 2,916,374 2,916,374 2,365,027 2,365,027
Time deposits............................. 2,334,992 2,358,494 2,085,149 2,098,537
Short-term borrowings..................... 244,995 244,995 296,312 296,312
Federal Home Loan Bank advances........... 157,954 157,723 -- --
Long-term debt, excluding capital lease
obligations............................ 114,982 114,982 74,472 74,731
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Forward and futures contracts............. -- 190 -- 14
When-issued securities
Commitments to sell.................... -- 4 -- --
Commitments to purchase................ -- -- -- --
Interest rate swaps....................... -- 277 -- --
</TABLE>
The following methods and assumptions were used by the Corporation in
estimating the fair value for financial instruments:
CASH AND CASH EQUIVALENTS. The carrying amount for cash and cash
equivalents approximates the fair value of the assets.
INTEREST-BEARING DEPOSITS AT FINANCIAL INSTITUTIONS AND INVESTMENT
SECURITIES. Fair values of these instruments are based on quoted market prices,
where available. If quoted market prices are not available, fair values are
based on the quoted values of similar instruments.
TRADING ACCOUNT SECURITIES. These instruments are carried in the
consolidated balance sheet at values which approximate their fair value based on
quoted market prices of similar instruments.
LOANS HELD FOR SALE. These instruments are carried in the consolidated
balance sheet at the lower of cost or market. The fair value of these
instruments is based on subsequent liquidation values of the instruments which
did not result in any significant gains or losses.
LOANS. The fair values of loans are estimated using discounted cash flow
analyses, and using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality and risk.
DEMAND DEPOSITS. The fair values of these instruments (i.e., checking
accounts, savings accounts, money market deposit accounts, and NOW accounts)
are, by definition, equal to the amount payable on demand at the reporting date
(i.e., their carrying amount).
TIME DEPOSITS. The fair values of time deposits (i.e., certificates of
deposit, IRAs, investment savings, etc.) are estimated using a discounted cash
flow calculation that applies interest rates currently being offered on these
instruments to a schedule of aggregated expected monthly maturities on time
deposits.
SHORT-TERM BORROWINGS. The carrying amount of short-term borrowings (i.e.,
federal funds purchased, securities sold under agreements to repurchase,
commercial paper, and other short-term borrowings) approximates their fair
values.
FEDERAL HOME LOAN BANK ADVANCES. The fair value of these advances is
estimated using discounted cash flow analyses, and using the FHLB quoted rates
of borrowing for advances with similar terms.
32
<PAGE> 35
NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
LONG-TERM DEBT. The fair value of long-term debt is based on quoted market
prices for the Corporation's publicly traded debt.
OFF-BALANCE-SHEET FINANCING INSTRUMENTS. Fair values of off-balance-sheet
instruments are based on current settlement values (forward contracts); quoted
market prices (futures and interest rate swaps); and current market values for
when-issued securities. The fair value of interest rate swaps represents the
unrealized gain in these contracts. The fair value of commitments to extend
credit and letters of credit (see Note 17) are not presented, since management
believes the fair value to be insignificant as the instruments are expected to
expire unused and the fees charged on such instruments are not significant.
NOTE 19. 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 the pending matters discussed below. Additionally, various other legal
proceedings against the Corporation and its subsidiaries have arisen in the
ordinary course of business. Management is of the opinion, based upon present
information, including evaluations of outside counsel, that the Corporation's
financial position will not be materially affected by the ultimate resolution of
these other legal matters. The Corporation and/or various subsidiaries are
parties to various pending civil actions, all of which are being defended
vigorously, as follows:
In 1988, the Corporation rescinded and terminated a purported agreement for
the acquisition of a Louisiana bank holding company, Great American Corporation
(GAC). The Corporation and a subsidiary were made parties to several civil
actions relating to the failed acquisition. In the second quarter of 1993
consummation of the settlement of all pending civil actions involving the
Corporation and a subsidiary arising from the attempted acquisition of GAC was
effected. The costs of such settlement did not exceed amounts previously
reserved for such purpose.
UPNB, a member of the MasterCard and VISA organizations, was a co-defendant
or cross-claim defendant in two related civil actions arising out of its
previous utilization of a third party, Electronic Transaction Network,
Inc.(E-Net), to solicit and assist in the administration of credit card
transaction processing arrangements with several thousand consumer merchants
located throughout the United States. During the third quarter of 1993, a
definitive agreement was entered into for the settlement of all pending
litigation against UPNB in connection with its former relationship with E-Net,
without the payment of any sum by UPNB.
The Corporation's former broker/dealer subsidiaries are among the more than
80 defendants in various lawsuits alleging violations of Federal and other
securities laws in connection with the underwriting and sale between 1986 and
early 1990 of $400 million of housing revenue bonds issued by the Health,
Educational, and Housing Facility Board of the City of Memphis, Tennessee, and
seven other taxable municipal bond issues. One of such subsidiaries participated
in the underwriting of the Memphis issue and is a defendant in purported class
claims based on that issue. Several individual actions against these
subsidiaries alleging violations in secondary market sales of such issues have
been consolidated in the litigation. The bonds were rated AAA by Standard &
Poors at the time of issuance, and maintained such rating until January, 1990,
when the bonds were downgraded. The market price of the bonds has since declined
significantly. Based on the information currently known, the Corporation is of
the opinion that it has meritorious defenses and has instructed counsel to
vigorously defend the lawsuits. The pending individual actions, even in the
aggregate, are not deemed by management to be material to the Corporation's
financial position.
Certain subsidiaries of the Corporation were threatened in 1989 with a
civil action by the FDIC for the estate of a closed savings association. If
filed, the action would reportedly seek compensatory damages of at least $37
million, and other relief including an injunction against transferring or
encumbering any assets until any judgments have been paid, based upon
allegations of wrongdoing in the sale of covered call options to the closed
savings association. An agreement between all parties to the threatened action
providing for the forebearance of the filing of such action and the tolling of
applicable statutes of limitation, entered into in 1989, continues in effect.
The Corporation has furnished the FDIC with information assertedly demonstrating
the lack of merit in the threatened action and believes that such action, if
nevertheless filed, can be resolved without material loss.
33
<PAGE> 36
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying financial statements and related financial information in
this annual report were prepared by the management of Union Planters Corporation
in accordance with generally accepted accounting principles, and where
appropriate reflect management's best estimates and judgment. Management is
responsible for the integrity, objectivity, consistency, and fair presentation
of the financial statements and all financial information contained in this
annual report.
Management maintains and depends upon internal accounting systems and
related systems of internal controls. The internal control systems are designed
to ensure that transactions are properly authorized and recorded in the
Corporation's financial records and to safeguard the Corporation's assets from
material loss or misuse. The Corporation utilizes a professional staff of
auditors who monitor compliance with and assess the effectiveness of the system
of internal accounting controls and coordinate overall audit coverage.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with representatives of the Corporation's
independent accountants and management to review accounting policies, control
procedures, and audit and regulatory examination reports. The independent
accountants have free access to the Committee, with and without the presence of
management, to discuss the results of their audit work and their evaluation of
the adequacy of internal controls and the quality of financial reporting.
The financial statements have been audited by Price Waterhouse, independent
accountants, who were engaged to express an opinion as to the fairness of
presentation of such financial statements.
<TABLE>
<S> <C>
/s/ Benjamin W. Rawlins, Jr. /s/ Jack W. Parker
- ---------------------------- ------------------
Benjamin W. Rawlins, Jr. Jack W. Parker
Chairman of the Board and Executive Vice President and
Chief Executive Officer Chief Financial Officer
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Union Planters Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of earnings, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Union Planters Corporation and its subsidiaries at December 31, 1993 and 1992,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1993 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Corporation's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, in 1993
the Corporation adopted three new accounting standards that changed its method
of accounting for postretirement benefits, postemployment benefits and income
taxes.
/s/ PRICE WATERHOUSE
- --------------------
PRICE WATERHOUSE
Memphis, Tennessee
January 20, 1994,
except as to Note 2
which is as of
March 1, 1994
34
<PAGE> 37
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, (1)
--------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
Net interest income...................................... $ 234,605 $ 191,137 $ 153,555 $ 134,324 $ 123,155
Provision for losses on loans............................ 9,689 18,557 24,835 19,166 49,229
Profits and commissions from trading activities.......... 8,720 10,168 14,707 24,268 36,700
Investment securities gains (losses)..................... 4,581 13,246 3,344 (341) (1,294)
Other noninterest income................................. 71,498 59,859 51,559 46,069 42,121
Noninterest expense...................................... 224,480 199,218 164,771 160,805 177,833
---------- ---------- ---------- ---------- ----------
Earnings (loss) before income taxes, extraordinary item,
and accounting changes................................. 85,235 56,635 33,559 24,349 (26,380)
Applicable income taxes (benefit)........................ 23,967 15,196 6,051 1,639 (4,111)
---------- ---------- ---------- ---------- ----------
Earnings (loss) before extraordinary item and accounting
changes................................................ 61,268 41,439 27,508 22,710 (22,269)
Extraordinary item-defeasance of debt, net of taxes...... (3,206) -- -- -- --
Accounting changes, net of taxes......................... 5,001 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net earnings (loss)...................................... $ 63,063 $ 41,439 $ 27,508 $ 22,710 $ (22,269)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
PER COMMON SHARE DATA (2)
Primary
Earnings (loss) before extraordinary item and
accounting changes................................... $ 2.69 $ 2.10 $ 1.59 $ 1.20 $ (1.19)
Extraordinary item-defeasance of debt, net of taxes.... (.16) -- -- -- --
Accounting changes, net of taxes....................... .25 -- -- -- --
Net earnings (loss).................................... 2.78 2.10 1.59 1.20 (1.19)
Fully diluted
Earnings (loss) before extraordinary item and
accounting changes................................... 2.49 2.02 1.58 1.20 (1.19)
Extraordinary item-defeasance of debt, net of taxes.... (.13) -- -- -- --
Accounting changes, net of taxes....................... .21 -- -- -- --
Net earnings (loss).................................... 2.57 2.02 1.58 1.20 (1.19)
Cash dividends........................................... .72 .60 .48 .48 .48
Book value............................................... 18.96 16.34 14.99 13.61 12.46
Book value assuming conversion of convertible preferred
stock.................................................. 19.06 16.84 14.95 13.60 12.46
BALANCE SHEET DATA (AT PERIOD END)
Total assets............................................. $6,318,186 $5,262,184 $3,786,839 $4,004,710 $4,002,614
Loans, net of unearned income............................ 2,935,215 2,231,839 1,912,914 2,129,083 1,995,383
Allowance for losses on loans............................ 80,442 64,290 47,934 50,921 46,871
Investment securities.................................... 2,617,053 2,198,103 1,147,803 1,155,266 1,019,759
Deposits................................................. 5,251,366 4,450,176 3,211,261 3,341,840 3,129,567
Long-term debt (3)
Parent Company......................................... 114,729 74,292 38,163 44,662 34,500
Subsidiary Banks....................................... 160,501 2,864 3,922 4,103 39,021
Total shareholders' equity............................... 477,300 356,211 269,446 237,035 240,591
Average assets........................................... 6,249,339 4,742,832 3,839,744 4,053,820 3,988,348
Average shareholders' equity............................. 446,994 329,492 247,859 243,783 265,233
Average shares outstanding (in thousands)
Primary.............................................. 19,622 16,765 16,632 18,641 18,761
Fully diluted........................................ 23,852 19,609 16,986 18,981 18,761
PROFITABILITY AND CAPITAL RATIOS
Before extraordinary item and accounting changes
Return on average assets............................... .98% .87% .72% .56% NM%
Return on average common equity........................ 15.18 13.65 11.18 9.34 NM
Net earnings
Return on average assets............................... 1.01% .87% .72% .56% NM%
Return on average common equity........................ 15.70 13.65 11.18 9.34 NM
Net interest income (taxable-equivalent) to average
earning assets......................................... 4.34 4.61 4.63 4.00 3.81
Loans/deposits........................................... 55.89 50.15 59.57 63.71 63.76
Common and preferred dividend payout ratio............... 34.07 38.93 32.71 40.81 NM
Equity/assets (period end)............................... 7.55 6.77 7.12 5.92 6.01
Average shareholders' equity/average total assets........ 7.15 6.95 6.46 6.01 6.65
Tier 1 capital to risk-weighted assets................... 14.85 13.81 12.19 9.57 NA
Total capital to risk-weighted assets.................... 18.59 16.33 14.93 12.17 NA
Leverage ratio........................................... 7.10 6.85 6.94 5.71 5.76
ASSET QUALITY RATIOS
Allowance/period end loans............................... 2.74% 2.88% 2.51% 2.39% 2.35%
Nonperforming loans/total loans.......................... .76 1.70 1.37 .98 .88
Allowance/nonperforming loans............................ 362.83 168.97 182.98 244.77 267.65
Nonperforming assets/loans and foreclosed property....... .92 1.99 1.90 1.62 1.26
Provision/average loans.................................. .35 .86 1.23 .93 2.50
Net charge-offs/average loans............................ .37 .83 1.38 1.10 2.25
</TABLE>
NA -- Not available NM -- Not meaningful
(1) Reference is made to "Basis of Presentation" in Note 1 to the consolidated
financial statements.
(2) Share and per share amounts have been retroactively restated for a
two-for-one stock split effected March 3, 1989 and for acquisitions
accounted for as poolings of interests.
(3) Long-term debt includes subordinated notes and debentures, obligations under
capital leases, mortgage indebtedness, and notes payable with maturities
greater than a year. Subsidiary banks' long-term debt in 1993 is primarily
FHLB advances.
35
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
CORPORATE OVERVIEW
Union Planters Corporation (the Corporation), a $6.3 billion multi-bank
holding company and savings and loan holding company incorporated in 1971 under
the laws of Tennessee and headquartered in Memphis, Tennessee, is the third
largest independent bank holding company headquartered in Tennessee. The
Corporation's activities are conducted through its lead bank, Union Planters
National Bank (UPNB), and 28 community banks and three savings and loan
subsidiaries (collectively, the Community Banks) located in Tennessee,
Mississippi, Arkansas, and Alabama (see Table 15). Subsequent to December 31,
1993 and through March 1, 1994, the Corporation acquired two bank holding
companies and one stand-alone bank, resulting in the Corporation having two
subsidiary banks in Kentucky and four additional banks in Tennessee. A listing
of the individual communities served by the Corporation's banking subsidiaries
is presented on page 59 of this report.
The Corporation, through its subsidiaries, provides a diversified range of
banking and financial services in the communities in which it operates,
including consumer, commercial and corporate lending, retail banking, mortgage
banking and other ancillary financial services normally furnished by
full-service financial institutions. Primarily through UPNB, the Corporation
also is engaged in mortgage servicing; investment management and trust services;
the issuance and servicing of credit and debit cards; and the origination,
packaging, and securitization of loans, primarily the government-guaranteed
portions of Small Business Administration (SBA) loans.
This section of the annual report provides a narrative discussion and
analysis of the Corporation's results of operations and financial condition for
the last three years. The foregoing financial statements and related notes and
the financial tables which follow this discussion should be considered an
integral part of this analysis.
ACQUISITIONS
Acquisitions have been and are expected to continue to be an important part
of the expansion of the Corporation's business. Over the last three years, the
Corporation has acquired 16 financial institutions which have increased total
assets by approximately $2.9 billion. Reference is made to Note 2 to the
financial statements and Tables 3 and 15 for additional information concerning
the institutions acquired.
Management's philosophy has been to provide additional diversification of
the revenue sources and earnings of the Corporation through the acquisition of
small-and medium-size financial institutions, allowing them to, where
practicable, remain separate entities, and to retain their names and boards of
directors as well as substantial autonomy in their day-to-day operations which
permits the institutions to grow within their markets without disruption.
Certain larger strategic acquisitions, Metropolitan and Fidelity (Note 2 to the
financial statements), have also been made.
This philosophy has made the Corporation an attractive acquiror of
financial institutions. Certain functions such as loan review, audit, payroll,
insurance management, data processing, and investment portfolio management are
centralized. Management believes that this philosophy provides the institution
with an environment which promotes high performance.
All of the Corporation's Community Banks have been acquired since 1986 and
are generally located in nonmetropolitan towns and communities, with the
exception of the Metropolitan and Fidelity acquisitions, and provide banking
services and loan products to such communities with an emphasis on single-family
residential mortgages, consumer, and small commercial lending. Of the 31
Community Banks owned at December 31, 1993, 18 have the largest deposit share
and seven have the second largest deposit share in their respective markets
providing UPC with a strong competitive position in those markets.
The Corporation expects to continue to take advantage of the consolidation
of the financial industry by further developing its franchise through
acquisitions. Future acquisitions, as have certain acquisitions in the past, may
entail the payment by the Corporation of consideration in excess of the book
value of the underlying assets being acquired and may result in the issuance of
additional shares of the Corporation's Common and Preferred Stock or the
incurring of additional indebtedness by the Corporation, which may rank senior
to outstanding subordinated debt, and could have a dilutive effect on earnings
or book value per share of the Corporation in the short-term.
36
<PAGE> 39
In 1994, the Corporation plans to organize and capitalize as four separate
Tennessee operating subsidiaries the regional locations of UPNB in Middle
Tennessee (Nashville and Murfreesboro), East Tennessee (Knoxville), Jackson, and
Chattanooga in order to enhance profitability in these regions by providing
better community and customer focus. The new banks will operate the same as the
Corporation's other subsidiary banks. UPNB's assets will decline approximately
$1.5 billion to approximately $2.0 billion following the capitalization of the
new entities. Dividends from UPNB are expected to provide the funding for the
capitalization of the separate banks.
The Corporation also has plans to merge four existing banking subsidiaries
into two of the newly created subsidiaries. These mergers are expected to be
made because of their geographic proximity to the institutions being formed.
These mergers are expected to take place over the next few years. Management
believes the Corporation's consolidated balance sheet and results of operations
will not be significantly impacted by these transactions.
1993 PERFORMANCE SUMMARY
The Corporation reported record net earnings of $63.1 million in 1993, a
52% increase over net earnings of $41.4 million in 1992, compared to net
earnings of $27.5 million in 1991. Fully diluted earnings per common share were
$2.57 in 1993, compared to $2.02 and $1.58 in 1992 and 1991, respectively.
Returns on average assets (ROA) and on average common equity (ROE), key
measurements of profitability in the banking industry, were 1.01% and 15.70%,
respectively, in 1993, versus .87% and 13.65%, respectively, in 1992. ROA and
ROE in 1991 were .72% and 11.18%, respectively.
Included in net earnings in 1993 was a net benefit of $1.8 million, or $.08
per fully diluted common share, from the cumulative effect of certain accounting
changes partially offset by an extraordinary item related to the in-substance
defeasance of debt. Reference is made to Notes 9, 15, and 16 for additional
information regarding these items.
The improvement in earnings in 1993 resulted from continued growth of net
interest income through acquisitions and existing operations, a lower provision
for losses on loans related to a significant improvement in asset quality, and a
reduction in provisions for resolution of litigation and certain operating
expenses. The impact of banks acquired accounted for approximately one fourth of
the improvement in net earnings. The growth in earnings between 1991 and 1992
was due to a favorable interest rate environment, acquisitions, investment
securities gains, and lower provisions for losses on loans partially offset by
one-time expenses and increased expenses from acquisitions.
UPNB had net earnings of $35.6 million in 1993, compared to $27.1 million
in 1992. ROA and ROE in 1993 were 1.07% and 15.26%, respectively, compared to
.89% and 14.07%, respectively, in 1992. The Community Banks had net earnings of
$30.2 million in 1993, compared to $24.2 million in 1992. ROA and ROE for the
Community Banks were 1.01% and 11.86%, respectively, compared to 1.36% and
16.71%, respectively, in 1992. The Community Banks' decline in ROA and ROE in
1993 was due primarily to one-time charges related to institutions acquired in
1993 and provisions for conversion to a new data processing system.
Table 1 summarizes the operating results for each of the major operating
units of the Corporation for each of the last five years. Additionally, Table 2
presents for the last five years the specific contributions to fully diluted
earnings per common share. A more detailed analysis of results of operations and
financial condition follows.
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income is the single most significant component of the
Corporation's earnings. For purposes of this discussion, net interest income has
been adjusted to a fully taxable-equivalent basis for certain tax-exempt loans
and investment securities. Reference is made to Tables 4 and 5 which present the
Corporation's average balance sheet and rate and volume analysis for each of the
years in the three-year period ended December 31, 1993.
In 1993, net interest income increased 24% from 1992, primarily as a result
of acquisitions. A favorable interest rate environment and acquisitions were the
primary reasons for the 24% growth of
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net interest income between 1991 and 1992. Net interest income was $247.9
million in 1993, compared to $200.0 million in 1992 and $161.3 million in 1991.
Taxable-equivalent interest income increased 18% in 1993 to $412.5 million
and increased 3% in 1992 to $349.4 million, due primarily to the growth of
earning assets from the Corporation's acquisitions. Average earning assets were
$5.7 billion in 1993, compared to $4.3 billion and $3.5 billion in 1992 and
1991, respectively. Loans and investment securities represented 49% and 45%,
respectively, of average earning assets in 1993, compared to 50% and 42%,
respectively, in 1992 and 58% and 32%, respectively, in 1991.
The shift in the mix of average earning assets to investment securities is
primarily due to the acquisition of deposits from the RTC (Metropolitan, Note 2
to the financial statements) in 1992 which provided approximately $500 million
in cash which was invested in investment securities. Acquisitions of other
institutions with low loan-to-deposit ratios, strong competition for good
quality loans, run-off of indirect consumer lending (a segment of lending no
longer emphasized), pay-offs of mortgage loans because of heavy refinancing
activity, and a reduction by management in the number of large loan
relationships have all contributed to the mix change.
The taxable-equivalent yield on average earning assets has declined from
9.75% in 1991 to 7.21% in 1993. This is due to the declining interest rate
environment over the last three years which has resulted in funds being invested
at lower rates as higher earning assets mature or reprice. This downward trend
is expected to continue unless a significant increase in interest rates should
occur. Loan volume is beginning to increase and should improve with the economy
which would help offset the decline in yield on earning assets.
Interest income has also increased due to an increase in average
interest-free deposits (demand deposits) of $190 million and $81 million in 1993
and 1992, respectively, which provided additional investable funds.
Approximately 60% of the increase is attributable to acquisitions and the
remaining portion is attributable to growth due to the low interest rate
environment. Individuals are not as concerned with balances in noninterest
bearing accounts as they are when interest rates are higher. Corporate customers
are required to keep higher compensating balances because of the low interest
credits for their balances.
Mortgage servicing-related demand deposits have not increased significantly
between 1992 and 1993; however, they are at historically high levels due
essentially to the high volume of refinancing activity in both years. A rising
interest rate environment would result in a decline in such deposits, since
refinancing activity would be expected to decline.
In 1993, interest expense increased 10% to $164.5 million following a 16%
decline in interest expense in 1992. The increase in 1993 is primarily the
result of a $1.2 billion increase in average interest-bearing liabilities to
$5.0 billion. The majority of the increase relates to acquisitions which
increased interest-bearing deposits. Also increasing interest expense was a $100
million increase in average Federal Home Loan Bank (FHLB) advances in 1993 which
were made to lock in interest rate spreads by borrowing low cost funds from the
FHLB and investing the proceeds in higher yielding assets. The decline in
interest expense between 1991 and 1992 was due primarily to a decline in market
interest rates partially offset by an increase in interest-bearing deposits
mostly attributable to acquisitions.
The rates paid for interest-bearing liabilities have continued to decline
over the last three years. In 1991, the average rate paid on interest-bearing
liabilities was 5.78%, declining to 3.92% in 1992 and to 3.29% in 1993.
Management expects rates to begin to gradually increase over the next twelve
months.
The repricing of earning assets in the current low interest rate
environment has put downward pressure on the net interest margin in 1993. This
follows two years of growth in the margin due to a declining interest rate
environment in which interest-bearing liabilities repriced downward faster than
interest-earning assets did which was offset in 1992 by a decline related
primarily to the Metropolitan transaction in the first quarter of 1992. In 1993,
the repricing of earning assets at lower interest rates continued while the
repricing of interest-bearing liabilities at lower interest rates was not as
dramatic. The interest rate spread in 1993 was 3.92%, compared to 4.13% in 1992
and 3.97% in 1991. Over the last three years, the net interest margin declined
from 4.63% in 1991 to 4.61% in 1992 and 4.34% in 1993.
The decline of the net interest margin is expected to continue in 1994,
unless significant loan growth should occur. Generally rising interest rates
will result in continued downward pressure on the
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net interest margin as interest-bearing liabilities are expected to reprice
before interest-earning assets. Loan demand is beginning to increase which
should partially offset any negative impact from rising interest rates.
Reference is made to the "Asset/Liability Management" discussion for additional
information regarding how the Corporation is positioned to react to changing
interest rates.
In 1993, the Corporation entered into three off-balance-sheet interest rate
swaps to lessen the Corporation's sensitivity to interest rate fluctuations (see
Note 17 to the financial statements). The impact of these interest rate swaps on
the Corporation's net interest income was not significant in 1993.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans (the provision) is the charge to earnings
to increase the allowance for losses on loans to the level required to cover
potential losses inherent in the loan portfolio. Management's policy is to
maintain the allowance for losses on loans at a level considered necessary to
absorb all estimated losses inherent in the loan portfolio. Reference is made to
"Allowance for Losses on Loans", "Nonperforming Assets" and "Potential Problem
Assets" discussions for additional information regarding items that may impact
the provision.
In 1993, the provision was $9.7 million, down $8.9 million from $18.6
million in 1992 which compared to $24.8 million in 1991. The decline in the
provision is reflective of improving asset quality. Financial institutions
acquired during 1993 increased the provision by approximately $3.9 million.
Excluding the impact of acquisitions, management does not expect the provision
to increase significantly in 1994.
NONINTEREST INCOME
Noninterest income increased 2% in 1993, compared to a 20% increase in
1992. Excluding securities gains, the increase in 1993 was 15% compared to 6% in
1992. The components of noninterest income are detailed in the statement of
earnings and Note 14 to the financial statements.
The increase in noninterest income in 1993 is primarily attributable to
acquisitions which increased noninterest income approximately $8.8 million,
derived primarily from service charges on deposit accounts, mortgage servicing
income, credit life insurance commissions, and safe deposit rentals. Also
contributing to the increase were the revenues of the SBA Loan Trading operation
which increased $2.0 million in 1993 to $6.6 million. This operation purchases,
pools, and securitizes the government-guaranteed portions of SBA loans.
Partially offsetting these increases was a decline in the revenues from the
Capital Markets operation which decreased $3.4 million to $2.1 million in 1993.
Capital Markets purchases, pools, and securitizes portfolios of whole mortgage
loans, consumer paper, and other financial instruments and sells the resulting
securities in the open market. Revenues of the Capital Markets operation have
declined over the past three years due to increased competition and the low
interest rate environment. Both the SBA and Capital Markets operations' revenues
are volatile from quarter-to-quarter and year-to-year and future levels cannot
be predicted with any certainty. Noninterest income also declined $2.6 million
from 1992 to 1993 due to noninterest income of $3.5 million and $901,000,
respectively, which was related to a troubled debt restructuring. Mortgage
servicing income declined $900,000 in 1993 to $7.6 million due to the low
interest rate environment which has resulted in a record level of refinancing of
mortgage loans. Merchant credit card fees continued to grow in 1993. Trust
service income increased 12% in 1993, following a 4% decline in 1992.
In 1992, revenues increased $3.5 million due to the troubled debt
restructuring mentioned above. Revenues from the SBA Loan Trading operation
increased $2.2 million in 1992 to $4.6 million, compared to $2.4 million in
1991. Also contributing to the increase were increased earnings of $1.9 million
from VSIBG, the limited partnership formed when the Corporation restructured its
broker/dealer operations in 1990. Service charges on deposit accounts increased
$1.4 million to $20.8 million in 1992, compared to $19.4 million in 1991. The
increase in service charge income was essentially due to acquisitions. Partially
offsetting these increases was a 1992 decrease in revenues from the Capital
Markets operation of $6.8 million to $5.5 million, compared to total revenues of
$12.3 million in 1991.
Investment securities gains were $4.6 million in 1993, compared to $13.2
million in 1992 and compared to $3.3 million in 1991. Securities gains in all
three years were due to various restructuring activities within the investment
securities portfolio.
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Noninterest income is expected to continue to grow primarily through
acquisitions but also through growth of existing operations and development of
new products. Securities gains or losses from the available for sale portfolio
may occur as a result of changing economic conditions and other factors deemed
to require portfolio restructuring. Mortgage servicing income is expected to
continue to decline until the refinancing activity slows. Revenues from merchant
credit card fees, trust income, and service charges on deposits are expected to
continue to increase.
NONINTEREST EXPENSE
Noninterest expenses increased 13% in 1993 to $224.5 million, following a
21% increase in 1992 to $199.2 million from $164.8 million in 1991. The
components of noninterest expense are detailed in the statement of earnings and
Note 14 to the financial statements.
Included in the increase in expenses in 1993, 1992, and 1991 were certain
unusual expenses as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Data processing conversion costs......................... $4.4 $ -- $ --
Merger related expenses.................................. 2.1 -- --
Write-off of intangibles................................. 1.2 -- 1.1
Provisions for litigation settlements.................... -- 9.0 7.6
Provisions for abandoned property........................ -- 5.2 1.6
Accelerated amortization of other intangibles............ 1.4 1.6 --
Accelerated amortization of mortgage servicing rights.... .5 8.2 --
---- ----- -----
Total.......................................... $9.6 $24.0 $10.3
---- ----- -----
---- ----- -----
</TABLE>
Salaries and employee benefits which are the largest component of
noninterest expense were $98.9 million in 1993, a 32% increase from $74.8
million in 1992 and compared to $69.8 million in 1991. The majority of the
increase is related to acquisitions. In 1993, acquisitions accounted for almost
75% of the increase. Full-time-equivalent employees have increased from 2,161 in
1991 to 2,539 in 1992 and to 3,003 in 1993. Acquired institutions increased
full-time-equivalent employees by 487 in 1993.
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
No. 106 and SFAS No. 112 which changed the accounting for postretirement and
postemployment benefits (Note 15 to the financial statements). The Corporation
elected to expense on January 1, 1993, the accumulated postretirement and
postemployment obligations of $9.6 million ($5.9 million after taxes) instead of
amortizing the obligation to expense over 20 years as permitted by the new
standards. The ongoing impact of these accounting changes is not expected to
increase expenses significantly over current levels.
Occupancy and equipment expense increased 25% in 1993, following a 20%
increase in 1992. The increases are primarily related to acquisitions which have
significantly increased the number of branch locations (see the inside front
cover of this report for a listing of the branch locations). The increase in
these expenses was limited due to "negative goodwill" resulting from the
Fidelity acquisition in 1992 which allowed the Corporation to write down the
fixed assets of Fidelity by the amount of negative goodwill which resulted in
lower occupancy and equipment expense of approximately $2.3 million annually.
UPNB completed the Union Planters Administrative Center at the end of 1991,
and in February 1994, completed a new headquarters building. The addition of
these two new buildings is not expected to significantly impact the
Corporation's total occupancy and equipment expenses because existing buildings
have been sold and operating efficiencies are being realized from the new
buildings.
Other noninterest expenses decreased $5.2 million in 1993 to $93.9 million,
following an increase of $25.3 million between 1991 and 1992 to $99.1 million.
The major changes relate to the unusual and one-time charges noted above and to
the impact of acquisitions.
The most significant other changes in other noninterest expense are: (i)
FDIC insurance assessment expense which increased $3.6 million in 1993 to $12.7
million, compared to $9.1 million and $6.8 million in 1992 and 1991,
respectively, due to an increase by the FDIC in its premium rate in 1991 and
higher levels of deposits primarily attributable to acquisitions; (ii) legal
fees, which have been a significant part of noninterest expense, decreased $2.9
million in 1993 to $2.3 million, compared to
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$5.2 million and $4.3 million in 1992 and 1991, respectively, attributable to
the final resolution of a significant amount of litigation; (iii) other real
estate expenses declined 30% in 1993 to $2.3 million from $3.2 million in 1992
and $2.4 million in 1991, primarily due to improving asset quality; (iv)
merchant credit card charges grew 17% to $4.6 million in 1993, compared to $3.9
million in 1992 and $3.1 million in 1991 (increased in relation to merchant
credit card fee income which also increased over these periods). Other
noninterest expenses (detailed in Note 14 to the financial statements) have
increased primarily due to acquisitions.
Management is committed to controlling and reducing noninterest expenses
where possible. With the downward pressure on the net interest margin,
management is evaluating ways to further reduce noninterest expenses. Tight
controls remain in effect on discretionary expenses. The one-time expenses
identified previously are not expected to impact future earnings.
In the last half of 1993, management made a decision to convert all of the
Corporation's subsidiaries to a common data processing system. As noted above,
the Corporation provided for data processing conversion costs in 1993 of $4.4
million. Once the conversion is completed, the Corporation's ongoing operating
costs are expected to be reduced significantly. Management has estimated annual
cost savings of approximately $6.0 million from the conversion of existing
institutions to the new data processing system. However, there can be no
assurance that savings of that magnitude will be realized. As the Corporation
acquires financial institutions, provisions will be required to convert their
data processing systems to the common system. The impact of such provisions
cannot be estimated at this time.
TAXES
In the first quarter of 1993, the Corporation adopted SFAS No. 109,
"Accounting for Income Taxes" (see Note 16 to the financial statements).
Applicable income taxes consist of provisions for federal and state income
taxes. Applicable income taxes before the cumulative effect of accounting
changes and the extraordinary item were $24.0 million in 1993, compared with
$15.2 million and $6.1 million, respectively, in 1992 and 1991.
Effective tax rates before the cumulative effects of accounting changes and
the extraordinary item for 1993, 1992, and 1991 were 28.1%, 26.8%, and 18.0%,
respectively. The variances from statutory rates are attributable primarily to
income from tax-exempt investment securities and loans and utilization of both
federal and state net operating loss carryforwards. The tax provision for 1993
was also affected by the enactment of tax law changes which became effective
during the third quarter of 1993. This legislation resulted in a $2.9 million
reduction in the tax provision for current operations. These changes were
primarily due to the deduction of previously nondeductible amortization of
certain intangible assets and the impact on the deferred tax asset of the
increase in the federal tax rate to 35%. These benefits have been partially
offset by the increase in the federal tax rate to 35% for the current year
provision. For additional information regarding the Corporation's effective tax
rate and the composition of income tax expense for the last three years, see
Note 16 to the financial statements.
The realization of approximately $7.4 million of the deferred tax asset of
$39.6 million is dependent upon generation of future taxable income sufficient
to offset these deductions. Management believes that, based upon historical
earnings and anticipated future earnings, normal operations will continue to
generate sufficient future taxable income to realize all of these benefits.
Because this income should be generated without requiring changes to the current
operating environment of the Corporation, no extraordinary strategies are deemed
necessary by management to generate sufficient income for purposes of realizing
the deferred tax asset.
The criteria for recognition of the deferred tax asset for regulatory
capital purposes are more stringent than for financial statement purposes and
allow only limited anticipation of future taxable income. Approximately $1.9
million of the Corporation's deferred tax asset has been disallowed for
regulatory capital purposes. See Table 13 for the risk-based capital
computation.
FINANCIAL CONDITION ANALYSIS
During 1993, the Corporation's balance sheet grew significantly as the
Corporation completed twelve acquisitions. At December 31, 1993, total assets
were $6.3 billion compared to $5.3 billion at December 31, 1992. Average total
assets were $6.2 billion in 1993, compared to $4.7 billion in 1992. The
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following is a more detailed discussion of the changes in the financial
condition of the Corporation between 1993 and 1992.
MONEY MARKET INVESTMENTS
Money market investments include interest-bearing deposits at financial
institutions, federal funds sold, securities purchased under agreements to
resell, trading account securities, and loans held for sale. These investments
provide the Corporation with a ready source of liquidity. Table 12 details these
investments at December 31 for each of the last three years and Table 4 presents
the average balances, interest income, and weighted average yields for the last
three years. At December 31, 1993, these investments totaled $289 million and
averaged $357 million in 1993 with an average yield of 4.39%. This compares to
$378 million at December 31, 1992 and an average balance of $343 million in 1992
with an average yield of 5.37%. The most significant components of these
investments are federal funds sold and trading account securities, which are
primarily the government-guaranteed portions of SBA loans.
INVESTMENT SECURITIES
Prior to January 1, 1994, investment securities included securities held
for sale and securities held for investment. At December 31, 1993, investment
securities represented 45% of total earning assets. Note 4 to the financial
statements details the components of the investment portfolio at December 31,
1993 and 1992, and the maturities and weighted average yields at December 31,
1993. Table 4 presents the average balance, tax-equivalent interest income, and
tax-equivalent yield of investment securities for each of the last three years.
Effective January 1, 1994, the Corporation adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" which is
discussed in Note 1 to the financial statements.
Upon adoption of SFAS No. 115, the Corporation transferred all securities
currently in the held for sale and held for investment portfolios, except for
obligations of states and political subdivisions, to the available for sale
category. The total amount of securities transferred on January 1, 1994 to the
available for sale portfolio from the held for sale and held for investment
portfolios was $2.2 billion ($595 million and $1.6 billion, respectively).
Held for Sale
At December 31, 1993, held for sale securities were $595 million, compared
to $477 million at December 31, 1992. The held for sale portfolio had unrealized
gains of $5.6 million and unrealized losses of $234,000 at year end 1993 which
compared to $9.1 million and $212,000, respectively, at year end 1992. The
decline in the amount of unrealized gains is primarily attributable to changes
in the composition of the portfolio. Held for sale securities (available for
sale securities under SFAS No. 115) may be sold in response to changes in
interest rates, liquidity needs, or asset/liability strategies. The largest
component of this portfolio is $234 million of mortgage-backed securities. In
the low interest rate environment, the Corporation has some exposure to
prepayments for these securities and monitors the portfolio on an ongoing basis.
Proceeds from the sales and maturities of these securities totaled $795 million
in 1993, resulting in net realized gains of $2.8 million.
Held for Investment
Securities held for investment totaled $2.0 billion at December 31, 1993,
compared to $1.7 billion at December 31, 1992. Unrealized gains and losses in
this portfolio totaled $41.2 million and $2.4 million, respectively, at December
31, 1993, compared to $34.1 million and $1.6 million, respectively, at December
31, 1992. The increases in this portfolio were primarily in obligations of state
and political subdivisions (49% of the increase) and U.S. Treasury securities
(33% of the increase). Proceeds from in-substance maturities (sales of
securities within 90 days of maturity) and calls of these securities totaled
$1.0 billion in 1993, resulting in net realized gains of $1.8 million.
LOANS
Loans are the largest component of the Corporation's earning assets. At
December 31, 1993, loans totaled $2.9 billion, compared to $2.2 billion at
December 31, 1992. Average loans were $2.8 billion in 1993, compared to $2.2
billion in 1992, with average yields of 8.79% and 9.30%, respectively. Table 7
presents the composition of the loan portfolio for each of the last five years.
The Corporation's
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acquisitions have significantly impacted loans. Acquisitions completed in 1993
added $649 million to loans (see Table 3).
During the past three years, adverse economic conditions and strong
competition have resulted in limited opportunities to make quality loans.
Moreover, to lessen risk, management has reduced the in-house lending limits to
large borrowers. The growth in the loan portfolio from acquisitions has been
primarily in real estate loans secured by 1-4 family residential properties and
consumer loans. The growth through acquisitions has been partially offset by a
decline in single family residential loans, predominately adjustable-rate loans,
due to refinancing activity caused by the low interest rate environment. During
the fourth quarter of 1993, some growth occurred in commercial lending. The
Community Banks have provided some growth in 1993. Average loans, excluding the
impact of acquisitions, increased $71 million in 1993.
Management expects loan growth to increase in 1994 as the economy continues
to improve. Emphasis will continue to be placed on expanding the portfolio of
residential real estate and consumer loans. Commercial lending activity is also
expected to increase in 1994.
ALLOWANCE FOR LOSSES ON LOANS
The allowance for losses on loans (the allowance) at December 31, 1993, was
$80.4 million, or 2.74% of loans, compared to $64.3 million, or 2.88% of loans
at December 31, 1992. Management's policy is to maintain the allowance at a
level deemed sufficient to absorb estimated losses in the loan portfolio. The
adequacy of the allowance is reviewed in detail quarterly taking into account
current and anticipated economic conditions and the related impact on specific
borrowers and industry groups, historical loan loss experience, the level of
classified and nonperforming loans, reviews and evaluations of specific loans,
changes in the nature and volume of the loan portfolio, and the results of
regulatory examinations. In the Corporation's due diligence investigation of
potential acquisition candidates, this same type of evaluation is made to
determine whether the institutions being acquired have the same reserve
standards as the Corporation. Tables 8 and 10 present detailed information
regarding the allowance for each of the last five years.
The significant increase in the allowance in 1993 was the result of
acquisitions which increased the allowance by $16.6 million. Net charge-offs as
a percentage of average loans declined to .37% in 1993, compared to .83% in 1992
which reflects the improving asset quality trend. Gross charge-offs declined
$13.3 million to $18.8 million in 1993 (including $6.2 million for 1993
acquisitions), primarily in the commercial loan category. Recoveries of
previously charged-off loans were $8.7 million in 1993, down from $14.2 million
in 1992. Recoveries in 1992 included a $7.0 million recovery of one loan
resulting from the consummation of a troubled debt restructuring.
Excluding the impact of acquisitions, management does not expect any
significant increase in charge-offs or the provision for losses on loans in
1994. Credit quality has improved significantly in the last twelve months and no
significant negative trends have been noted. If significant loan growth should
occur, some increase in the provision for losses on loans would be expected.
LOAN CONCENTRATIONS
Management believes that the Corporation's loan portfolio is adequately
diversified. Diversification is considered important because it reduces the
risks associated with changing economic conditions. The Corporation's Community
Banks and UPNB serve communities in Tennessee, Northern Mississippi, Northeast
Arkansas, Kentucky, and Alabama. At December 31, 1993, the Corporation had no
concentrations equaling 10% or more of loans in any single industry.
The Corporation's largest concentration of loans is in single family
residential loans (35%) which historically have had low loss experience. Over
the last several years, management has also made efforts to diversify the loan
portfolio between large and smaller sized loans to lessen the Corporation's risk
exposure. Management believes that this objective has been achieved, since at
December 31, 1993, the Corporation had only $228 million of loans ($381 million
of commitments) where the relationship exceeded $5 million.
NONPERFORMING ASSETS
Nonperforming assets consist of nonaccrual and restructured loans, other
real estate owned, and other foreclosed properties. Table 9 presents an analysis
of nonperforming assets and loans 90 days or
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more past due for the last five years. Note 1 to the financial statements
describes the Corporation's policy for placing loans on nonperforming status.
Nonperforming assets declined significantly in 1993 and were $27.0 million,
or .92% of loans and foreclosed properties at December 31, 1993, compared to
$44.5 million, or 1.99% of loans and foreclosed properties at December 31, 1992.
Nonperforming loans were $22.2 million, or .76% of loans, compared to $38.0
million, or 1.70% of loans, at December 31, 1992. Institutions acquired in 1993
accounted for approximately $4.2 million of the total nonperforming assets at
December 31, 1993.
Nonaccrual loans represent the largest component of nonperforming assets
and totaled $14.6 million at year end 1993 compared to $36.7 million at year end
1992. The allowance for losses on loans as a percentage of nonperforming loans
was 363% at year end 1993, compared to 169% at year end 1992. At December 31,
1993, the largest amounts of nonaccrual loans were concentrated in 1-4 family
residential loans ($4.5 million), commercial real estate loans ($3.6 million),
and commercial loans ($2.5 million). Excluding the impact of acquisitions,
management does not anticipate any significant increase in the level of
nonaccrual loans in 1994.
The increase in restructured loans in 1993 relates primarily to one $6.0
million loan which was renegotiated during the second quarter of 1993. The
borrower is in compliance with the restructured terms and has demonstrated an
ability to make payments over a period of time. If the performance continues,
the Corporation expects to return the loan to performing status. Foreclosed
properties declined $1.7 million to $4.8 million at December 31, 1993.
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 that become nonperforming. At
December 31, 1993, the Corporation had potential problem assets (all of which
were loans) totaling $6.5 million which are not expected to significantly impact
asset quality of the Corporation.
DEPOSITS
The Corporation's deposit base is its primary source of liquidity. Total
deposits consist of deposits from the communities the Corporation serves with no
significant out-of-market deposits. Tables 4 and 6 present the average balances
and average rates paid on the Corporation's deposits.
Average total deposits increased 30% in 1993 to $5.3 billion, compared to
$4.1 billion in 1992. At December 31, 1993, total deposits were $5.3 billion,
compared to $4.5 billion at December 31, 1992. Average deposits increased
primarily due to acquisitions in 1993 which increased total deposits
approximately $1.0 billion. Excluding the impact of acquisitions, deposits have
declined approximately $232 million between 1992 and 1993.
The low interest rate environment over the last three years has caused
consumers to evaluate their interest-bearing deposits versus other investment
alternatives which has resulted in some disintermediation of deposits from the
banking system. Emphasis is being placed by management on nontraditional
investment products in an attempt to retain customers considering leaving the
deposit system.
All categories of average deposits increased in 1993, principally from
acquisitions. Acquisitions were the primary reason for the increase in average
interest-bearing deposits of 29% between 1992 and 1993. Average
noninterest-demand deposits increased 37%, primarily from acquisitions but also
from growth due to the low interest rate environment. The current environment
requires commercial customers to maintain larger balances to offset the impact
of lower earnings credit rates and individuals are not as concerned with
noninterest-bearing balances as they are in a higher interest rate environment.
Finally, mortgage-related demand deposits are at historically high levels
because of prepayments due to refinancing activity.
SHAREHOLDERS' EQUITY
Shareholders' equity increased $121.1 million in 1993 to $477.3 million at
December 31, 1993. The ratio of shareholders' equity to total assets at December
31, 1993 and 1992 was 7.55% and 6.77%,
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respectively. Common and preferred stock issued in connection with acquisitions
accounted for $74 million of the increase. Additionally, shareholders' equity
increased $5 million due to stock issued through stock options, employee benefit
plans, and the Corporation's dividend reinvestment plan. Retained net earnings
(earnings less dividends paid) increased shareholders' equity by $42 million.
Total dividends paid in 1993 totaled $21 million which represented a 34%
dividend payout ratio and compares to dividends paid of $16 million in 1992
which represented a 39% dividend payout ratio.
CAPITAL ADEQUACY
The key to continued growth and profitability for the Corporation is to
maintain an adequate level of capital. Capital adequacy is determined based upon
the level of capital as well as asset quality, liquidity, earnings history,
economic conditions, and the level of acquisition activity.
The Federal Reserve Board (Federal Reserve), the Office of the Comptroller
of the Currency (OCC), the Office of Thrift Supervision (OTS), and the Federal
Deposit Insurance Corporation (FDIC) have adopted capital guidelines governing
the Corporation and its subsidiary banks and savings and loan institutions.
These guidelines require the maintenance of an amount of capital based on
risk-weighted assets in order that certain higher risk categories of assets will
have more capital backing them than lower risk assets. Capital is also required
to be maintained for certain off-balance-sheet activities such as loan
commitments and letters of credit.
The regulatory capital guidelines divide capital into two tiers, Tier 1 and
Tier 2 capital. Tier 1 capital consists of common shareholders' equity,
noncumulative perpetual preferred stock, a limited amount of cumulative
perpetual preferred stock, and minority interests in consolidated subsidiaries
less certain intangibles and one-half of investments in unconsolidated
subsidiaries. In certain other instances, other deductions may be required such
as a disallowed portion of a deferred tax asset or, until approved for
inclusion, the net adjustment to equity for the fair value adjustment to
available for sale investment securities (SFAS No. 115). Tier 2 capital includes
a portion of the allowance for losses on loans, preferred stock not qualifying
as Tier 1 capital, and qualifying subordinated debt. In determining the
risk-based capital requirements, assets are assigned risk weights of zero to 100
percent, depending on the regulatory assigned levels of credit risk associated
with such assets. Off-balance-sheet items are included in the calculation of
risk-adjusted assets through conversion factors established by the regulatory
agencies. At December 31, 1993, the Corporation's Tier 1 and Total capital to
risk-weighted assets ratios were 14.85% and 18.59%, respectively, well above
required regulatory minimums. These ratios compare to 13.81% and 16.33%,
respectively, at December 31, 1992.
In addition to the risk-weighted capital requirements, the regulatory
agencies have established a leverage capital requirement. This is calculated by
dividing Tier 1 capital by unadjusted quarterly average total assets. At
December 31, 1993, the Corporation's leverage ratio was 7.10%, compared to 6.85%
at December 31, 1992, which exceeded the required regulatory minimums.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
established five capital categories for banks, savings and loan associations,
and bank holding companies. Institutions are classified into the capital
categories based on their leverage ratio and Tier 1 and Total capital risk-
weighted ratios. At December 31, 1993, the Corporation and its subsidiary
financial institutions qualified for the "well-capitalized" capital category.
LIQUIDITY
Liquidity for a financial institution is the ability to meet cash flow
requirements for deposit withdrawals, new loans, and loan commitments, and to
take advantage of attractive investment opportunities. The Corporation's primary
sources of liquidity are its deposit base and money market investments which
were discussed previously. Liquidity is also achieved through short-term
borrowing, borrowing under available credit lines, and the issuance of
securities and debt instruments in the marketplace.
The parent company's primary source of liquidity is management fees and
dividends from subsidiaries. Note 12 to the financial statements provides a
discussion of the restrictions upon the Corporation's subsidiaries ability to
pay dividends and extend credit to the parent company. The number of subsidiary
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.
45
<PAGE> 48
During 1993, the parent company issued $75 million of 6.25% Subordinated
Notes due 2003 under a $150 million shelf registration statement and received
net proceeds of approximately $74 million. Approximately $39 million of the
proceeds were used to in-substance defease the Corporation's 10 1/8%
Subordinated Debentures due 1999 (see Note 9 to the financial statements).
At December 31, 1993, the parent company had cash and cash equivalents
totaling $102 million compared to $59 million at December 31, 1992, which
management believes provides the parent company with adequate liquidity.
Additional liquidity will be provided from management fees and dividends from
subsidiaries. The liquidity needs of the parent company are for the payment of
operating expenses of the parent company, dividends on outstanding Common and
Preferred Stock, repayment of debt, debt service, and funding for acquisitions.
Additionally, management has the option to call for redemption on or after
October 31, 1994, the Series C Preferred Stock currently outstanding, assuming
approval were granted by the Federal Reserve, although there can be no assurance
that such approval would be granted. Based on the current interest rate
environment and the Corporation's existing capital levels, it is probable that
the Corporation's right of redemption will be exercised.
ASSET/LIABILITY MANAGEMENT
Asset/liability management is considered to be one of the most important
aspects of the Corporation's efforts to sustain profitability. The goal of the
Corporation's asset/liability management is to maximize net interest income
within acceptable levels of interest rate risk and liquidity. To achieve this
goal, a proper balance must be maintained between assets and liabilities with
respect to size, maturity, repricing, rates of return, and degrees of risk.
The Corporation's Funds Management Committee oversees the conduct of global
asset/liability management for the Corporation. This committee reviews the
asset/liability structure and interest rate sensitivity of each affiliated
financial institution and that of the consolidated Corporation. While the
Corporation grants wide latitude to the management of its affiliated financial
institutions, it is the policy of the Corporation that each affiliate establish
policies for the proper conduct of balance sheet management. These policies
contain, at a minimum, limits on rate sensitivity, guidelines for liquidity
maintenance, and capital ratio guidelines.
The Corporation performs rate-sensitivity analysis regularly to show
repricing amounts for the first twelve months, years one to two, years two
through five, and in a single category for all amounts occurring more than five
years from the analysis date. Table 11 presents the Corporation's rate-
sensitivity analysis at December 31, 1993.
Balance sheet simulation analysis is also conducted to determine the impact
on net interest income for the next twelve months under several interest rate
scenarios. Projecting net interest income on one simulation which holds rates
and volumes constant indicates a declining net interest income versus 1993 as
normal roll-off and repricing of earning assets occurs at lower than historical
market rates. When this projection is subjected to immediate and parallel yield
curve shifts in interest rates ("rate shock") of 200 basis points, first rising
and then falling, the annual impact of the "rate shock" at December 31, 1993, on
the Corporation's net interest income was a positive $134,000 pre-tax and a
negative $5.6 million pre-tax, respectively, which is well within the
Corporation's policy limits.
OFF-BALANCE-SHEET INSTRUMENTS
The Corporation uses off-balance-sheet instruments in order to manage
interest rate risk and generate fee income. Loan commitments, letters of credit,
futures and forward contracts, when-issued securities, and interest rate swaps
are not carried on the balance sheet. The income and expense related to these
instruments are reflected in the income statement. Note 17 to the financial
statements provides information on these off-balance-sheet instruments.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The required disclosures regarding the fair value of financial instruments
are included in Note 18 to the financial statements along with a summary of the
methods and assumptions used by the Corporation in determining the fair values.
The differences between the fair values and book values are primarily caused by
differences between contractual and market interest rates. Fair values have
46
<PAGE> 49
varied from period-to-period due to the composition of the balance sheet and the
current interest rate environment.
Management's opinion is that the information required in the SFAS No. 107
disclosure does not meaningfully reflect the underlying value of the Corporation
due to the requirements of SFAS No. 107 in the application of fair value
accounting. Comparisons of the fair value of the Corporation with other
financial institutions may not be meaningful due to differences in the
assumptions and methods used in determining fair values. Therefore, this
information is not used by management to manage the Corporation and its banking
subsidiaries. Other methods, including the asset/liability management philosophy
discussed previously, are used.
FOURTH QUARTER 1993 RESULTS
Net earnings for the fourth quarter of 1993 were $13.0 million, an increase
of 13% over the same period in 1992. Fully diluted earnings per common share
were $.52, compared to $.55 a year ago. Net earnings for the fourth quarter of
1993 included an extraordinary loss, net of taxes, of $3.2 million, or $.06 per
fully diluted share, from the in-substance defeasance of the Corporation's
10 1/8% Subordinated Capital Debentures due 1999. Earnings before the
extraordinary item were $16.2 million, a 41% increase over the same period in
1992. Returns on average assets and average common equity before the
extraordinary loss were 1.02% and 15.11%, respectively, compared to .90% and
14.42%, respectively, for the fourth quarter of 1992.
The improvement in fourth quarter results was due to continued growth of
net interest income, a lower provision for losses on loans, and growth of
noninterest income. Table 14 includes comparative quarterly operating results
for the fourth quarter of 1993 as well as for the previous seven quarters.
Net interest income for the fourth quarter of 1993 increased 11% to $57.9
million, compared to $52.0 million for the fourth quarter of 1992. The increase
was primarily due to acquisitions. The provision for losses on loans declined
$6.1 million to $710,000 for the fourth quarter of 1993 which is reflective of
the Corporation's improving asset quality. Investment securities gains were
$642,000 for the fourth quarter of 1993, compared to $1.2 million in 1992. Other
noninterest income increased 1% in the fourth quarter of 1993, primarily due to
acquisitions. Other noninterest income for the fourth quarter of 1992 included
nonrecurring income of $3.5 million related to a troubled debt restructuring.
Noninterest expenses increased 11% in the fourth quarter of 1993 to $55.1
million. The increase was primarily attributable to companies acquired. Fourth
quarter 1993 expenses included nonrecurring expenses of approximately $1.5
million, compared to $1.7 million in the fourth quarter of 1992.
DIVIDENDS
The Corporation paid cash dividends on its Common Stock totaling $13.0
million, or $.72 per share in 1993, compared to $10.0 million, or $.60 per share
in 1992. Dividends totaling $8.5 million were paid or accrued on the
Corporation's Preferred Stock outstanding, compared to $6.2 million in 1992. The
increase in the Preferred Stock dividends was due to the issuance of additional
shares of Preferred Stock in 1993. In January 1994, the Board of Directors
increased the regular quarterly dividend on the Corporation's Common Stock to
$.21 per share ($.84 annually).
The Corporation's primary sources of cash available to pay dividends are
cash and cash equivalents of the parent company and management fees and
dividends from subsidiaries. The only current contractual restriction on the
Corporation's ability to pay dividends is a credit agreement which limits
dividends to 60% of the previous year's net earnings. Management does not expect
this restriction to affect the current dividend policy.
CAPITAL EXPENDITURES
In the normal course of business, the Corporation replaces furniture and
equipment and builds new branch locations to better serve its customers.
Management has planned capital expenditures for 1994 totaling approximately $7.5
million. These expenditures are in various stages of planning and are not
expected to have a significant impact on the Corporation's future operating
results.
CONTINGENT LIABILITIES
The Corporation and its subsidiaries are defendants in various lawsuits. A
discussion of the significant legal matters can be found in Note 19 to the
financial statements. During 1991 and 1992, the
47
<PAGE> 50
Corporation made provisions for litigation settlements totaling $9.0 million and
$7.6 million, respectively. Management does not expect any additional material
provisions for litigation for the foreseeable future. In 1992 and 1993, a
significant number of these lawsuits were finally resolved using previously
established provisions for litigation settlements. Management is of the opinion
that the Corporation's financial position will not be materially affected by the
ultimate resolution of litigation pending or known to be threatened at December
31, 1993.
IMPACT OF PROPOSED ACCOUNTING STANDARDS
SFAS No. 114 -- Accounting by Creditors for Impairment of a Loan
In May 1993, SFAS No. 114 was issued. It is applicable to all creditors and
loans, and addresses the accounting for the impairment of loans,
uncollateralized as well as collateralized, except large groups of
smaller-balance, homogeneous loans (e.g. consumer and mortgage loans) that are
collectively evaluated for impairment, loans carried at fair value or at lower
of cost or fair value, leases, and debt securities as defined by SFAS No. 115.
Such loans are required to be measured based upon the present value of expected
future cash flows discounted at the loan's effective interest rate or, as a
practical expedient, at the loan's observable market price or fair value of the
underlying collateral if the loan should be collateral dependent. This statement
also applies to all loans that have been restructured in accordance with SFAS
No. 15. SFAS No. 114 is effective for fiscal years beginning after December 31,
1994, with earlier adoption encouraged. Management has not quantified the impact
of SFAS No. 114 on the financial statements but does not expect it to be
material to the financial position or operating results of the Corporation.
Statement of Position No. 93-6 (SOP 93-6) -- Employers' Accounting for
Employee Stock Ownership Plans
In November 1993, SOP 93-6 was issued and is effective for fiscal years
beginning after December 31, 1993. The SOP prescribes certain accounting and
disclosures required for employer stock ownership plans (ESOP) that contain
unallocated shares (i.e. leveraged ESOPs). The Corporation has reviewed the
provisions of SOP 93-6 and does not believe that the adoption of such will have
a material impact on the Corporation's financial position or results of
operation as all shares held by the Corporation's ESOP are allocated to its
participants (see Note 15 to the financial statements).
48
<PAGE> 51
TABLE 1. SUMMARY OF CONSOLIDATED RESULTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, (1)
---------------------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
COMMERCIAL BANKING
Union Planters National Bank
Net interest income............................... $ 121,633 $ 117,199 $ 91,060 $ 82,469 $ 82,791
Provision for losses on loans..................... (4,473) (15,520) (22,864) (18,046) (46,525)
Noninterest income................................ 51,228 49,346 51,875 41,393 33,281
Noninterest expense............................... (119,823) (115,568) (100,577) (94,276) (84,263)
--------- --------- --------- -------- --------
Operating earnings (loss)..................... 48,565 35,457 19,494 11,540 (14,716)
Investment securities gains (losses).............. 2,860 11,626 4,052 699 (48)
Gain on sale of collateral related to a troubled
debt............................................ 901 3,513 -- -- --
Accelerated amortization of mortgage servicing
rights.......................................... (500) (8,200) -- -- --
Accelerated amortization of other intangibles..... (1,203) (1,379) -- -- --
Provisions for conversion of data processing
systems......................................... (1,547) -- -- -- --
Write-off of intangibles.......................... (28) -- -- -- (4,051)
Provision for litigation settlements.............. -- -- (675) (225) --
Provisions for abandoned property................. -- (5,200) (1,643) -- --
--------- --------- --------- -------- --------
Earnings (loss) before income taxes........... 49,048 35,817 21,228 12,014 (18,815)
--------- --------- --------- -------- --------
Community Bank Subsidiaries
Net interest income............................... 119,235 76,973 66,468 52,751 38,456
Provision for losses on loans..................... (5,216) (3,037) (1,971) (1,120) (2,704)
Noninterest income................................ 23,274 13,306 12,169 9,825 6,877
Noninterest expense............................... (90,408) (53,202) (48,691) (39,637) (28,491)
--------- --------- --------- -------- --------
Operating earnings............................ 46,885 34,040 27,975 21,819 14,138
Investment securities gains (losses).............. 1,721 1,582 895 (1,080) (1,335)
Accelerated amortization of other intangibles..... (182) (270) -- -- --
Provisions for conversion of data processing
systems......................................... (2,877) -- -- -- --
Merger related expenses........................... (2,113) -- -- -- --
Write-off of intangibles.......................... (1,181) -- (1,053) -- --
Reversion of excess assets of pension plans....... -- -- -- -- 2,521
--------- --------- --------- -------- --------
Earnings before income taxes.................. 42,253 35,352 27,817 20,739 15,324
--------- --------- --------- -------- --------
BROKER/DEALER
Profits and commissions from trading activities..... -- -- -- 19,024 36,700
Less: Commissions paid.............................. -- -- -- (8,555) (22,225)
--------- --------- --------- -------- --------
Net profits and commissions................... -- -- -- 10,469 14,475
Net interest income................................. -- -- -- 1,461 1,653
Noninterest income.................................. 3,652 3,920 2,031 203 1,996
Noninterest expenses................................ (222) (1,923) (2,088) (14,433) (22,612)
--------- --------- --------- -------- --------
Operating earnings (loss)..................... 3,430 1,997 (57) (2,300) (4,488)
Provisions for litigation settlements............... -- (6,675) (9,250) -- (5,200)
Write-off of goodwill............................... -- -- -- -- (3,462)
Loss on managed options account..................... -- -- -- -- (1,141)
Provisions for property write-downs................. -- -- -- (272) (750)
--------- --------- --------- -------- --------
Earnings (loss) before income taxes........... 3,430 (4,678) (9,307) (2,572) (15,041)
--------- --------- --------- -------- --------
PARENT COMPANY
Net interest income (expense)....................... (6,263) (3,035) (3,973) (2,357) 255
Noninterest income, excluding subsidiary
dividends(2)...................................... 1,284 42 264 3 51
Noninterest expense (3)............................. (4,517) (4,576) (3,192) (3,618) (4,243)
--------- --------- --------- -------- --------
Operating earnings (loss)..................... (9,496) (7,569) (6,901) (5,972) (3,937)
Investment securities gains (losses)................ -- 38 (1,603) 40 89
(Provisions) reversals for litigation settlements... -- (2,325) 2,325 100 (4,000)
--------- --------- --------- -------- --------
Earnings (loss) before income taxes........... (9,496) (9,856) (6,179) (5,832) (7,848)
--------- --------- --------- -------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES,
EXTRAORDINARY ITEM, AND ACCOUNTING
CHANGES..................................... 85,235 56,635 33,559 24,349 (26,380)
Applicable income (taxes) benefit..................... (23,967) (15,196) (6,051) (1,639) 4,111
--------- --------- --------- -------- --------
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM AND
ACCOUNTING CHANGES.......................... 61,268 41,439 27,508 22,710 (22,269)
Extraordinary item -- defeasance of debt, net of
taxes............................................... (3,206) -- -- -- --
Accounting changes, net of taxes
Postretirement/Postemployment obligations........... (5,925) -- -- -- --
Income taxes........................................ 10,926 -- -- -- --
--------- --------- --------- -------- --------
NET EARNINGS (LOSS)........................... $ 63,063 $ 41,439 $ 27,508 $ 22,710 $(22,269)
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------
</TABLE>
(1) Individual line items will not total to the consolidated statement of
earnings amounts due to eliminating entries.
(2) Net of intercompany dividends from bank subsidiaries of $28.1 million, $20.7
million, $21.3 million, $19.7 million, and $31.8 million in 1993 through
1989, respectively.
(3) Management fees charged to subsidiaries of $7.2 million, $5.9 million, $5.6
million, $4.3 million, and $4.1 million in 1993 through 1989, respectively,
have been netted against noninterest expense.
49
<PAGE> 52
TABLE 2. CONTRIBUTION TO FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net interest income-FTE................................................. $ 10.40 $ 10.20 $ 9.50 $ 7.50 $ 6.98
Provision for losses on loans........................................... (0.41) (0.95) (1.46) (1.01) (2.62)
------- ------- ------- ------- -------
Net interest income after provision for losses on loans-FTE............. 9.99 9.25 8.04 6.49 4.36
------- ------- ------- ------- -------
Noninterest income
Service charges on deposits........................................... 1.20 1.06 1.14 0.89 0.79
Profits and commissions from trading activities....................... 0.37 0.52 0.87 1.28 1.96
Investment securities gains (losses).................................. 0.19 0.68 0.20 (0.02) (0.07)
Other income............................................................ 1.79 1.99 1.88 1.54 1.45
------- ------- ------- ------- -------
Total noninterest income........................................ 3.55 4.25 4.09 3.69 4.13
------- ------- ------- ------- -------
Noninterest expense
Salaries and employee benefits........................................ (4.15) (3.81) (4.10) (4.07) (4.26)
Net occupancy expense................................................. (0.67) (0.67) (0.62) (0.58) (0.59)
Equipment expense..................................................... (0.66) (0.62) (0.63) (0.62) (0.66)
Other expense......................................................... (3.93) (5.06) (4.35) (3.20) (3.97)
------- ------- ------- ------- -------
Total noninterest expense....................................... (9.41) (10.16) (9.70) (8.47) (9.48)
------- ------- ------- ------- -------
Earnings (loss) before income taxes-FTE, extraordinary item, and
accounting changes............................................ 4.13 3.34 2.43 1.71 (0.99)
Applicable income taxes-FTE............................................. (1.56) (1.23) (0.81) (0.51) (0.20)
------- ------- ------- ------- -------
Earnings (loss) before extraordinary item and accounting
changes....................................................... 2.57 2.11 1.62 1.20 (1.19)
Extraordinary item and accounting changes, net of taxes................. 0.08 -- -- -- --
Preferred stock dividends............................................... (0.08) (0.09) (0.04) -- --
------- ------- ------- ------- -------
Net earnings (loss)............................................. $ 2.57 $ 2.02 $ 1.58 $ 1.20 $ (1.19)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Change in net earnings applicable to fully diluted earnings per share
using previous year average shares outstanding........................ $ 1.10 $ 0.75 $ 0.22 $ 2.40 $ (2.38)
Change in average shares outstanding.................................... (0.55) (0.31) 0.16 (0.01) (0.01)
------- ------- ------- ------- -------
Change in net earnings.......................................... $ 0.55 $ 0.44 $ 0.38 $ 2.39 $ (2.39)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Average fully diluted shares (in thousands)............................. 23,852 19,609 16,986 18,981 18,761
------- ------- ------- ------- -------
------- ------- ------- ------- -------
FTE -- Fully taxable-equivalent
</TABLE>
TABLE 3. ACQUISITIONS COMPLETED IN 1993
BALANCES AT RESPECTIVE DATES OF ACQUISITION
<TABLE>
<CAPTION>
SECURITY TOTAL
TRUST/ IMPACT ON
BOET SAVETRUST MARYVILLE GBI(1) OTHERS(2) UPC
-------- --------- --------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at financial
institutions.................................. $ 1,103 $ 9,502 $ -- $ 397 $ 5,996 $ 16,998
Loans, net of unearned income................... 124,861 105,317 113,644 102,944 202,387 649,153
Allowance for losses on loans................... (2,636) (1,889) (3,496) (2,156) (6,430) (16,607)
-------- --------- --------- -------- -------- ----------
Net loans..................................... 122,225 103,428 110,148 100,788 195,957 632,546
Investment securities........................... 61,848 126,454 54,915 47,536 131,434 422,187
Intangible assets............................... 7,009 4,396 -- -- 6,783 18,188
Cash and cash equivalents....................... 27,988 10,087 17,741 13,200 50,408 119,424
Other real estate owned, net.................... -- 610 868 710 1,183 3,371
Premises and equipment.......................... 7,292 4,365 -- 8,120 8,020 27,797
Other assets.................................... 3,480 2,131 3,002 2,955 7,610 19,178
-------- --------- --------- -------- -------- ----------
TOTAL ASSETS.................................. $230,945 $260,973 $186,674 $173,706 $407,391 $1,259,689
-------- --------- --------- -------- -------- ----------
-------- --------- --------- -------- -------- ----------
LIABILITIES
Deposits........................................ $196,088 $233,611 $168,960 $163,214 $349,771 $1,111,644
Other interest-bearing liabilities.............. 7,156 -- -- 4,251 7,496 18,903
Other liabilities............................... 2,401 5,383 3,627 1,485 4,679 17,575
-------- --------- --------- -------- -------- ----------
TOTAL LIABILITIES............................. $205,645 $238,994 $172,587 $168,950 $361,946 $1,148,122
-------- --------- --------- -------- -------- ----------
-------- --------- --------- -------- -------- ----------
PURCHASE PRICE/CAPITAL CONTRIBUTION/EQUITY AT
RESPECTIVE DATES OF ACQUISITION FOR POOLINGS.... $ 25,300 $ 21,979 $ 14,087 $ 4,756 $ 45,445 $ 111,567
-------- --------- --------- -------- -------- ----------
-------- --------- --------- -------- -------- ----------
</TABLE>
(1) Amounts are as of January 1, 1993 for GBI, since it was accounted for as a
pooling of interests.
(2) Includes FSB, FCB, Farmers Union, and Erin, which were accounted for as
purchases. Also included are January 1, 1993 amounts for HHC, CSB, and FFS
which were accounted for as poolings of interests. See Note 2 to the
financial statements for additional information.
50
<PAGE> 53
TABLE 4. AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1993 1992 1991
---------------------------- ---------------------------- ----------------------------
INTEREST FTE INTEREST FTE INTEREST FTE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- -------- ------ ---------- -------- ------ ---------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions............. $ 43,560 $ 1,634 3.75% $ 80,682 $ 3,999 4.96 % $ 108,675 $ 7,525 6.92 %
Federal funds sold and securities
purchased under agreements to
resell............................. 143,758 4,602 3.20 115,557 4,280 3.70 118,492 6,606 5.58
Trading account securities(1)........ 120,061 6,194 5.16 105,116 6,648 6.32 63,286 5,419 8.56
Loans held for resale................ 49,699 3,239 6.52 41,817 3,457 8.27 51,369 4,671 9.09
Investment securities
Taxable securities................. 2,200,847 116,025 5.27 1,601,510 106,139 6.63 939,658 79,253 8.43
Tax-exempt securities(1)........... 382,994 36,640 9.57 234,213 23,912 10.21 181,703 19,582 10.78
---------- -------- ---------- -------- ---------- --------
Total investment securities.... 2,583,841 152,665 5.91 1,835,723 130,051 7.08 1,121,361 98,835 8.81
---------- -------- ---------- -------- ---------- --------
Loans, net of unearned income (1) and
(2)................................ 2,777,032 244,133 8.79 2,161,804 200,983 9.30 2,018,146 216,299 10.72
---------- -------- ---------- -------- ---------- --------
Total earning assets(1)........ 5,717,951 412,467 7.21 4,340,699 349,418 8.05 3,481,329 339,355 9.75
-------- -------- --------
Cash and due from banks.............. 255,854 198,659 178,411
Premises and equipment............... 131,304 91,579 76,722
Allowance for losses on loans........ (80,933) (63,285) (51,530)
Other assets......................... 225,163 175,180 154,812
---------- ---------- ----------
TOTAL ASSETS................... $6,249,339 $4,742,832 $3,839,744
---------- ---------- ----------
---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts................ $1,326,050 $ 30,679 2.31% $1,092,551 $ 31,109 2.85 % $ 900,361 $ 41,994 4.66 %
Savings deposits..................... 795,362 19,288 2.43 468,222 12,828 2.74 338,795 13,611 4.02
Certificates of deposit of $100,000
and over........................... 341,775 13,659 4.00 267,362 12,603 4.71 257,971 17,602 6.82
Other time deposits.................. 2,126,592 83,174 3.91 1,719,340 81,065 4.71 1,291,081 87,045 6.74
Short-term borrowings
Federal funds purchased and
securities sold under agreements
to repurchase.................... 222,136 5,983 2.69 211,662 6,631 3.13 235,662 12,278 5.21
Other.............................. 9,107 304 3.34 8,450 311 3.68 9,177 531 5.79
Federal Home Loan Bank advances...... 100,280 3,592 3.58 -- -- -- -- -- --
Long-term debt
Subordinated capital notes and
debentures....................... 81,126 7,447 9.18 41,311 4,340 10.51 34,162 3,720 10.89
Other.............................. 4,540 421 9.27 6,341 528 8.33 14,018 1,254 8.95
---------- -------- ---------- -------- ---------- --------
Total interest-bearing
liabilities.................. 5,006,968 164,547 3.29 3,815,239 149,415 3.92 3,081,227 178,035 5.78
Noninterest-bearing demand deposits.... 709,855 -- 519,885 -- 438,482 --
---------- -------- ---------- -------- ---------- --------
Total sources of funds......... 5,716,823 164,547 4,335,124 149,415 3,519,709 178,035
-------- -------- --------
Other liabilities...................... 85,522 78,216 72,176
Shareholders' equity................... 446,994 329,492 247,859
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY......... $6,249,339 $4,742,832 $3,839,744
---------- ---------- ----------
---------- ---------- ----------
NET INTEREST INCOME(1)................. $247,920 $200,003 $161,320
-------- -------- --------
-------- -------- --------
INTEREST RATE SPREAD(1)................ 3.92% 4.13 % 3.97 %
------ ------ ------
------ ------ ------
NET INTEREST MARGIN(1)................. 4.34% 4.61 % 4.63 %
------ ------ ------
------ ------ ------
TAXABLE-EQUIVALENT ADJUSTMENTS
Loans................................ $ 1,123 $ 1,102 $ 1,537
Securities........................... 12,192 7,764 6,228
-------- -------- --------
$ 13,315 $ 8,866 $ 7,765
-------- -------- --------
-------- -------- --------
</TABLE>
(1) Taxable-equivalent yields are calculated assuming a 35% income tax rate in
1993 and a 34% income tax rate in 1992 and 1991. State taxes are calculated
at 6% without any tax-exempt exclusion.
(2) Including loans on nonaccrual status.
51
<PAGE> 54
TABLE 5. ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
1993 VERSUS 1992 1992 VERSUS 1991
--------------------------------- --------------------------------
INCREASE INCREASE
(DECREASE) (DECREASE)
DUE TO CHANGE IN:(1) DUE TO CHANGE IN:(1)
-------------------- TOTAL -------------------- TOTAL
AVERAGE AVERAGE INCREASE AVERAGE AVERAGE INCREASE
VOLUME RATE (DECREASE) VOLUME RATE (DECREASE)
--------- -------- ---------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits at other financial
institutions.................................. $ (1,548) $ (817) $ (2,365) $ (1,676) $ (1,850) $ (3,526)
Federal funds sold and securities purchased
under agreements to resell.................... 954 (632) 322 (160) (2,166) (2,326)
Trading account securities...................... 869 (1,323) (454) 2,911 (1,682) 1,229
Loans held for resale........................... 587 (805) (218) (816) (398) (1,214)
Investment securities
Taxable securities............................ 34,467 (24,581) 9,886 46,653 (19,767) 26,886
Tax-exempt securities......................... 14,319 (1,591) 12,728 5,407 (1,077) 4,330
--------- -------- ---------- -------- -------- ----------
Total investment securities................. 48,786 (26,172) 22,614 52,060 (20,844) 31,216
--------- -------- ---------- -------- -------- ----------
Loans........................................... 54,585 (11,435) 43,150 14,684 (30,000) (15,316)
--------- -------- ---------- -------- -------- ----------
TOTAL INTEREST INCOME....................... 104,233 (41,184) 63,049 67,003 (56,940) 10,063
--------- -------- ---------- -------- -------- ----------
INTEREST EXPENSE
Money market accounts........................... 5,984 (6,414) (430) 7,728 (18,613) (10,885)
Savings deposits................................ 8,078 (1,618) 6,460 4,297 (5,080) (783)
Certificates of deposit of $100,000 and over.... 3,163 (2,107) 1,056 620 (5,619) (4,999)
Other time deposits............................. 17,298 (15,189) 2,109 24,320 (30,300) (5,980)
Federal funds purchased and securities sold
under agreements to repurchase................ 316 (964) (648) (1,149) (4,498) (5,647)
Other short-term borrowings..................... 23 (30) (7) 9 (229) (220)
Federal Home Loan Bank advances................. 3,592 -- 3,592 -- -- --
Subordinated capital notes and debentures....... 3,716 (609) 3,107 755 (135) 620
Other long-term debt............................ (162) 55 (107) (644) (82) (726)
--------- -------- ---------- -------- -------- ----------
TOTAL INTEREST EXPENSE...................... 42,008 (26,876) 15,132 35,936 (64,556) (28,620)
--------- -------- ---------- -------- -------- ----------
CHANGE IN NET INTEREST INCOME..................... $ 62,225 $(14,308) $ 47,917 $ 31,067 $ 7,616 $ 38,683
--------- -------- ---------- -------- -------- ----------
--------- -------- ---------- -------- -------- ----------
PERCENTAGE INCREASE IN NET INTEREST INCOME OVER
PRIOR PERIOD.................................... 23.96% 23.98%
---------- ----------
---------- ----------
</TABLE>
(1) The change in interest due to both rate and volume has been allocated to
change due to volume and change due to rate in proportion to the
relationship of the absolute dollar amounts of the change in each.
TABLE 6. AVERAGE DEPOSITS(1)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Noninterest-bearing demand................................. $ 709,855 $ 519,885 $ 438,482 $ 431,966 $ 420,733
Money market(2)............................................ 1,326,050 1,092,551 900,361 884,607 789,473
Savings(3)................................................. 795,362 468,222 338,795 304,253 265,421
Other time(4).............................................. 2,126,592 1,719,340 1,291,081 1,260,007 1,116,997
---------- ---------- ---------- ---------- ----------
TOTAL AVERAGE CORE DEPOSITS............................ 4,957,859 3,799,998 2,968,719 2,880,833 2,592,624
Certificates of deposit of $100,000 and over............... 341,775 267,362 257,971 314,355 395,041
---------- ---------- ---------- ---------- ----------
TOTAL AVERAGE DEPOSITS................................. $5,299,634 $4,067,360 $3,226,690 $3,195,188 $2,987,665
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
(1) Table 4 presents the average rate paid on the above deposit categories for
the three years ended December 31, 1993.
(2) Includes money market savings accounts and super NOW accounts.
(3) Includes regular savings accounts, NOW accounts, and premium savings
accounts.
(4) Includes certificates of deposit of less than $100,000, investment savings
deposits, IRA's, and Christmas Club accounts.
52
<PAGE> 55
TABLE 7. COMPOSITION OF THE LOAN PORTFOLIO
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DOMESTIC LOANS
Commercial, financial, and agricultural.................. $ 664,362 $ 549,049 $ 566,307 $ 739,289 $ 797,101
Real estate -- construction.............................. 82,971 54,353 54,678 74,267 95,313
Real estate -- mortgage
Secured by 1-4 family residential...................... 1,022,263 752,405 458,133 464,988 388,117
Other mortgage loans................................... 517,886 386,802 325,773 296,214 239,389
Home equity.............................................. 86,356 83,936 51,831 46,695 35,320
Consumer
Credit cards and other related plans................... 99,103 71,115 62,807 58,826 53,120
Other consumer loans................................... 450,780 331,451 368,298 439,787 391,055
Direct lease financing................................... 25,914 16,493 32,728 36,274 28,314
---------- ---------- ---------- ---------- ----------
Total domestic loans................................. 2,949,635 2,245,604 1,920,555 2,156,340 2,027,729
FOREIGN LOANS.............................................. 2,250 1,750 12,710 2,000 2,363
---------- ---------- ---------- ---------- ----------
TOTAL LOANS.......................................... 2,951,885 2,247,354 1,933,265 2,158,340 2,030,092
Less: Unearned income.................................. 16,670 15,515 20,351 29,257 34,709
---------- ---------- ---------- ---------- ----------
TOTAL LOANS, NET OF UNEARNED INCOME.................. $2,935,215 $2,231,839 $1,912,914 $2,129,083 $1,995,383
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
TABLE 8. ALLOCATION OF THE ALLOWANCE FOR LOSSES ON LOANS BY CATEGORY OF LOANS
AND THE PERCENTAGE OF LOANS BY CATEGORY TO TOTAL LOANS OUTSTANDING
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
--------------------- --------------------- ---------------------- --------------------- ---------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF LOANS TO OF LOANS TO OF LOANS TO OF LOANS TO OF LOANS TO
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
------- ------------ ------- ------------ ------- ------------ ------- ------------ ------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial,
financial,
and
agricultural.. $25,538 22% $22,219 26% $17,388 29% $21,419 34% $20,521 39%
Real
estate --
construction.. 1,527 3 1,216 1 2,794 3 1,554 4 1,704 5
Real
estate --
mortgage... 38,972 52 28,500 54 15,794 41 15,839 35 13,848 31
Consumer..... 13,845 22 12,000 18 11,358 25 11,569 25 10,343 24
Foreign...... 35 -- 25 -- 45 -- 54 -- 31 --
Direct lease
financing.. 525 1 330 1 555 2 486 2 424 1
------- --- ------- --- ------- --- ------- --- ------- ---
Total.... $80,442 100% $64,290 100% $47,934 100% $50,921 100% $46,871 100%
------- --- ------- --- ------- --- ------- --- ------- ---
------- --- ------- --- ------- --- ------- --- ------- ---
</TABLE>
Note: The allocation of the allowance is presented based in part on evaluations
of specific loans, past history, and economic conditions within specific
industries or geographic areas. Since all of these factors are subject to
change, the current allocation of the allowance is not necessarily
indicative of the breakdown of future losses.
53
<PAGE> 56
TABLE 9. NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Nonaccrual loans................................................ $14,646 $36,698 $24,204 $18,206 $14,826
Restructured loans.............................................. 7,525 1,351 1,993 2,598 2,686
------- ------- ------- ------- -------
Total nonperforming loans................................... 22,171 38,049 26,197 20,804 17,512
------- ------- ------- ------- -------
Foreclosed property
Other real estate owned, net of reserve for losses............ 4,358 6,326 10,063 13,680 7,498
Other foreclosed properties................................... 434 171 247 171 265
------- ------- ------- ------- -------
Total foreclosed properties................................. 4,792 6,497 10,310 13,851 7,763
------- ------- ------- ------- -------
Total nonperforming assets.................................. $26,963 $44,546 $36,507 $34,655 $25,275
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Loans 90 days or more past due and not on nonaccrual status..... $ 4,771 $ 3,368 $ 4,071 $ 9,281 $ 5,444
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Nonperforming loans as a percentage of loans.................... 0.76% 1.70% 1.37% 0.98% 0.88%
Nonperforming assets as a percentage of loans plus foreclosed
properties.................................................... 0.92 1.99 1.90 1.62 1.26
Allowance for losses on loans as a percentage of nonperforming
loans......................................................... 362.83 168.97 182.98 244.77 267.65
Loans 90 days or more past due and not on nonaccrual status as a
percentage of loans........................................... .16 .15 .21 .44 .27
</TABLE>
TABLE 10. ALLOWANCE FOR LOSSES ON LOANS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance at beginning of period......................... $ 64,290 $ 47,934 $ 50,921 $ 46,871 $ 41,063
Loans charged off
Commercial, financial, and agricultural.............. 9,476 20,690 18,481 19,423 25,265
Real estate-construction............................. 34 361 710 1,305 614
Real estate-mortgage................................. 2,508 3,844 3,712 2,334 10,642
Consumer............................................. 6,798 7,176 12,384 7,515 11,210
Direct lease financing............................... 9 20 31 129 133
---------- ---------- ---------- ---------- ----------
Total charge-offs.................................. 18,825 32,091 35,318 30,706 47,864
---------- ---------- ---------- ---------- ----------
Recoveries on loans previously charged off
Commercial, financial, and agricultural.............. 4,476 10,135 2,729 3,992 1,558
Real estate-construction............................. 49 108 23 195 49
Real estate-mortgage................................. 611 444 441 476 753
Consumer............................................. 3,506 3,464 2,590 3,326 1,225
Foreign.............................................. -- -- 1,568 -- --
Direct lease financing............................... 39 61 145 13 5
---------- ---------- ---------- ---------- ----------
Total recoveries................................... 8,681 14,212 7,496 8,002 3,590
---------- ---------- ---------- ---------- ----------
Net charge-offs........................................ 10,144 17,879 27,822 22,704 44,274
Provision charged to expense........................... 9,689 18,557 24,835 19,166 49,229
Increase due to acquisitions........................... 16,607 15,678 -- 7,588 853
---------- ---------- ---------- ---------- ----------
Balance at end of period............................... $ 80,442 $ 64,290 $ 47,934 $ 50,921 $ 46,871
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Loans, net of unearned income, at end of period........ $2,935,215 $2,231,839 $1,912,914 $2,129,083 $1,995,383
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Average loans, net of unearned income, during period... $2,777,032 $2,161,804 $2,018,146 $2,063,925 $1,966,799
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratios:
Allowance at end of period to loans, net of unearned
income............................................. 2.74% 2.88% 2.51% 2.39% 2.35%
Allowance at end of period to average loans, net of
unearned income.................................... 2.90 2.97 2.38 2.47 2.38
Net charge-offs to average loans, net of unearned
income............................................. .37 .83 1.38 1.10 2.25
</TABLE>
54
<PAGE> 57
TABLE 11. RATE SENSITIVITY ANALYSIS AT DECEMBER 31, 1993
<TABLE>
<CAPTION>
INTEREST-SENSITIVE WITHIN
---------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 1-2 2-5 OVER NONINTEREST-
DAYS(B) DAYS DAYS DAYS YEARS YEARS 5 YEARS BEARING TOTAL
-------- ----- ------ ------- ----- ------ ------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
ASSETS
Loans and leases......... $ 642 $ 327 $ 272 $ 457 $ 265 $ 583 $ 391 $ 15 $2,952
Investment securities.... 320 278 320 504 490 367 338 -- 2,617
Other earning assets..... 183 53 53 -- -- -- -- -- 289
Other assets............. -- -- -- -- -- -- -- 460 460
-------- ----- ------ ------- ----- ------ ------- ------------- ------
TOTAL ASSETS..... $1,145 $ 658 $ 645 $ 961 $ 755 $ 950 $ 729 $ 475 $6,318
-------- ----- ------ ------- ----- ------ ------- ------------- ------
-------- ----- ------ ------- ----- ------ ------- ------------- ------
SOURCES OF FUNDS
Money market deposits.... $ 151 $ 298 $ -- $ 349 $ 20 $ 502 $ -- $ -- $1,320
Other savings and time
deposits.............. 431 565 571 337 230 656 57 -- 2,847
Time deposits over
$100,000.............. 72 72 80 49 20 39 2 -- 334
Short-term borrowings.... 245 -- -- -- -- -- -- -- 245
Federal Home Loan Bank
advances.............. 101 20 4 1 3 13 16 -- 158
Long-term debt........... -- -- -- -- -- -- 117 -- 117
Noninterest-bearing
deposits.............. -- -- -- -- -- -- -- 750 750
Other liabilities........ -- -- -- -- -- -- -- 70 70
Shareholders' equity..... -- -- -- -- -- -- -- 477 477
-------- ----- ------ ------- ----- ------ ------- ------------- ------
TOTAL SOURCES OF
FUNDS.......... $1,000 $ 955 $ 655 $ 736 $ 273 $1,210 $ 192 $ 1,297 $6,318
-------- ----- ------ ------- ----- ------ ------- ------------- ------
-------- ----- ------ ------- ----- ------ ------- ------------- ------
INTEREST RATE SWAPS........ $ -- $(150) $ (150) $ -- $ 100 $ 200 $ -- $ -- $ --
INTEREST RATE SENSITIVITY
GAP...................... 145 (447) (160) 225 582 (60) 537 (822) --
CUMULATIVE INTEREST RATE
SENSITIVITY GAP.......... 145 (302) (462) (237) 345 285 822 -- --
CUMULATIVE GAP AS A
PERCENTAGE OF
TOTAL ASSETS............. 2% (5)% (7)% (4)% 5% 5% 13% --% --%
</TABLE>
MANAGEMENT HAS MADE THE FOLLOWING ASSUMPTIONS IN THE ABOVE ANALYSIS:
(1) Assets and liabilities are generally scheduled according to their earliest
repricing period when the repricing is less than the contractual maturity.
(2) Nonaccrual loans are included in the noninterest-bearing category.
(3) Fixed-rate mortgage loan maturities are based on the principal prepayment
patterns of comparable mortgage-backed securities.
(4) The scheduled maturities of mortgage-backed securities and CMO'S incorporate
principal prepayments of these securities using current and consensus
interest rate forecasts in conjunction with the latest three month
historical prepayment speeds.
(5) Securities held 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 dates when valued at a premium to par.
(6) Money market deposits and savings deposits that have no contractual
maturities are scheduled according to the Corporation's best estimate of
their repricing sensitivity to changes in market rates. This varies by
product type and market.
(7) 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 total assets
would have been negative (27%), (27%), (30%), (20%), (10%), and positive 4%,
respectively, for the 0-30 days, 31-90 days, 91-180 days, 181-365 days, 1-2
years, and 2-5 years categories at December 31, 1993.
55
<PAGE> 58
TABLE 12. INVESTMENT SECURITIES AND MONEY MARKET ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
U.S. Government obligations
U.S. Treasury securities................................. $ 804,351 $ 646,329 $ 264,623
Securities of U.S. Government agencies................... 1,286,348 1,216,643 644,603
---------- ---------- ----------
Total U.S. Government obligations................ 2,090,699 1,862,972 909,226
Obligations of state and political subdivisions............ 441,673 294,564 190,573
Other investment securities................................ 84,681 40,567 48,004
---------- ---------- ----------
Total investment securities...................... 2,617,053 2,198,103 1,147,803
Interest-bearing deposits at financial institutions........ 26,647 84,204 134,947
Federal funds sold and securities purchased under resale
agreements............................................... 53,149 92,354 59,570
Trading account securities................................. 153,482 109,584 90,271
Loans held for resale...................................... 56,053 91,543 32,257
---------- ---------- ----------
Total investment securities and money market
assets......................................... $2,906,384 $2,575,788 $1,464,848
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
TABLE 13. RISK-BASED CAPITAL
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1993 1992 1991
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
TIER 1 CAPITAL
Shareholders' equity..................................... $ 477,300 $ 356,211 $ 269,446
Minority interest in a consolidated subsidiary........... 1,588 1,588 500
Less goodwill and one-half of investment in
unconsolidated subsidiaries........................... (31,097) (8,493) (6,938)
Less disallowed deferred tax asset....................... (1,861) -- --
---------- ---------- ----------
TOTAL TIER 1 CAPITAL............................. 445,930 349,306 263,008
TIER 2 CAPITAL
Allowance for losses on loans............................ 38,067 32,027 27,232
Qualifying long-term debt................................ 74,479 32,000 32,000
Less one-half of investment in unconsolidated
subsidiaries.......................................... (136) (147) (129)
---------- ---------- ----------
TOTAL CAPITAL.................................... $ 558,340 $ 413,186 $ 322,111
---------- ---------- ----------
---------- ---------- ----------
RISK-WEIGHTED ASSETS....................................... $3,003,001 $2,529,912 $2,157,866
---------- ---------- ----------
---------- ---------- ----------
RATIOS
Equity to assets......................................... 7.55% 6.77% 7.12%
Leverage ratio........................................... 7.10 6.85 6.94
Tier 1 capital to risk-weighted assets................... 14.85 13.81 12.19
Total capital to risk-weighted assets.................... 18.59 16.33 14.93
</TABLE>
56
<PAGE> 59
TABLE 14. SELECTED QUARTERLY DATA
<TABLE>
<CAPTION>
1993 QUARTERS ENDED (1) AND (2)
----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
-------- ------- ------------ ----------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net interest income....................... $57,963 $59,649 $ 59,049 $57,944 $234,605
Provision for losses on loans............. (2,823 ) (4,667) (1,489) (710) (9,689)
Noninterest income........................ 19,404 23,214 21,467 20,714 84,799
Noninterest expense....................... (54,637 ) (56,589) (58,149) (55,105) (224,480)
-------- ------- ------------ ----------- --------
Earnings before income taxes,
extraordinary item, and accounting
changes................................. 19,907 21,607 20,878 22,843 85,235
Applicable income taxes................... 6,413 7,052 3,877 6,625 23,967
-------- ------- ------------ ----------- --------
Earnings before extraordinary item and
accounting changes...................... 13,494 14,555 17,001 16,218 61,268
Extraordinary item, net of taxes.......... -- -- -- (3,206) (3,206)
Accounting changes, net of taxes.......... 5,001 -- -- -- 5,001
-------- ------- ------------ ----------- --------
Net earnings.................... $18,495 $14,555 $ 17,001 $13,012 $ 63,063
-------- ------- ------------ ----------- --------
-------- ------- ------------ ----------- --------
PER COMMON SHARE DATA
Earnings per common share before
extraordinary item and accounting
changes
Primary.............................. $ .60 $ .63 $ .75 $ .71 $ 2.69
Fully diluted........................ .57 .59 .68 .65 2.49
Net earnings
Primary.............................. .85 .63 .75 .55 2.78
Fully diluted........................ .78 .59 .68 .52 2.57
Dividends............................... .18 .18 .18 .18 .72
UPC COMMON STOCK DATA(3)
High trading price...................... $ 29.13 $ 29.25 $ 30.00 $ 28.75 $ 30.00
Low trading price....................... 22.50 22.63 25.00 23.63 22.50
Closing price........................... 29.00 25.75 29.00 25.13 25.13
Trading volume (in thousands)(4)........ 3,059 1,926 2,008 2,800 9,793
</TABLE>
<TABLE>
<CAPTION>
1992 QUARTERS ENDED (1)
----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
-------- ------- ------------ ----------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net interest income....................... $40,596 $47,577 $ 50,920 $52,044 $191,137
Provision for losses on loans............. (6,067 ) (3,900) (1,777) (6,813) (18,557)
Noninterest income........................ 17,058 19,120 26,079 21,016 83,273
Noninterest expense....................... (39,561 ) (49,428) (60,411) (49,818) (199,218)
-------- ------- ------------ ----------- --------
Earnings before income taxes.............. 12,026 13,369 14,811 16,429 56,635
Applicable income taxes................... 2,977 3,421 3,880 4,918 15,196
-------- ------- ------------ ----------- --------
Net earnings.................... $ 9,049 $ 9,948 $ 10,931 $11,511 $ 41,439
-------- ------- ------------ ----------- --------
-------- ------- ------------ ----------- --------
PER COMMON SHARE DATA
Earnings per common share
Primary.............................. $ .48 $ .50 $ .55 $ .57 $ 2.10
Fully diluted........................ .47 .48 .52 .55 2.02
Dividends............................... .15 .15 .15 .15 .60
UPC COMMON STOCK DATA(3)
High trading price...................... $ 15.50 $ 20.13 $ 20.75 $ 24.75 $ 24.75
Low trading price....................... 13.75 14.63 17.50 17.75 13.75
Closing price........................... 15.13 18.38 18.88 24.25 24.25
Trading volume (in thousands)(4)........ 1,888 2,313 1,322 2,066 7,589
</TABLE>
(1) Certain quarterly amounts have been reclassified to conform with current
financial reporting presentation.
(2) Quarterly amounts for 1993 have been restated for acquisitions accounted for
using the pooling of interests method of accounting in 1993.
(3) Union Planters Corporation's Common Stock is listed on the New York Stock
Exchange (NYSE), and is traded under the symbol UPC. All share prices
represent closing prices as reported by the NYSE. There were approximately
5,400 holders of the Corporation's Common Stock as of December 31, 1993.
(4) Trading volume represents the total daily volume for the period shown as
reported by NYSE.
57
<PAGE> 60
TABLE 15. UNION PLANTERS CORPORATION'S BANKING SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------------------
ASSETS LOANS DEPOSITS EQUITY
------ ------ -------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
TENNESSEE
Union Planters National Bank................................. $3,495 $1,428 $2,657 $251.6
Merchants State Bank in Humboldt............................. 208 94 188 15.3
First Federal Savings Bank in Maryville...................... 185 104 170 13.4
Bank of Goodlettsville....................................... 178 91 163 13.8
The First National Bank of Crossville........................ 158 66 144 11.1
Citizens Bank in Cookeville.................................. 150 79 137 11.3
Security Trust Federal Savings Bank in Knoxville............. 133 58 109 11.1
Bank of Roane County in Harriman............................. 130 73 120 8.9
Central State Bank in Lexington.............................. 108 57 100 6.9
First State Bank of Brownsville.............................. 91 45 75 9.3
Bank of East Tennessee in Morristown......................... 87 19 72 7.8
Bank of Commerce in Woodbury................................. 80 33 72 6.9
DeKalb County Bank and Trust Company in Alexandria........... 75 42 69 5.8
Farmers Union Bank in Ripley................................. 69 34 55 8.5
Citizens Bank & Trust Company in Wartburg.................... 61 36 53 4.5
First Citizens Bank of Hohenwald............................. 53 30 45 3.9
SaveTrust Federal Savings Bank in Dyersburg.................. 42 23 31 3.3
Bank of Trenton and Trust Company............................ 42 18 38 2.5
Erin Bank & Trust Company.................................... 39 14 34 4.6
First State Bank of Fayette County in Somerville............. 33 15 30 2.3
Cumberland City Bank......................................... 27 14 25 2.1
Pickett County Bank and Trust Company in Byrdstown........... 24 13 22 1.5
------ ------ -------- ------
Total.............................................. $5,468 $2,386 $4,409 $406.4
------ ------ -------- ------
------ ------ -------- ------
MISSISSIPPI
United Southern Bank of Clarksdale........................... $ 329 $ 169 $ 298 $ 28.3
First National Bank in New Albany............................ 145 85 133 11.3
------ ------ -------- ------
Total.............................................. $ 474 $ 254 $ 431 $ 39.6
------ ------ -------- ------
------ ------ -------- ------
ARKANSAS
North Arkansas Bancshares, Inc. (NABS)
Mercantile Bank in Jonesboro............................... $ 253 $ 175 $ 223 $ 23.2
First State Bank of Newport................................ 60 26 53 7.1
Bank of Weiner............................................. 37 19 32 4.5
Searcy County Bank in Marshall............................. 36 15 32 3.7
The Bank of Rector......................................... 29 14 27 2.6
Mercantile Bank in Mammoth Spring.......................... 29 15 26 2.7
Mercantile Bank in Hardy................................... 24 17 21 1.8
------ ------ -------- ------
Total.............................................. $ 468 $ 281 $ 414 $ 45.6
------ ------ -------- ------
------ ------ -------- ------
ALABAMA
Steiner Bank in Birmingham................................... $ 24 $ 12 $ 15 $ 2.6
------ ------ -------- ------
------ ------ -------- ------
</TABLE>
Subsequent to December 31, 1993 and through March 1, 1994, the Corporation
consummated the acquisitions of Mid-South Bancorp, Inc. (locations in Tennessee
and Kentucky), First National Bancorp of Shelbyville, Inc. (Tennessee), and
Anderson County Bank (Tennessee). See Note 2 to the financial statements.
58
<PAGE> 61
UNION PLANTERS CORPORATION
COMMUNITIES SERVED
<TABLE>
<CAPTION>
OFFICES
-------
<S> <C>
TENNESSEE
UNION PLANTERS NATIONAL BANK
Antioch, Bartlett, Brentwood, Chattanooga,
Clinton, Collierville, Cordova, Dickson,
Eagleville, Franklin, Gallatin, Germantown,
Goodlettsville, Hendersonville, Jackson,
Knoxville, Lebanon, Madison, Memphis, Milan,
Mt. Juliet, Murfreesboro, Nashville, Oak Ridge,
and Smyrna..................................... 90
MERCHANTS STATE BANK
Dyersburg, Gibson, Humboldt, Martin, Ripley,
Rutherford, Union City, and Yorkville.......... 13
FIRST FEDERAL SAVINGS BANK
Alcoa and Maryville............................ 3
BANK OF GOODLETTSVILLE
Goodlettsville, Springfield, and White House... 4
FIRST NATIONAL BANK OF SHELBYVILLE*
Monteagle, Shelbyville, and Tracy City......... 5
THE FIRST NATIONAL BANK OF CROSSVILLE
Crossville and Fairfield Glade................. 5
CITIZENS BANK IN COOKEVILLE
Algood, Baxter, Cookeville, and Monterey....... 6
SECURITY TRUST FEDERAL SAVINGS AND LOAN ASSOCIATION
Clinton, Greeneville, Kingston, Knoxville,
Morristown, and Oak Ridge...................... 7
BANK OF ROANE COUNTY
Harriman, Kingston, Lenoir City, Oliver
Springs,
and Rockwood................................... 5
CENTRAL STATE BANK
Jackson and Lexington.......................... 4
FIRST STATE BANK
Brownsville and Stanton........................ 4
BANK OF EAST TENNESSEE
Morristown and Talbott......................... 6
BANK OF COMMERCE IN WOODBURY
Auburntown and Woodbury........................ 3
DEKALB COUNTY BANK & TRUST COMPANY
Alexandria, Celina, Dowelltown, and
Smithville..................................... 5
FARMERS UNION BANK
Ripley......................................... 3
CITIZENS BANK & TRUST COMPANY IN WARTBURG
Oliver Springs, Sunbright, and Wartburg........ 3
FIRST CITIZENS BANK OF HOHENWALD................... 3
<CAPTION>
OFFICES
-------
<S> <C>
SAVETRUST FEDERAL SAVINGS BANK
Dyersburg and Newbern.......................... 3
BANK OF TRENTON AND TRUST COMPANY.................. 1
ERIN BANK & TRUST COMPANY.......................... 1
FIRST CITIZENS BANK*
Columbia, Franklin, and Mt. Pleasant........... 3
FIRST STATE BANK OF FAYETTE COUNTY IN SOMERVILLE... 1
CUMBERLAND CITY BANK............................... 1
THE PEOPLES BANK OF ELK VALLEY IN FAYETTEVILLE*.... 1
PICKETT COUNTY BANK AND TRUST COMPANY IN
BYRDSTOWN........................................ 1
ANDERSON COUNTY BANK IN CLINTON*................... 1
MISSISSIPPI
UNITED SOUTHERN BANK
Batesville, Clarksdale, Drew, Friars Point,
Lambert, Lula, Olive Branch, Oxford, Pope,
Sledge, and Tutwiler........................... 16
FIRST NATIONAL BANK IN NEW ALBANY
Ashland, Blue Mountain, Hickory Flat, New
Albany, Ripley, and Tupelo..................... 9
KENTUCKY
SIMPSON COUNTY BANK IN FRANKLIN*................... 4
ADAIRVILLE BANKING COMPANY*........................ 1
ARKANSAS
MERCANTILE BANK IN JONESBORO
Bono, Brookland, and Jonesboro................. 9
FIRST STATE BANK OF NEWPORT
Newport and Tuckerman.......................... 3
BANK OF WEINER
Fisher and Weiner.............................. 2
SEARCY COUNTY BANK
Leslie and Marshall............................ 2
THE BANK OF RECTOR................................. 1
MERCANTILE BANK IN MAMMOTH SPRING.................. 1
MERCANTILE BANK IN HARDY
Hardy and Sidney............................... 2
ALABAMA
STEINER BANK IN BIRMINGHAM......................... 2
-------
TOTAL.............................................. 234
-------
-------
</TABLE>
* Acquired subsequent to December 31, 1993
59
<PAGE> 62
<TABLE>
<CAPTION>
- ----------------------------------------------------------- ----------------------------------------------------------------
- ----------------------------------------------------------- ----------------------------------------------------------------
UNION PLANTERS CORPORATION/ UNION PLANTERS NATIONAL BANK
UNION PLANTERS NATIONAL BANK REGIONAL BRANCHES
<S> <C> <C> <C>
DIRECTORS UNION PLANTERS UNION PLANTERS UNION PLANTERS
CORPORATION NATIONAL BANK NATIONAL BANK
ALBERT M. AUSTIN EXECUTIVE OFFICERS CHATTANOOGA, TN NASHVILLE, TN
Chairman BENJAMIN W. RAWLINS, THOMAS W. FLENNIKEN STANLEY D. OVERTON
Cannon, Austin JR. Regional President Regional Chairman
and Cannon, Inc. Chairman & CEO
ADVISORY DIRECTORS ADVISORY DIRECTORS
MARVIN E. BRUCE J. ARMISTEAD SMITH
Chairman & CEO Vice Chairman STEVE A. BOVELL ANITA BALTIMORE
TBC Corporation President Vice President of Business
JACKSON W. MOORE Capstone Properties, Inc. Dev.
GEORGE W. BRYAN President Interior Design Services, Inc.
Senior Vice JOHN F. GERM
President JAMES A. GURLEY President WILLIAM R. BRUCE
Sara Lee Corporation Executive Vice Campbell & Associates, Inc. Attorney
President Baker, Worthington, Crossley
ROBERT B. COLBERT, DOROTHY P. HICKS Stansberry & Woolf
JR.* JACK W. PARKER Real Estate Broker
Retired Fletcher Bright Company JUDSON G. COLLINS
Signal Apparel Executive Vice Retired Broadcaster
Co., Inc. President and DALE F. STUDER
Chief Financial President CHARLES W. COOK, JR.
HANFORD F. FARRELL, Officer Studer Investments Regional President
JR. Union Planters National Bank
Chairman M. KIRK WALTERS DR. HARRY D. WAGNER
Farrell-Cooper Senior Vice President, President DAN W. DENNEY
Mining Compan Treasurer, and Chief Fortune Practice Management Partner
Accounting Officer of Chattanooga Wilson County Motor Company
JAMES L. HARPER** ------------------------------
Partner J. F. SPRINGFIELD ------------------------------ JAMES L. HARPER
Harper-Maes and Secretary and Partner
Associates General Counsel UNION PLANTERS Harper-Maes and Associates
--------------------------------- NATIONAL BANK
PARNELL S. LEWIS, --------------------------------- JACKSON, TN JOE L. HOOPER
JR. HARBERT R. ALEXANDER Retired Savings Bank Executiv
President UNION PLANTERS Regional President
Anderson-Tully NATIONAL BANK VADEN M. LACKEY, JR.
Company ADVISORY DIRECTORS Attorney
ADVISORY DIRECTORS Stokes & Bartholomew, P.A.
C.J. LOWRANCE, III WILLIAM E. ALLEN
President DR. C. C. HUMPHREYS President JOHN T. ROCHFORD
Lowrance Brothers President Emeritus Devilbiss Air Power Company President
& Co., Inc Memphis State Rochford Realty and
University THOMPSON DABNEY Construction Company, Inc.
R. BRAD MARTIN Chairman
Chairman & CEO LLOYD B. LOVITT, W.P. Dabney & Son Furniture T. C. SUMMERS
Proffitts, Inc. JR. Chairman/Owner
Owner and President CHARLES E. DUNHAM T.C. Summers, Inc.
JACKSON W. MOORE Jacobson & Lovitt Retired ------------------------------
President Development Co. ------------------------------
Union Planters CARL KIRKLAND
Corporation ROBERT D. MCCALLUM President & CEO UNION PLANTERS
Consultant Kirkland Consolidated, Inc. NATIONAL BANK
STANLEY D. OVERTON KNOXVILLE, TN
Vice Chairman J.T. MURFF DONALD LAYCOOK
Union Planters Investor President J. ARMISTEAD SMITH
National Bank Laycook Printing Company Regional Chairman
THOMAS R. PRICE
C. PENN OWEN, JR. Attorney at Law J.H. LUCKEY CHARLES T. BRYANT
Managing Partner The Winchester Partner Regional President
Bowdre Place Law Firm C.E. Luckey & Sons
ADVISORY DIRECTORS
KENNETH W. PLUNK** TIMMONS L. TREADWELL, THOMAS S. REED
President III Owner DAVID G. BROWN
Union Planters Managing Partner Reed & Associates, Inc. Owner
National Bank Treadwell & Harry Brown, Brown & West Real
A.U. TAYLOR, III Estate
BENJAMIN W. RAWLINS, President
JR. City Lumber Company LINDA L. BROWN
Chairman & CEO Owner
Union Planters JOHN W. WILLIAMS Linda Brown Realty Company
Corporation and Manager
Union Planters Jackson Utility Division RICHARD A. DEW, MD
National Bank ------------------------------ Methodist Medical Center
------------------------------
DR. V. LANE RAWLINS UNION PLANTERS CARL C. ENSOR, JR.
President NATIONAL BANK Retired
Memphis State MURFREESBORO, TN Former Banker
University KATHY S. POTTER
Regional President B. JAMES GEORGE
DONALD F. SCHUPPE President
Retired Managing ADVISORY DIRECTORS Beta Development Corporation
Partner
Memphis Office JAMES H. BAILEY, III RUBY A. MILLER
Price Waterhouse Architect Agent
Johnson and Bailey Architects, State Farm Insurance Company
J. ARMISTEAD SMITH P.C.
Vice Chairman and STANLEY C. ROY, CPA
President of the JEFFREY S. HENRY Certified Public Accountant
Community Bank Colonel
Group Tennessee Army National Guard MILUS R. SKIDMORE
Union Planters Investor
Corporation SAM H. INGRAM Entrepreneur
Board of Regents
LESLIE M. STRATTON, State of Tennessee DR. BOB F. THOMAS
III Professor
President MARGARET NEAL THOMPSON Roane State Community College
Leslie M. Stratton Regional Director
Company TN/KY Division ARCHIE F. WEAVER
Rehability Corporation President
MIKE P. STURDIVANT* Coronado Stone-Weaver
President Enterprises
Due West Gin Co.,
Inc.
RICHARD A. TRIPPEER,
JR.
President
R. A. Trippeer,
Inc.
* Director of
Union Planters
Corporation only.
** Director of Union
Planters National
Bank only.
</TABLE>
60
<PAGE> 63
<TABLE>
<S> <C> <C> <C>
- --------------------------- --------------------------- --------------------------- ---------------------------
- --------------------------- --------------------------- --------------------------- ---------------------------
BANK OF GOODLETTSVILLE CITIZENS BANK &
TENNESSEE BANKING GOODLETTSVILLE, TN (CONT'D) CENTRAL STATE BANK TRUST CO.
SUBSIDIARIES LEXINGTON, TN WARTBURG, TN (CONT'D)
BANK OF COMMERCE TIMOTHY M. GARRETT
WOODBURY, TN Vice Chairman BILLY MAX WOODS ROY MCNEAL
Bank of Goodlettsville President & CEO Secretary to the Board
STEVE A. SMITH Funeral Director Citizens Bank & Trust Co.
Chairman, President & CEO Cole and Garrett Funeral DIRECTORS Retired Pharmacist
Home, Inc.
DIRECTORS THOMAS E. BUNCH BILLY M. RICE
TONY D. GREGORY Retired Postmaster President & CEO
WILLIAM H. BRYSON Executive Vice President Citizens Bank & Trust Co.
Attorney at Law Bank of Goodlettsville HAROLD GRIGGS
Owner FRED J. ROETTGER
CHRISTINE DILLON DANIEL R. HAWKINS Griggs Big Star Super Chairman
Executive Vice President President and CEO Market Citizens Bank & Trust Co.
Bank of Commerce Bank of Goodlettsville Martin Marietta Engineer
JAMES W. GURLEY
MARSHALL E. DUGGIN --------------------------- Vice President -- Cashier WAYNE SOLOMON
Attorney at Law --------------------------- Central State Bank Owner, Schubert Funeral
BANK OF ROANE COUNTY Home
ROY FUSTON HARRIMAN, TN THOMAS HOLMES
Owner LARRY W. BYRKIT Owner ARLAND SPEARS
Fuston's Antiques President & CEO Holmes Ford, Inc. Retired
Fuston's Variety Store
DIRECTORS JOHN MELTON ---------------------------
AUSTIN JENNINGS Vice President ---------------------------
Owner LARRY W. BYRKIT Central State Bank CUMBERLAND CITY BANK
Jennings Jewelers President & CEO CUMBERLAND CITY, TN
Bank of Roane County ELMER L. STEWART
G. WENDELL KENNEDY Attorney ROBERTA D. HOLLEY
Retired Postal C. S. HARVEY, JR. President & CEO
Worker/Farmer President CAROL A. STONE
Harvey's Furniture & Vice President DIRECTORS
DONALD PASCHAL Appliance Central State Bank
Farmer DR. HARPER L. COLE
JAMES M. HENRY BOBBY TATE Retired Educator
STEVE A. SMITH President Vice President
Chairman, President & CEO Tennessee Resource Valley Central State Bank W.E. DOUGHERTY
Bank of Commerce Retired Postmaster
CHARLES W. JOHNSON LAWTON REX TODD
WILLIAM SMITH Retired Vice President H. RYAN HOLLEY
Vice Chairman Rockwood Electric Utility Central State Bank Chairman
Bank of Commerce Cumberland City Bank
WILLIAM A. NEWCOMB BILLY MAX WOODS
GORDON SUMMAR Attorney at Law President & CEO ROBERTA D. HOLLEY
Farmer Newcomb & Murphy Central State Bank President & CEO
Cumberland City Bank
ADVISORY DIRECTOR GILBERT D. PICKEL ADVISORY DIRECTOR
President G. L. LANDISS, JR.
R.H. BURKE Century 21, Pickel KENNETH L. AUSTIN Retired Postal Service
- ------------------------ Partners, Inc. Vice President
- ------------------------ Central State Bank STEPHEN T. LEWIS
C. G. SEXTON Cashier
BANK OF EAST TENNESSEE Sexton Automotive Group --------------------------- Cumberland City Bank
MORRISTOWN, TN ---------------------------
BROWDER G. WILLIAMS CITIZENS BANK ---------------------------
CHARLES T. BRYANT Attorney at Law COOKEVILLE, TN ---------------------------
President & CEO Chairman DEKALB COUNTY BANK
Bank of Roane County GLENN H. RAMSEY AND TRUST COMPANY
DIRECTORS Chairman & CEO ALEXANDRIA, TN
GEORGE E. WILSON, III
URSELL B. ATKINS President DIRECTORS TOMMY ANDERTON
Agency Manager Roane Hosiery, Inc. Chairman, President & CEO
Hamblen County Farm GARY W. CARWILE
Bureau --------------------------- President DIRECTORS
--------------------------- Carwile Mechanical
CHARLES T. BRYANT BANK OF TRENTON Contractors TOMMY ANDERTON
President & CEO AND TRUST COMPANY Chairman, President & CEO
Bank of East Tennessee TRENTON, TN ROBERT C. DAVIS DeKalb County Bank &
Pharmacist/Owner Trust Company
KENNETH D. CARPENTER DOTTY M. JONES Medical Center Pharmacy
Manager President & CEO DAN ANDREWS
Appalachian Electric WILLIAM C. FRANCIS Bank Consultant
Cooperative DIRECTORS Physician
William C. Francis, M.D., R. V. BELLENFANT
JERRY C. CRANFORD WILLIAM HAYNES P.C. Retired
Director of Manufacturing Retired
Universal Furniture CHARLES W. KIBBONS, JR. ALVA T. HARRELL
WINTER HODGES Personal Investments CPA
SAMUEL F. GRIGSBY, SR. President Marlin-Edmondson, P.C.
Chairman of the Board Westwin, Inc. L. W. LEGGE, JR.
Bank of East Tennessee President ANTHONY T. MOORE
Farmer RICHARD INGRAM L. W. Legge Insurance Chairman, President & CEO
President Agency First Federal Savings Bank
SAMUEL F. GRIGSBY, JR. Ingram's IGA, Inc.
Executive Vice President JAMES T. MARTIN LARRY E. VICKERS
Bank of East Tennessee DOTTY M. JONES President President
President & CEO Citizens Bank L. E. Vickers and
WILLIAM H. INMAN Bank of Trenton and Trust Associates
Retired Judge Company GLENN H. RAMSEY Data Processing Company
Chairman & CEO
JOE H. SANFORD HUNTER PARTEE Citizens Bank TOM WILEY
Former Farm Credit Manager Retired Director of Operations
GARY SASSER Designs by Norvell, Inc.
WILLIAM F. YOUNG GEORGE RASBERRY President
President Owner Averitt Express, Inc. ---------------------------
Young's Furniture Company Rasberry Motors ---------------------------
ADVISORY DIRECTORS
- --------------------------- C.B. SINGLETON, JR. ERIN BANK & TRUST COMPANY
- --------------------------- Chairman of the Board H.S. BARNES ERIN, TN
Bank of Trenton and Trust LEON T. DELOZIER
BANK OF GOODLETTSVILLE Company E.H. HOOPER BYDE SIMPSON
GOODLETTSVILLE, TN WALLACE PRESCOTT President & CEO
ELEANOR B. SADLER
DANIEL R. HAWKINS W.R. WHITAKER, JR. DIRECTORS
President and CEO ---------------------------
--------------------------- JOHNNY D. BAGGETT
DIRECTORS CITIZENS BANK & Executive Vice President
TRUST CO. Erin Bank & Trust Company
JACQUELINE W. ALSTON WARTBURG, TN
Vice President C. W. MITCHUM, JR.
Bank of Goodlettsville BILLY M. RICE Pharmacist
President & CEO Partner, Mitchum Drug
KENNETH T. ANDERSON Company
Senior Vice President DIRECTORS
Bank of Goodlettsville
RAYMOND BUXTON
JOHN C. GARRETT, III Retired Chemist
Chairman
Bank of Goodlettsville WILLIAM L. HARPER
Martin Marietta Chemist
</TABLE>
61
<PAGE> 64
<TABLE>
<S> <C> <C> <C>
- ------------------------- ------------------------- ------------------------- -------------------------
- ------------------------- ------------------------- ------------------------- -------------------------
ERIN BANK & TRUST FIRST FEDERAL SAVINGS BANK FIRST STATE BANK PICKETT COUNTY
COMPANY MARYVILLE, TN (CONT'D) BROWNSVILLE, TN (CONT'D) BANK AND TRUST COMPANY
ERIN, TN (CONT'D) BYRDSTOWN, TN
R. VERNON MOBLEY JERRY C. HILL RONALD C. RICHARDS
Retired Rural Carrier President President TIMOTHY J. BARNHILL
Colonial Development, Inc. Richards Agency, President & CEO
BYDE SIMPSON Incorporated
President & CEO HOMER L. ISBELL DIRECTORS
Erin Bank & Trust Retired Physician ELEANOR ROOKS
Company Retired Educator TIMOTHY J. BARNHILL
ROBERT R. KNOLL President & CEO
JOSEPH H. SPENCER Dentist DALLAS SMOTHERS Pickett County Bank and
Attorney Dr. Robert R. Knoll, Manager Trust Company
Retired Circuit Court DDS, P.C. Haywood Farmers
Judge Cooperative COLEMAN CROUCH
DON E. PETERSON Co-Owner
HOMER A. THOMAS Vice President JERE WILLIAMSON, JR. Green Meadows Angus
Retired Lawler-Wood, Inc. Executive Vice President Farms
General Insurance Agency First State Bank
JAMES N. PROFFITT, JR. DOUGLAS GARRETT
- ------------------------- CPA and Partner ------------------------- Owner
- ------------------------- Proffitt & Goodson, Inc. ------------------------- Garrett's Pharmacy
FARMERS UNION BANK B. R. SULLIVAN FIRST STATE BANK OF HERBERT GROCE
RIPLEY, TN President and CEO FAYETTE COUNTY Retired
First Federal Savings SOMERVILLE, TN Tennessee Farmers Co-op
S. N. ANTHONY, JR. Bank Co-Owner
President & CEO PAUL B. DAWSON, JR. Green Meadows Angus
J. DAVID WALKER President & CEO Farms
DIRECTORS Owner
General Live Stock DIRECTORS ROY H. KOGER
S. N. ANTHONY, JR. Operation Retired
President & CEO FRANK BOSWELL Executive Vice President
Farmers Union Bank ------------------------- Owner Pickett County Bank and
------------------------- Somerville Farm Supply Trust Company
S. N. ANTHONY, III THE FIRST NATIONAL Owner, Koger Farms
President BANK OF CROSSVILLE PAUL B. DAWSON, JR.
S. N. Anthony, Inc. CROSSVILLE, TN President & CEO -------------------------
Insurance First State Bank of -------------------------
FRED J. FLICK Fayette County
RANDY LANKFORD President & CEO SAVETRUST FEDERAL SAVINGS
Owner THOMAS H. FOWLER BANK
Lankford Realty Company DIRECTORS Landowner DYERSBURG, TN
L. W. POSTON, JR. DIANE D. BROWN J. PAYSON MATTHEWS, III G. W. HAMPTON
Contractor Senior Vice President Attorney at Law Chairman, President & CEO
The First National Bank
JOSEPH H. WALKER, III of Crossville FRANK S. MCKNIGHT DIRECTORS
Chancery Court Judge Physician, Morris Clinic
J. W. BROWN WILLIAM A. ADCOCK
- ------------------------- Chairman REUBEN S. RHEA CEO
- ------------------------- The First National Bank President AWM, Inc.
FIRST CITIZENS BANK of Crossville Rhea Oil Company
HOHENWALD, TN Farmer RALPH W. FARMER
FRED J. FLICK Woodburn Farms Attorney at Law
ANNETTE PEERY President & CEO Farmer Moore Jones
President & CEO The First National Bank ------------------------- Hamilton & Lay
of Crossville -------------------------
DIRECTORS MERCHANTS STATE BANK HOWARD C. GUTHRIE
J. H. GRAHAM, III HUMBOLDT, TN Athletic Director
DAVID ADCOX Chief Financial Officer Dyersburg State
President Southeast Mat Company CLINT O. WILLIAMS Community College
Highland Corporation President & CEO
L. BURRELL HARRIS G. W. HAMPTON
DAN ANDREWS Vice President DIRECTORS Chairman, President & CEO
Bank Consultant Brown Insurance Group SaveTrust Federal
JACK ALBRIGHT, JR. Savings Bank
DON BARBER THOMAS E. LOONEY Retired
Owner and Manager Attorney at Law Hale-Albright Men's Store JOHN H. HOFF
Barber Oil Co. Looney & Looney Insurance Agent
FRED BAIER, JR. Bradshaw & Company
ROBERT BURKLOW J. ROBERT MITCHELL, JR. Owner Insurors
Burklow & Associates Owner Farmers Seed Company
Mitchell Drug Company JOHNNIE D. SORRELL
DOUGLAS CHAPMAN FELIX R. DOWSLEY Vice President
Senior Vice President RALPH PADGETT Retired SaveTrust Federal Savings
First Citizens Bank Owner Dowsley Insurance and Bank
Plateau Truck & Tractor Realty
GEORGE S. MILES Company -------------------------
Financial Consultant and THOMAS D. DUNLAP -------------------------
Vice Chairman of the WILLIAM D. SELECMAN, Attorney and Landowner
Board D.D.S. SECURITY TRUST FEDERAL
First Citizens Bank Private Practice W. RALPH JONES, III SAVINGS & LOAN ASSOCIATION
President KNOXVILLE, TN
RICKY MORROW COSBY STONE Jones Manufacturing
Owner Managing Partner Company LANNY T. PAYNE
Morrow's Foodtown and TAP Publishing Company Chairman, President, and
Dairy Queen Restaurant CHARLES R. LEWIS Chief Executive Officer
------------------------- Director Emeritus
ANNETTE PEERY ------------------------- DIRECTORS
President and CEO HAROLD W. MCLEARY, JR.
First Citizens Bank FIRST STATE BANK Attorney at Law J. MICHAEL ANDERSON
BROWNSVILLE, TN Director
MARYLAND SPEARS CLINT O. WILLIAMS President
Distributor JERE EAST President & CEO Hilltop Enterprises, Inc.
Yogie's Purity Milk President Merchants State Bank
MICHAEL SPITZER DIRECTORS ADVISORY DIRECTORS
Attorney at Law
Keaton, Turner, and KENNETH COZART JAMES ATKINS
Spitzer Certified Public FRED BAIER, JR.
Accountant JAMES CRENSHAW
GLENN WOODALL LARRY FOWLKES
Owner JERE EAST W. W. HASSELL
Woodall Grading and President L. H. HERNDON, JR.
Engraving Co., Inc. First State Bank J. GUS HICKS
- ------------------------- ED JONES
- ------------------------- C. THOMAS HOOPER, III
Attorney at Law
FIRST FEDERAL SAVINGS BANK
MARYVILLE, TN ALLEN KING
Farmer
B. R. SULLIVAN
President and CEO PATRICK H. MANN, JR.
Attorney at Law
DIRECTORS
PETER MASCOLO
DARRELL D. AKINS President
President and Co-owner Kleer Vu Industries,
Akins & Tombras of Inc.
Knoxville
RAILEY POWELL
THOMAS B. CLICK President
Owner Powell Hardwood
McCammon Ammons Funeral Manufacturing Company
Home
</TABLE>
62
<PAGE> 65
<TABLE>
<S> <C> <C> <C>
- --------------------------- --------------------------- --------------------------- ---------------------------
- --------------------------- --------------------------- --------------------------- ---------------------------
SECURITY TRUST FEDERAL UNITED SOUTHERN BANK FIRST STATE BANK THE BANK OF RECTOR
SAVINGS & LOAN ASSOCIATION CLARKSDALE, MS (CONT'D) OF NEWPORT RECTOR, AR
KNOXVILLE, TN (CONT'D) NEWPORT, AR
LANNY T. PAYNE KENNETH O. WILLIAMS RONALD L. BENSON
Chairman, President, and Owner TOMMY HARGROVE President
Chief Executive Officer Swan Lake Farms President
Security Trust Federal DIRECTORS
Savings & Loan Association ADVISORY DIRECTORS DIRECTORS
RONALD L. BENSON
GLORIA S. RAY BATESVILLE, POPE AND SLEDGE MORRIS CRANDALL President
Director Richard H. McMahan Farmer The Bank of Rector
President M. M. Randolph
Greater Knoxville Sports R. F. Rowsey, Jr. STEPHEN GRAHAM JOE CALVIN
Corporation Dr. Jack B. Stewart, Jr. Farmer Attorney at Law
Mary L. Troxler
GEORGE H. RIEGER E. G. Walker, Jr. SHIRLEY HAIGWOOD DANNY FORD
Director James S. Whitaker Farmer Glen Sain Motor Sales, Inc.
President
Southern Employee Benefit OLIVE BRANCH TOMMY HARGROVE DANNY HOLIFIELD
Services Gilbert Allen President Farmer
Lawrence Curbo First State Bank of Newport
RANDY E. ROBERSON Gordon Davidson G. L. LIEBLONG
Executive Vice President Ruth Gadd PHIL HOUT Chairman
Security Trust Federal Harold Nichols Attorney at Law North Arkansas Bancshares,
Savings & Loan Thomas Williams Inc.
Association DAVID L. JOHNSTON
DREW Retired (Banker) ---------------------------
MICHAEL J. ROTHMAN James Steven Clark ---------------------------
Director William J. Dubard G. L. LIEBLONG MERCANTILE BANK
President Prentiss Lewis Chairman MAMMOTH SPRING, AR
Nursing Careers, Inc. Dr. Travis Richardson North Arkansas Bancshares,
A. W. Shurden Inc. BILL PACE
J. ARMISTEAD SMITH Billy Joe Waldrup President
Vice Chairman JOE DAVID SMITH
Union Planters Corporation LAMBERT Veterinarian DIRECTORS
President Danny Baxley
Community Bank Group C. B. Cobb, Jr. ROBERT VANHOOK RICHARD GARRISON
Ray C. Crawford Director and Owner Cattle Farmer
- --------------------------- Barry S. Haynes Van Atkins/Campbell Bell
- --------------------------- Newell Inman Stores BILL HASS
MISSISSIPPI BANKING Robert K. Mehrle Attorney at Law
SUBSIDIARIES FORREST WISE
TUTWILER Retired (Industry) G. L. LIEBLONG
FIRST NATIONAL BANK James Brand Chairman
NEW ALBANY, MS Gus Berryhill --------------------------- North Arkansas Bancshares,
Floyd Swindoll --------------------------- Inc.
CHARLES P. DAVIS P. H. Thornton, III
President & CEO BANK OF WEINER BILL PACE
--------------------------- WEINER, AR President
DIRECTORS --------------------------- Mercantile Bank
ARKANSAS BANKING NILES BISE
BILLY H. BRELAND SUBSIDIARIES President & CEO WENDELL RAGSDALE
Certified Public Accountant MERCANTILE BANK Auto Parts Store
JONESBORO, AR DIRECTORS
CHARLES P. DAVIS ---------------------------
President & CEO G. L. LIEBLONG NILES BISE ---------------------------
First National Bank Chairman & CEO President & CEO MERCANTILE BANK
Bank of Weiner HARDY, AR
THOMAS H. HAMILTON, III DIRECTORS
Salesman CHARLES E. GIVENS BOB EVINS
MARYSTEL APPLETON Cart Well Company President
JOE K. ROBBINS, JR. Bobilldick Farms
President Dr. E. L. Hogue DIRECTORS
Robbins Farms, Inc. ROY COOPER Physician
Cooper Construction Company BOB EVINS
LESTER F. SUMNERS JOHN MARCUS HOGUE President
Attorney at Law JOHN FREEMAN Baskin-Robbins/Grizzly Mercantile Bank
President and COO Adams BBQ
- --------------------------- Mercantile Bank FLOYD HANNON, JR.
- --------------------------- G. L. LIEBLONG Retired
UNITED SOUTHERN BANK LYNN GREENE Chairman
CLARKSDALE, MS Lynn Greene's Big Star North Arkansas Bancshares, KEVIN KING
Inc. Attorney at Law
C. WILLIS CONNELL, JR. TOMMY LAWRENCE
Chairman & CEO Manager HERBERT ZIEGENHORN G. L. LIEBLONG
Par 5, Inc. Farmer Chairman
DIRECTORS North Arkansas Bancshares,
G. L. LIEBLONG --------------------------- Inc.
C. WILLIS CONNELL, JR. Chairman ---------------------------
Chairman & CEO North Arkansas Bancshares, SEARCY COUNTY BANK ---------------------------
United Southern Bank Inc. MARSHALL, AR ---------------------------
ALABAMA BANKING
WILLIS L. FRAZER J. C. MAHON NEIL WILKINS SUBSIDIARY
President & COO Retired District Manager President STEINER BANK
United Southern Bank Riceland Foods BIRMINGHAM, AL
DIRECTORS
FLETCHER S. HAYNES DR. EUGENE SMITH B. K. GOODWIN, III
Farmer Retired President J. VIRGIL BLAIR President & CEO
Arkansas State University Retired
W. S. HEATON, JR. DIRECTORS
Farmer M. G. SPURLOCK GEORGE E. DANIEL
Farm Real Estate Daniel Hardware B. K. GOODWIN, III
WILL LEWIS, JR. President & CEO
Partner DR. DOUGLAS WOOD BOB DERICKSON Steiner Bank
J. E. Neilson Company Wood, Wood & Young Vision Retired
Clinic ARNOLD L. STEINER
ED PEACOCK, III G. L. LIEBLONG Retired President
President Chairman Steiner Bank
United Southern Bank North Arkansas Bancshares,
Clarksdale Office Inc. MARY S. STEINER
M. P. STURDIVANT ANCIL MAYS
President Buck Mays Dept. Store
Due West Gin Co., Inc.
NEIL WILKINS
President
Searcy County Bank
</TABLE>
63
<PAGE> 66
CORPORATE INFORMATION
ANNUAL MEETING
Thursday, April 28, 1994 at 10 a.m.
Union Planters Administrative Center
Assembly Room C
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
CORPORATE OFFICES
7130 Goodlett Farms Parkway
Memphis, TN 38018
(901) 383-6000
CORPORATE MAILING ADDRESS
P.O. Box 387
Memphis, TN 38147
TRANSFER AGENT & REGISTRAR
Union Planters National Bank
Corporate Trust Operations
6200 Poplar Avenue
Suite 300
Memphis, TN 38119
DIVIDEND PAYING AGENT
Union Planters National Bank
INDEPENDENT ACCOUNTANTS
Price Waterhouse
STOCK LISTINGS
Common
NYSE Symbol: UPC
Wall Street Journal: Unplantr
Series E Convertible Preferred
NASDAQ NMS Symbol: UPCPO
Wall Street Journal: Unplantr pfE
FOR FINANCIAL INFORMATION
CONTACT
Jack W. Parker
Executive Vice President
and Chief Financial Officer
(901) 383-6781
FORM 10-K
Copies of the Corporation's
Annual Report on Form 10-K
as filed with the Securities and
Exchange Commission are
available on request by
writing or calling the
Marketing Division at
(901) 383-6780.
DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN
The Plan allows Union Planters
shareholders to reinvest their
dividends in Union Planters
common stock at a 5% discount
from market. No brokerage
commissions or service charges
are paid by shareholders.
The plan also permits those
participating in the plan to
buy additional shares
with optional cash payments
and no brokerage commissions.
Full details are available by
calling (901) 383-6960 or
writing Union Planters
Corporate Trust Operations.
The Corporation's banking
subsidiaries are members of the
FDIC and are Equal Housing
Lenders. UPC and its subsidiaries
are Equal Opportunity Employers.
64
<PAGE> 67
UNION PLANTERS CORPORATION
P.O. BOX 387
MEMPHIS, TENNESSEE 38147
<PAGE> 68
Description of map on inside front cover of the Annual Report
The inside front cover of Exhibit 13 (Union Planters Corporation's Annual Report
to Shareholders for 1993) contains a map of the states of Kentucky, Arkansas,
Tennessee, Mississippi, and Alabama showing the headquarters of Union Planters
Corporation and Union Planters National Bank; Union Planters National Bank
Regional Branches; and Community Banks' Headquarters.
<PAGE> 1
UNION PLANTERS CORPORATION, Registrant, Exhibit 21
A bank holding company and a savings and loan holding company Page 1 of 2
<TABLE>
<CAPTION>
Name of Registrant State or Jurisdiction Percentage of
and Subsidiaries Under Laws of Which Organized Voting Securities Owned
- ------------------ ----------------------------- -----------------------
<S> <C> <C>
Union Planters Corporation (Registrant) Tennessee
Union Planters National Bank (a) United States (1) 99.90%
Chickasaw Capital Corporation (b) Tennessee 100.00%
Investment Group Mortgage Corporation (b and g) Tennessee 100.00%
Union Planters Investment Bankers Corporation (a and g) Tennessee 100.00%
Union Planters Investment Bankers Group, Inc. (c and g) Tennessee 100.00%
UMIC, Inc. (c and g) Tennessee 100.00%
UMIC Securities Corporation (c and g) Tennessee 100.00%
Bank of Roane County (a) Tennessee 100.00%
First National Bank of Crossville (a) United States 100.00%
Merchants State Bank (a) Tennessee 100.00%
Bank of Trenton and Trust Company (a) Tennessee 100.00%
Fairless, Hinton & Harbert, Inc. (d) Tennessee 100.00%
Southeastern Bancshares, Inc. (a) Tennessee 100.00%
DeKalb County Bank & Trust Company (e) Tennessee 100.00%
First Citizens Bank of Hohenwald (a) Tennessee 100.00%
Citizens Bank, Cookeville, Tennessee (a) Tennessee 100.00%
Pickett County Bank and Trust Company (a) Tennessee 100.00%
United Southern Bank (a) Mississippi 100.00%
First National Bank, New Albany, MS (a) United States 100.00%
Cumberland City Bank (a) Tennessee 100.00%
Citizens Bank & Trust Company, Wartburg, Tennessee (a) Tennessee 100.00%
Steiner Bank (a) Alabama 100.00%
Planters Life Insurance Company (f) Arizona 100.00%
Guardian Realty Company (f) Alabama 100.00%
North Arkansas Bancshares, Inc. (a) Arkansas 100.00%
Mercantile Bank, Hardy (h) Arkansas 100.00%
Mercantile Bank, Mammoth Spring (h) Arkansas 100.00%
The Bank of Rector (h) Arkansas 100.00%
Searcy County Bank (h) Arkansas 100.00%
First State Bank, Newport (h) Arkansas 100.00%
Mercantile Corporation (h) Arkansas 100.00%
Advance Data (i) Arkansas 50.00%
Mercantile Bank, Jonesboro (h) Arkansas 100.00%
Mercantile Realty, Inc. (j) Arkansas 100.00%
Bank of Weiner (h) Arkansas 100.00%
First Federal Savings Bank of Maryville, Tennessee (a) United States 100.00%
Foothills Financial Services (k) Tennessee 100.00%
Southwestern Investment Company (a) Tennessee 100.00%
Union Planters-Great American Acquisition Tennessee 100.00%
Corporation (a and g)
Bank of East Tennessee (a) Tennessee 100.00%
Southeastern Credit Life Insurance Company (l) Arizona 100.00%
Security Trust Federal Savings and Loan Association (a) United States 100.00%
S.T. Service Corporation (m) Tennessee 100.00%
Commerce Capital Corporation (m) Tennessee 100.00%
SaveTrust Federal Savings Bank (a) United States 100.00%
First Service Corporation (n) Tennessee 100.00%
</TABLE>
<PAGE> 2
UNION PLANTERS CORPORATION, Registrant, Exhibit 21
(Continued) Page 2 of 2
<TABLE>
<S> <C> <C>
First State Bancshares, Inc. (a) Tennessee 100.00%
First State Bank of Fayette County (o) Tennessee 100.00%
First Cumberland Bank (a and g) Tennessee 100.00%
Farmers Union Bank (a) Tennessee 100.00%
Garrett Bancshares, Inc. (a) Tennessee 100.00%
Bank of Goodlettsville (p) Tennessee 100.00%
Erin Bank & Trust Company (a) Tennessee 100.00%
First Financial Services, Inc. (a) Tennessee 100.00%
First State Bank (q) Tennessee 100.00%
First State Leasing, Inc. (r) Tennessee 100.00%
Bank of Commerce, Woodbury, Tennessee (a) Tennessee 100.00%
Bancom Services, Inc. (s and g) Tennessee 100.00%
Central State Bancorp, Inc. Tennessee 100.00%
Central State Bank (t) Tennessee 100.00%
Mid-South Bancorp, Inc. (a) Kentucky 100.00%
Simpson County Bank (u) Kentucky 100.00%
Adairville Banking Company (u) Kentucky 100.00%
General Trust Company (u) Tennessee 100.00%
First Citizens Bank (u) Tennessee 88.22%
The Peoples Bank of Elk Valley (u) Tennessee 99.01%
Anderson County Bank (a) Tennessee 100.00%
First National Bancorp of Shelbyville (a) Tennessee 100.00%
First National Bank of Shelbyville (v) Tennessee 100.00%
First Leasing Corp. of Shelbyville (w) Tennessee 100.00%
</TABLE>
(1) Balance held by Directors of the Bank as directors' qualifying shares
(a) Subsidiary of Union Planters Corporation
(b) Subsidiary of Union Planters National Bank
(c) Subsidiary of Union Planters Investment Bankers Corporation
(d) Subsidiary of Bank of Trenton and Trust Company
(e) Subsidiary of Southeastern Bancshares, Inc.
(f) Subsidiary of Steiner Bank
(g) Inactive subsidiary
(h) Subsidiary of North Arkansas Bancshares, Inc.
(i) A partnership of which Mercantile Corporation owns a 50% interest
(j) Subsidiary of Mercantile Bank, Jonesboro
(k) Subsidiary of First Federal Savings Bank of Maryville, Tennessee
(l) Subsidiary of Bank of East Tennessee
(m) Subsidiary of Security Trust Federal Savings and Loan Association
(n) Subsidiary of SaveTrust Federal Savings Bank
(o) Subsidiary of First State Bancshares, Inc.
(p) Subsidiary of Garrett Bancshares, Inc.
(q) Subsidiary of First Financial Services, Inc.
(r) Subsidiary of First State Bank
(s) Subsidiary of Bank of Commerce
(t) Subsidiary of Central State Bancorp, Inc.
(u) Subsidiary of Mid-South Bancorp, Inc.
(v) Subsidiary of First National Bancorp of Shelbyville
(w) Subsidiary of First National Bank of Shelbyville
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the previously filed
Registration Statements on Form S-3 (No. 33-27814) and Form S-8 (Nos. 2-87392,
33-23306, 33-35928, and 33-53454) of Union Planters Corporation of our report
dated January 20, 1994 appearing on page 34 of the Annual Report to
Shareholders which is incorporated in this Annual Report on Form 10-K.
PRICE WATERHOUSE
Memphis, Tennessee
March 24, 1994
