<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - --- SECURITIES EXCHANGE ACT OF 1934
For the transition period to .
---- ----
Commission File No. 1-10160
-------
UNION PLANTERS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-0859007
----------------------- ------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018
------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (901) 383-6000
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at July 31, 1994
------------------------- ----------------------------
Common stock $5 par value 23,045,058
<PAGE> 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
INDEX
<S> <C> <C>
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheet - June 30, 1994,
June 30, 1993, and December 31, 1993 3
b) Consolidated Statement of Earnings -
Three and Six Months Ended June 30, 1994 and 1993 4
c) Consolidated Statement of Changes in
Shareholders' Equity - Six Months Ended
June 30, 1994 5
d) Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1994 and 1993 6
e) Notes to Unaudited Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17
Part II. Other Information
Item 1. Legal Proceedings 38
Item 2. Changes in Securities 38
Item 3. Defaults Upon Senior Securities 38
Item 4. Submission of Matters to a Vote of Security Holders 38
Item 5. Other Information 38
Item 6. Exhibits and Reports on Form 8-K 38
Signatures 40
</TABLE>
-2-
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
---------------------------
DECEMBER 31,
1994 1993 1993
----------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 283,892 $ 245,154 $ 225,626
Interest-bearing deposits at financial institutions 10,489 37,729 26,647
Federal funds sold and securities purchased
under agreements to resell 24,993 118,224 53,149
Trading account securities, at market 148,204 101,115 153,482
Loans held for resale 6,933 79,839 56,053
Investment securities
Available for sale (Amortized cost June 30, 1994: $2,354,149;
Fair value June 30, 1993 and December 31, 1993: $535,341
and $600,491, respectively) 2,331,859 505,485 595,090
Held to maturity (Fair value: $562,653; $2,196,774,
and $2,060,769, respectively) 554,269 2,156,389 2,021,963
Loans 3,349,133 2,810,373 2,951,885
Less: Unearned income (18,308) (17,495) (16,670)
Allowance for losses on loans (85,640) (81,017) (80,442)
----------- ----------- ------------
Net loans 3,245,185 2,711,861 2,854,773
Premises and equipment 150,185 131,501 135,511
Accrued interest receivable 58,415 51,132 49,953
Goodwill and other intangibles 45,193 46,240 40,794
Other assets 107,237 131,350 105,145
----------- ----------- ------------
TOTAL ASSETS $ 6,966,854 $ 6,316,019 $ 6,318,186
----------- ----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 819,741 $ 723,088 $ 750,093
Certificates of deposit of $100,000 and over 348,293 339,838 334,173
Other interest-bearing 4,410,816 4,307,151 4,167,100
----------- ----------- ------------
TOTAL DEPOSITS 5,578,850 5,370,077 5,251,366
Short-term borrowings 506,516 208,710 244,995
Federal Home Loan Bank advances 167,140 119,969 157,954
Long-term debt 117,049 77,090 117,276
Accrued interest, expenses, and taxes 46,694 42,440 41,893
Other liabilities 33,696 41,072 27,402
----------- ----------- ------------
TOTAL LIABILITIES 6,449,945 5,859,358 5,840,886
----------- ----------- ------------
Commitments and contingent liabilities - - -
Shareholders' equity
Preferred stock
Convertible 87,298 87,298 87,298
Nonconvertible 17,250 17,250 17,250
Common stock, $5 par value; 50,000,000 shares authorized;
21,814,022 issued and outstanding (19,552,261 at
June 30, 1993 and 19,656,924 at December 31, 1993) 109,070 97,761 98,285
Additional paid-in capital 88,851 83,236 86,385
Net unrealized loss - available for sale securities (13,633) - -
Retained earnings 228,073 171,116 188,082
----------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY 516,909 456,661 477,300
----------- ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,966,854 $ 6,316,019 $ 6,318,186
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 4
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -----------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 68,175 $ 60,794 $ 132,678 $ 119,569
Interest on investment securities
Taxable 30,381 30,618 57,612 61,480
Tax-exempt 6,828 6,152 13,680 11,389
Interest on deposits at financial institutions 96 346 218 1,045
Interest on federal funds sold and securities
purchased under agreements to resell 433 1,065 1,299 2,119
Interest on trading account securities 2,219 1,703 3,978 3,302
Interest on loans held for resale 248 636 829 1,155
----------- ----------- ----------- -----------
Total interest income 108,380 101,314 210,294 200,059
----------- ----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits 37,632 37,736 74,595 75,092
Interest on short-term borrowings 3,931 1,582 5,815 3,362
Interest on Federal Home Loan Bank advances
and long-term debt 4,020 2,793 7,659 4,821
----------- ----------- ----------- -----------
Total interest expense 45,583 42,111 88,069 83,275
----------- ----------- ----------- -----------
NET INTEREST INCOME 62,797 59,203 122,225 116,784
Provision for losses on loans - 4,667 - 7,490
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS 62,797 54,536 122,225 109,294
----------- ----------- ----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 7,802 7,225 15,364 13,732
Bank card income 1,915 1,808 3,944 3,581
Mortgage servicing income 1,693 1,939 3,323 3,971
Trust service income 1,452 1,477 3,007 2,980
Profits and commissions from trading activities 1,352 2,170 2,841 3,803
Investment securities gains 1 2,545 101 3,425
Other income 5,112 6,496 10,735 11,954
----------- ----------- ----------- -----------
Total noninterest income 19,327 23,660 39,315 43,446
----------- ----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 24,977 25,615 49,664 49,180
Net occupancy expense 4,281 4,013 8,595 7,956
Equipment expense 4,288 3,895 8,648 7,776
Other expense 22,533 23,066 43,754 46,314
----------- ----------- ----------- -----------
Total noninterest expense 56,079 56,589 110,661 111,226
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES AND
ACCOUNTING CHANGES 26,045 21,607 50,879 41,514
Applicable income taxes 7,659 7,052 14,994 13,465
----------- ----------- ----------- -----------
EARNINGS BEFORE ACCOUNTING CHANGES 18,386 14,555 35,885 28,049
Accounting changes, net - - - 5,001
----------- ----------- ----------- -----------
NET EARNINGS $ 18,386 $ 14,555 $ 35,885 $ 33,050
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE
Earnings before accounting changes
Primary $ .74 $ .63 $ 1.44 $ 1.23
Fully diluted .68 .59 1.33 1.16
Net earnings
Primary $ .74 $ .63 $ 1.44 $ 1.49
Fully diluted .68 .59 1.33 1.37
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Primary 21,947 19,716 21,905 19,458
Fully diluted 26,430 23,838 26,387 23,426
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 5
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
NET
UNREALIZED
LOSS ON
AVAILABLE
ADDITIONAL FOR SALE
PREFERRED COMMON PAID-IN SECURITIES, RETAINED
STOCK STOCK CAPITAL NET OF TAXES EARNINGS TOTAL
--------- --------- ---------- ------------ --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 104,548 $ 98,285 $ 86,385 $ - $ 188,082 $ 477,300
Net earnings - - - - 35,885 35,885
Cash dividends
Common Stock, $.42 per share - - - - (8,876) (8,876)
Series B Preferred Stock, $4.00 per share - - - - (176) (176)
Series C Preferred Stock, $1.30 per share - - - - (895) (895)
Series D Preferred Stock, $ .97 per share - - - - (247) (247)
Series E Preferred Stock, $1.00 per share - - - - (3,108) (3,108)
Pooled institutions prior to pooling - - - - (39) (39)
Common shares issued under employee benefit
plans and dividend reinvestment plan,
net of shares repurchased - 624 3,905 - (2,082) 2,447
Issuance of 2,032,196 shares of Common
Stock for acquisitions (Note 2) - 10,161 (1,439) - 19,541 28,263
Net unrealized loss on securities
available for sale, net of taxes - - - (13,633) - (13,633)
Other - - - - (12) (12)
--------- --------- --------- --------- --------- ---------
BALANCE, JUNE 30, 1994 $ 104,548 $ 109,070 $ 88,851 $ (13,633) $ 228,073 $ 516,909
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------------
1994 1993
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 35,885 $ 33,050
Reconciliation of net earnings to net cash provided by operating activities
Cumulative effect of accounting changes - (5,001)
Provision for losses on loans and other real estate 84 9,024
Depreciation and amortization 6,922 6,174
Amortization and write-off of intangibles 3,350 5,979
Net amortization of investment securities 2,995 3,792
Net realized gains on sale of investment securities (101) (3,425)
Deferred income taxes (benefit) 621 (2,530)
Decrease in assets
Trading account securities and loans held for resale 54,398 20,173
Accrued interest receivable and other assets 9,601 10,777
Increase (decrease) in accrued interest, expenses, taxes, and other liabilities 2,022 (25,984)
Other, net 98 644
--------- ---------
Net cash provided by operating activities 115,875 52,673
--------- ---------
INVESTING ACTIVITIES
Net decrease in short-term investments 18,977 63,473
Proceeds from sales and maturities of investment securities available for sale 536,406 446,423
Purchases of investment securities available for sale (603,684) (246,938)
Proceeds from maturities of investment securities 32,236 455,055
Purchases of investment securities (71,389) (700,032)
Net (increase) decrease in loans (116,616) 75,429
Net cash received from purchases of financial institutions 28,814 72,121
Purchases of premises and equipment, net (10,336) (10,147)
--------- ---------
Net cash (used) provided by investing activities (185,592) 155,384
--------- ---------
FINANCING ACTIVITIES
Net decrease in deposits (154,988) (191,622)
Net increase (decrease) in short-term borrowings 260,848 (99,890)
Proceeds from long-term debt 16,097 117,714
Repayment of long-term debt (11,196) (4,553)
Proceeds from issuance of common stock, net 5,510 16,125
Purchase and retirement of common stock, net (3,063) (151)
Cash dividends paid (13,341) (9,936)
--------- ---------
Net cash provided (used) by financing activities 99,867 (172,313)
--------- ---------
Net increase in cash and cash equivalents 30,150 35,744
Cash and cash equivalents at the beginning of the period 278,735 327,634
--------- ---------
Cash and cash equivalents at the end of the period $ 308,885 $ 363,378
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest $ 86,802 $ 81,495
Taxes 10,166 12,272
Other real estate transferred from loans $ 1,652 $ 5,379
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 7
UNION PLANTERS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. PRINCIPLES OF ACCOUNTING
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles. The foregoing financial
statements are unaudited; however, in the opinion of management, all
adjustments, including normal recurring adjustments, necessary for a fair
presentation of the consolidated financial statements have been included. June
30, 1993 interim financial statements and financial information have been
restated for 1993 acquisitions subsequent to June 30 accounted for as poolings
of interests. Additionally, 1994 first quarter financial statements and
financial information have been restated for second quarter 1994 acquisitions
accounted for as poolings of interests.
As discussed in the Corporation's 1993 Annual Report to Shareholders,
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," was adopted effective January 1,
1994.
The accounting policies followed by Union Planters Corporation and its
subsidiaries (the Corporation) for interim financial reporting are consistent
with the accounting policies followed for annual financial reporting except as
noted below. The notes included herein should be read in conjunction with the
notes to the consolidated financial statements included in the Corporation's
1993 Annual Report to Shareholders. Certain 1993 amounts have been
reclassified to be consistent with the 1994 financial reporting presentation.
NOTE 2. MERGERS AND ACQUISITIONS
POOLINGS OF INTERESTS
During the first six months of 1994, the Corporation completed three
acquisitions and in 1993 completed four acquisitions which were accounted for
using the pooling of interests method of accounting. The table below summarizes
these acquisitions.
<TABLE>
<CAPTION>
1993 ACQUISITIONS
- - -----------------
TOTAL ASSETS AT TOTAL EQUITY AT
DATE SHARES JANUARY 1, JANUARY 1,
INSTITUTION ACQUIRED ISSUED 1993 1993
- - ---------------------------- ---------- -------- --------------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Garrett Bancshares, Inc. (GBI) 5/31/93 613,088 $173.7 $ 4.8
Hogue Holding Company, Inc. (HHC) 9/1/93 219,274 38.5 4.4
Central State Bancorp, Inc. (CSB) 9/1/93 630,355 107.8 10.7
First Financial Services, Inc. (FFS) 10/1/93 447,906 86.0 8.4
--------- ------ -----
1,910,623 $406.0 $28.3
--------- ------ -----
</TABLE>
<TABLE>
<CAPTION>
1994 ACQUISITIONS
- - -----------------
TOTAL ASSETS AT TOTAL EQUITY AT
DATE SHARES JANUARY 1, JANUARY 1,
INSTITUTION ACQUIRED ISSUED 1994 1994
- - ----------------------------- ---------- -------- --------------- ----------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Mid-South Bancorp, Inc. (MSB) 1/1/94 839,542 $184.7 $11.9
First National Bancorp of
Shelbyville, Inc. (FNBS) 3/1/94 974,886 170.0 12.2
Clin-Ark Bancshares, Inc. (CBI) 4/1/94 217,768 50.3 4.2
--------- ------ -----
2,032,196 $405.0 $28.3
--------- ------ -----
</TABLE>
-7-
<PAGE> 8
The consolidated financial statements for 1993 and 1994 include the
results of the institutions acquired in 1993. The results of institutions
acquired in 1994 are included in the consolidated financial statements for
1994; however, prior year amounts have not been restated due to immateriality.
Eliminations have been made for material intercompany transactions with the
pooled companies. The 1994 acquisitions contributed approximately $1,550,000,
$232,000, and $402,000 to 1994 net interest income, noninterest income, and net
earnings, respectively, of the Corporation through their respective dates of
acquisition.
PURCHASE ACQUISITIONS
The Corporation acquired eight institutions in 1993 and three in the first
six months of 1994 which were accounted for using the purchase method of
accounting. The table below summarizes these acquisitions:
<TABLE>
<CAPTION>
TOTAL ASSETS
DATE PURCHASE RESULTING AT DATE OF
INSTITUTION ACQUIRED CONSIDERATION PRICE INTANGIBLES ACQUISITION
- - ------------------------ -------- --------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
Bank of East Tennessee (BOET) (a) 1/1/93 648,786 Shares of $25.3 $ 7.0 $ 231
Series E Preferred
Stock
Security Trust Federal Savings
and Loan Association and
SaveTrust Federal Savings Bank
(Security Trust/SaveTrust) 1/1/93 Cash 22.0 3.0 261
First Federal Savings Bank 2/26/93 625,000 Shares of NM (b) - 187
(Maryville) (b) Common Stock
(Conversion/
Acquisition)
First State Bancshares, Inc. 3/12/93 Cash and Common 3.9 .4 34
(FSB) (c) Stock (90,162 Shares)
First Cumberland Bank (FCB) (d) 3/15/93 Cash .2 - 20
Farmers Union Bank 4/1/93 Cash 9.5 4.2 78
(Farmers Union)
Erin Bank & Trust Company 6/1/93 259,736 Shares of 8.3 2.1 43
(Erin) Series E Preferred
Stock
Anderson County Bank (ACB) 3/1/94 Cash 2.6 (e) .7 22
Assumption of liabilities and 4/19/94 Cash .4 .4 15
purchase of assets from the
RTC (f)
Tennessee Bancorp, Inc. (TBI) (d) (g) 5/1/94 Cash 13.5 5.4 92
------ -----
Total $ 23.2 $ 983
====== =====
</TABLE>
(a) The Corporation previously held 17.93% of the common stock of BOET ($3.4
million). On January 1, 1993, the Corporation purchased an additional
43.93% of the common stock of BOET in exchange for the Corporation's
Series E Preferred Stock ($11.1 million). Effective May 3, 1993, the
Corporation acquired the remaining common stock of BOET in exchange for
the Corporation's Series E Preferred Stock ($10.8 million).
(b) Maryville was a mutual savings bank which, pursuant to a conversion
acquisition, converted to a federal stock charter. All of the stock of
Maryville was acquired by the Corporation in exchange for a capital
contribution equalling approximately $14.1 million derived in part from
the proceeds of a public offering of the Corporation's Common Stock made
in connection with the conversion/acquisition.
-8-
<PAGE> 9
(c) FSB is the parent company of First State Bank of Fayette County
(Somerville).
(d) Assets and liabilities at date of acquisition were transferred to UPNB.
(e) Subject to adjustment.
(f) Two subsidiaries of the Corporation assumed approximately $14 million of
deposits (including accrued interest) and acquired assets (primarily
loans) from the Resolution Trust Corporation and simultaneously sold
certain loans to a third party.
(g) TBI is the parent company of Tennessee National Bank in Columbia,
Tennessee.
NM -- Not meaningful.
Intangibles are being amortized primarily using the straight line method
over periods ranging from 10 to 15 years. The recording of the acquisition of
Maryville resulted in negative goodwill of approximately $9.4 million, $8.1
million of which was deducted from noncurrent, nonmonetary assets (premises and
equipment, fair value adjustment of loans, prepaid software, and mortgage
servicing rights). The remaining negative goodwill of $1.3 million was recorded
in other liabilities and is being accreted over seven years.
The following unaudited pro forma information summarizes the pro forma
impact of the purchase acquisitions completed during the first six months of
1994 and the pro forma impact of the purchase acquisitions completed in 1993
assuming consummation of all such transactions on January 1, 1993. The
unaudited pro forma results are not necessarily representative of the actual
results that would have occurred or which may occur in the future.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
---------------------------
SIX MONTHS ENDED
JUNE 30,
---------------------------
1994 1993
--------- --------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net interest income $ 123,326 $ 121,357
Provision for losses on loans 163 (10,374)
Noninterest income 39,382 44,058
Noninterest expense (112,130) (115,290)
--------- ---------
Earnings before income taxes
and accounting changes 50,741 39,751
Applicable income taxes 15,058 13,849
--------- ---------
Earnings before accounting changes 35,683 25,902
Accounting changes, net of taxes - 5,001
--------- ---------
Net earnings $ 35,683 $ 30,903
========= =========
Earnings per common share
Earnings before accounting changes
Primary $ 1.43 $ 1.07
Fully diluted 1.32 1.03
Net earnings
Primary 1.43 1.32
Fully diluted 1.32 1.24
</TABLE>
-9-
<PAGE> 10
The following details the net cash received from purchases of financial
institutions:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1994 1993
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Fair value of assets acquired $ 541,048 $ 1,245,602
Liabilities assumed (496,394) (1,148,122)
Issuance of Common Stock (28,264) (30,618)
Issuance of Preferred Stock - (30,127)
Less previous investment - (3,387)
---------- ----------
Cash paid for purchase of other
financial institutions 16,390 33,348
Cash and cash equivalents acquired (45,204) (105,469)
---------- ----------
Net cash received from purchases
of financial institutions $ (28,814) $ (72,121)
========== ===========
</TABLE>
PENDING ACQUISITIONS
The Corporation has signed definitive agreements pursuant to which it
would acquire the institutions listed below and, subject to receipt of various
approvals and satisfaction of certain contractual conditions precedent, all are
expected to be consummated in 1994. The number of shares of Common Stock to be
issued in connection with these acquisitions is subject to change depending on
the market price of the Corporation's Common Stock during the stipulated
pricing periods. The shares below are based on an assumed current market price
of $25.25.
<TABLE>
<CAPTION>
ANTICIPATED APPROXIMATE
METHOD OF TOTAL
INSTITUTION CONSIDERATION ACCOUNTING ASSETS
- - ---------------------------- ---------------- --------------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Liberty Bancshares, Inc., Parent Company Approximately 1,223,353 Pooling of Interests $ 170
of Liberty Federal Savings Bank in shares of Common Stock
Paris, TN (LBI) (a)
Earle Bankshares, Inc., Parent Company of Approximately 320,000 Pooling of Interests 40
First Southern Bank in Earle, shares of Common Stock
AR (EBI) (b)
BNF BANCORP, Inc. (formerly BANKFIRST Approximately 2,054,000 Pooling of Interests 262
Corporation), Parent Company of shares of Common Stock
BANKFIRST, a federal savings bank in
Decatur, AL (BNF) (c)
Grenada Sunburst System Corporation, Approximately 13,486,000 Pooling of Interests 2,463
Parent Company of Sunburst Bank, shares of Common Stock
Mississippi, in Grenada, MS; and
Sunburst Bank, in
Baton Rouge, LA (GSSC)
Mid South Bancshares, Inc., Parent Approximately 523,000 Pooling of Interests 128
Company of Security Bank in shares of Common Stock
Paragould, AR, and Farmers
and Merchants Bank in
Reyno, AR (MSB-ARK)
Commercial Bancorp, Inc., Parent Approximately 185,000 Pooling of Interests 29
Company of The Commercial Bank, shares of Common Stock ------
Obion, TN (Obion)
Total $3,092
======
</TABLE>
(a) Acquisition consummated July 1, 1994.
(b) Acquisition consummated August 1, 1994.
(c) Acquisition expected to be consummated September 1, 1994.
-10-
<PAGE> 11
NOTE 3. LOANS
Loans are summarized by type as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial, financial, and agricultural $ 675,118 $ 664,362
Real estate - construction 103,123 82,971
Real estate - mortgage
Secured by 1-4 family 1,264,073 1,022,263
Other mortgage loans 590,436 517,886
Consumer
Credit cards and other related plans 100,700 99,103
Home equity 91,119 86,356
Other consumer 486,833 450,780
Foreign
Government 1,750 2,250
Direct lease financing, net 35,981 25,914
----------- ------------
Total Loans $ 3,349,133 $ 2,951,885
=========== ============
</TABLE>
Nonperforming loans and loans 90 days or more past due are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $ 16,788 $ 14,646
Restructured loans 1,425 7,525
----------- -----------
Total nonperforming loans $ 18,213 $ 22,171
----------- -----------
Loans 90 days or more past due and not
on nonaccrual status $ 3,784 $ 4,771
=========== ===========
</TABLE>
NOTE 4. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans for the six months ended June
30, 1994, are summarized as follows (Dollars in thousands):
<TABLE>
<S> <C>
Balance, January 1, 1994 $ 80,442
Provision charged to expense -
Allowances of banks acquired 6,556
Recoveries 5,141
Amounts charged off (6,499)
-----------
Balance, June 30, 1994 $ 85,640
===========
</TABLE>
-11-
<PAGE> 12
NOTE 5. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, 1994
----------------------------------------------------------
UNREALIZED
AMORTIZED ----------------------- FAIR
COST GAINS LOSSES VALUE
---------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Government obligations
U.S. Treasury securities $ 1,044,139 $ 1,407 $ 11,061 $ 1,034,485
Securities of U.S. Government agencies
Collateralized mortgage obligations 321,464 185 6,217 315,432
Mortgage-backed securities 747,234 3,145 7,768 742,611
Other 162,755 566 1,410 161,911
Other stocks and securities 78,557 79 1,216 77,420
----------- -------- -------- -----------
Total investment securities
available for sale $ 2,354,149 $ 5,382 $ 27,672 $ 2,331,859
=========== ======== ======== ===========
HELD TO MATURITY
U.S. Government obligations
U.S. Treasury securities $ 91,852 $ 237 $ 1,408 $ 90,681
Securities of U.S. Government agencies
Collateralized mortgage obligations 16,869 164 189 16,844
Other 297 - - 297
----------- -------- -------- -----------
Total U.S. Government obligations 109,018 401 1,597 107,822
Obligations of states and political
subdivisions 445,236 14,017 4,437 454,816
----------- -------- -------- -----------
Total other securities 15 - - 15
----------- -------- -------- -----------
Total investment securities
held to maturity $ 554,269 $ 14,418 $ 6,034 $ 562,653
=========== ======== ======== ===========
</TABLE>
-12-
<PAGE> 13
NOTE 5. INVESTMENT SECURITIES (continued)
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------------------------------------------
UNREALIZED
AMORTIZED ----------------------- FAIR
COST GAINS LOSSES VALUE
--------- -------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
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
Bonds, notes, and debentures 1,896 10 - 1,906
Collateralized mortgage obligations 39,036 177 114 39,099
Other 1,300 30 - 1,330
---------- -------- ------- -----------
Total other securities 67,366 217 114 67,469
----------- -------- ------- -----------
Total investment securities
held for investment $ 2,021,963 $ 41,190 $ 2,384 $ 2,060,769
=========== ======== ======= ===========
</TABLE>
For the six-month periods ended June 30, 1994 and 1993, the Corporation
had gross realized gains on investment securities available for sale of
$413,000 and $2,311,000, respectively, and gross realized losses of $373,000
and $16,000, respectively. For investment securities held to maturity, gross
realized gains for the six months ended June 30, 1994 and 1993 were $63,000 and
$1,206,000, respectively, and gross realized losses of $2,000 and $77,000,
respectively. In the first six months of 1994, the gross realized gains and
losses for held to maturity securities resulted from "calls" of securities
prior to scheduled maturity.
Investment securities having a carrying value of approximately $872
million and $591 million at June 30, 1994 and December 31, 1993, respectively,
were pledged to secure public and trust funds on deposit and securities sold
under agreements to repurchase.
As of January 1, 1994 and in connection with the adoption of SFAS No. 115,
$1.6 billion of held to maturity securities and $595,000 held for sale
securities were transferred to the available for sale category of securities.
Additionally, approximately $80 million of held to maturity securities related
to 1994 acquisitions were transferred to the available for sale securities
portfolio.
-13-
<PAGE> 14
NOTE 6. OTHER NONINTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1994 1993 1994 1993
------- ------ ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OTHER NONINTEREST INCOME
VSIBG partnership earnings $ 581 $ 1,033 $ 1,287 $ 1,913
Credit life insurance commissions 732 698 1,436 1,305
Brokerage fee income 334 401 710 801
Computer service income 11 122 46 272
Sale of servicing 370 279 588 317
Gain on troubled debt restructuring - 901 - 901
Other 3,084 3,062 6,668 6,445
------- ------- ------- -------
TOTAL OTHER NONINTEREST INCOME $ 5,112 $ 6,496 $10,735 $11,954
======= ======= ======= =======
OTHER NONINTEREST EXPENSE
Amortization of mortgage
servicing rights $ 453 $ 673 $ 850 $ 1,842
FDIC assessments 3,210 3,124 6,383 6,202
Amortization of goodwill and
other intangibles 1,339 1,481 2,591 4,140
Legal fees 724 934 1,161 1,869
Other contracted services 1,503 1,588 3,052 3,180
Advertising and promotion 2,076 1,415 3,285 2,608
Brokerage and clearing fees 700 885 1,458 1,772
Postage and carrier 1,486 1,259 2,940 2,558
Stationery and supplies 1,526 1,313 2,921 2,498
Merchant credit card charges 893 1,064 1,986 2,081
Communications 1,007 1,062 2,010 2,126
Other real estate expense 142 812 243 1,826
Other personnel services 682 528 1,302 1,098
Federal Reserve fees 465 444 892 867
Dues, subscriptions, and
contributions 560 552 1,071 1,169
Travel 438 507 848 891
Miscellaneous charge-offs 408 253 690 439
Insurance 275 371 622 750
Servicing foreclosure expense 105 210 210 420
Consultant fees 243 355 416 625
Taxes other than income taxes 402 411 896 814
Acquisition-related expenses - 1,793 - 1,793
Other 3,896 2,032 7,927 4,746
------- ------- ------- -------
TOTAL OTHER NONINTEREST EXPENSE $22,533 $23,066 $43,754 $46,314
======= ======= ======= =======
</TABLE>
-14-
<PAGE> 15
NOTE 7. INCOME TAXES
Applicable income taxes for the six months ended June 30, 1994, were $15.0
million, resulting in an effective tax rate of 29.5%. Applicable income taxes
for the same period in 1993 were $13.5 million, resulting in an effective tax
rate of 32.4%. The tax expense applicable to investment securities gains for
the six months ended June 30, 1994 and 1993 was $39,000 and $1,300,000,
respectively.
At June 30, 1994, the Corporation had a net deferred tax asset of $50.8
million recorded in other assets compared to $35.6 million at June 30, 1993,
and $39.6 million at December 31, 1993.
Effective January 1, 1994, the Corporation adopted SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities." Reference
is made to Note 1 of the Corporation's 1993 Annual Report to Shareholders for
further discussion. The impact of SFAS No. 115 at June 30, 1994 was to increase
the cumulative net deferred tax asset by $8.7 million.
NOTE 8. FEDERAL HOME LOAN BANK (FHLB) ADVANCES
The Corporation's subsidiaries have obtained various advances from the
Federal Home Loan Bank (FHLB) totaling $167.1 million at June 30, 1994, under
Blanket Agreements for Advances and Security Agreements (the Agreements). The
Agreements entitle the Corporation's subsidiaries to borrow funds from the FHLB
to fund mortgage loan programs and satisfy other funding needs. Interest rates
on the advances vary from fixed rate advances to variable rate advances. The
majority of the advances at June 30, 1994, had variable rates tied to the
three-month LIBOR rate. Maturity dates for the advances range from 1994 to
2014. Collateral (mortgage loans) under the Agreements must be 150% of the
advances outstanding, $167.1 million at June 30, 1994.
NOTE 9. SHAREHOLDERS' EQUITY
PREFERRED STOCK
An analysis of the Corporation's Preferred Stock follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Preferred stock without par value,
10,000,000 shares authorized
CONVERTIBLE
Series A Preferred Stock,
250,000 shares authorized, none issued $ - $ -
Series B, $8 Nonredeemable, Cumulative,
Convertible Preferred Stock (stated at
liquidation value of $100),
44,000 shares issued and outstanding 4,400 4,400
Series D, 9.5% Redeemable,
Cumulative, Convertible Preferred Stock
(stated at liquidation value of $20.50),
253,655 shares issued and outstanding 5,200 5,200
Series E, 8% Cumulative, Convertible,
Preferred Stock (stated at liquidation value
of $25), 3,107,922 shares issued and outstanding 77,698 77,698
-------- --------
Total convertible preferred stock 87,298 87,298
NONCONVERTIBLE
Series C, 10 3/8%, Increasing Rate,
Redeemable, Cumulative Preferred Stock
(stated at liquidation value of $25),
690,000 shares issued and outstanding 17,250 17,250
-------- --------
Total nonconvertible preferred stock 17,250 17,250
-------- --------
Total preferred stock $104,548 $104,548
======== ========
</TABLE>
-15-
<PAGE> 16
NOTE 10. CONTINGENT LIABILITIES
LEGAL PROCEEDINGS
Management is of the opinion that neither the Corporation's financial
position, results of operations, nor liquidity will be materially affected by
the ultimate resolution of pending or threatened legal proceedings. There were
no significant developments during the second quarter of 1994 in any pending or
threatened legal proceedings which would alter such opinion.
The Corporation and/or various subsidiaries are parties to certain pending
or threatened civil actions which are described in Item 3, Part I of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1993,
in Note 19 to the Corporation's consolidated financial statements on page 33 of
the 1993 Annual Report to Shareholders and in Note 10 to the Corporation's
quarterly report on Form 10-Q dated March 31, 1994(10-Q). Note 10 to the 10-Q
describes certain pending litigation in the U. S. District Court for the
Western District of Tennessee against UPNB and eight other banks alleging
violations of the Sherman Act. During the second quarter of 1994, the
plaintiffs' motion for reconsideration of the court's granting of the
defendants' motion for summary judgment on the Sherman Act claim was denied,
and plaintiffs appealed to the United States Court of Appeals for the 6th
Circuit.
Various other legal proceedings pending against the Corporation and/or its
subsidiaries have arisen in the ordinary course of business.
-16-
<PAGE> 17
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following provides a narrative discussion and analysis of significant
changes in results of operations and financial condition. This discussion
should be read in conjunction with the consolidated financial statements and
related financial analysis set forth in the Corporation's 1993 Annual Report,
the Corporation's Quarterly Report on Form 10-Q dated March 31, 1994, and the
interim unaudited financial statements and notes for the three months ended
June 30, 1994, included in Part I herein, and the other supplemental financial
data included in this discussion.
The following table presents selected financial highlights for the three
and six months ended June 30, 1994 and 1993.
<TABLE>
<CAPTION>
PERCENTAGE
THREE MONTHS ENDED SIX MONTHS ENDED CHANGE
JUNE 30, JUNE 30, --------------
------------------- ------------------- THREE SIX
1994 1993 1994 1993 MONTHS MONTHS
------- ------- ------- ------- ------ ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Earnings before accounting changes $18,386 $14,555 $35,885 $28,049 26% 28%
Net earnings 18,386 14,555 35,885 33,050 26 9
Earnings before accounting changes:
Primary earnings per common share .74 .63 1.44 1.23 17 17
Fully diluted earnings per common share .68 .59 1.33 1.16 15 15
Return on average assets 1.06 .92 1.06 .91 15 16
Return on average common equity 15.51 14.46 15.40 14.53 7 6
Net earnings
Primary earnings per common share .74 .63 1.44 1.49 17 (3)
Fully diluted earnings per common share .68 .59 1.33 1.37 15 (3)
Return on average assets 1.06 .92 1.06 1.08 15 (2)
Return on average common equity 15.51 14.46 15.40 17.56 7 (12)
Dividends per common share .21 .18 .42 .36 17 17
Net interest margin (FTE) 4.17 4.32 4.15 4.37 (3) (5)
Interest rate spread (FTE) 3.73 3.92 3.73 3.97 (5) (6)
Book value per common share 18.90 18.01 5
Book value assuming conversion of
convertible preferred stock 19.00 18.29 4
</TABLE>
Net interest margin - Net interest income as a percentage of average earning
assets
Interest rate spread - Difference in the yield on average earning assets and
the rate on average interest-bearing liabilities
FTE - Fully tax-equivalent basis
-17-
<PAGE> 18
ACQUISITIONS
During the first six months of 1994 the Corporation consummated six
acquisitions. Additionally, two acquisitions have been consummated subsequent
to June 30, 1994. The following table presents at June 30, 1994, the balances
at the respective dates of acquisition for the institutions acquired through
June 30, 1994. Reference is made to Note 2 to the interim financial statements
and the Corporation's Current Reports on Form 8-K dated January 10, 1994,
February 8, 1994, April 14, 1994, April 15, 1994, May 18, 1994, and May 19,
1994, for additional information regarding the pending and completed
acquisitions.
UNION PLANTERS CORPORATION
CONSUMMATED ACQUISITIONS
BALANCES RECORDED AT RESPECTIVE DATES OF ACQUISITION
JUNE 30, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL IMPACT
MSB (A) FNBS (A) CBI (A) TBI OTHER (B) ON UPC
-------- -------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions $ - $ 1,179 $ - $ 1,600 $ - $ 2,779
Loans, net of unearned income 114,234 66,753 34,143 50,631 16,243 282,004
Allowance for losses on loans (2,123) (2,834) (434) (787) (378) (6,556)
--------- --------- --------- --------- --------- ---------
Net loans 112,111 63,919 33,709 49,844 15,865 275,448
Investment securities 47,572 92,317 13,255 34,027 755 187,926
Intangible assets 479 - - 5,464 1,039 6,982
Cash and cash equivalents 16,847 5,490 1,629 2,584 18,654 45,204
Other real estate owned, net 510 66 - - - 576
Premises and equipment 4,185 2,250 1,050 3,484 194 11,163
Other assets 2,979 4,857 619 1,865 649 10,969
--------- --------- -------- --------- --------- ---------
Total assets $ 184,683 $ 170,078 $ 50,262 $ 98,868 $ 37,156 $ 541,047
========= ========= ========= ========= ========= =========
LIABILITIES
Deposits $ 166,082 $ 153,918 $ 45,766 $ 82,993 $ 33,713 $ 482,472
Other interest-bearing
liabilities 4,670 - 62 - - 4,732
Other liabilities 2,076 3,926 260 2,415 513 9,190
--------- --------- --------- --------- --------- ---------
Total liabilities $ 172,828 $ 157,844 $ 46,088 $ 85,408 $ 34,226 $ 496,394
========= ========= ========= ========= ========= =========
Purchase price/capital
contribution/equity at
respective dates of
acquisition for poolings $ 11,855 $ 12,234 $ 4,174 $ 13,460 $ 2,930 $ 44,653
========= ========= ========= ========= ========= =========
</TABLE>
(a) Amounts are as of January 1, 1994, for MSB, FNBS, and CBI which were
accounted for as poolings of interests.
(b) Includes ACB and the acquisition, from the Resolution Trust Corporation of
certain assets and assumption of certain liabilities of a failed
institution.
-18-
<PAGE> 19
PENDING ACQUISITIONS
The Corporation is continuing its efforts to acquire other financial
institutions in selected markets. Reference is made to Note 2 to the interim
financial statements for information regarding pending acquisitions.
Negotiations with other institutions are ongoing.
GRENADA SUNBURST SYSTEM CORPORATION PENDING ACQUISITION
On July 1, 1994, the Corporation entered into a definitive agreement to
acquire Grenada Sunburst System Corporation (GSSC) in a tax-free exchange of
shares of the Corporation's Common Stock in a transaction to be accounted for
as a pooling of interests. Based on the current market price ($25.25 per share
at August 5, 1994), the Corporation would issue approximately 13.5 million
shares of the Corporation's Common Stock, subject to change based on the market
price of the Corporation's Common Stock during a stipulated pricing period.
GSSC is a multi-bank holding company headquartered in Grenada,
Mississippi. It is the third largest financial institution headquartered in
Mississippi. GSSC has total assets of approximately $2.5 billion. The two major
subsidiaries of GSSC are Sunburst Bank, Mississippi, and Sunburst Bank,
Louisiana, with total assets of $2.0 billion and $500 million, respectively.
GSSC operates in 124 locations in 59 counties in Mississippi and Louisiana. The
acquisition is expected to be completed by year end 1994, subject to receiving
approval by both companies' shareholders and regulatory agencies and the
satisfaction of other closing conditions.
GSSC represents a significant acquisition and in management's opinion will
enhance market share and add to the value of the Corporation's banking
franchise. Reference is made to the Corporation's Current Reports on Form 8-K
dated May 19, 1994, as amended, July 1, 1994, and July 26, 1994 for pro forma
financial information, financial statements of GSSC, and the definitive
agreement.
REORGANIZATION OF UNION PLANTERS NATIONAL BANK (UPNB)
Incidental to a corporate division of UPNB, as of July 1,1994, the
Corporation formed four new bank subsidiaries, Union Planters Bank of East
Tennessee, National Association; Union Planters Bank of Middle Tennessee,
National Association; Union Planters Bank of Chattanooga, National Association;
and Union Planters Bank of Jackson, National Association (collectively the
Regional Banks). The Corporation injected equity of $101.7 million in the
Regional Banks with a majority of the funds ($98 million) having been provided
by a dividend from UPNB. Each of the Regional Banks acquired from UPNB at book
value substantially all of the assets and assumed all of the liabilities of the
UPNB branches located in its region. The establishment of these branches into
separate banks will permit a local management team and board of directors to
focus on the needs and opportunities within the local market, and is consistent
with the Corporation's community bank philosophy. UPNB will continue to operate
branches in the Memphis, Tennessee area. The separation of the branches held by
UPNB had no material impact on the consolidated financial condition of the
Corporation.
-19-
<PAGE> 20
OPERATING RESULTS - THREE AND SIX MONTHS ENDED JUNE 30, 1994
The following tables present the contributions to fully diluted earnings
per common share and a summary of the second quarter and year-to-date results
by major operating units of the Corporation. A discussion of the operating
results follows these tables.
UNION PLANTERS CORPORATION
CONTRIBUTIONS TO FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 EPS
------------------ INCREASE
1994 1993 (DECREASE)
------ ------ ----------
<S> <C> <C> <C>
Net interest income-FTE $ 4.91 $ 5.24 $ (.33)
Provision for losses on loans - (.32) .32
------ ------ ------
Net interest income after provision
for losses on loans-FTE 4.91 4.92 (.01)
------ ------ ------
Noninterest income
Service charges on deposits .58 .59 (.01)
Bank card income .15 .15 -
Mortgage servicing income .13 .17 (.04)
Trust service income .11 .13 (.02)
Profits and commissions from
trading activities .11 .16 (.05)
Investment securities gains - .15 (.15)
Other income .41 .51 (.10)
------ ------ ------
Total noninterest income 1.49 1.86 (.37)
------ ------ ------
Noninterest expense
Salaries and benefits 1.88 2.10 .22
Net occupancy expense .32 .34 .02
Equipment expense .33 .33 -
Other expense 1.66 1.98 .32
------ ------ ------
Total noninterest expense 4.19 4.75 .56
------ ------ ------
Earnings before income taxes and
accounting changes-FTE 2.21 2.03 .18
Applicable income taxes-FTE .85 .83 (.02)
------ ------ ------
Earnings before accounting changes 1.36 1.20 .16
Accounting changes - .21 (.21)
------ ------ ------
Net earnings 1.36 1.41 (.05)
Less preferred stock dividends .03 .04 .01
------ ------ ------
Fully diluted earnings per share $ 1.33 $ 1.37 $ (.04)
====== ====== ======
Change in net earnings applicable
to common shares using previous
year average shares outstanding $ .10
Change in average shares outstanding (.14)
======
Change in net earnings $ (.04)
======
</TABLE>
FTE - Fully taxable-equivalent basis
-20-
<PAGE> 21
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SUMMARY OF CONSOLIDATED RESULTS (A)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1994 1993 1994 1993
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial Banking
Union Planters National Bank
Net interest income $ 31,068 $ 30,449 $ 60,134 $ 60,080
Provision for losses on loans 1,003 (1,967) 1,354 (3,409)
Noninterest income 12,027 13,067 24,607 25,163
Noninterest expense (30,090) (29,469) (59,172) (58,446)
-------- -------- -------- --------
Operating earnings 14,008 12,080 26,923 23,388
Investment securities gains 55 1,623 51 2,243
Gain on sale of collateral related to a
troubled debt restructuring - 901 - 901
Write-off of intangibles - - - (28)
Accelerated amortization of mortgage servicing rights - - - (500)
Accelerated amortization of intangibles - (301) - (602)
-------- -------- -------- --------
Earnings before taxes 14,063 14,303 26,974 25,402
-------- -------- -------- --------
Community Bank Subsidiaries:
Net interest income 32,951 30,423 64,551 59,922
Provision for losses on loans (1,003) (2,700) (1,354) (4,081)
Noninterest income 6,368 5,808 12,609 11,447
Noninterest expense (25,024) (23,344) (50,105) (45,649)
-------- -------- -------- --------
Operating earnings 13,292 10,187 25,701 21,639
Investment securities gains (54) 922 121 1,182
Accelerated amortization of intangibles - (44) - (99)
Write-off of intangibles - - - (1,181)
Expenses related to acquisitions - (1,793) - (1,793)
-------- -------- -------- --------
Earnings before taxes 13,238 9,272 25,822 19,748
-------- -------- -------- --------
Parent Company and Broker/Dealer
Net interest income (expense) (1,222) (1,669) (2,460) (3,218)
Noninterest income, excluding dividends
from subsidiaries (b) 970 1,363 2,084 2,558
Noninterest expense (c) (1,004) (1,662) (1,470) (2,976)
-------- -------- -------- --------
Operating loss (1,256) (1,968) (1,846) (3,636)
Investment securities gains (losses) - - (71) -
-------- -------- -------- --------
Loss before taxes (1,256) (1,968) (1,917) (3,636)
-------- -------- -------- --------
Earnings before income taxes and accounting changes 26,045 21,607 50,879 41,514
Applicable income taxes (7,659) (7,052) (14,994) (13,465)
-------- -------- -------- --------
Earnings before accounting changes 35,885 28,049
Accounting changes, net of taxes
Income taxes - - - 10,926
Postretirement/postemployment benefits - - - (5,925)
-------- -------- -------- --------
Net earnings $ 18,386 $ 14,555 $ 35,885 $ 33,050
======== ======== ======== ========
</TABLE>
(a) Individual line items may not total to the consolidated statement of
earnings amounts due to eliminations in consolidation.
(b) Net of intercompany dividends from bank subsidiaries of $14.2 million and
$26.3 million for the three and six months ended June 30, 1994,
respectively, compared to $6.5 million and $10.0 million, respectively,
for the same period in 1993.
(c) Management fees charged to subsidiaries of $4.4 million and $8.9 million
for the three and six months ended June 30, 1994, respectively, have been
netted against noninterest expense. For the same periods in 1993, these
fees totaled $1.7 million and $3.4 million, respectively.
-21-
<PAGE> 22
SECOND QUARTER EARNINGS OVERVIEW
For the second quarter, the Corporation had net earnings and record
operating earnings of $18.4 million compared to $14.6 million for the same
period in 1993. Fully diluted earnings per common share was $.68, an increase
of 15% over net earnings of $.59 per share for the second quarter of 1993.
Fully diluted earnings per common share for the second quarter are based on 2.6
million more shares than for the same period last year, primarily as a result
of shares issued for acquisitions. The Corporation's return on assets for the
second quarter was 1.06% compared to .92% in 1993, and the return on common
equity was 15.51% compared to 14.46%.
The continued growth of net interest income in the second quarter,
primarily due to acquisitions, and the decline in the provision for losses on
loans due to improving asset quality were the primary reasons for the increase
in earnings. Additionally, expense reductions and nonrecurring one-time
expenses in prior periods more than offset the increase in noninterest expenses
from acquisitions. A more detailed review and discussion of the Corporation's
financial condition and results of operations follows.
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income on a fully taxable-equivalent basis (FTE) for the
second quarter was $66.5 million, 7% higher than the second quarter last year
which was $62.4 million and 5% higher than the first quarter of 1994 which was
$63.1 million. For the first six months of 1994, net interest income was $129.6
million, a 6% increase over 1993's first six months. The increase in net
interest income is primarily related to acquisitions.
The net interest margin for the second quarter of 1994 was 4.17% compared
to 4.32% and 4.13% for the second quarter of 1993 and the first quarter of
1994, respectively. For the first six months of 1994 the net interest margin
was 4.15% compared to 4.37% for the same period in 1993. The interest rate
spread for the second quarter this year was 3.73% compared to 3.92% a year ago.
These ratios have declined over the four quarters of 1993; however, beginning
with the second quarter of 1994 they have started to improve and are expected
to continue to do so over the remainder of 1994 from the growth in loans and
from the repricing of variable-rate investment securities and the reinvestment
of maturing investment securities in a rising rate environment. Competitive
loan and deposit rates will continue to keep pressure on the net interest
margin.
To be consistent with industry practice, in the first quarter of 1994 the
Corporation reclassified certain interchange fees arising from credit card
loans (formerly included in interest income) to bank card income, a component
of noninterest income. For the three and six months ended June 30, 1994, these
fees were $569,000 and $1.1 million, respectively, compared to $446,000 and
$828,000 for the same periods in 1993.
Interest income (FTE) for the three and six months ended June 30, 1994
totaled $112.1 million and $217.7 million, respectively, an increase of $7.6
million and $11.7 million, respectively, over the same periods in 1993. The
increase in interest income is primarily in loans which, excluding the impact
of acquisitions, have increased approximately 9% for the six months ended June
30, 1994 compared to the same period in 1993 and have increased approximately
3% over the first quarter of 1994. Interest income on investment securities
increased $864,000 between the second quarter of 1994 and 1993, and decreased
$248,000 between the first half of 1994 and 1993. Average investment securities
increased $235 million and $245 million, respectively, for the same periods.
The increase in interest income resulting from an increased volume of
investment securities has been offset by lower yields on investment securities
as they repriced or matured due to a declining interest rate environment. The
taxable-equivalent yield on earning assets was 7.03% and 6.98%, respectively,
for the three and six months ended June 30, 1994, a decrease of 20 and 35 basis
points, respectively. The yield on earning assets for the second quarter of
1994 increased 11 basis points from the first quarter of 1994 due to a rise in
interest rates.
-22-
<PAGE> 23
Interest expense for the three and six months ended June 30, 1994 was
$45.6 million and $88.1 million, an increase of $3.5 million and $4.8 million,
respectively, over the same periods in 1993. The increase is primarily related
to an increase in average Federal Home Loan Bank advances of $68 million and
$116 million, respectively, for the above periods. These advances were obtained
to lock in interest rate spreads by borrowing variable-rate funds with specific
term maturities and investing the proceeds in variable-rate earning assets with
specific matched maturities. Average subordinated debentures increased $40
million for the two periods primarily as a result of a public offering of
debentures in the fourth quarter of 1993, partially offset by an in-substance
defeasance of approximately $34 million of previously issued debentures.
Short-term borrowings also increased $198 million and $100 million,
respectively, for the three and six months ended June 30, 1994 compared to the
same periods in 1993. Average interest-bearing deposits have increased $130
million and $206 million, respectively, between 1993 and 1994, primarily due to
acquisitions. However, interest expense on deposits did not increase
significantly due to the declining interest rate environment in 1993 which was
offset by the increase in interest expense in the second quarter of 1994 due to
the increased deposit levels from acquisitions. Acquisitions increased average
interest-bearing deposits by $316 million and $376 million, respectively, for
the three and six months ended June 30, 1994 compared to 1993.
In the fourth quarter of 1993, the Corporation entered into interest rate
swaps as hedging transactions to lessen the Corporation's sensitivity to
interest rate fluctuations. The impact of these instruments on net interest
income for the three and six months ended June 30, 1994 was to increase
interest income for the quarter and first six months $576,000 ($113,000
investment securities and $463,000 loans) and $1.5 million ($340,000 investment
securities and $1.1 million loans), respectively, and reduce interest expense
on long-term debt $9,000 and $121,000, respectively.
Reference is made to the average balance sheets which follow this
discussion for detailed yields and rates on the components of net interest
income.
PROVISION FOR LOSSES ON LOANS
The continued reduction in nonperforming assets and the strong reserve
coverage of nonperforming assets resulted in the Corporation not recording
provisions for losses on loans for the three and six months ended June 30,
1994. For these same periods in 1993, the provisions for losses on loans were
$4.7 million and $7.5 million, respectively. Management does not expect to
record any provision for losses on loans for the remainder of 1994, unless a
significant increase in loans should occur or there should be a significant
increase in nonperforming assets, neither of which is expected at this time by
management to occur.
NONINTEREST INCOME
Noninterest income was $19.3 million for the second quarter of 1994, a
decrease of 18% from the second quarter of 1993 and a decrease of 3% from the
first quarter of 1994. For the six months ended June 30, 1994, noninterest
income was $39.3 million, a 10% decrease from 1993's first six months.
The most significant decrease for the three-and-six month periods was
investment securities gains which decreased $2.5 million and $3.3 million,
respectively. Additionally, noninterest income for both periods in 1993
included a one-time gain of $901,000 related to a troubled debt restructuring.
For the second quarter and first six months of 1994, service charges on
deposits and bank card income both increased over the same periods in 1993.
Service charges on deposits increased due to acquisitions and to account
promotions which resulted in increased service charge income. Bank card income
has continued to grow as emphasis has been placed on expanding the credit card
business. Bank card income for the second quarter was down slightly from the
first quarter of 1994 due to quarterly fluctuations in the business.
-23-
<PAGE> 24
Offsetting the increases in noninterest income discussed above were
decreases in mortgage servicing income, profits and commissions from trading
activities, and VSIBG Limited Partnership earnings between the second quarter
and first six months of 1994 compared to 1993 and between the first and second
quarters of 1994. The decrease in mortgage servicing income was due primarily
to the high level of refinancing activity over the last two years. The decline
in profits and commissions from a decline in trading activities is related to
the SBA trading activities and the discontinuance of the Capital Markets
operations which is discussed below.
Due to the continued decline in revenues from the Capital Markets
operations, management decided to discontinue these operations at the beginning
of the second quarter of 1994. The discontinuance is not expected to have a
significant impact on operating results of the Corporation. For the second
quarter of 1994, the Capital Markets operations had total revenues of $228,000
and total expenses of $348,000 compared to $802,000 and $711,000, respectively,
for the second quarter of 1993. For the first half of 1994 revenues and
expenses were $628,000 and $945,000, respectively, compared to $1.3 million and
$1.4 million for the same periods in 1993. Additionally, the Corporation is
discontinuing its computer service business which has been declining over the
past few years due to the consolidation in the banking industry.
NONINTEREST EXPENSE
Noninterest expense was $56.1 million for the second quarter of 1994, a
decrease of 1% from the second quarter of 1993, and a 3% increase over the
first quarter of 1994. For the six months ended June 30, 1994, noninterest
expense was 110.7 million, a .5% decrease from the same period in 1993.
Acquisitions in 1993 and 1994 increased noninterest expenses approximately $1.2
million and $4.0 million, respectively, for the three and six months ended June
30, 1994 compared to 1993. These expense increases were offset by reductions in
expenses due to nonrecurring one-time charges in prior periods and other
expense reductions.
Salaries and benefits expense, the largest item in noninterest expense,
was $25.0 million for the second quarter of 1994, a 3% decrease from the second
quarter of 1993 and a 1% increase over the first quarter of 1994. For the six
months ended June 30, 1994, salaries and benefits expense was $50.0 million, a
1% increase over 1993. Acquisitions were the primary reason for the increase in
these expenses and which were partially offset by a decline in incentive
compensation of approximately $900,000 and $1.4 million, respectively, for the
three and six months ended June 30, 1994 compared to the same periods in 1993.
Full-time equivalent employees were 3,258 at June 30, 1994 compared to 3,051 at
June 30, 1993.
Other noninterest expense decreased for the three and six months ended
June 30, 1994 compared to the same periods in 1993 due to the following
significant items: (i) one-time expenses related to acquisitions declined $1.8
million for both periods; (ii) other real estate expense declined $670,000 and
$1.6 million, respectively, due to improving asset quality; (iii) amortization
of intangibles declined $362,000 and $2.5 million, respectively, primarily from
accelerated amortization of intangibles in 1993; and (iv) legal fees decreased
$210,000 and $708,000, respectively, as litigation activity declined
year-to-year.
The increase in noninterest expense between the first and second
quarters of 1994 was due primarily to increased advertising by the
Corporation's lead bank, increased legal fees related to outstanding litigation
and legal costs associated with acquisitions.
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
Nos. 106 and 112 related to postretirement and postemployment benefits. The
Corporation recorded the cumulative obligation for postretirement and
postemployment benefits upon adoption which was $9.6 million ($5.9 million
after taxes). The ongoing impact on earnings is not significantly different
from previous practice.
Management is continuing to evaluate ways to reduce noninterest expense
while maintaining quality customer service. Management is conducting a thorough
review of existing operations and expenses in an effort to further reduce
expenses.
-24-
<PAGE> 25
TAXES
Applicable income taxes for the six months ended June 30, 1994 were $15.0
million, resulting in an effective tax rate of 29.5%, which compares to $13.5
million, or an effective tax rate of 32.4% for the six months ended June 30,
1993. Federal income taxes were provided at statutory rates of 35% and 34% for
the six months ended June 30, 1994 and 1993, respectively, as a result of a
retroactive tax rate increase which did not become effective until the third
quarter of 1993. The decrease in the effective rate in the six months ended
June 30 1994, as compared to the six months ended June 30, 1993, is due
primarily to the deductibility in 1994 of the amortization of certain
intangible assets which were not deductible in prior periods and to an increase
in nontaxable municipal bond interest. These amounts were partially offset by a
one percent increase in the federal statutory tax rate to 35%.
The Corporation adopted SFAS No. 109 effective January 1, 1993 and
recorded a benefit in the first quarter of 1993 of $10.9 million from the
cumulative effect of the accounting change. Additionally, the Corporation
adopted SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". Reference is made to Note 1 to the consolidated financial
statements in the 1993 Annual Report to Shareholders for further discussion. At
June 30, 1994, the Corporation recorded a deferred tax asset of $8.7 million
related to the fair market valuation adjustment required by SFAS No. 115.
EARNINGS CONSIDERATIONS FOR THE LAST HALF OF 1994
In connection with the pending acquisitions, particularly the GSSC
acquisition, and possible internal and acquisition related reorganizations,
management anticipates that possible significant expenses (e.g. elimination of
duplicate facilities, staff reductions, elimination of duplicate functions,
write-off of impaired assets, etc.) may be incurred in the third and fourth
quarters of 1994 upon completion of ongoing financial, due diligence, and
strategic reviews and assessments of the post-merger operating environment of
the Corporation. It is preliminarily estimated that at least $2.0 million of
such expense will be incurred in the third quarter. Any additional charges
which may be incurred in either the third or fourth quarter as a result of
completion of the studies cannot be estimated at this time. Additionally,
management expects significant future cost savings from the combined operations
of the Corporation and GSSC once that acquisition is consummated. Preliminary
studies indicate that there are significant savings opportunities and
management expects that they will be realized once the recommendations are
implemented; however, the final savings which may actually be realized cannot
be estimated at this time.
Management is evaluating its available for sale (AFS) investment portfolio
in light of the rising interest rate environment in the first half of 1994.
Selective restructurings of the AFS investment portfolio to increase book
yields are expected in the last half of 1994. It is currently estimated that
the losses recognized would be in a range of $2.5 million to $5 million after
taxes. These losses have already been recognized on the Corporation's balance
sheet by a reduction in shareholders' equity under SFAS No. 115, adopted
January 1, 1994. The higher book yields in the investment portfolio after the
restructurings are expected to increase the Corporation's future earnings and
any losses are expected to be earned back over a shorter time period than the
original maturity of the securities being sold. The restructurings are expected
to enhance the liquidity and flexibility of the Corporation's balance sheet.
-25-
<PAGE> 26
UNION PLANTERS CORPORATION
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------------------------------------------
1994 1993
---------------------------------- -------------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- --------- ------ --------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions $ 9,321 $ 96 4.13% $ 37,427 $ 346 3.71%
Federal funds sold and securities
purchased under agreements to resell 46,348 433 3.75 129,746 1,065 3.29
Trading account securities, at market 167,061 2,219 5.33 128,906 1,703 5.30
Loans held for resale 13,569 248 7.33 43,772 636 5.83
Investment securities (1) (2) 2,917,380 40,590 5.58 2,682,545 39,726 5.94
Loans, net of unearned income (1) 3,241,766 68,529 8.48 2,776,395 61,061 8.82
----------- --------- ----------- --------
TOTAL EARNING ASSETS (1) (2) 6,395,445 112,115 7.03 5,798,791 104,537 7.23
--------- --------
Cash and due from banks 261,744 253,442
Premises and equipment 148,598 130,394
Allowance for losses on loans (88,225) (80,568)
Other assets 207,773 223,632
----------- ---------
TOTAL ASSETS $ 6,925,335 $ 6,325,691
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts $ 1,255,486 7,655 2.45% $ 1,337,611 7,706 2.31%
Savings deposits 1,055,201 5,595 2.13 807,451 5,013 2.49
Certificates of Deposit of
$100,000 and over 354,933 3,394 3.84 350,783 3,552 4.06
Other time deposits 2,156,806 20,988 3.90 2,196,267 21,465 3.92
Short-term borrowings 427,045 3,930 3.68 228,844 1,582 2.77
Federal Home Loan Bank advances 167,523 1,868 4.97 99,663 836 3.36
Long-term debt
Subordinated capital notes and debentures 114,757 2,096 7.33 74,292 1,829 9.87
Other 2,345 57 9.75 5,660 128 9.07
----------- --------- ----------- --------
TOTAL INTEREST-BEARING LIABILITIES 5,534,096 45,583 3.30 5,100,571 42,111 3.31
Demand Deposits 791,357 695,202
----------- --------- ----------- --------
TOTAL SOURCES OF FUNDS 6,325,453 45,583 5,795,773 42,111
--------- --------
Other liabilities 77,989 87,520
Net unrealized loss on
available for sale securities (490) -
Shareholders' equity 522,893 442,398
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,925,335 $ 6,325,691
=========== ===========
NET INTEREST INCOME $ 66,532 $ 62,426
======== ========
INTEREST RATE SPREAD 3.73% 3.92%
==== ====
NET INTEREST MARGIN 4.17% 4.32%
==== ====
(1) Taxable-equivalent adjustment:
Loans $ 354 $ 267
Investment securities 3,381 2,956
-------- --------
$ 3,735 $ 3,223
======== ========
</TABLE>
(2) Yields are calculated based on historical cost and excludes the impact of
the net unrealized loss on available for sale securities.
-26-
<PAGE> 27
UNION PLANTERS CORPORATION
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------------------------
1994 1993
---------------------------------- ------------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- --------- ------ --------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions $ 9,427 $ 218 4.66% $ 56,298 $ 1,045 3.74%
Federal funds sold and securities
purchased under agreements to resell 74,026 1,299 3.54 135,997 2,119 3.14
Trading account securities 159,947 3,978 5.02 120,911 3,302 5.51
Loans held for resale 22,526 829 7.42 36,559 1,155 6.37
Investment securities (1) (2) 2,841,525 78,071 5.54 2,596,596 78,319 6.08
Loans, net of unearned income (1) 3,185,639 133,313 8.40 2,723,578 120,111 8.89
----------- --------- ----------- ---------
TOTAL EARNING ASSETS (1) (2) 6,293,090 217,708 6.98 5,669,939 206,051 7.33
--------- ---------
Cash and due from banks 270,982 251,240
Premises and equipment 146,344 129,153
Allowance for losses on loans (87,804) (79,057)
Other assets 221,581 222,523
----------- ---------
TOTAL ASSETS $ 6,844,193 $ 6,193,798
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts $ 1,298,882 15,292 2.37% $ 1,331,687 15,571 2.36%
Savings deposits 1,017,786 10,920 2.16 771,765 9,622 2.51
Certificates of Deposit of
$100,000 and over 350,305 6,672 3.84 343,135 6,917 4.07
Other time deposits 2,161,262 41,711 3.89 2,175,410 42,982 3.98
Short-term borrowings
Federal funds purchased and securities
sold under agreements to repurchase 339,059 5,705 3.39 235,712 3,244 2.78
Other 6,823 110 3.25 9,883 118 2.41
Federal Home Loan Bank advances 167,539 3,443 4.14 51,781 885 3.45
Long-term debt
Subordinated capital notes and debentures 114,750 4,088 7.18 74,292 3,659 9.93
Other 2,865 128 9.01 6,444 277 8.67
----------- --------- ----------- --------
TOTAL INTEREST-BEARING LIABILITIES 5,459,271 88,069 3.25 5,000,109 83,275 3.36
Demand Deposits 784,815 675,092
----------- --------- ----------- ---------
TOTAL SOURCES OF FUNDS 6,244,086 88,069 5,675,201 83,275
--------- ---------
Other liabilities 78,989 91,680
Net unrealized gain on
available for sale securities 4,696 -
Shareholders' equity 516,422 426,917
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,844,193 $ 6,193,798
=========== ===========
NET INTEREST INCOME $ 129,639 $ 122,776
========= =========
INTEREST RATE SPREAD 3.73% 3.97%
==== ====
NET INTEREST MARGIN 4.15% 4.37%
==== ====
(1) Taxable-equivalent adjustment:
Loans $ 635 $ 542
Investment securities 6,779 5,450
--------- ---------
$ 7,414 $ 5,992
========= =========
</TABLE>
(2) Yields are calculated based on historical cost and excludes the impact of
the net unrealized gain on available for sale securities.
-27-
<PAGE> 28
FINANCIAL CONDITION
The Corporation's total assets grew $651 million to $7.0 billion at June
30, 1994 compared to June 30, 1993, and increased $649 million from December
31, 1993 to June 30, 1994 due primarily to acquisitions. Certain financial
information in 1993 and for the first quarter of 1994 has been restated to
reflect acquisitions accounted for using the pooling of interests method of
accounting (see Note 2 to the financial statements). The table at the beginning
of this discussion presents the impact of the 1994 acquisitions on the balance
sheet as of the date of acquisition. Average assets for the second quarter of
1994 were $6.9 billion compared to $6.3 billion for the second quarter of 1993.
For the first six months of 1994, average total assets were $6.8 billion
compared to $6.2 billion for the same period in 1993.
MONEY MARKET INVESTMENTS
At June 30, 1994, money market investments were $191 million. Average
money market investments for the three and six months ended June 30, 1994 were
$236 million and $266 million, respectively, with average yields of 5.09% and
4.80%, respectively. This compares to $340 million and $350 million,
respectively, with average yields of 4.43% and 4.39%, respectively, for the
same periods in 1993. These investments provide the Corporation with a ready
source of liquidity. The increase in yield between the two periods is
reflective of the increase in short-term interest rates over the first half of
1994.
INVESTMENT SECURITIES
The Corporation's investment portfolio during the first half of 1994
represented 45% of average earning assets. The portfolio is managed to maximize
yield over the interest rate cycle while minimizing market exposure to rising
rates. The average taxable-equivalent yield of the investment portfolio was
5.58% for the second quarter of 1994 compared to 5.94% for the same period in
1993. For the first six months of 1994 the average yield was 5.54% compared to
6.08% for the same period a year ago. The difference in the fair value of the
investment portfolio compared to its amortized cost has declined from a gain of
$44.2 million at December 31, 1993 to a loss of $13.9 million at June 30, 1994,
primarily due to the changing interest rate environment. Reference is made to
Note 5 to the interim financial statements for a detailed presentation of the
components of the investment securities portfolio.
The REMIC and CMO issues in the investment portfolio are 86% U.S.
Government Agencies issues with the remaining 14% being readily marketable
non-agency collateralized mortgage obligations backed with agency pooled
collateral or whole loan collateral. All non-agency issues currently held are
rated "AAA" by either Standard & Poors or Moodys. The REMIC and CMO portions
of the investment portfolio have approximately 37% in monthly floating rate
issues with the majority indices being LIBOR and PRIME. Normal practice is to
purchase at or near par to reduce the risk of premium write-offs on
prepayments.
The Corporation adopted SFAS No. 115 "Accounting for Certain Investments
in Debt and Equity Securities" as of January 1, 1994. In adopting SFAS No. 115,
the Corporation chose to initially classify all investment securities, except
obligations of states and political subdivisions, as "Available for Sale"
securities.
AVAILABLE FOR SALE SECURITIES
Available for sale securities were $2.3 billion at June 30, 1994 compared
to $595 million at December 31, 1993. At the end of the period, the portfolio
had unrealized gains of $5.4 million and unrealized losses of $27.7 million,
which resulted in a net loss which was recorded as an adjustment to the
carrying value of available for sale securities of $22.3 million ($13.6
million, net of taxes). At December 31, 1993, these securities had unrealized
gains of $5.6 million and unrealized losses of $234,000.
HELD TO MATURITY SECURITIES
Held to maturity securities at June 30, 1994 were $554 million, consisting
primarily of obligations of states and political subdivisions totaling $445
million. The held to maturity portfolio as of June 30, 1994 had unrealized
gains of $14.4 million and unrealized losses of $6.0 million. At December 31,
1993, these securities totaled $2.0 billion having unrealized gains and losses
of $41.2 million and $2.4 million, respectively.
-28-
<PAGE> 29
LOANS
Loans at June 30, 1994 were $3.3 billion compared to $2.8 billion and $3.1
billion at June 30, 1993 and March 31, 1994, respectively. Average loans for
the second quarter of 1994 were higher than both periods, and, excluding the
impact of acquisitions, increased 9.6% over the same quarter in 1993 and 3%
over the first quarter of 1994. Average loans represented 51% of the
Corporation's earning assets for the first half of 1994 compared to 48% for the
same period in 1993. Loan activity has been increasing as the economy has
improved and management expects this growth to continue. Management is
expecting to undertake marketing initiatives in the last half of 1994 which are
intended to increase loan volume. The exact cost of these initiatives, if
undertaken, cannot be estimated at this time.
ALLOWANCE FOR LOSSES ON LOANS
The following table provides a reconciliation of the allowance for losses
on loans (the allowance) at the dates indicated and certain key ratios for the
six-month periods ended June 30, 1994 and 1993 and for the year ended December
31, 1993.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------- FOR THE YEAR ENDED
1994 1993 DECEMBER 31, 1993
---- ---- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at the beginning
of the period $ 80,442 $ 64,290 $ 64,290
Provision charged to expense - 7,490 9,689
Allowances of banks acquired (a) 6,556 16,567 16,607
Recoveries 5,141 4,167 8,681
Charge-offs (6,499) (11,497) $ (18,825)
----------- ----------- -----------
Balance at the end of the period $ 85,640 $ 81,017 $ 80,442
=========== =========== ===========
Loans outstanding at period end $ 3,330,825 $ 2,792,878 $ 2,935,215
=========== =========== ===========
Average loans during the period $ 3,185,369 $ 2,723,578 $ 2,777,032
=========== =========== ===========
Ratios:
Allowance/period end loans 2.57% 2.90% 2.74%
Charge-offs/average loans (b) .41 .85 .68
Recoveries/average loans (b) .32 .31 .31
Net charge-offs (recoveries)/average
loans (b) .09 .54 .37
Provision/average loans (b) NM .55 .35
</TABLE>
(a) At date of acquisition for acquisitions accounted for using the purchase
method of accounting and as of January 1 for acquisitions accounted for
using the pooling of interests method of accounting.
(b) Amounts annualized for June 30, 1994 and 1993
NM - Not meaningful
The adequacy of the allowance for losses on loans is reviewed 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 results of regulatory examinations. This analysis is performed
on a bank by bank basis as well as being evaluated on a consolidated basis.
This same type of analysis is performed by the Corporation in its due diligence
evaluation of potential acquisition candidates.
The allowance at June 30, 1994, was $85.6 million, an increase of $5.2
million over December 31, 1993, and compared to $81.0 million at June 30, 1993.
The increase in the allowance over December 31, 1993 primarily reflects the
allowances of banks acquired which totaled $6.6 million for the first six
months of 1994.
-29-
<PAGE> 30
The Corporation had net charge-offs for the second quarter of 1994 of $2.5
million compared to net charge-offs of $4.6 million for the same quarter a year
ago and compared to net recoveries of $1.1 million for the first quarter of
1994. Charge-offs declined to $4.9 million for the second quarter compared to
$6.9 million for the same period last year and compared to $1.6 million for
the first quarter of 1994. Recoveries of $2.4 million for the second quarter of
1994 compared to $2.3 million for the second quarter of 1993 and $2.7 million
for the first quarter of 1994.
The improving asset quality has resulted in the Corporation not making a
provision for losses on loans for the first six months of 1994, and management
does not expect to record a provision for the remainder of 1994. The
Corporation's ratios of allowance for losses on loans to loans and allowance
for losses on loans to nonperforming assets are, compared to its peers, among
the highest in the Southeast.
-30-
<PAGE> 31
NONPERFORMING ASSETS
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
------------------ ------------
1994 1993 1993
------- ------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual loans $16,788 $18,445 $14,646
Restructured loans 1,425 7,558 7,525
------- ------- -------
Total nonperforming loans 18,213 26,003 22,171
------- ------- -------
Foreclosed property
Other real estate owned,
net of reserve for losses 3,319 7,767 4,358
Other foreclosed properties 233 177 434
------- ------- -------
Total foreclosed properties 3,552 7,944 4,792
------- ------- -------
Total nonperforming assets $21,765 $33,947 $26,963
======= ======= =======
Loans 90 days or more past due
and not on nonaccrual status $ 3,784 $ 4,551 $ 4,771
======= ======= =======
Nonperforming loans as a
percentage of loans .55% .93% .76%
Nonperforming assets as a
percentage of loans and
foreclosed properties .65 1.21 .92
Allowance for losses on loans
as a percentage of
nonperforming loans 470.21 311.57 362.83
Loans 90 days or more past
due and not on nonaccrual
status as a percentage of
loans .11 .16 .16
</TABLE>
Nonperforming assets at June 30, 1994, declined $12.1 million from $33.9
million at June 30, 1993 to $21.8 million at June 30, 1994, and declined $7.1
million from $28.9 million at March 31, 1994. The significant decline in
nonperforming assets from the first quarter of 1994 was due primarily to one
renegotiated loan being removed from the "renegotiated loans" classification
because it has performed in compliance with its renegotiated terms and has
demonstrated the ability to make payments over a period of time. The
significant decline in nonperforming assets has resulted in a reserve coverage
ratio of nonperforming loans that is among the highest for banks in the
Southeast.
-31-
<PAGE> 32
The following table details the composition of nonaccrual loans and loans
90 days or more past due.
<TABLE>
<CAPTION>
JUNE 30, 1994
----------------------------
NONACCRUAL LOANS 90 DAYS OR
LOANS MORE PAST DUE
---------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Real estate loans
Construction and land development $ 1,760 $ 11
Secured by farmland 1,050 23
Secured by 1-4 family residential
properties 6,138 1,026
Secured by nonfarm nonresidential
properties 21 -
Secured multifamily residential
properties 2,720 320
-------- -------
Total real estate 11,689 1,380
Commercial, financial, and
agricultural loans 3,455 442
Consumer loans 1,644 1,958
Direct lease financing - 4
-------- -------
Total $ 16,788 $ 3,784
======== =======
</TABLE>
The following table details the composition of the Corporation's other
real estate owned, net of the reserve for losses on other real estate of $1,183
million.
<TABLE>
<CAPTION>
JUNE 30, 1994
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Type of Property
Construction and land development $ 381
Farmland 25
1-4 family residential properties 1,270
Multifamily residential properties 627
Commercial properties 1,016
--------
Total other real estate owned,
net of the reserve for losses $ 3,319
========
</TABLE>
POTENTIAL PROBLEM ASSETS
Potential problem assets consist of assets which are generally secured and
not currently considered nonperforming, and include those assets where
information about possible credit problems has caused management to have
serious doubts as to the ability of such borrowers to comply with present
repayment terms. Historically, these assets have been loans which have become
nonperforming. At June 30, 1994, the Corporation had potential problem assets
(all of which were loans) of $5.1 million.
-32-
<PAGE> 33
ASSET LIABILITY MANAGEMENT
The table on page 34 presents the Corporation's interest rate sensitivity
analysis at June 30, 1994. The analysis is at a point-in-time and could change
significantly on a daily basis. This analysis alone cannot be used to predict
how the Corporation is positioned to react to changing interest rates. Other
factors such as the mix of earning assets and interest-bearing liabilities,
interest rate spreads, and the level of interest rates impact the Corporation's
net interest income.
Balance sheet simulation analysis is conducted to determine the impact on
net interest income for the next twelve months under several interest rate
scenarios. One such scenario uses current rates at June 30, 1994 and holds the
rates and volumes constant for the simulation. When this projection is
subjected to immediate and parallel shifts in interest rates ("rate shock") of
200 basis points, first rising and then falling, the annual impact of the "rate
shock" at June 30, 1994 on the Corporation's net interest income was a negative
$6.7 million and a positive $1.4 million pretax, respectively, which is well
within the Corporation's policy limits.
OFF-BALANCE-SHEET INSTRUMENTS
The Corporation, on a limited basis, uses off-balance-sheet financial
instruments to manage interest-rate risk. Since December 31, 1993, there has
been no significant change in the off-balance-sheet instruments and reference
is made to Note 17 to the audited financial statements in the Corporation's
1993 Annual Report to Shareholders for additional information regarding these
instruments.
The most significant of these instruments are interest-rate swaps which
the Corporation entered into in the fourth quarter of 1993. There has been no
change in the notional amounts outstanding since year end. The Corporation has
a policy for its derivative products which has been approved and is monitored
by the Funds Management Committee and the Board of Directors. The policy
establishes individual positions for derivative products not to exceed $100
million notional amount and that open positions in the aggregate will not
exceed 10% of consolidated total assets. Any exceptions to the policy must be
approved by the Board of Directors. The open positions are reviewed monthly by
the Funds Management Committee to determine compliance with established
policies. As of June 30, 1994, there are no positions which would be regarded
as an exception under the Corporation's policy.
The Corporation entered into the interest-rate swaps described above to
convert specific assets (loans and investment securities) from floating-rate to
fixed-rate instruments and to convert a liability from a fixed rate to a
floating rate. The Corporation is the end-user on all interest-rate swaps and
does not act as a dealer in these instruments. A summary of the Corporation's
interest-rate swaps follows:
<TABLE>
<CAPTION>
CURRENT RATES (a) YEAR TO DATE
------------------------- NET INTEREST
NOTIONAL VARIABLE FIXED RATE MATURITY INCOME UNREALIZED
INSTRUMENT HEDGED AMOUNT RATE PAID RECEIVED DATE IMPACT LOSS
- - ----------------- -------- --------- ---------- -------- ------------ ----------
(In millions) (In millions)
<S> <C> <C> <C> <C> <C> <C>
Commercial loans $ 150 3.94% 5.22% 1/96-99 (b) $ 1.1 $ 8.8
Securities 100 4.94 4.44 6/95 .3 1.1
Long-term debt 50 4.75 4.46 5/96 .1 1.6
----- ----- -----
Total $ 300 $ 1.5 $11.5
===== ===== =====
</TABLE>
(a) The variable rates paid are tied to the three-month LIBOR rate for the
loans and six month LIBOR rate for the investment securities and long-term
debt swaps. The variable rates are based on specific indices specified by
the applicable contracts. The next repricing dates for the variable rates
paid for the loans, investment securities and long-term debt are July
1994, December 1994, and November 1994, respectively.
(b) If the LIBOR rate at January 5, 1996 should be equal to or less than
5.3125%, these swaps will mature on January 5, 1996.
(c) Reference is made to the "Net Interest Income" discussion for a discussion
of the impact of these swaps on interest income and interest expense.
-33-
<PAGE> 34
UNION PLANTERS CORPORATION AND SUBSIDIARIES
RATE-SENSITIVITY ANALYSIS AT JUNE 30, 1994
<TABLE>
<CAPTION>
INTEREST-SENSITIVE WITHIN
----------------------------------------------------------------------------------------
NON-
0-30 31-90 91-180 181-365 1-2 2-5 OVER INTEREST-
DAYS DAYS DAYS DAYS YEARS YEARS 5 YEARS BEARING TOTAL
-------- -------- ------- ------- ------- ------- -------- --------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans and leases $ 744 $ 321 $ 262 $ 470 $ 263 $ 818 $ 454 $ 17 $ 3,349
Investment securities 275 235 276 699 725 367 309 - 2,886
Other earning assets 84 53 50 2 1 1 - - 191
Other assets - - - - - - - 541 541
------- ------- ------- ------- ------- ------- ------- ------- ------
Total assets $ 1,103 $ 609 $ 588 $ 1,171 $ 989 $ 1,186 $ 763 $ 558 $ 6,967
======= ======= ======= ======= ======= ======= ======= ======= =======
SOURCES OF FUNDS
Money market deposits $ 77 $ 322 $ - $ 342 $ 24 $ 430 $ - $ - $ 1,195
Other savings and time deposits 448 658 415 463 275 913 44 - 3,216
Time deposits over $100,000 86 74 59 54 43 30 2 - 348
Short-term borrowings 504 2 1 - - - - - 507
Federal Home Loan Bank
advances 112 7 2 3 5 18 20 - 167
Long-term debt - - - - - - 117 - 117
Noninterest-bearing deposits - - - - - - - 820 820
Other liabilities - - - - - - - 80 80
Shareholders' equity - - - - - - - 517 517
------- ------- ------- ------- ------- ------- ------- ------- ------
Total sources of funds $ 1,227 $ 1,063 $ 477 $ 862 $ 347 $ 1,391 $ 183 $ 1,417 $ 6,967
======= ======= ======= ======= ======= ======= ======= ======= =======
Interest rate swap $ (200) $ - $ (100) $ 100 $ - $ 200 $ - $ - $ -
Interest rate sensitivity gap $ (324) $ (454) $ 11 $ 409 $ 642 $ (5) $ 580 $ (859) $ -
Cumulative interest rate
sensitivity gap $ (324) $ (778) $ (767) $ (358) $ 284 $ 279 $ 859 $ - $ -
Cumulative gap as a percentage
of total assets (5%) (11%) (11%) (5%) 4% 4% 12% -% -%
</TABLE>
Management has made the following assumptions in the above analysis:
(a) Assets and liabilities are generally assigned to a period based upon their
earliest repricing period when the repricing is less than the contractual
maturity.
(b) Nonaccrual loans are included in the noninterest-bearing category.
(c) Fixed-rate mortgage loan maturities are based on the principal prepayment
patterns of comparable mortgage-backed securities.
(d) The scheduled maturities of mortgage-backed securities and CMOs
incorporate principal prepayment of these securities using current and
consensus interest-rate forecasts in conjunction with the latest
three-month historical prepayment schedules.
(e) Securities available for sale are currently treated in the same manner as
comparable securities in the Investment Securities Portfolio in that they
are scheduled according to their contractual maturities or earliest
repricing period if sooner; however, the maturities of callable agencies
are scheduled according to their call dates when valued at a premium or
par.
(f) Money-market deposits and savings deposits that have no contractual
maturities are scheduled according to the Corporation's best estimate of
their repricing to changes in market rates. This varies by product type
and market.
(g) If all money-market, NOW, and savings deposits had been included in the
0-30 Days category above, the cumulative gap as a percentage of earning
assets would have been negative (35%), (33%), (33%), (22%), (11%), 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 June 30, 1994.
-34-
<PAGE> 35
LIQUIDITY
The Corporation's core deposit base is its most important and stable
funding source. These deposits, along with money market assets, provide
liquidity for the Corporation. The Corporation's deposit base is almost
entirely comprised of "in-market" deposits, as the Corporation has no known
brokered deposits. Certificates of deposits of $100,000 or more represent only
6% of total deposits at June 30, 1994. The following table presents an analysis
of the Corporation's deposits.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS
----------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1994 1993 1994 1993
------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Demand deposits $ 791 $ 695 $ 785 $ 675
Money market accounts (a) 1,256 1,338 1,299 1,332
Savings deposits (b) 1,055 807 1,018 772
Other time deposits (c) 2,157 2,196 2,161 2,175
------ ------ ------ ------
Total core deposits 5,259 5,036 5,263 4,954
Certificates of deposit
of $100,000 and over 355 351 350 343
------ ------ ------ ------
Total deposits $5,614 $5,387 $5,613 $5,297
====== ====== ====== ======
</TABLE>
(a) Includes money market savings accounts, High Yield accounts, and super NOW
accounts.
(b) Includes regular and premium savings accounts and NOW accounts.
(c) Includes certificates of deposit under $100,000, investment savings
accounts, and other time deposits.
The Corporation's average deposits continued to grow during the first half
of 1994 primarily due to acquisitions. Excluding the impact of acquisitions,
average deposits declined approximately $135 million and $104 million,
respectively, between the three and six months ended June 30, 1994 and 1993.
The decline was primarily due to the low interest-rate environment which has
resulted in deposits leaving the banking system.
The parent company's source of liquidity is management fees and dividends
from subsidiaries. The number of financial institutions owned by the
Corporation provides a diversified base for the payment of dividends should one
or more of the subsidiaries have capital needs and be unable to pay dividends
to the parent company. At June 30, 1994, the parent company had cash and cash
equivalents totaling $107.5 million and had working capital of $86.1 million.
At July 1, 1994, the parent company could have received dividends from
subsidiary banks without prior regulatory approval of $12.8 million. Additional
dividends will be available depending on the future earnings of subsidiary
banks. The amount of dividends available without regulatory approval has
declined from the first quarter of 1994 due to the $98 million special dividend
paid by UPNB incidental to the formation of four new banks. See "Reorganization
of UPNB" above. This is not expected to have a material impact on parent
company liquidity or its ability to pay dividends.
-35-
<PAGE> 36
SHAREHOLDERS' EQUITY
The Corporation's total shareholders' equity increased $40 million from
December 31, 1993 to $517 million at June 30, 1994. The increase was due
primarily to the issuance of Common Stock in connection with acquisitions which
increased shareholders' equity by $28 million. The balance, $12 million of the
increase, was due primarily to retained net earnings less the adjustment for
net unrealized loss on available for sale securities of $14 million. Dividends
on Common Stock for the first six months of 1994 totaled $8.876 million, or
$.42 per share, while Preferred Stock dividends totaled $4.426 million.
CAPITAL ADEQUACY
The following table presents capital adequacy information regarding the
Corporation and the table on the following page presents the calculation of the
Corporation's risk-based capital.
<TABLE>
<CAPTION>
JUNE 30,
-------------------- DECEMBER 31,
1994 1993 1993
--------- --------- ------------
CAPITAL ADEQUACY DATA
<S> <C> <C> <C>
Total shareholders' equity/
total assets (at period end) 7.42% 7.23% 7.55%
Average shareholders' equity/
average total assets 7.55 6.89 7.15
Tier 1 capital/unweighted
assets (leverage ratio) (a) 7.18 6.68 7.10
Parent company long-term debt/equity 22.20 16.63 24.04
Dividend payout ratio 37.07 30.98 34.07
</TABLE>
(a) Based on period-end capital and quarterly adjusted average assets
At June 30, 1994, total shareholders' equity was 7.42% of total assets,
and the Tier 1 leverage ratio was 7.18% compared to 7.10% at December 31, 1993
and 6.68% at June 30, 1993. The following table presents the Corporation's
risk-based capital and its Tier 1 and total capital ratios. The capital ratios
improved from June 30, 1993 to June 30, 1994, and declined slightly from
December 31, 1993 to June 30, 1994 due to the impact of acquisitions. The
regulatory capital ratios qualify the Corporation for the "well-capitalized"
regulatory classification.
-36-
<PAGE> 37
RISK-BASED CAPITAL
<TABLE>
<CAPTION>
JUNE 30,
---------------------- DECEMBER 31,
1994 1993 1993
---------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Tier 1 capital
Shareholders' equity $ 516,909 $ 456,661 $ 477,300
Minority interest in
consolidated subsidiaries 1,968 1,588 1,588
Less goodwill, other intangibles, and
one-half of investment in
unconsolidated subsidiaries (35,994) (35,848) (31,097)
Fair value adjustment available
for sale securities (gain) loss 13,633 - -
Deferred tax asset not qualifying for
regulatory capital (2,086) (2,034) (1,861)
---------- ---------- ----------
Total Tier 1 capital 494,430 420,367 445,930
Tier 2 capital
Allowance for losses on loans (a) 42,975 39,513 38,067
Qualifying long-term debt 74,514 32,000 74,479
Less one-half of investment in
unconsolidated subsidiaries (20) (67) (136)
---------- ---------- ----------
Total capital $ 611,899 $ 491,813 $ 558,340
========== ========== ==========
Risk-weighted assets (b) $3,395,296 $3,119,561 $3,003,001
========== ========== ==========
Ratios as a percent of end of
period risk-weighted assets
Tier 1 capital 14.56% 13.48% 14.85%
Total capital 18.02 15.77 18.59
</TABLE>
(a) Limited as required by regulatory guidelines.
(b) Based on risk-weighted assets as defined by regulatory guidelines.
QUARTERLY COMMON STOCK DIVIDEND
On July 28, 1994, the Corporation's Board of Directors declared a
quarterly dividend of $.23 per share on the Corporation's Common Stock
outstanding, an increase of 9.5% over the previous quarterly dividend of $.21
per share. The dividend is payable August 19, 1994, to holders of record on
August 8, 1994.
IMPACT OF PROPOSED ACCOUNTING STANDARDS
Reference is made to page 48 of the Corporation's 1993 Annual Report to
Shareholders for a discussion of certain proposed accounting standards.
Management is not aware of any additional standards that have been issued that
might have a significant impact on the Corporation.
-37-
<PAGE> 38
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The information called for by this Item is incorporated by reference to
Item 3, Part I of the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1993, Note 19 to the Corporation's consolidated financial
statements on page 33 of the 1993 Annual Report to Shareholders, Note 10 on
page 15 of the Corporation's quarterly report on Form 10-Q dated March 31, 1994
and Note 10 of the interim unaudited financial statements included in Part I
hereof.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on April 28, 1994. Matters
submitted to and approved by shareholders are listed below, as is a tabulation
of voting. Broker nonvotes totaled 149,470.
(1) The following persons nominated as Directors were elected:
<TABLE>
<CAPTION>
Class I For Withheld
------- --- --------
<S> <C> <C>
Marvin E. Bruce 17,231,567 129,698
Robert B. Colbert, Jr. 17,238,707 122,558
Stanley D. Overton 17,238,660 122,605
</TABLE>
(2) The selection by the Board of Directors of Price Waterhouse as the
Corporation's independent public accountants and auditors for the
year ended December 31, 1994 was ratified by the following vote:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
17,267,367 32,147 61,751
</TABLE>
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS FOR FORM 8-K
(a) Exhibits:
2 - Agreement and Plan of Reorganization dated July 1,
1994 between Union Planters Corporation and GSSC
Acquisition Company, Inc. and Grenada Sunburst System
Corporation, Sunburst Bank, Mississippi and Sunburst
Bank (filed as Exhibit 2 (a) to the Corporation's
Current Report on Form 8-K dated July 26, 1994).
11 - Computation of Per Share Earnings
-38-
<PAGE> 39
(b) Reports on Form 8-K:
Date of Current
Report Subject
--------------- -----------------
1. April 14, 1994 Financial statements of entities
being acquired
2. April 15, 1994 Pro forma financial statements
for December 31, 1993
3. April 28, 1994 First quarter 1994 earnings press
release
4. May 18, 1994 Financial statements of entities
being acquired
5. May 19, 1994 Pro forma financial statements
for March 31, 1994, amended July
26, 1994 to include additional
probable acquisitions
6. July 1, 1994 Announcement of the signing of a
definitive agreement to acquire
Grenada Sunburst System
Corporation (GSSC)
7. July 21, 1994 Second quarter 1994 earnings
press release
8. July 26, 1994 Definitive agreement to acquire
GSSC and audited financial
statements and first quarter
interim financial statements for
GSSC
-39-
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION PLANTERS CORPORATION
--------------------------------------
(Registrant)
Date: August 11, 1994
By: /s/Benjamin W. Rawlins, Jr.
--------------------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and
Chief Executive Officer
By: /s/John W. Parker
--------------------------------------
John W. Parker
Executive Vice President and
Chief Financial Officer
By: /s/M. Kirk Walters
--------------------------------------
M. Kirk Walters
Senior Vice President, Treasurer
and Chief Accounting Officer
-40-
<PAGE> 1
EXHIBIT 11
PAGE 1 OF 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -------------------------
1994 1993 1994 1993
-------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
Average shares outstanding 21,779,406 19,523,447 21,749,580 19,269,639
Average common share equivalents:
Assumed exercise of options
outstanding 167,106 192,351 155,628 188,626
----------- ----------- ----------- -----------
Primary average shares outstanding 21,946,512 19,715,798 21,905,208 19,458,265
=========== =========== =========== ===========
Earnings before accounting changes $ 18,386 $ 14,555 $ 35,885 $ 28,049
Less: Preferred stock dividends
Series B (88) (88) (176) (176)
Series C (444) (448) (895) (895)
Series D (124) (124) (247) (247)
Series E (1,554) (1,457) (3,108) (2,724)
----------- ----------- ----------- -----------
Earnings before accounting changes
applicable to common shares $ 16,176 $ 12,438 $ 31,459 $ 24,007
=========== =========== =========== ===========
Net earnings $ 18,386 $ 14,555 $ 35,885 $ 33,050
Less: Preferred stock dividends (2,210) (2,117) (4,426) (4,042)
----------- ----------- ----------- -----------
Net earnings applicable to common shares $ 16,176 $ 12,438 $ 31,459 $ 29,008
=========== =========== =========== ===========
Primary Earnings Per Common Share:
Earnings before accounting changes $ .74 $ .63 $ 1.44 $ 1.23
Net earnings .74 .63 1.44 1.49
</TABLE>
<PAGE> 2
EXHIBIT 11
PAGE 2 OF 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -------------------------
1994 1993 1994 1993
-------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER COMMON SHARE
Average shares outstanding 21,779,406 19,523,447 21,749,580 19,269,639
Assumed conversion of options outstanding 172,372 192,683 159,562 214,941
Assumed conversion of preferred stock
outstanding:
Series B 339,768 339,768 339,768 339,768
Series D 253,655 253,655 253,655 253,655
Series E 3,884,902 3,528,741 3,884,902 3,347,714
----------- ----------- ----------- -----------
Fully diluted average shares outstanding 26,430,103 23,838,294 26,387,467 23,425,717
=========== =========== =========== ===========
Earnings before accounting changes $ 18,386 $ 14,555 $ 35,885 $ 28,049
Less: Series C preferred stock dividends (444) (448) (895) (895)
Earnings before accounting changes ----------- ----------- ----------- -----------
applicable to common shares $ 17,942 $ 14,107 $ 34,990 $ 27,154
=========== =========== =========== ===========
Net earnings $ 18,386 $ 14,555 $ 35,885 $ 33,050
Less: Series C preferred stock dividends (444) (448) (895) (895)
----------- ----------- ----------- -----------
Net earnings applicable to common shares $ 17,942 $ 14,107 $ 34,990 $ 32,155
=========== =========== =========== ===========
Fully Diluted Earnings Per Common Share:
Earnings before accounting changes $ .68 $ .59 $ 1.33 $ 1.16
Net earnings .68 .59 1.33 1.37
</TABLE>
