<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, 1995
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) (IRS 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, 1995
- ------------------------- ----------------------------
Common stock $5 par value 40,875,967
<PAGE> 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1995
INDEX
<TABLE>
<CAPTION>
Page
-----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheet -- June 30, 1995,
June 30, 1994, and December 31, 1994 3
b) Consolidated Statement of Earnings --
Three and Six Months Ended June 30, 1995 and 1994 4
c) Consolidated Statement of Changes in
Shareholders' Equity -- Six Months Ended
June 30, 1995 5
d) Consolidated Statement of Cash Flows --
Six Months Ended June 30, 1995 and 1994 6
e) Notes to Unaudited Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 34
Item 2. Changes in Securities 34
Item 3. Defaults Upon Senior Securities 34
Item 4. Submission of Matters to a Vote of Security Holders 34
Item 5. Other Information 34
Item 6. Exhibits and Reports on Form 8-K 35
Signatures 36
</TABLE>
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
---------------------------- DECEMBER 31,
1995 1994 1994
---------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 434,175 $ 420,233 $ 488,722
Interest-bearing deposits at financial institutions 35,020 14,901 10,641
Federal funds sold and securities purchased
under agreements to resell 56,351 44,253 29,953
Trading account securities 210,775 148,204 155,951
Loans held for resale 54,136 40,937 24,493
Investment securities
Available for sale (Amortized cost: $1,500,011; $2,622,948;
and $1,975,897, respectively) 1,501,600 2,600,055 1,928,984
Held to maturity (Market value: $1,027,154; $1,081,147;
and $1,009,969, respectively) 1,005,348 1,072,302 1,033,160
Loans 6,115,497 5,416,619 5,980,581
Less:Unearned income (30,410) (28,160) (31,453)
Allowance for losses on loans (118,675) (122,823) (122,089)
---------- ----------- -----------
Net loans 5,966,412 5,265,636 5,827,039
Premises and equipment 199,170 214,078 204,136
Accrued interest receivable 83,191 83,948 87,509
Goodwill and other intangibles 46,940 51,291 50,236
Other assets 152,321 135,161 174,245
---------- ----------- -----------
TOTAL ASSETS $9,745,439 $10,090,999 $10,015,069
========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $1,244,678 $ 1,244,371 $ 1,380,737
Certificates of deposit of $100,000 and over 585,569 545,739 559,593
Other interest-bearing 6,433,016 6,550,897 6,477,512
---------- ----------- -----------
TOTAL DEPOSITS 8,263,263 8,341,007 8,417,842
Short-term borrowings 140,434 534,101 415,171
Federal Home Loan Bank advances 291,630 220,611 224,103
Long-term debt 121,793 121,026 116,848
Accrued interest, expenses, and taxes 76,672 63,231 72,211
Other liabilities 40,127 42,276 38,187
---------- ----------- -----------
TOTAL LIABILITIES 8,933,919 9,322,252 9,284,362
---------- ----------- -----------
Commitments and contingent liabilities -- -- --
Shareholders' equity
Preferred stock
Convertible 87,298 87,298 87,298
Nonconvertible -- 17,250 --
Common stock, $5 par value; 100,000,000 shares authorized;
40,553,285 issued and outstanding (39,912,615 at
June 30, 1994 and 40,179,474 at December 31, 1994) 202,766 199,478 200,897
Additional paid-in capital 74,960 64,430 69,204
Net unrealized gain (loss) on available for sale securities 926 (14,159) (28,527)
Retained earnings 445,570 414,450 401,835
---------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 811,520 768,747 730,707
---------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $9,745,439 $10,090,999 $10,015,069
========== =========== ===========
</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,
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $139,108 $111,573 $270,725 $217,086
Interest on investment securities
Taxable 32,944 39,744 68,017 75,586
Tax-exempt 7,769 8,224 15,700 16,474
Interest on deposits at financial institutions 587 165 902 380
Interest on federal funds sold and securities
purchased under agreements to resell 1,763 712 2,258 2,012
Interest on trading account securities 3,269 2,219 6,005 3,978
Interest on loans held for resale 945 248 1,239 829
-------- -------- -------- --------
Total interest income 186,385 162,885 364,846 316,345
-------- -------- -------- --------
INTEREST EXPENSE
Interest on deposits 76,247 56,699 145,520 112,255
Interest on short-term borrowings 2,664 4,272 7,146 6,387
Interest on Federal Home Loan Bank advances
and long-term debt 6,936 4,850 13,091 9,175
-------- -------- -------- --------
Total interest expense 85,847 65,821 165,757 127,817
-------- -------- -------- --------
NET INTEREST INCOME 100,538 97,064 199,089 188,528
Provision for losses on loans 2,000 985 3,686 1,800
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS 98,538 96,079 195,403 186,728
-------- -------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts 17,628 12,919 33,888 25,431
Bank card income 4,784 2,372 9,426 4,841
Mortgage servicing income 2,268 2,392 4,614 4,767
Trust service income 2,005 1,969 4,036 4,013
Profits and commissions from trading activities 3,422 1,831 5,036 3,801
Investment securities gains (losses) 18 169 (3) 274
Other income 7,434 6,592 14,773 13,536
-------- -------- -------- --------
Total noninterest income 37,559 28,244 71,770 56,663
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries and employee benefits 39,111 39,919 78,383 79,365
Net occupancy expense 6,115 6,399 12,443 12,807
Equipment expense 7,395 6,473 14,276 12,889
Other expense 33,363 33,345 63,993 63,802
-------- -------- -------- --------
Total noninterest expense 85,984 86,136 169,095 168,863
-------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES 50,113 38,187 98,078 74,528
Applicable income taxes 16,247 11,935 31,197 22,889
-------- -------- -------- --------
NET EARNINGS $ 33,866 $ 26,252 $ 66,881 $ 51,639
======== ======== ======== ========
NET EARNINGS APPLICABLE TO COMMON SHARES $ 32,183 $ 24,042 $ 63,432 $ 47,213
======== ======== ======== ========
EARNINGS PER COMMON SHARE
Primary $ .79 $ .60 $ 1.56 $ 1.18
Fully diluted .75 .58 1.49 1.14
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Primary 40,607 40,045 40,514 40,004
Fully diluted 45,108 44,529 45,005 44,486
</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, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN (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, 1995 $87,298 $200,897 $ 69,204 $(28,527) $401,835 $730,707
Net earnings -- -- -- -- 66,881 66,881
Cash dividends
Common Stock, $.48 per share -- -- -- -- (19,381) (19,381)
Series B Preferred Stock, $4.00 per share -- -- -- -- (176) (176)
Series D Preferred Stock, $ .65 per share -- -- -- -- (165) (165)
Series E Preferred Stock, $1.00 per share -- -- -- -- (3,108) (3,108)
Common shares issued under employee benefit
plans and dividend reinvestment plan,
net of shares repurchased -- 1,869 5,756 -- (343) 7,282
Change in net unrealized gain (loss)
on available for sale securities,
net of taxes -- -- -- 29,453 -- 29,453
Other -- -- -- -- 27 27
-------- --------- -------- --------- -------- --------
BALANCE, JUNE 30, 1995 $ 87,298 $ 202,766 $ 74,960 $ 926 $445,570 $811,520
======== ========= ======== ========= ======== ========
</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,
--------------------------
1995 1994
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 66,881 $ 51,639
Reconciliation of net earnings to net cash provided by operating activities
Provision for losses on loans and other real estate 3,902 2,372
Depreciation and amortization 10,507 9,978
Amortization of intangibles 3,888 4,220
Net amortization (accretion) of investment securities (73) 2,835
Net realized losses (gains) on sales of investment securities 3 (274)
Deferred income tax (benefit) expense (2,268) 584
(Increase) decrease in assets
Trading account securities and loans held for resale (84,467) 100,268
Accrued interest receivable and other assets 12,272 10,488
Increase in accrued interest, expenses,
taxes, and other liabilities 6,557 1,906
Other, net 275 (123)
--------- ---------
Net cash provided by operating activities 17,477 183,893
--------- ---------
INVESTING ACTIVITIES
Net (increase) decrease in short-term investments (19,636) 23,279
Proceeds from sales of available for sale securities 318,822 88,446
Proceeds from maturities, calls, and prepayments
of available for sale securities 245,746 524,979
Purchases of available for sale securities (89,540) (676,446)
Proceeds from maturities, calls, and prepayments
of held to maturity securities 30,595 134,806
Purchases of held to maturity securities (1,374) (201,199)
Net increase in loans (146,099) (228,750)
Net cash received from purchases of financial institutions -- 69,910
Sales of premises and equipment 6,802 1,417
Purchases of premises and equipment (13,148) (17,215)
--------- ---------
Net cash provided (used) by investing activities 332,168 (280,773)
--------- ---------
FINANCING ACTIVITIES
Net decrease in deposits (154,579) (134,469)
Net (decrease) increase in short-term borrowings (274,737) 256,526
Proceeds from FHLB advances and long-term debt 126,611 46,197
Repayment of FHLB advances and long-term debt (54,716) (33,371)
Proceeds from issuance of common stock, net 7,767 6,384
Purchase and retirement of common stock, net (485) (3,063)
Cash dividends paid (22,912) (18,307)
--------- ---------
Net cash (used) provided by financing activities (373,051) 119,897
--------- ---------
Net (decrease) increase in cash and cash equivalents (23,406) 23,017
Cash and cash equivalents at the beginning of the period 513,932 441,469
--------- ---------
Cash and cash equivalents at the end of the period $ 490,526 $ 464,486
========= =========
SUPPLEMENTAL DISCLOSURES
Purchases of other financial institutions:
Fair value of assets acquired $ -- $ 918,276
Liabilities assumed -- (837,636)
Common stock issued -- (64,250)
--------- ---------
Cash paid for the purchase of other financial institutions -- 16,390
Cash and cash equivalents acquired -- (86,300)
--------- ---------
Net cash received from purchases of financial institutions $ -- $ (69,910)
========= =========
Cash paid for
Interest $ 157,089 $ 123,046
Taxes 14,460 18,229
Loans transferred to other real estate through foreclosure 3,040 2,414
Unrealized gain (loss) on securities available for sale 1,589 (22,893)
</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,
consisting only of normal recurring adjustments, necessary for a fair statement
of the consolidated financial condition, results of operations, and cash flows
for the interim period have been included.
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
1994 Annual Report to Shareholders, a copy of which is Exhibit 13 to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1994
(1994 10-K). Certain 1994 amounts have been reclassified to be consistent with
the 1995 financial reporting presentation. Operating results for the six
months ended June 30, 1995 are not necessarily indicative of the results that
may be expected for the year.
NOTE 2. MERGERS AND ACQUISITIONS
There were no acquisitions completed during the first six months of 1995.
Reference is made to Note 2 on pages 43 through 47 of the Corporation's Annual
Report to Shareholders for information regarding acquisitions completed in
1994.
On July 1, 1995, the Corporation completed the acquisition of the
$110-million First State Bancorporation, Inc., the parent company of First
Exchange Bank in Tiptonville, Tennessee. As consideration therefor, the
Corporation issued 388,497 shares of 8% Cumulative, Convertible Preferred
Stock, Series E. The acquisition is being accounted for using the purchase
method of accounting.
The Corporation has signed definitive agreements pursuant to which
management believes it is probable the Corporation would acquire the entities
listed below subject to receiving regulatory approvals and satisfaction of
certain contractual conditions precedent.
<TABLE>
<CAPTION>
PENDING ACQUISITIONS
ANTICIPATED APPROXIMATE
TYPE OF METHOD OF TOTAL
INSTITUTION CONSIDERATION ACCOUNTING ASSETS
- ---------------------------- ----------------- ---------------- ------------
(IN MILLIONS)
<S> <C> <C> <C>
Capital Bancorporation, Inc., Approximately 4,200,000 Pooling of interests $1,115
Cape Girardeau, Missouri; shares of Common Stock
Parent Company of Capital Bank
of Cape Girardeau County; Capital
Bank of Columbia; Capital Bank of
Southwest Missouri; Capital Bank &
Trust; Capital Bank of Sikeston;
Capital Bank of Perryville, N.A.;
Maryland Avenue Bancorporation, Inc.;
Century State Bancshares, Inc.; and
Capital Bank, a Federal Savings Bank
(Jonesboro, Arkansas)
Eastern National Bank, Cash, Series E Purchase 266
Miami, Florida Preferred Stock, and
Promissory Notes
Planters Bank & Trust Company, Approximately 341,000 Pooling of interests 60
Forrest City, Arkansas shares of Common Stock
------
Total $1,441
======
</TABLE>
-7-
<PAGE> 8
NOTE 3. LOANS
Loans are summarized by type as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial, financial, and agricultural $1,323,658 $1,364,729
Real estate -- construction 229,365 225,591
Real estate -- mortgage
Secured by 1-4 family residential 2,051,808 2,035,290
Other mortgage loans 1,017,956 990,779
Home equity 161,275 140,305
Consumer
Credit cards and other related plans 360,953 263,927
Other consumer 922,077 919,618
Direct lease financing, net 48,405 40,342
---------- ----------
Total Loans $6,115,497 $5,980,581
========== ==========
</TABLE>
Nonperforming loans and loans 90 days or more past due are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $ 23,709 $ 17,476
Restructured loans 1,286 1,564
---------- ----------
Total nonperforming loans $ 24,995 $ 19,040
========== ==========
Loans 90 days or more past due and not
on nonaccrual status $ 11,579 $ 5,874
========== ==========
</TABLE>
NOTE 4. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans for the three and six months
ended June 30, 1995, are summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1995
------------------ ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Beginning balance $122,905 $122,089
Provision charged to expense 2,000 3,686
Recoveries 2,626 6,445
Amounts charged off (8,856) (13,545)
-------- --------
Balance, June 30, 1995 $118,675 $118,675
======== ========
</TABLE>
On January 1, 1995, the Corporation adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan -- Income Recognition and Disclosures." As
of June 30, 1995, the amount of the Corporation's impaired loans and
disclosures related thereto were not material.
-8-
<PAGE> 9
NOTE 5. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, 1995
-----------------------------------------------
UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE SECURITIES
U.S. Government obligations
U.S. Treasury $ 390,194 $ 1,837 $ 928 $ 391,103
U.S. Government agencies
Collateralized mortgage obligations 209,072 211 2,297 206,986
Mortgage-backed 589,012 5,135 2,803 591,344
Other 205,086 595 885 204,796
---------- ------- ------- ----------
Total U.S. Government obligations 1,393,364 7,778 6,913 1,394,229
Other stocks and securities 106,647 1,354 630 107,371
---------- ------- ------- ----------
TOTAL AVAILABLE FOR SALE SECURITIES $1,500,011 $ 9,132 $ 7,543 $1,501,600
========== ======= ======= ==========
HELD TO MATURITY SECURITIES
U.S. Government obligations
U.S. Treasury $ 452,097 $ 5,509 $ 823 $ 456,783
U.S. Government agencies 54,752 217 1,156 53,813
---------- ------- ------- ----------
Total U.S. Government obligations 506,849 5,726 1,979 510,596
Obligations of states and political
subdivisions 498,298 22,363 4,302 516,359
Other securities 201 -- 2 199
---------- ------- ------- ----------
TOTAL HELD TO MATURITY SECURITIES $1,005,348 $28,089 $ 6,283 $1,027,154
========== ======= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1994
----------------------------------------------
UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE SECURITIES
U.S. Government obligations
U.S. Treasury $ 484,414 $ 745 $ 9,302 $ 475,857
U.S. Government agencies
Collateralized mortgage obligations 325,084 33 11,221 313,896
Mortgage-backed 816,683 1,061 22,669 795,075
Other 211,922 189 4,426 207,685
---------- ------ ------- ----------
Total U.S. Government obligations 1,838,103 2,028 47,618 1,792,513
Other stocks and securities 137,794 1,018 2,341 136,471
---------- ------ ------- ----------
TOTAL AVAILABLE FOR SALE SECURITIES $1,975,897 $3,046 $49,959 $1,928,984
========== ====== ======= ==========
HELD TO MATURITY SECURITIES
U.S. Government obligations
U.S. Treasury $ 451,897 $ 40 $13,250 $ 438,687
U.S. Government agencies 62,449 15 3,881 58,583
---------- ------ ------- ----------
Total U.S. Government obligations 514,346 55 17,131 497,270
Obligations of states and political
subdivisions 518,583 9,097 15,212 512,468
Other 231 -- -- 231
---------- ------ ------- ----------
TOTAL HELD TO MATURITY SECURITIES $1,033,160 $9,152 $32,343 $1,009,969
========== ====== ======= ==========
</TABLE>
On January 1, 1994, and in connection with the adoption of SFAS No. 115,
$1.6 billion of investment securities were transferred to the available for
sale category. In addition, approximately $446 million (fair value
approximately $436 million) of securities were transferred to available for
sale securities in order to effect and maintain compliance with the
Corporation's existing interest-rate-risk position and credit-risk policies
after taking into account the securities portfolios of financial institutions
acquired. There have been no transfers in 1995.
-9-
<PAGE> 10
Investment securities having a carrying value of approximately $983 million
and $1.017 billion at June 30, 1995 and December 31, 1994, respectively, were
pledged to secure public and trust funds on deposit and securities sold under
agreements to repurchase.
The following table presents the gross realized gains and losses on
investment securities for the six months ended June 30, 1995 and 1994. The
gains and losses on held to maturity securities for both years resulted from
calls of securities.
<TABLE>
<CAPTION>
REALIZED GAINS REALIZED LOSSES
----------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Available for sale securities $2,089 $485 $(2,156) $(389)
Held to maturity securities 64 180 -- (2)
------ ---- ------- -----
Total $2,153 $665 $(2,156) $(391)
====== ==== ======= =====
</TABLE>
NOTE 6. OTHER NONINTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OTHER NONINTEREST INCOME
Credit life insurance commissions $ 1,194 $ 1,081 $ 2,377 $ 2,128
Customer ATM usage fees 810 672 1,541 1,253
VSIBG partnership earnings 512 581 653 1,287
Brokerage fee income 373 334 715 710
Sale of servicing 167 398 264 634
Other 4,378 3,526 9,223 7,524
------- ------- ------- -------
TOTAL OTHER NONINTEREST INCOME $ 7,434 $ 6,592 $14,773 $13,536
======= ======= ======= =======
OTHER NONINTEREST EXPENSE
FDIC insurance assessments $ 4,685 $ 4,716 $ 9,088 $ 9,393
Advertising and promotion 2,373 3,028 4,675 5,188
Stationery and supplies 2,644 2,432 5,136 4,788
Postage and other carrier 2,588 2,300 5,156 4,436
Amortization of goodwill and
other intangibles 1,610 1,592 3,199 3,099
Other contracted services 1,653 1,630 3,449 3,297
Communications 1,684 1,560 3,269 3,100
Legal fees 780 1,163 1,549 2,082
Other personnel services 1,193 1,020 2,384 1,944
Dues, subscriptions, and
contributions 862 914 1,742 1,803
Merchant credit card charges 876 893 1,705 1,986
Audit fees 525 739 1,155 1,506
Taxes other than income taxes 659 764 1,564 1,640
Brokerage and clearing fees 1,839 700 2,704 1,458
Insurance 416 591 840 1,241
Miscellaneous charge-offs 1,033 512 1,501 864
Travel 681 586 1,264 1,118
Amortization of mortgage servicing rights 418 724 689 1,121
Federal Reserve fees 417 477 816 917
Consultant fees 903 262 1,501 564
Other real estate expense 96 488 357 753
Other 5,428 6,254 10,250 11,504
------- ------- ------- -------
TOTAL OTHER NONINTEREST EXPENSE $33,363 $33,345 $63,993 $63,802
======= ======= ======= =======
</TABLE>
-10-
<PAGE> 11
NOTE 7. INCOME TAXES
Applicable income taxes for the six months ended June 30, 1995, were $31.2
million, resulting in an effective tax rate of 31.8%. Applicable income taxes
for the same period in 1994 were $22.9 million, resulting in an effective tax
rate of 30.7%. The tax expense (benefit) applicable to investment securities
gains (losses) for the six months ended June 30, 1995 and 1994 was ($1,000) and
$107,000, respectively. The increase in the effective rate for the six months
ended June 30, 1995, as compared to the six months ended June 30, 1994, is due
primarily to the increase in taxable earnings for the period.
At June 30, 1995, the Corporation had a net deferred tax asset of $52.3
million compared to $69.2 million at December 31, 1994. Included in the net
deferred tax asset at June 30, 1995 was a deferred tax liability of $663,000
compared to a deferred tax asset of $18.4 million at December 31, 1994,
relating to the fair market valuation adjustment for available for sale
securities as required by SFAS No. 115. A change in the market valuation of the
available for sale securities portfolio accounted for the decrease in the net
deferred tax asset related to the SFAS No. 115 adjustment.
Management continues to believe that, based upon historical earnings, normal
operations will continue to generate sufficient taxable income to realize the
portion of the deferred tax asset that is dependent upon the generation of
future taxable income.
NOTE 8. FEDERAL HOME LOAN BANK (FHLB) ADVANCES
The Corporation's subsidiaries have obtained from the Federal Home Loan Bank
(FHLB) various advances totaling $292 million at June 30, 1995, 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 its mortgage-loan programs and to satisfy other funding needs. Interest
rates on the advances are both fixed-rate and variable-rate with the majority
of the advances at June 30, 1995 being variable-rate tied to the three-month
LIBOR rate. Maturity dates for the advances range from 1995 to 2015. The value
of the collateral (mortgage loans) under the Agreements must be at least 150%
of the advances outstanding ($292 million at June 30, 1995).
NOTE 9. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Corporation's outstanding preferred stock, all of which is convertible
into shares of the Corporation's Common Stock, is summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Preferred stock, without par value,
10,000,000 shares authorized
Series A Preferred Stock,
250,000 shares authorized, none issued $ -- $ --
Series B, $8 Nonredeemable,
Cumulative, Convertible
Preferred Stock (stated at
liquidation value of $100 per share),
44,000 shares issued and outstanding 4,400 4,400
Series D, 9.5% Redeemable,
Cumulative, Convertible
Preferred Stock (stated at
liquidation value of $20.50 per share),
253,655 shares issued and outstanding 5,200 5,200
Series E, 8% Cumulative,
Convertible, Preferred Stock
(stated at liquidation value
of $25 per share), 3,107,922 shares
issued and outstanding 77,698 77,698
------- -------
Total preferred stock $87,298 $87,298
======= =======
</TABLE>
The Corporation called for redemption of the Series D Preferred Stock
effective July 1, 1995. All shares of the Series D Preferred Stock have since
been converted into 253,655 shares of the Corporation's Common Stock.
-11-
<PAGE> 12
NOTE 10. CONTINGENT LIABILITIES
CONTINGENT LIABILITIES
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 1994 10-K, in Note 19 to the Corporation's consolidated financial
statements found on pages 68 and 69 of the 1994 Annual Report to Shareholders
(1994 Annual Report), and in Note 10 of the Corporation's quarterly report on
Form 10-Q dated March 31, 1995. Various other legal proceedings pending against
the Corporation and/or its subsidiaries have arisen in the ordinary course of
business.
Based upon present information, including evaluations of certain actions by
outside counsel, management believes 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 in any of the pending or threatened actions which
affected such opinions during the second quarter of 1995.
-12-
<PAGE> 13
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 the Corporation's 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 1994
Annual Report, the Corporation's Quarterly Report on Form 10-Q dated March 31,
1995, the Corporation's interim unaudited financial statements and notes for
the three and six months ended June 30, 1995, included in Part I hereof, and
the other supplemental financial data included in this discussion.
The following table presents selected financial highlights for the three and
six months ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
PERCENTAGE
THREE MONTHS ENDED SIX MONTHS ENDED CHANGE
JUNE 30, JUNE 30, ------------------
---------------------- ---------------------- THREE SIX
1995 1994 1995 1994 MONTHS MONTHS
-------- -------- -------- -------- ------ ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net earnings $33,866 $26,252 $66,881 $51,639 29% 30%
Primary earnings per common share .79 .60 1.56 1.18 32 32
Fully diluted earnings per common share .75 .58 1.49 1.14 29 31
Return on average assets 1.39% 1.05% 1.38% 1.05%
Return on average common equity 18.38 14.43 18.48 14.33
Dividends per common share $ .25 $ .21 $ .48 $ .42 19 14
Net interest margin (FTE) 4.66% 4.42% 4.62% 4.35%
Interest rate spread (FTE) 3.97 3.95 3.96 3.89
Expense ratio 1.99 2.31 2.01 2.28
Efficiency ratio 60.45 66.01 60.54 66.46
Book value per common share $ 17.86 $ 16.64 7
Shareholders equity to total assets 8.33% 7.62%
Leverage ratio 7.96 7.43
</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
Expense ratio -- Operating net noninterest expense [noninterest expense minus
noninterest income, excluding significant nonrecurring revenues/expenses and
investment securities gains (losses)] divided by average assets
Efficiency ratio -- Operating noninterest expense (excluding significant
nonrecurring expenses) divided by net interest income (FTE) plus noninterest
income, excluding significant nonrecurring revenues and investment securities
gains (losses)
FTE -- Fully taxable-equivalent basis
-13-
<PAGE> 14
OPERATING RESULTS -- THREE AND SIX MONTHS ENDED JUNE 30, 1995
The following table presents the contributions to fully diluted earnings per
common share. A discussion of the operating results follows this table.
UNION PLANTERS CORPORATION
CONTRIBUTIONS TO FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, EPS
------------------ INCREASE
1995 1994 (DECREASE)
------ ------ ----------
<S> <C> <C> <C>
Net interest income--FTE $4.61 $4.44 $ .17
Provision for losses on loans (.08) (.04) (.04)
----- ----- -----
Net interest income after provision
for losses on loans--FTE 4.53 4.40 .13
----- ----- -----
Noninterest income
Service charges on deposit accounts .76 .57 .19
Bank card income .21 .11 .10
Mortgage servicing income .10 .11 (.01)
Trust service income .09 .09 --
Profits and commissions from
trading activities .11 .08 .03
Investment securities gains -- -- --
Other income .33 .31 .02
----- ----- -----
Total noninterest income 1.60 1.27 .33
----- ----- -----
Noninterest expense
Salaries and employee benefits 1.74 1.78 .04
Net occupancy expense .28 .29 .01
Equipment expense .32 .29 (.03)
Other expense 1.42 1.43 .01
----- ----- -----
Total noninterest expense 3.76 3.79 .03
----- ----- -----
Earnings before income taxes--FTE 2.37 1.88 .49
Applicable income taxes--FTE .88 .72 (.16)
----- ----- -----
Net earnings 1.49 1.16 .33
Less preferred stock dividends -- .02 .02
----- ----- -----
Fully diluted earnings per share $1.49 $1.14 $ .35
===== ===== =====
Change in net earnings applicable
to common shares using previous
year average shares outstanding $ .36
Change in average shares outstanding (.01)
-----
Change in net earnings $ .35
=====
</TABLE>
_______________
FTE -- Fully taxable-equivalent basis
-14-
<PAGE> 15
SECOND QUARTER EARNINGS OVERVIEW
For the second quarter of 1995, the Corporation reported record earnings of
$33.9 million, or $.75 per fully diluted common share. This represents a 29%
increase compared to net earnings for the same period in 1994 of $26.3 million,
or $.58 per fully diluted common share. Returns on average assets and average
common equity for the second quarter of 1995 were 1.39% and 18.38%,
respectively, which compares to 1.05% and 14.43% for the same period in 1994.
Net earnings for the six months ended June 30, 1995 were $66.9 million, or
$1.49 per fully diluted common share. This compares to net earnings of $51.6
million, or $1.14 per fully diluted common share, for the same period in 1994.
The improvement in net earnings for the second quarter of 1995 is
attributable to increases in both net interest income of $3.5 million and
noninterest income of $9.3 million, while noninterest expense decreased
$152,000. The following is a more complete discussion and analysis of the
operating results for the three and six months ended June 30, 1995 compared to
the same periods in 1994.
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income (FTE) for the second quarter of 1995 was $104.7 million,
a 2% increase over both the second quarter of 1994 and first quarter of 1995
which were $102.4 million and $102.8 million, respectively. For the first half
of 1995, net interest income was $207.5 million compared to $197.7 million for
the same period in 1994. The improvement is attributable to loan growth, a
higher yield on the investment securities portfolio, and a higher net interest
margin. Reference is made to the Corporation's average balance sheet and
analysis of volume and rate changes which follow this discussion for additional
information regarding the changes in net interest income.
The net interest margin for the second quarter of 1995 was 4.66% which
compares to 4.42% for the same quarter last year and 4.59% for the first
quarter of 1995. The net interest margin for the first half of 1995 was 4.62%,
27 basis points higher than the net interest margin for the same period in
1994. The interest rate spread increased to 3.97% for the second quarter of
1995 from 3.95% for the same period a year ago and compared to 3.96% for the
first quarter of 1995.
-15-
<PAGE> 16
INTEREST INCOME
The following table presents a breakdown of average earning assets for the
three and six months ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- --------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C>
Average earning assets $9.0 $9.3 $9.1 $9.2
Comprised of:
Loans 68% 57% 67% 57%
Investment securities 29 40 30 40
Other earning assets 3 3 3 3
_____________
Fully taxable-equivalent yield on
average earning assets 8.48% 7.26% 8.31% 7.16%
</TABLE>
Fully taxable-equivalent interest income for the second quarter of 1995
increased 13% compared to the same period in 1994 and increased 4% compared to
the first quarter of 1995. For the first half of 1995, the increase was 15%
over the same period in 1994. The increase is attributable primarily to loan
growth and higher yields on earning assets. Average loans for the second
quarter of 1995 increased 2% over the first quarter of 1995 and increased 15%
over the same period in 1994. Year to date average loans have increased 15%
compared to the same period in 1994. The growth in loans occurred in almost
all categories. The yield on average earning assets increased in 1995 compared
to the previous year primarily due to the higher interest rate environment
during that period of time and to the shift in the Corporation's mix of earning
assets from investment securities to loans.
INTEREST EXPENSE
The following table presents a breakdown of average interest-bearing
liabilities for the three and six months ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C>
Average interest-bearing liabilities $7.6 $8.0 $7.7 $7.9
Comprised of:
Deposits 92% 90% 92% 91%
Short-term borrowings 2 6 3 5
FHLB advances and long-term debt 6 4 5 4
_______________
Rates paid on average interest-
bearing liabilities 4.51% 3.31% 4.35% 3.27%
</TABLE>
Interest expense increased 30% in the second quarter of 1995 compared to the
same period in 1994 and increased 7% over the first quarter of 1995. For the
six months ended June 30, 1995, interest expense increased 30% compared to the
same period in 1994. The increase is due to increased rates in almost all
categories of interest-bearing liabilities and is reflective of the
interest-rate environment. Most of the increase relates to deposits, the
largest category of interest-bearing liabilities. Partially offsetting the
increase due to higher rates paid has been a decrease in average
interest-bearing liabilities, primarily deposits.
-16-
<PAGE> 17
The Corporation's interest-rate swaps decreased net interest income for the
three and six months ended June 30, 1995 by approximately $668,000 and $1.2
million, respectively, compared to an increase in net interest income of
approximately $715,000 and $1.9 million, respectively, in the same periods in
1994. The change in the impact is reflective of the increase in interest rates
over the twelve-month period. The impact of the interest-rate swaps has been
substantially offset by corresponding changes in interest rates and yields
related to the underlying assets and liabilities.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans for the second quarter of 1995 was $2.0
million, or .13% of average loans on an annualized basis, compared to $985,000,
or .07% of average loans, for the same period in 1994 and $1.7 million, or .11%
of average loans, for the first quarter of 1995. For the six months ended June
30, 1995, the provision for losses on loans was $3.7 million compared to $1.8
million for the same period in 1994. The low level of provisions reflects the
good asset quality the Corporation has maintained over the last two years. The
increased provision in 1995 relates primarily to consumer loan growth. The
level of the provision for losses on loans is expected to increase over the
remainder of 1995 commensurate with the loan growth.
NONINTEREST INCOME
Noninterest income for the second quarter of 1995 was $37.6 million, an
increase of 33% over the same period in 1994, and an increase of 10% compared
to the first quarter of 1995. For the first half of 1995, noninterest income
was $71.8 million compared to $56.7 million for the same period a year ago. The
improvement is attributable to increases in fee and other income identified as
a result of the Corporation's restructuring plan initiated in the third quarter
of 1994, an increase in fees on consumer loans related to implementation of a
consumer loan marketing plan, and increased revenues attributable to increased
transaction volumes in the SBA trading activities.
The restructuring plan included an evaluation of the Corporation's banking
services with a goal of implementing "best practices" in all areas. As a
result, the Corporation's banking subsidiaries evaluated their practices
related to service charges on deposit accounts and increased certain fees
(primarily overdraft fees), implemented new fees, and reduced the number of
fees that were being waived. The result was a $4.7 million increase in service
charges on deposit accounts to $17.6 million for the second quarter of 1995
compared to the same period in 1994 and a $1.4 million increase over the first
quarter of 1995. For the six months ended June 30, 1995, service charges on
deposits were $33.9 million, an increase of $8.5 million over the same period
in 1994. Once the above changes are fully implemented, the level of service
charges on deposit accounts is expected to stabilize and future increases will
not be the same as the first two quarters of 1995.
Bank card income increased $2.4 million to $4.8 million for the second
quarter of 1995 compared to the same period in 1994. Year-to-date bank card
income is $9.4 million which is an increase of $4.6 million over the first half
of 1994. The growth is directly attributable to the increased volume of
consumer loans (primarily credit cards) as a result of the year end marketing
program. Future revenue levels are dependent on the credit card customer usage
levels and the number of cards outstanding.
SBA trading revenues increased $1.6 million for the second quarter of 1995
to $3.4 million as compared to $1.8 million for the same period in 1994 and
$1.6 million for the first quarter of 1995. The increase is attributable to an
increased level of trading activity during the second quarter. Revenues from
this activity are volatile such that future levels cannot be predicted with any
certainty.
NONINTEREST EXPENSE
Noninterest expense for the second quarter of 1995 decreased $152,000 to
$86.0 million which compares to $86.1 million for the second quarter of 1994.
Noninterest expense increased $2.8 million compared to the first quarter of
1995 attributable primarily to increased volumes in the bank card and SBA
trading activities. For the first six months of 1995,
-17-
<PAGE> 18
noninterest expense was $169.1 million which constituted a $232,000 increase
over the same period in 1994.
The minimal increase in expenses, excluding the increases related to
increased volumes in the bank card and SBA trading activities, relates
primarily to management's efforts to increase productivity and improve
profitability from the implementation of the restructuring plan mentioned
previously. This plan provides for a reduction of approximately 1,000 employees
through voluntary and involuntary separation plans, the consolidation or
divestiture of approximately 38 branches, and the consolidation of certain of
the Corporation's subsidiary banks and branches operating in the same or
adjacent geographic locations. The implementation of the plan began at the end
of 1994 and is expected to be fully implemented in 1995 or the early part of
1996.
Salaries and employee benefits decreased $808,000 between the second
quarters of 1995 and 1994. Compared to the first quarter of 1995, salaries and
employee benefits decreased approximately $161,000. For the first half of 1995,
salaries and employee benefits were $78.4 million compared to $79.4 million for
the same period in 1994. The reduction in these expenses relates primarily to
the Corporation's voluntary separation plan which is discussed in the 1994
Annual Report, Note 13 to the consolidated financial statements. Of the 388
employees who elected voluntary separation, approximately 304 employees have
already terminated and approximately 84 employees will terminate later in 1995.
Due to the nature of certain positions affected by employees electing the
voluntary separation, there were approximately 70 employees replaced. During
the first half of 1995, the Corporation paid $9.8 million out of employee
severance reserves, leaving a reserve balance of $2.7 million at June 30, 1995
which is expected to be adequate to complete the voluntary and involuntary
termination plans.
The number of full-time-equivalent employees at June 30, 1995 was 4,723
compared to 5,029 at December 31, 1994, 5,226 (restated for acquisitions
accounted for as poolings of interests) at June 30, 1994, and 4,879 at March
31, 1995. The decline in the number of employees since December 31, 1994 has
achieved approximately 30% of the Corporation's restructuring plan goal. The
decrease in employees from December 31, 1994 was partially offset by an
increase of approximately 40 employees in the consumer loan area due to a
significant increase in loans outstanding. There were no other significant
changes in noninterest expense between the three and six months ended June 30,
1995 and 1994.
The Corporation has also commenced its plans to consolidate or divest
certain branch locations. Notifications to regulatory agencies are being made.
The consolidations or divestitures are not expected to be completed until the
end of 1995 or possibly the first quarter of 1996, depending on the time of
receipt of regulatory approvals. Since December 31, 1994, 17 branches have been
sold, closed, or consolidated with other branches and the Corporation has plans
to consolidate or divest an additional 21 branches.
Plans to consolidate certain subsidiary banks have also begun and are
expected to be completed during 1995. The number of subsidiary banks has been
reduced from 47 at December 31, 1994 to 34 as of July 1, 1995. The
consolidation of these subsidiaries is expected to result in operating
efficiencies that should improve the profitability of the Corporation, although
quantification of the savings cannot be accurately estimated.
At year end management estimated that savings from effecting its
restructuring plan would be approximately $25 million to $30 million annually
attributable primarily to the staff reductions and $1 million to $3 million
from branch consolidation and divestitures. Management is of the opinion that
these estimates of annual savings are likely to be achieved; however, the full
impact of the savings may not be realized until 1996. At June 30, 1995, the
Corporation had reserves related to the restructuring plan of $9.7 million
(including the reserve related to employee severance discussed above), which
management considers adequate to complete its restructuring plan.
-18-
<PAGE> 19
CHANGE IN FDIC DEPOSIT INSURANCE ASSESSMENT
On August 8, 1995, the FDIC announced changes in the insurance assessments
for financial institutions. The deposit insurance assessments currently range
from 23 cents per $100 of deposits for well-capitalized institutions to 31
cents for weaker institutions. The change announced by the FDIC would reduce
the rate for well-capitalized institutions in the Bank Insurance Fund (BIF) to
4 cents per $100 of deposits. For Savings Association Insurance Fund (SAIF)
institutions, the premiums will remain unchanged. Based on the Corporation's
current deposit levels, it is estimated that the Corporation's deposit
insurance expense will be reduced approximately $12 million annually. The
change is expected to be effective during the third quarter and may result in
retroactive application to the second quarter of 1995. As of June 30, 1995,
the Corporation had approximately $6.7 billion of deposits in the BIF fund and
$1.6 billion of deposits in the SAIF fund.
-19-
<PAGE> 20
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------
1995 1994
--------------------------------- -----------------------------------
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 $ 37,532 $ 587 6.27% $ 14,347 $ 165 4.61%
Federal funds sold and securities
purchased under agreements to resell 116,020 1,763 6.09 75,816 712 3.77
Trading account securities 170,514 3,269 7.69 167,061 2,219 5.33
Investment securities (1) and (2) 2,594,541 44,450 6.87 3,717,357 52,918 5.71
Loans, net of unearned income (1) 6,097,279 140,479 9.24 5,313,708 112,219 8.47
---------- -------- ----------- --------
TOTAL EARNING ASSETS (1) AND (2) 9,015,886 190,548 8.48 9,288,289 168,233 7.26
-------- --------
Cash and due from banks 401,536 419,643
Premises and equipment 197,929 212,330
Allowance for losses on loans (123,433) (125,270)
Other assets 257,438 266,708
---------- -----------
TOTAL ASSETS $9,749,356 $10,061,700
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts $1,269,722 9,955 3.14% $ 1,496,941 $ 9,089 2.44%
Savings deposits 1,695,788 11,645 2.75 1,787,670 9,869 2.21
Certificates of deposit of
$100,000 and over 581,766 7,719 5.32 551,765 5,183 3.77
Other time deposits 3,475,518 46,928 5.42 3,326,607 32,558 3.93
Short-term borrowings 189,133 2,664 5.65 461,291 4,272 3.71
Federal Home Loan Bank advances 299,433 4,557 6.10 219,491 2,621 4.79
Long-term debt
Subordinated capital notes and
debentures 114,809 2,332 8.15 116,389 2,108 7.26
Other 2,620 47 7.20 4,747 121 10.22
---------- -------- ----------- --------
TOTAL INTEREST-BEARING LIABILITIES 7,628,789 85,847 4.51 7,964,901 65,821 3.31
Noninterest-bearing demand deposits 1,210,490 1,221,804
---------- -------- ----------- --------
TOTAL SOURCES OF FUNDS 8,839,279 85,847 9,186,705 65,821
-------- --------
Other liabilities 120,321 102,320
Shareholders' equity 789,756 772,675
---------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $9,749,356 $10,061,700
========== ===========
NET INTEREST INCOME $104,701 $102,412
======== ========
INTEREST RATE SPREAD 3.97% 3.95%
==== =====
NET INTEREST MARGIN 4.66% 4.42%
==== =====
____________________
(1) Taxable-equivalent adjustments:
Loans $ 426 $ 398
Investment securities 3,737 4,950
-------- --------
$ 4,163 $ 5,348
======== ========
(2) Yields are calculated based on historical cost and exclude the impact of
the net unrealized gains and losses on available for sale securities.
</TABLE>
-20-
<PAGE> 21
UNION PLANTERS CORPORATION AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1995 VERSUS 1994
-----------------------------------------
INCREASE
(DECREASE)
DUE TO CHANGE IN: (1)
----------------------- TOTAL
AVERAGE AVERAGE INCREASE
VOLUME (2) RATE (2) (DECREASE)
----------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits at
financial institutions $ 345 $ 77 $ 422
Federal funds sold and securities
purchased under agreements to resell 485 566 1,051
Trading account securities 47 1,003 1,050
Investment securities (FTE) (17,927) 9,459 (8,468)
Loans, net of unearned income (FTE) 17,479 10,781 28,260
-------
TOTAL INTEREST INCOME (5,057) 27,372 22,315
-------
INTEREST EXPENSE
Money market accounts (1,517) 2,383 866
Savings deposits (529) 2,305 1,776
Certificates of deposit of
$100,000 and over 295 2,241 2,536
Other time deposits 1,516 12,854 14,370
Short-term borrowings (3,263) 1,655 (1,608)
Other long-term debt 1,031 1,055 2,086
-------
TOTAL INTEREST EXPENSE (26,171) 46,197 20,026
-------
CHANGE IN NET INTEREST INCOME $ 2,289
=======
PERCENTAGE INCREASE IN NET INTEREST
INCOME OVER PRIOR PERIOD 2.24%
=======
</TABLE>
____________________
(1) The change due to both rate and volume has been allocated to change due
to volume and change due to rate in proportion to the relationship of
the absolute dollar amounts of the change in each.
(2) Variances are computed on a line-by-line basis and are nonadditive.
-21-
<PAGE> 22
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
1995 1994
--------------------------------- ----------------------------------
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 $ 28,435 $ 902 6.40% $ 15,858 $ 380 4.83%
Federal funds sold and securities
purchased under agreements to resell 76,185 2,258 5.98 118,117 2,012 3.44
Trading account securities 167,469 6,005 7.23 159,947 3,978 5.02
Investment securities (1) and (2) 2,731,839 91,307 6.74 3,624,118 100,511 5.59
Loans, net of unearned income (1) 6,049,617 272,824 9.09 5,249,789 218,644 8.40
---------- -------- ---------- --------
TOTAL EARNING ASSETS (1) and (2) 9,053,545 373,296 8.31 9,167,829 325,525 7.16
-------- --------
Cash and due from banks 400,968 426,702
Premises and equipment 199,985 209,626
Allowance for losses on loans (124,009) (124,911)
Other assets 256,899 282,140
---------- ----------
TOTAL ASSETS $9,787,388 $9,961,386
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts $1,307,200 $ 20,360 3.14% $1,545,188 $ 18,204 2.38%
Savings deposits 1,714,286 22,838 2.69 1,744,246 19,331 2.23
Certificates of deposit of
$100,000 and over 570,526 14,454 5.11 547,497 10,147 3.74
Other time deposits 3,430,504 87,868 5.17 3,322,961 64,573 3.92
Short-term borrowings 260,358 7,146 5.53 377,951 6,387 3.41
Federal Home Loan Bank advances 277,544 8,368 6.08 216,267 4,809 4.48
Long-term debt
Subordinated capital notes and
debentures 114,801 4,633 8.14 116,398 4,112 7.12
Other 2,304 90 7.88 5,299 254 9.67
---------- -------- ---------- --------
TOTAL INTEREST-BEARING LIABILITIES 7,677,523 165,757 4.35 7,875,807 127,817 3.27
Noninterest-bearing demand deposits 1,219,492 1,212,962
---------- -------- ---------- --------
TOTAL SOURCES OF FUNDS 8,897,015 165,757 9,088,769 127,817
-------- --------
Other liabilities 110,856 103,447
Shareholders' equity 779,517 769,170
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $9,787,388 $9,961,386
========== ==========
NET INTEREST INCOME $207,539 $197,708
======== ========
INTEREST RATE SPREAD 3.96% 3.89%
===== =====
NET INTEREST MARGIN 4.62% 4.35%
===== =====
___________________
(1) Taxable-equivalent adjustments:
Loans $ 860 $ 729
Investment securities 7,590 8,451
-------- --------
$ 8,450 $ 9,180
======== ========
(2) Yields are calculated based on historical cost and exclude the impact of
the net unrealized gains and losses on available for sale securities.
</TABLE>
-22-
<PAGE> 23
UNION PLANTERS CORPORATION AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1995 VERSUS 1994
------------------------------------------
INCREASE
(DECREASE)
DUE TO CHANGE IN: (1)
----------------------- TOTAL
AVERAGE AVERAGE INCREASE
VOLUME (2) RATE (2) (DECREASE)
----------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits at
financial institutions $ 371 $ 151 $ 522
Federal funds sold and securities
purchased under agreements to resell (886) 1,132 246
Trading account securities 195 1,832 2,027
Investment securities (FTE) (27,516) 18,312 (9,204)
Loans, net of unearned income (FTE) 35,099 19,081 54,180
-------
TOTAL INTEREST INCOME (4,105) 51,876 47,771
-------
INTEREST EXPENSE
Money market accounts (3,096) 5,252 2,156
Savings deposits (338) 3,845 3,507
Certificates of deposit of
$100,000 and over 443 3,864 4,307
Other time deposits 2,151 21,144 23,295
Short-term borrowings (2,411) 3,170 759
Other long-term debt 1,397 2,519 3,916
-------
TOTAL INTEREST EXPENSE (45,210) 83,150 37,940
-------
CHANGE IN NET INTEREST INCOME $ 9,831
=======
PERCENTAGE INCREASE IN NET INTEREST
INCOME OVER PRIOR PERIOD 4.97%
=======
</TABLE>
____________________
(1) The change due to both rate and volume has been allocated to change due
to volume and change due to rate in proportion to the relationship of
the absolute dollar amounts of the change in each.
(2) Variances are computed on a line-by-line basis and are nonadditive.
-23-
<PAGE> 24
FINANCIAL CONDITION
The Corporation's total assets were $9.7 billion at June 30, 1995 compared
to $10.1 billion at June 30, 1994, and $9.7 billion at March 31, 1995. Average
assets for the three and six months ended June 30, 1995 were $9.7 billion and
$9.8 billion, respectively, compared to $10.1 billion and $10.0 billion,
respectively, for the same periods in 1994.
INVESTMENT SECURITIES
The Corporation's investment securities portfolio of $2.5 billion at June
30, 1995 consisted of available for sale securities which are carried on the
balance sheet at fair value and securities held to maturity which are carried
at amortized cost. Reference is made to Note 5 to the interim financial
statements which provides the composition of the investment portfolio at June
30, 1995 and December 31, 1994.
U.S. Treasury and U. S. Government agency obligations represented
approximately 75.8% of the investment securities portfolio at June 30, 1995.
The Corporation has some credit risk in the investment portfolio, however
management does not consider that risk to be significant.
The REMIC and CMO issues in the investment securities portfolio are 95.9%
U.S. Government agencies issues; the remaining 4.1% are readily marketable,
collateralized mortgage obligations backed by agency-pooled collateral or
whole-loan collateral. All nonagency issues held are currently rated "AAA" by
either Standard & Poors or Moodys. The REMIC and CMO portions of the investment
securities portfolio include approximately 65.2% in floating-rate issues, the
majority being indexed to LIBOR or PRIME. Normal practice is to purchase
investment securities at or near par value to reduce risk of premium write-offs
on unexpected prepayments. The limited credit risk in the investment securities
portfolio consists of the holdings of nonagency CMOs, municipal obligations and
corporate stocks, and notes and debentures which accounted for 1.3%, 19.9%, and
2.9%, respectively, of the investment securities portfolio at June 30, 1995.
At June 30, 1995, the Corporation had approximately $44.4 million of
structured notes (as currently defined by the regulatory agencies), which
constitutes approximately 1.7% of the investment securities portfolio. The
definition of structured notes was broadened by the regulatory agencies during
the second quarter of 1995 resulting in approximately $16 million of additional
securities being included in this classification. Structured notes have
uncertain cash flows which are driven by interest-rate movements and may expose
a company to greater market risk than traditional medium-term notes. All of the
Corporation's investments of this type are government agency issues (primarily
Federal Home Loan Bank and Federal National Mortgage Association). The
structured notes vary in type but primarily include step-up bonds and
index-amortizing notes. These securities are carried in the Corporation's
available for sale securities portfolio and the unrealized loss in these
securities at June 30, 1995 was approximately $1.0 million. The market risk
associated with the structured notes is not considered material to the
Corporation's financial position, results of operations, or liquidity and
involves no credit risk.
AVAILABLE FOR SALE SECURITIES
Available for sale securities at June 30, 1995 were $1.5 billion and had
unrealized gains of $9.1 million and unrealized losses of $7.5 million, which
resulted in a positive adjustment to the carrying value of available for sale
securities of $1.6 million ($926,000, net of taxes). At December 31, 1994,
these securities totaled $1.9 billion and had unrealized gains of $3.0 million
and unrealized losses of $50.0 million. Holdings of these securities declined
approximately $427 million from December 31, 1994, primarily as a result of
loan funding needs.
HELD TO MATURITY SECURITIES
Held to maturity securities at June 30, 1995 were $1.0 billion, consisting
primarily of U.S. Government obligations and obligations of states and
political subdivisions. The held to maturity portfolio as of June 30, 1995 had
unrealized gains of $28.1 million and
-24-
<PAGE> 25
unrealized losses of $6.3 million. At December 31, 1994, these securities
totaled $1.0 billion and had unrealized gains and losses of $9.2 million and
$32.3 million, respectively. The change in the unrealized gains and losses
reflects the changes in interest rates and financial markets since year end.
As held to maturity securities mature in the future, additional securities
purchased with the proceeds thereof are expected to be classified as available
for sale securities due to the Corporation's need for flexibility in funding
future loan growth and managing interest-rate risk.
LOANS
Loans at June 30, 1995 were $6.1 billion compared to $5.4 billion and $5.9
billion at June 30, 1994 and December 31, 1994, respectively. Average loans for
the second quarter of 1995 were $6.1 billion, a 15% increase over the $5.3
billion for the second quarter of 1994. Note 3 to the interim financial
statements presents the composition of the loan portfolio.
The primary area of growth since year end has been in the consumer loan
portfolio (primarily credit card loans), which is primarily attributable to the
consumer loan marketing program implemented in the fourth quarter of 1994. The
growth in loans from June 30, 1994 to June 30, 1995 occurred in almost all
categories of loans with the largest growth occurring in consumer loans and
loans secured by 1-4 family residential mortgages which increased approximately
$345 million and $190 million, respectively. Commercial loans have increased
approximately $100 million and other real estate loans have increased
approximately $65 million. The Corporation's loan-to-deposit ratio was 74% at
June 30, 1995 compared to 65% and 71%, respectively, at June 30, 1994, and
December 31, 1994.
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, 1995 and 1994 and for the year ended December
31, 1994.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------- FOR THE YEAR ENDED
1995 1994 DECEMBER 31, 1994
---------- ---------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at the beginning
of the period $ 122,089 $ 114,353 $ 114,353
Provision charged to expense 3,686 1,800 3,636
Allowances of banks acquired (a) -- 9,377 9,252
Recoveries 6,445 5,747 13,287
Charge-offs (13,545) (8,454) (18,439)
---------- ---------- ----------
Balance at the end of the period $ 118,675 $ 122,823 $ 122,089
========== ========== ==========
Loans outstanding at period end $6,085,087 $5,388,459 $5,949,128
========== ========== ==========
Average loans during the period $6,049,617 $5,249,789 $5,426,880
========== ========== ==========
Ratios:
Allowance/period end loans 1.95% 2.28% 2.05%
Charge-offs/average loans (b) .45 .32 .34
Recoveries/average loans (b) .21 .22 .25
Net charge-offs (recoveries)/
average loans (b) .24 .10 .09
Provision/average loans (b) .12 .07 .07
</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, 1995 and 1994
-25-
<PAGE> 26
The allowance at June 30, 1995 was $118.7 million, a decrease of $3.4
million from December 31, 1994, and a decrease of $4.1 million compared to
$122.8 million at June 30, 1994. The decrease resulted from net charge-offs
exceeding the provision for losses on loans. Net charge-offs for the second
quarter were $6.2 million compared to $3.4 million for the same period in 1994
and compared to $870,000 for the first quarter of 1995. An increasing level of
charge-offs is expected over the last half of 1995 related primarily to the
increase in consumer loans, primarily credit card loans, which is normal for
this type of portfolio. Additionally, the levels of recoveries are expected to
decline from the levels of the past three years. The Corporation's loan
growth, anticipated higher levels of charge-offs, and anticipated lower levels
of recoveries are expected to result in higher provisions for losses on loans
in the future. Management believes that the allowance is sufficient to absorb
estimated losses inherent in the loan portfolio at June 30, 1995.
-26-
<PAGE> 27
NONPERFORMING ASSETS
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
----------------- ------------
1995 1994 1994
------ ------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual loans $23,709 $23,224 $17,476
Restructured loans 1,286 2,001 1,564
------- ------- -------
Total nonperforming loans 24,995 25,225 19,040
------- ------- -------
Foreclosed property
Other real estate owned,
net of reserve for losses 5,633 8,305 5,434
Other foreclosed properties 338 399 559
------- ------- -------
Total foreclosed properties 5,971 8,704 5,993
------- ------- -------
Total nonperforming assets $30,966 $33,929 $25,033
======= ======= =======
Loans 90 days or more past due
and not on nonaccrual status $11,579 $ 8,590 $ 5,874
======= ======= =======
__________________
Nonperforming loans as a
percentage of loans .41% .47% .32%
Nonperforming assets as a
percentage of loans and
foreclosed properties .51 .63 .42
Allowance for losses on loans
as a percentage of
nonperforming loans 475 487 641
Loans 90 days or more past
due and not on nonaccrual
status as a percentage of loans .19 .16 .10
</TABLE>
The Corporation's asset quality measures continue to be at acceptable levels
as shown above. The level of nonperforming assets over the past two quarters
has increased over the historically low level at year end. Management is not
aware of any general deterioration in the overall loan portfolio. Loans 90
days or more past due and not on nonaccrual status increased $5.7 million over
year end due primarily to the increase in consumer loans, primarily credit
cards.
POTENTIAL PROBLEM ASSETS
Potential problem assets consist of assets which are generally secured and
not currently considered nonperforming, but with respect to which information
concerning possible credit problems has caused management to have serious
doubts as to the ability of such borrowers to comply in the future with present
repayment terms. Historically these assets have been loans that become
nonperforming. At June 30, 1995, the Corporation had potential problem assets
(all of which were loans) aggregating $10.8 million.
-27-
<PAGE> 28
OFF-BALANCE-SHEET INSTRUMENTS
On a limited basis the Corporation uses off-balance-sheet financial
instruments to manage interest-rate risk. Reference is made to Note 17 to the
audited consolidated financial statements in the Corporation's 1994 Annual
Report to Shareholders for additional information regarding these instruments.
A summary of the Corporation's interest-rate swaps follows:
<TABLE>
<CAPTION>
CURRENT RATES (A) 1995
NOTIONAL AMOUNT ---------------------- YEAR-TO-DATE
-------------------- VARIABLE FIXED NET INTEREST UNREALIZED
JUNE 30, DECEMBER 31, RATE RATE MATURITY INCOME GAIN
BALANCE SHEET INSTRUMENTS 1995 1994 PAID RECEIVED DATE IMPACT (LOSS)
- --------------------------- -------- ------------ -------- -------- -------- ---------- ----------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans (b) and (c) $150 $150 6.50% 5.22% 1/96-99 (c) $ (.9) $(3.3)
Securities (d) -- 100 -- -- -- -- --
Long-term debt debentures 50 50 6.04 4.46 5/96 (.4) (.8)
Long-term FHLB advances (e) -- 10 -- -- -- .1 --
---- ---- ----- -----
Total $200 $310 $(1.2) $(4.1)
==== ==== ===== =====
</TABLE>
___________________
(a) The variable rates paid are tied to the three-month LIBOR rate for the
loans and the six-month LIBOR rate for the debenture swaps. The next
repricing dates for the variable rates paid for the loans and long-term
debt debentures are October 1995 and November 1995, respectively. These
variable rates may change significantly in the future due to changes in
the financial markets and interest rates.
(b) This swap was entered into to reduce the volatility of net interest
income. At the time the swap was executed, management reduced the risk
associated with stable or further declining interest rates and the
resultant impact on net interest income.
(c) This interest-rate swap's amortization period may change quarterly based
on changes in the underlying index rate. If the index rate should be
less than or equal to 5.3125% on January 5, 1996, the swap would
terminate on that date. If the index rate should remain at the current
rate (5.855% as of July 27, 1995) through January 5, 1996 and
thereafter, the swap would mature July 5, 1996. The swap maturity has
the potential to extend to January 1999 in the event the index rate
should be equal to or exceed 8.3125% on January 5, 1996 and for the
remainder of the term of the swap.
(d) Management sold the securities related to this interest-rate swap in
January 1995. At December 31, 1994, the Corporation recognized a $1.1
million loss on this interest-rate swap. This swap matured in June 1995.
(e) The long-term FHLB advances interest-rate swap was entered into by Union
Planters Bank of Mississippi (formerly Sunburst Bank, Mississippi), a
subsidiary of Grenada Sunburst System Corporation acquired December 31,
1994. Currently the Corporation is in the process of reorganizing Union
Planters Bank of Mississippi (UPBMS) into five banks (three existing and
two to be organized.) In connection with the reorganization, management
decided to terminate certain outstanding advances and the related
interest-rate swap. In terminating the swap, the Corporation recognized
a gain of approximately $777,000 which was partially offset by a penalty
of approximately $588,000 resulting from the prepayment of the FHLB
advances.
-28-
<PAGE> 29
ASSET LIABILITY MANAGEMENT
The following table presents the Corporation's interest-rate sensitivity
analysis at June 30, 1995. This analysis alone cannot be relied upon to
predict how the Corporation is positioned to react to changing interest rates,
since it has been prepared as of a point-in-time and could change significantly
on a daily basis. Other significant 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 interest rates at June 30, 1995 and
holds the rates and volumes constant for the simulation. When this projection
is subjected to immediate and parallel shifts in interest rates ("rate shocks")
of 200 basis points, first rising and then falling, the annual impact of the
"rate shock" at June 30, 1995 on the Corporation's projected net interest
income was a positive $13.2 million and a negative $18.1 million pretax,
respectively, which is within the Corporation's policy limits.
-29-
<PAGE> 30
UNION PLANTERS CORPORATION AND SUBSIDIARIES
RATE-SENSITIVITY ANALYSIS AT JUNE 30, 1995
<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 $1,725 $ 459 $ 484 $ 800 $513 $1,474 $ 635 $ 25 $6,115
Investment securities 234 149 188 579 474 446 437 -- 2,507
Other earning assets 202 151 2 1 -- 1 -- -- 357
Other assets -- -- -- -- -- -- -- 766 766
------ ------ ----- ------ ---- ------ ------ ------- ------
TOTAL ASSETS $2,161 $ 759 $ 674 $1,380 $987 $1,921 $1,072 $ 791 $9,745
====== ====== ===== ====== ==== ====== ====== ======= ======
SOURCES OF FUNDS
Money market deposits $ 60 $ 344 $ -- $ 344 $ -- $ 499 $ -- $ -- $1,247
Other savings and time deposits 480 1,070 734 736 526 1,623 16 -- 5,185
Time deposits over $100,000 116 106 107 130 68 58 1 -- 586
Short-term borrowings 138 2 -- -- -- -- -- -- 140
Federal Home Loan Bank
advances 146 79 7 4 11 31 14 -- 292
Long-term debt -- -- -- -- -- -- 122 -- 122
Noninterest-bearing deposits -- -- -- -- -- -- -- 1,245 1,245
Other liabilities -- -- -- -- -- -- -- 117 117
Shareholders' equity -- -- -- -- -- -- -- 811 811
------ ------ ----- ------ ---- ------ ------ ------- ------
TOTAL SOURCES OF FUNDS $ 940 $1,601 $ 848 $1,214 $605 $2,211 $ 153 $ 2,173 $9,745
====== ====== ===== ====== ==== ====== ====== ======= ======
Interest rate swaps $ (150) $ -- $ (50) $ 50 $ -- $ 150 $ -- $ -- $ --
Interest rate sensitivity gap $1,071 $ (842) $(224) $ 216 $382 $ (140) $ 919 $(1,382) $ --
Cumulative interest rate
sensitivity gap $1,071 $ 229 $ 5 $ 221 $603 $ 463 $1,382 $ -- $ --
Cumulative gap as a percentage
of total assets 11% 2% 0% 2% 6% 5% 14%
</TABLE>
___________________
Management has made the following assumptions in preparing the above analysis:
(a) Assets and liabilities are generally scheduled according to their
earliest repricing dates regardless of their contractual maturities.
(b) Nonaccrual loans are included in the noninterest-bearing category.
(c) Fixed-rate mortgage loan maturities are estimated based on the principal
prepayment patterns of comparable mortgage-backed securities.
(d) The scheduled maturities of mortgage-backed securities and CMOs assume
principal prepayment of these securities on dates estimated by
management, relying primarily upon current and consensus interest-rate
forecasts in conjunction with the latest three-month historical
prepayment schedules.
(e) Investment securities available for sale are currently treated in the
same manner as comparable securities in the investment securities held
to maturity portfolio in that they are scheduled according to their
earliest repricing dates, or if they should not reprice, at their
contractual maturities; however the maturities of callable agencies
securities 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 management's best estimate of
their repricing in response to changes in market rates. The impact of
changes in market rates would vary 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 total
assets would have been negative (19%), (19%), (21%), (15%), (11%), and
positive 5%, respectively, for the 0-30 Days, 31-90 days, 91-180 Days,
181-365 Days, 1-2 years, 2-5 Years, and over 5 Years categories at June
30, 1995.
-30-
<PAGE> 31
LIQUIDITY
The Corporation's core deposit base is its most important and stable funding
source. These deposits, along with available for sale securities and money
market investments, provide liquidity for the Corporation. The Corporation's
deposit base is comprised of "in-market" deposits, as the Corporation has no
known brokered deposits. Certificates of deposit of $100,000 or more
represented only 7% of total deposits at June 30, 1995. The following table
presents an analysis of the Corporation's deposits:
<TABLE>
<CAPTION>
AVERAGE DEPOSITS
----------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, MARCH 31, JUNE 30,
------------------ --------- -------------------
1995 1994 1995 1995 1994
-------- -------- --------- -------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Demand deposits $1,210 $1,222 $1,229 $1,219 $1,213
Money market accounts (a) 1,270 1,497 1,345 1,307 1,545
Savings deposits (b) 1,696 1,788 1,733 1,714 1,744
Other time deposits (c) 3,476 3,327 3,385 3,431 3,323
------ ------ ------ ------ ------
Total core deposits 7,652 7,834 7,692 7,671 7,825
Certificates of deposit
of $100,000 and over 582 552 559 571 547
------ ------ ------ ------ ------
Total deposits $8,234 $8,386 $8,251 $8,242 $8,372
====== ====== ====== ====== ======
</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.
Average deposits were $8.2 billion for the second quarter of 1995, a
decrease of $17 million and $152 million, respectively, from the first quarter
of 1995 and the second quarter of 1994. For the six months ended June 30, 1995
total average deposits decreased $130 million compared to the same period in
1994. The decrease resulted primarily from a decline in money market and
savings deposits, a portion of the decline having been offset by growth in
certificates of deposit. Also, approximately $90 million of the decline relates
to the sale of certain branches required as a condition to receiving prior
regulatory approval to consummate the acquisition of Grenada Sunburst System
Corporation at December 31, 1994.
The parent company's source of cash flow 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, 1995, the parent company had cash and cash
equivalents totaling $41.2 million and short-term investments totaling $77.0
million. The parent company's net working capital at June 30, 1995 was $ 101.8
million. At July 1, 1995, the parent company could have received dividends from
subsidiary banks of $31 million without prior regulatory approval. The payment
of additional dividends will be dependent on the future earnings of the
Corporation's subsidiary banks. Management believes that the parent company
has adequate liquidity to meet its cash needs, including the payment of
dividends and servicing of its long-term debt.
SHAREHOLDERS' EQUITY
The Corporation's total shareholders' equity increased $80.8 million from
December 31, 1994 to $812 million at June 30, 1995. The increase was due to
retained net earnings of $44.1 million, a reduction in the net unrealized loss
on available for sale securities of $29.4
-31-
<PAGE> 32
million and Common Stock issued in connection with employee benefit and
dividend reinvestment plans of $7.3 million.
CAPITAL ADEQUACY
The following table presents certain capital-adequacy ratios of 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,
1995 1994 1994
------ ------ ------------
CAPITAL ADEQUACY DATA
- ---------------------
<S> <C> <C> <C>
Total shareholders' equity/
total assets (at period end) 8.33% 7.62% 7.30%
Average shareholders' equity/
average total assets 7.96 7.72 7.76
Tier 1 capital/unweighted
assets (leverage ratio) (a) 7.96 7.43 7.18
Parent company long-term debt/equity 14.15 14.93 15.71
Dividend payout ratio 34.14 35.45 64.68
</TABLE>
___________________
(a) Based on period-end capital and quarterly adjusted average assets
At June 30, 1995, total shareholders' equity was 8.33% of total assets and
the leverage ratio was 7.96% compared to 7.30% and 7.18%, respectively, at
December 31, 1994. The improvement in these ratios has resulted primarily from
the Corporation's retained net earnings. The shareholders' equity to total
assets ratio improved more than the leverage ratio because the adjustment for
the net unrealized loss on available for sale securities improved $29.4 million
from year end to a net unrealized gain of $926,000. This adjustment is not
included in the leverage ratio calculation.
-32-
<PAGE> 33
RISK-BASED CAPITAL
<TABLE>
<CAPTION>
JUNE 30,
------------------------- DECEMBER 31,
1995 1994 1994
---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Tier 1 capital
Shareholders' equity $ 811,520 $ 768,747 $ 730,707
Minority interest in
consolidated subsidiaries 1,088 1,968 1,088
Less goodwill, other intangibles, and
one-half of investment in
unconsolidated subsidiaries (35,788) (37,860) (38,138)
Less deferred tax asset not qualifying
as regulatory capital (2,295) (2,086) (2,494)
Unrealized (gain) loss on available for
sale securities (926) 14,159 28,527
---------- --------- ---------
Total Tier 1 capital 773,599 744,928 719,690
Tier 2 capital
Allowance for losses on loans (a) 75,046 67,767 74,204
Qualifying long-term debt 74,566 74,514 74,540
Less one-half of investment in
unconsolidated subsidiaries (22) (20) (18)
---------- ---------- ----------
Total capital $ 923,189 $ 887,189 $ 868,416
========== ========== ==========
Risk-weighted assets (b) $5,960,037 $5,446,612 $5,888,361
========== ========== ==========
Ratios as a percent of end of
period risk-weighted assets
Tier 1 capital 12.98% 13.68% 12.22%
Total capital 15.49 16.29 14.75
</TABLE>
___________________
(a) Limited as required by regulatory guidelines.
(b) Based on risk-weighted assets as defined by regulatory guidelines.
IMPACT OF ACCOUNTING STANDARDS
SFAS NO. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
Effective July 1, 1995, the Corporation adopted prospectively the provisions
of SFAS No. 122, "Accounting for Mortgage Servicing Rights, an amendment of
SFAS No. 65". This statement requires entities to recognize as separate assets
rights to service mortgage loans for others, regardless of how the servicing
rights are acquired. The impact of adoption of this standard, assuming current
mortgage production levels is estimated to increase the Corporation's net
earnings for the last half of 1995 by approximately $1 million.
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<PAGE> 34
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, 1994, Note 19 to the Corporation's consolidated financial
statements on pages 68 and 69 of the 1994 Annual Report to Shareholders, Note
10 to the Corporation's unaudited consolidated financial statements included in
the quarterly report on Form 10-Q dated March 31, 1995, and Note 10 to the
Corporation's unaudited consolidated financial statements included herein.
ITEM 2 -- CHANGES IN SECURITIES
None
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Corporation's Annual Meeting of Shareholders was held on April 27, 1995.
Matters submitted to and approved by shareholders are listed below, as is a
tabulation of voting. Broker nonvotes totaled 41,472.
(1) The following persons nominated as Directors were elected:
<TABLE>
<CAPTION>
Class I For Withheld
------- --- --------
<S> <C> <C>
Milton J. Womack 30,957,609 259,695
Class II
Albert M. Austin 30,965,580 251,724
George W. Bryan 30,953,780 263,524
C. J. Lowrance, III 30,966,085 251,219
Mike P. Sturdivant 30,987,781 229,523
</TABLE>
(2) The selection by the Board of Directors of Price Waterhouse LLP as
the Corporation's independent accountants and auditors for the year
ending December 31, 1995 was ratified by the following vote:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
31,045,973 51,198 120,133
</TABLE>
(3) An amendment to the charter of the Corporation to increase the number
of shares of the Corporation's Common Stock, $5.00 par value per
share, authorized for issuance by the Corporation from 50,000,000 to
100,000,000:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
29,167,661 1,554,531 495,112
</TABLE>
ITEM 5 -- OTHER INFORMATION
None
-34-
<PAGE> 35
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2 -- Agreement and Plan of Reorganization dated as of June 20,
1995 (as amended and restated June 22, 1995) between Union
Planters Corporation, CBI Acquisition Company, Inc., and
Capital Bancorporation, Inc., incorporated herein by
reference to Exhibit 2(c) to Union Planters Corporation's
Current Report on Form 8-K dated June 27, 1995.
11 -- Computation of Earnings Per Common Share
27 -- Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
Date of Report/Date of Earliest Event Reported Subject
- ---------------------------------------------- -------
1. April 27, 1995/April 27, 1995 Press Release announcing
first quarter of 1995
operating results
2. June 27, 1995/June 20, 1995 Signing of definitive
agreement to acquire
Capital Bancorporation,
Inc.
-35-
<PAGE> 36
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 10, 1995
-------------------
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
-36-
<PAGE> 1
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
<PAGE> 2
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,
-------------------- --------------------
1995 1994 1995 1994
--------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
Average shares outstanding 40,471 39,878 40,383 39,847
Average common share equivalents:
Assumed exercise of options outstanding 136 167 131 157
------- ------- ------- -------
Primary average shares outstanding 40,607 40,045 40,514 40,004
======= ======= ======= =======
Net earnings $33,866 $26,252 $66,881 $51,639
Less: Preferred stock dividends
Series B (88) (88) (176) (176)
Series C (redeemed October 31, 1994) -- (444) -- (895)
Series D (41) (124) (165) (247)
Series E (1,554) (1,554) (3,108) (3,108)
------- ------- ------- -------
Net earnings applicable to common shares $32,183 $24,042 $63,432 $47,213
======= ======= ======= =======
Primary Earnings Per Common Share $.79 $.60 $1.56 $1.18
</TABLE>
<PAGE> 3
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,
-------------------- ----------------------
1995 1994 1995 1994
--------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER COMMON SHARE
Average shares outstanding 40,471 39,878 40,383 39,847
Assumed exercise of options outstanding 158 172 143 160
Assumed conversion of preferred stock
outstanding:
Series B 340 340 340 340
Series D 254 254 254 254
Series E 3,885 3,885 3,885 3,885
------- ------- ------- -------
Fully diluted average shares outstanding 45,108 44,529 45,005 44,486
======= ======= ======= =======
Net earnings $33,866 $26,252 $66,881 $51,639
Less: Series C preferred stock
dividends (1) -- (444) -- (895)
------- ------- ------- -------
Net earnings applicable to common shares $33,866 $25,808 $66,881 $50,744
======= ======= ======= =======
Fully Diluted Earnings Per Common Share $.75 $.58 $1.49 $1.14
</TABLE>
___________________
(1) Redeemed October 31, 1994
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UNION PLANTERS CORPORATION FOR THE SIX MONTHS ENDED
JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 434,175
<INT-BEARING-DEPOSITS> 35,020
<FED-FUNDS-SOLD> 56,351
<TRADING-ASSETS> 210,775
<INVESTMENTS-HELD-FOR-SALE> 1,501,600
<INVESTMENTS-CARRYING> 1,005,348
<INVESTMENTS-MARKET> 1,027,154
<LOANS> 6,085,087
<ALLOWANCE> 118,675
<TOTAL-ASSETS> 9,745,439
<DEPOSITS> 8,263,263
<SHORT-TERM> 140,434
<LIABILITIES-OTHER> 116,799
<LONG-TERM> 413,423
<COMMON> 0
87,298
202,766
<OTHER-SE> 521,456
<TOTAL-LIABILITIES-AND-EQUITY> 9,745,439
<INTEREST-LOAN> 271,964
<INTEREST-INVEST> 83,717
<INTEREST-OTHER> 9,165
<INTEREST-TOTAL> 364,846
<INTEREST-DEPOSIT> 145,520
<INTEREST-EXPENSE> 165,757
<INTEREST-INCOME-NET> 199,089
<LOAN-LOSSES> 3,686
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 169,095
<INCOME-PRETAX> 98,078
<INCOME-PRE-EXTRAORDINARY> 66,881
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,881
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.49
<YIELD-ACTUAL> 4.62
<LOANS-NON> 23,709
<LOANS-PAST> 11,579
<LOANS-TROUBLED> 1,286
<LOANS-PROBLEM> 10,831
<ALLOWANCE-OPEN> 122,089
<CHARGE-OFFS> 13,545
<RECOVERIES> 6,445
<ALLOWANCE-CLOSE> 118,675
<ALLOWANCE-DOMESTIC> 118,675
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
