<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission File No. 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) 580-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Common Stock having a par New York Stock Exchange
value of $5 per share (name of each exchange
(title of class) on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
8% Cumulative, Convertible Preferred Stock,
Series E having a stated value of $25 per share
(title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant at February 28, 1997 was approximately $2,816,173,000.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE
REGISTRANT'S CLASSES OF COMMON STOCK
CLASS OUSTANDING AT FEBRUARY 28, 1997
Common Stock having a par 65,591,029
value of $5 per share
(title of class)
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
Part of Form 10-K
Documents Incorporated into which incorporated
<S> <C>
1. Certain parts of the Annual Report to Shareholders Parts I and II, Items 1, 2, 5,
for the year ended December 31, 1996 6, 7, and 8
2. Certain parts of the Definitive Proxy Statement for Part III
the Annual Shareholders Meeting to be held April 17, 1997
</TABLE>
<PAGE> 2
Form 10-K Cross-Reference Index
<TABLE>
<CAPTION>
Page
<S> <C>
Part I
Item 1. Business 3
Item 1a. Executive Officers of the Registrant 13
Item 2. Properties 13
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders *
Part II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 15
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure *
Part III
Item 10. Directors and Executive Officers of the Registrant 15
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and Management 15
Item 13. Certain Relationships and Related Transactions 16
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 17
Signatures 18
* Not Applicable
</TABLE>
2
<PAGE> 3
Part I
Item 1. BUSINESS
General
Union Planters Corporation (the Corporation) is a $15.2-billion
multi-state bank holding company whose primary business is banking. The
Corporation is the largest bank holding company headquatered in Tennessee and is
one of the fifty largest bank holding companies in the United States. Union
Planters National Bank (UPNB), a $6.0-billion bank headquartered in Memphis,
Tennessee, is the Corporation's largest subsidiary. The principal markets of the
Corporation are in Tennessee, Mississippi, Missouri, Arkansas, Louisiana,
Alabama, and Kentucky. These areas are served by the Corporation's 37 banking
subsidiaries and through 438 banking offices and 544 ATMs. Reference is made to
the 1996 Annual Report to Shareholders for a map on the inside front cover of
the report showing the areas served by the Corporation; Table 15 on page 34
which presents the Corporation's banking subsidiaries by state showing total
assets, loans, deposits, and shareholders' equity; and the listing of
Communities Served.
As part of the Corporation's banking services, its subsidiaries are
engaged in mortgage origination and servicing; investment management and trust
services; the issuance of credit and debit cards; the origination, packaging,
and securitization of loans, primarily the government guaranteed portions of
Small Business Administration (SBA) loans; purchasing and servicing delinquent
FHA/VA government-insured/guaranteed loans from third parties and GNMA pools
serviced for others; full-service and discount brokerage services; and the sale
of bank-eligible insurance products and services.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, the Corporation is subject to the regulation
and supervision of the Federal Reserve Board under the Bank Holding Company Act
of 1956 ("BHCA"). Each of the Corporation's banking subsidiaries, including its
savings bank subsidiary, is a member of the Federal Deposit Insurance
Corporation (FDIC) and as such its deposits are insured by the FDIC to the
maximum extent provided by law.
The Corporation's banking subsidiaries which are national banking
associations, including its principal subsidiary, UPNB, are subject to
supervision and examination by the Office of the Comptroller of the Currency
(the Comptroller) and the FDIC. State bank subsidiaries of the Corporation which
are members of the Federal Reserve System are subject to supervision and
examination by the Federal Reserve Board and the state banking authorities of
the states in which they are located. State bank subsidiaries which are not
members of the Federal Reserve System are subject to supervision and examination
by the FDIC and the state banking authorities of the states in which they are
located. The Corporation's savings bank subsidiary is subject to supervision and
examination by the Office of Thrift Supervision (OTS). The Corporation's banking
subsidiaries are subject to various requirements and restrictions, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans and other extensions of credit that may be granted and the
interest that may be charged thereon and limitations on the types of investments
that may be made and the types of services that may be offered. Various consumer
laws and regulations also affect the operations of the banking subsidiaries. In
addition to the impact of regulation, the banking subsidiaries are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy.
The BHCA requires every bank holding company to obtain the prior approval
of the Federal Reserve Board before (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company would directly or indirectly own or
control more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of a bank; or (iii) it may merge or consolidate with any other bank
holding company.
The BHCA further provides that the Federal Reserve Board may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States,
3
<PAGE> 4
or the effect of which may be substantially to lessen competition or to tend to
create a monopoly in any section of the country, or that in any other manner
would be in restraint of trade, unless the anticompetitive effects of the
proposed transaction are clearly outweighed by the public interest in meeting
the convenience and needs of the community to be served. The Federal Reserve
Board is also required to consider the financial and managerial resources and
future prospects of the bank holding companies and banks concerned and the
convenience and needs of the community to be served. Consideration of financial
resources generally focuses on capital adequacy, and consideration of
convenience and needs issues includes the parties' performance under the
Community Reinvestment Act of 1977, as amended (the CRA), both of which are
discussed below.
The BHCA, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
Interstate Banking Act), which became effective on September 29, 1995, repealed
the prior statutory restrictions on interstate acquisitions of banks by bank
holding companies, such that the Corporation and any other bank holding company
located in Tennessee may now acquire a bank located in any other state, and a
bank holding company located outside Tennessee may lawfully acquire any
Tennessee-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage and other restrictions. The Interstate
Banking Act also generally provides that, after June 1, 1997, national and
state-chartered banks may branch interstate through acquisitions of banks in
other states. By adopting legislation prior to that date, a state has the
ability either to "opt in" and accelerate the date after which interstate
branching is permissible or to "opt out" and prohibit interstate branching
altogether. Tennessee has "opted in."
The BHCA generally prohibits the Corporation from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve Board to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. In determining whether a
particular activity is permissible, the Federal Reserve Board must consider
whether the performance of such an activity reasonably can be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency that outweigh possible adverse effects such
as undue concentration of resources, decreased or unfair competition, conflicts
of interest, or unsound banking practices. For example, factoring accounts
receivable, acquiring or servicing loans, leasing personal property, conducting
discount securities brokerage activities, performing certain data processing
services, acting as agent or broker in selling credit life insurance and certain
other types of insurance in connection with credit transactions, and performing
certain insurance underwriting activities have all been determined by the
Federal Reserve Board to be permissible activities of bank holding companies.
The BHCA does not place territorial limitations on permissible nonbanking
activities of bank holding companies. Despite prior approval, the Federal
Reserve Board has the power to order a bank holding company or its subsidiaries
to terminate any activity or to terminate its ownership or control of any
subsidiaries when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
CAPITAL
The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies. The minimum guideline for the ratio (Risk-Based Capital
Ratio) of total capital (Total Capital) to risk-weighted assets (including
certain off-balance-sheet activities such as standby letters of credit) is 8%.
At least half of the Total Capital must be composed of Tier 1 Capital, which
consists of common shareholders' equity, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock
and a limited amount of cumulative perpetual preferred stock, less goodwill and
excluding the unrealized gain or loss, net of taxes, on available for sale
securities. The remainder, which is "Tier 2 Capital," may consist of limited
amounts of subordinated debt (or certain other qualifying debt issued prior to
March 12, 1988), other preferred stock and a limited amount of loan loss
reserves.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio of Tier 1 Capital to average total assets less goodwill (the
Leverage Ratio) of 3% for bank holding companies that meet certain specified
criteria, including those having the highest regulatory rating. All other bank
holding companies generally are required to maintain a Leverage Ratio of at
least 3% (up to 5% in the case of institutions effecting acquisitions and other
activities resulting in expansion). The guidelines also provide that bank
holding companies experiencing internal growth or making acquisitions are
expected to maintain strong capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal
4
<PAGE> 5
Reserve Board has indicated that it will consider a "tangible Tier 1 Capital
Leverage Ratio" (deducting all intangibles) and other indicia of capital
strength in evaluating proposals for expansion or new activities. The Federal
Reserve Board has not advised the Corporation of any specific minimum Leverage
Ratio applicable to the Corporation.
The federal bank regulatory agencies maintain the Risk-Based Capital
guidelines for banks and bank holding companies under continuing review. Banks
are required to give explicit consideration to interest-rate risk as an element
of capital adequacy by maintaining capital to compensate for such risk in an
amount measured by the bank's exposure to interest-rate risk in excess of a
regulatory threshold. A proposal recently issued by the Federal Reserve Board
and joined in by the other bank regulatory agencies increases the amount of
capital required to be carried against certain long-term derivative contracts;
in addition, the proposal recognizes the effect of certain bilateral netting
arrangements in reducing potential future exposure under these contracts. The
Corporation's Management believes that these changes, if adopted, will not have
a material effect on the Corporation's compliance with capital adequacy
requirements.
Failure to meet regulatory capital requirements can subject an
institution to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, and a
prohibition on the taking of brokered deposits. As described below, substantial
additional restrictions can be imposed upon FDIC-insured institutions that fail
to meet applicable capital requirements. See "Prompt Corrective Action"
discussion below.
At December 31, 1996, the Corporation's Total Risk-Based Capital Ratio
was 18.32%; its Tier I Risk-Based Capital Ratio (i.e., its ratio of Tier I
Capital to risk-weighted assets) was 15.29%; and its Leverage Ratio was 9.61%.
In addition, each of the Corporation's banking subsidiaries satisfied the
minimum capital requirements applicable to it and had the requisite capital
levels to qualify as a "well-capitalized" institution under the prompt
corrective action provision discussed below.
Each of the Corporation's banking subsidiaries is subject to Risk-Based
and Leverage Capital Ratio requirements adopted by their respective federal
regulators which are substantially similar to those adopted by the Federal
Reserve Board. As of December 31, 1996, the Total and Tier I Risk-Based Capital
and Leverage Ratios of UPNB, the Corporation's largest bank subsidiary, were
12.26%, 11.01%, and 6.95%, respectively. Neither the Corporation nor any of the
banking subsidiaries has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA), and the joint regulations thereunder adopted by the federal banking
agencies, require the banking regulators to take prompt corrective action in
respect of depository institutions that do not meet their minimum capital
requirements. FDICIA establishes five capital tiers: "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized." Under capital regulations, a bank is defined
to be well capitalized if it maintains a Leverage Ratio of at least 5%, a Tier 1
Risk-Based Capital Ratio of at least 6% and a Total Risk-Based Capital Ratio of
at least 10% and is not otherwise in a "troubled condition" as determined by its
appropriate federal regulatory agency. A bank is defined to be adequately
capitalized if it meets all of its minimum capital requirements as described
under "Capital" above. In addition, a bank will be considered "undercapitalized"
if it fails to meet any minimum required measure, "significantly
undercapitalized" if it is significantly below such measure, and "critically
undercapitalized" if it fails to maintain a level of tangible equity equal to
not less than 2% of total assets. A bank may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfatory examination rating.
Regardless of their capital levels, all institutions are restricted from
making any capital distribution or paying any management fees that would cause
the institution to fail to satisfy the minimum levels required to be considered
adequately capitalized. An undercapitalized institution is: (i) subject to
increased monitoring by the appropriate federal banking regulator; (ii) required
to submit an acceptable capital restoration plan within 45 days; (iii) subject
to asset growth limits; and (iv) required to obtain prior regulatory approval
for acquisitions, branching, and new lines of business. Such capital restoration
plan must include a guarantee by the institution's holding company that the
institution will comply with the plan until it has been adequately capitalized
on average for four consecutive quarters. Pursuant to the guarantee, the
institution's holding company would be liable up to the lesser of 5% of the
institution's total assets or the amount necessary to bring the institution into
capital compliance as of the
5
<PAGE> 6
date it failed to comply with its capital restoration plan. If the controlling
bank holding company should fail to fulfill its obligations under the guarantee
and should file (or should have filed against it) a petition under the Federal
Bankruptcy Code, the appropriate federal banking regulator could have a claim as
a general creditor of the bank holding company and, if the guarantee were deemed
to be a commitment to maintain capital under the Federal Bankruptcy Code, the
claim would be entitled to priority in such bankruptcy proceeding over
third-party creditors of the bank holding company.
The regulatory agencies have discretionary authority to reclassify
well-capitalized institutions as adequately capitalized or to impose on
adequately capitalized institutions requirements or actions specified for
undercapitalized institutions if the agency should determine after notice and an
opportunity for hearing that the institution is in an unsafe or unsound
condition or is engaging in an unsafe or unsound practice, which can consist of
the receipt of an unsatisfactory examination rating if the deficiencies cited
are not corrected. A significantly undercapitalized institution, as well as any
undercapitalized institution which should fail to submit an acceptable capital
restoration plan, may be subject to regulatory demands for recapitalization;
broader application of restrictions on transactions with affiliates; limitations
on interest rates paid on deposits, asset growth, and other activities; possible
replacement of directors and officers; and restrictions on capital distributions
by any bank holding company controlling the institution. Any persons controlling
the institution could not receive bonuses or increases in compensation without
prior regulatory approval and the institution is prohibited from making payments
of principal or interest on its subordinated debt. If an institution should
become critically undercapitalized, the institution would be subject to
conservatorship or receivership within 90 days unless periodic determinations
are made that forbearance from such action would better protect the deposit
insurance fund. Unless appropriate findings and certifications are made by the
appropriate federal bank regulatory agencies, a critically undercapitalized
institution must be placed in receivership if it should remain critically
undercapitalized on average during the calendar quarter beginning 270 days after
the date it became critically undercapitalized.
COMMUNITY REINVESTMENT
All of the Corporation's banking subsidiaries are subject to the
provisions of the CRA and the federal banking agencies' other implemented
regulations. Under the CRA, all financial institutions have a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of their entire communities, including low-to-moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA
requires the federal banking agencies, in connection with their examination of a
depository institution, to assess the institution's record in assessing and
meeting the credit needs of the community served by that institution, including
low-to-moderate income neighborhoods. The regulatory agency's assessment of the
institution's record is made available to the public. Further, such assessment
is required of any institution which has applied to: (i) charter a national
bank; (ii) obtain deposit insurance coverage for a newly chartered institution;
(iii) establish a new branch office that will accept deposits; (iv) relocate an
office; or (v) merge or consolidate with, or acquire the assets or assume the
liabilities of, a federally regulated financial institution. In the case of a
bank holding company applying for approval to acquire a bank or bank holding
company, the Federal Reserve Board will assess the records of each subsidiary
depository institution of the applicant bank holding company, and such records
may be the basis for denying the application. Based on their most recent CRA
compliance examinations, the Corporation's subsidiary banks and thrifts all
received at least a "satisfactory" CRA rating.
Since December 1993, the federal banking agencies had had under
consideration a revision of their CRA regulations in order to provide clearer
guidance to depository institutions on the nature and extent of their CRA
obligations and the methods by which those obligations would be assessed and
enforced. In response to widespread criticism of the December 1993 proposal, the
agencies on September 26, 1994, issued a revised proposal which was adopted
substantially as proposed on April 17, 1995. Under these new CRA regulations,
which are now effective, the earlier process-based CRA assessment factors were
replaced with a new evaluation system which would rate institutions based on
their actual performance in meeting community credit needs. The evaluation
system used to judge an institution's CRA performance consists of three tests: a
lending test; an investment test; and a service test. Each of these tests will
be applied by the institution's federal regulator in an assessment context that
would take into account such factors as: (i) demographic data pertaining to the
community, (ii) the institution's capacity and constraints, (iii) the
institution's product offerings and business strategy, and (iv) data on the
prior
6
<PAGE> 7
performance of the institution and similarly situated lenders. The new lending
test -- the most important of the three tests for all institutions other than
wholesale and limited purpose (e.g., credit card) banks -- will be used to
evaluate an institution's lending activities as measured by its home-mortgage
loans, small business and farm loans, community-development loans and, at the
option of the institution, its consumer loans. The institution's regulator will
weigh each of these lending categories to reflect their relative importance to
the institution's overall business and, in the case of community development
loans, the characteristics and needs of the institution's service area and the
opportunities available for this type of lending. Assessment criteria for the
lending test will include: (i) geographical distribution of the institution's
lending; (ii) distribution of the institution's home mortgage and consumer loans
among different economic segments of the community; (iii) the number and amount
of small business and small farm loans made by the institution; (iv) the number
and amount of community-development loans outstanding; and (v) the institution's
use of innovative or flexible lending practices to meet the needs of
low-to-moderate income individuals and neighborhoods. At the election of an
institution or if particular circumstances so warrant, the banking agencies will
take into account in making their assessments lending by the institution's
affiliates as well as community-development loans made by the lending consortia
and other lenders in which the institution has invested. As part of the new
regulation, all financial institutions will be required to report data on their
small business and small farm loans as well as their home mortgage loans, which
are currently required to be reported under the Home Mortgage Disclosure Act.
The focus of the investment test will be the degree to which the
institution is helping to meet the needs of its service area through qualified
investments that (i) benefit low-to-moderate income individuals and small
businesses or farms, (ii) address affordable housing needs, or (iii) involve
donations of branch offices to minority or women's depository institutions.
Assessment of an institution's performance under the investment test will be
based upon the dollar amount of the institution's qualified investments, its use
of innovative or complex techniques to support community-development
initiatives, and its responsiveness to credit and community-development needs.
The service test will evaluate an institution's systems for delivering retail
banking services, taking into account such factors as (i) the geographical
distribution of the institution's branch offices and ATMs, (ii) the
institution's record of opening and closing branch offices and ATMs, and (iii)
the availability of alternate product-delivery systems such as home banking and
loan production offices in low-to-moderate income areas. The federal regulators
will also consider an institution's community-development service as part of the
service test. A separate community-development test will be applied to wholesale
or limited purpose financial institutions.
Smaller institutions, i.e, those having total assets of less than $250
million, will be evaluated under more streamlined criteria. In addition, a
financial institution will have the option of having its CRA performance
evaluated based on a strategic plan of up to five years in length that is
developed in cooperation with local community groups. In order to be rated under
a strategic plan, the institution will be required to obtain the prior approval
of its federal regulator.
The joint agency CRA regulation provides that an institution evaluated
under a given test will receive one of five ratings for that test: outstanding,
high satisfactory, low satisfactory, needs to improve, or substantial
noncompliance. An institution will then receive a certain number of points for
its rating on each test and the points will be combined to produce an overall
composite rating of either outstanding, satisfactory, needs to improve, or
substantial non-compliance. Under the agencies' rating guidelines, an
institution that receives an "outstanding" rating on the lending test will
receive a rating of at least "satisfactory", and no institution can receive an
overall rating of "satisfactory" unless it receives a rating of at least "low
satisfactory" on its lending test. In addition, evidence of discriminatory or
other illegal credit practices would adversely affect an institution's overall
rating. Under the new regulations, an institution's CRA rating would continue to
be taken into account by its regulator in considering various types of
applications.
DIVIDEND RESTRICTIONS
The Corporation is a legal entity separate and distinct from its banking
subsidiaries and its nonbanking subsidiaries. The Corporation's revenues (on a
parent company only basis) result, in significant part, from dividends paid to
the Corporation by its subsidiaries. The right of the Corporation, and
consequently the rights of creditors and shareholders of the Corporation, to
participate in any distribution of the assets or earnings of any subsidiary
through the payment of such dividends or otherwise is necessarily subject to the
prior claims of creditors of the subsidiary (including depositors, in the case
of banking subsidiaries) except to the extent that claims of the Corporation in
its capacity as a creditor may be recognized.
7
<PAGE> 8
There are statutory and regulatory requirements applicable to the payment
of dividends to the Corporation by its banking subsidiaries. Each national
banking association subsidiary of the Corporation is required by federal law to
obtain the prior approval of the Comptroller for the declaration of dividends if
the total of all dividends to be declared by the board of directors of such bank
in any year would exceed the total of (i) such bank's net profits (as defined
and interpreted by regulation) for that year, plus (ii) the retained net profits
(as defined and interpreted by regulation) for the preceding two years, less any
required transfers to surplus. In addition, national banks may only pay
dividends to the extent that their retained net profits (including the portion
transferred to surplus) exceed statutory bad debts (as defined by regulation).
The Corporation's state-chartered banking subsidiaries are subject to similar
restrictions on the payment of dividends by the respective state laws under
which they are organized. Furthermore, as described above under "Prompt
Corrective Action," all depository institutions are prohibited from paying any
dividends, making other distributions, or paying any management fees if, after
such payment, the depository institution would fail to satisfy its minimum
capital requirements. In accordance with the specified calculations, at January
1, 1997, approximately $86.0 million was available for distribution to the
Corporation without obtaining prior regulatory approval. Future dividends will
depend upon the level of earnings of the banking subsidiaries of the
Corporation. It is the policy of the Federal Reserve Board that bank holding
companies should pay dividends only out of current earnings. Federal banking
regulators also have the authority to prohibit banks and bank holding companies
from paying a dividend if they should deem such payment to be an unsafe or
unsound practice.
SUPPORT OF BANKING SUBSIDIARIES
Under Federal Reserve Board policy, the Corporation is expected to act as
a source of financial strength to its banking subsidiaries and, where required,
to commit resources to support each of such subsidiaries. This support may be
required at times when, absent such Federal Reserve Board policy, the
Corporation may not be inclined to provide it. Moreover, if one of its banking
subsidiaries should become undercapitalized, under FDICIA the Corporation would
be required to guarantee the subsidiary bank's compliance with its capital plan
in order for such plan to be accepted by the federal regulatory authority. See
discussion under "Prompt Corrective Action" above.
Under the "cross guarantee" provisions of the Federal Deposit Insurance
Act (the FDI Act), any FDIC-insured subsidiary of the Corporation may be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC in connection with (i) the "default" of any other commonly controlled
FDIC-insured subsidiary or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured subsidiary "in danger of default." "Default" is
defined generally as the appointment of a conservator or receiver and "in danger
of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance.
Because it is a bank holding company, any capital loans made by the
Corporation to its banking subsidiaries are subordinate in right of payment to
deposits and to certain other indebtedness of such subsidiary bank. In the
event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of
a banking subsidiary will be assumed by the bankruptcy trustee and entitled to
a priority of payment over certain other creditors of the bank holding company,
including the holders of its subordinated debt.
TRANSACTIONS WITH AFFILIATES
Provisions of the Federal Reserve Act impose restrictions on the type,
amount and quality of transactions between "affiliates" (as defined below) of an
insured bank and the insured bank (including a bank holding company and its
nonbank subsidiaries). The purpose of these restrictions is to prevent misuse of
the resources of the insured institution by its uninsured affiliates. An
exception to most of these restrictions is provided for transactions between two
insured banks that are within the same holding company where the holding company
owns 80% or more of each of these banks (the sister bank exception). The
restrictions also do not apply to transactions between an insured bank and its
wholly owned subsidiaries. These restrictions include limitations on the
purchase and sale of assets and extensions of credit by the insured bank to its
holding company or its nonbank subsidiaries. An insured bank and its
subsidiaries are limited in engaging in "covered transactions" with their
nonbank or nonsavings-bank affiliates to the following amounts: (i) in the case
of any one such affiliate, the aggregate amount of covered transactions of the
insured bank and its subsidiaries may not exceed 10% of the capital stock and
surplus of the insured bank and (ii) in the case of all affiliates, the
aggregate amount of covered transactions of the insured bank and its
subsidiaries may not exceed 20% of the capital
8
<PAGE> 9
stock and surplus of the bank. "Covered transactions" are defined by statute to
include loans or other extensions of credit as well as purchases of securities
issued by an affiliate, purchases of assets (unless otherwise exempted by the
Federal Reserve Board), the acceptance of securities issued by the affiliate as
collateral for a loan and the issuance of a guarantee, acceptance or letter of
credit on behalf of an affiliate. Further, provisions of the BHCA, as amended,
prohibit a bank holding company and its subsidiaries from engaging in certain
tie-in arrangements in connection with any extension of credit, lease or sale of
property or furnishing of services. As used herein, "affiliate" means generally
any company that controls the insured bank, a company which is under common
control with the insured bank and a subsidiary of the insured bank.
FDIC DEPOSIT INSURANCE
Currently, certain deposits of financial institutions are separately
insured under two deposit-insurance funds, both administered by the FDIC. They
are the Bank Insurance Fund (the BIF) for deposits originated by banks and the
Savings Association Insurance Fund (the SAIF) for deposits originated by savings
associations. The targeted designated reserve ratio (DRR), i.e, the ratio of the
net worth of each of the two funds to the aggregate amount of deposits insured
by it, is 1.25%. Significant claims made against the two funds, especially the
SAIF, have been paid over recent years due to failures of banks and savings
associations. Through deposit-insurance assessments made by the FDIC, the BIF's
DRR was restored to 1.25% of insured deposits in 1995; however, at September 30,
1996, approximately $4.5 billion was required to restore the SAIF's DRR to that
level. On that date the Deposit Insurance Funds Act of 1996 (the Funds Act)
became law. The Funds Act required the FDIC to impose a one-time assessment on
SAIF-assessable deposits (including 80% of those which had been acquired by
banks, i.e., so-called "Oakar" Deposits) sufficient to capitalize the SAIF at
its targeted DRR of 1.25%. In response, the FDIC imposed an assessment of 65.7
basis points ($6.57 per $1,000) on SAIF-assessable deposits deemed to have been
held as of March 31, 1995. Since certain of its banking subsidiaries held
SAIF-assessable (including "Oakar") deposits, the Corporation incurred a
SAIF-assessment expense of $22.3 million at September 30, 1996. Since the
recapitalization of both the BIF and SAIF has increased their DRR's to 1.25% and
since financial institution failures have dramatically decreased, in the near
future financial institutions, including the Corporation, are expected to have
significantly lower deposit insurance assessments than have been imposed in the
recent past. Moreover, the FDIC establishes deposit insurance assessment rates
based primarily upon an institution's risk to the deposit insurance funds such
that the Corporation's banking subsidiaries, all of which are deemed to be "well
capitalized" for regulatory purposes, should enjoy favorable rates in the event
that further assessments should be necessary.
Under the Funds Act, the BIF and the SAIF would be merged on the date as
of which the last savings association shall cease to exist. The SAIF was
initially funded by issuance of Financing Corporation bonds (the FICO Bonds).
The Funds Act provides that 20% of the interest payable on the FICO Bonds shall
be assessed against BIF-assessable deposits and the remaining 80% against
SAIF-assessable deposits prior to the merger of the BIF and SAIF to form the
Deposit Insurance Fund (the DIF). After the merger, DIF-assessable deposits
would be assessed for 100% of the FICO Bond interest, since the separate
existence of the BIF and SAIF would have ceased.
BROKERED DEPOSITS
The FDIC has adopted regulations governing the receipt of brokered
deposits. Under the regulations, a bank may not lawfully accept, roll over or
renew brokered deposits unless (i) it is well capitalized or (ii) it is
adequately capitalized and receives a waiver from the FDIC. A bank that may not
receive brokered deposits also may not offer "pass-through" insurance on certain
employee benefit accounts. Whether or not it has obtained such a waiver, an
adequately capitalized bank may not pay an interest rate on any deposits in
excess of 75 basis points over certain prevailing market rates specified by
regulation. There are no such restrictions on a bank that is well capitalized.
Because the Corporation's banking subsidiaries at December 31, 1996, had the
requisite capital levels to qualify as well capitalized institutions, the
Corporation believes the brokered deposits regulation will have no material
effect on the funding or liquidity of any of its banking subsidiaries.
SAFETY AND SOUNDNESS STANDARDS
The FDI Act, as amended by the FDICIA and the Riegle Community
Development and Regulatory Improvement Act of 1994, requires the federal bank
regulatory agencies to prescribe standards, by regulations or guidelines,
relating to the internal controls, information systems and internal audit
systems, loan documentation, credit underwriting, interest-rate-risk exposure,
asset growth, asset quality, earnings, stock valuation and compensation, fees
and benefits and such other operational and managerial standards as the agencies
may deem appropriate. The federal
9
<PAGE> 10
bank regulatory agencies adopted, effective August 9, 1995, a set of guidelines
prescribing safety and soundness standards pursuant to FDICIA, as amended. The
guidelines establish general standards relating to internal controls and
information systems, internal audit systems, loan documentation, credit
underwriting, interest-rate exposure, asset growth and compensation, fees and
benefits. In general, the guidelines require, among other things, appropriate
systems and practices to identify and manage the risks and exposures specified
in the guidelines. The guidelines prohibit excessive compensation as an unsafe
and unsound practice and describe compensation as excessive when the amounts
paid are unreasonable or disproportionate to the services performed by an
executive officer, employee, director, or principal stockholder. The federal
banking agencies determined that stock valuation standards were not appropriate.
In addition, the agencies adopted regulations that authorize, but do not
require, an agency to order an institution that has been given notice by an
agency that it is not satisfying any one or more of such safety and soundness
standards to submit a compliance plan. If, after being so notified, an
institution should fail to submit an acceptable compliance plan or should fail
in any material respect to implement an accepted compliance plan, the agency
must issue an order directing action to correct the deficiency and may issue an
order di recting other actions of the types to which an undercapitalized
association is subject under the "prompt correction action" provisions of
FDICIA. See "Prompt Corrective Action" above. If an institution should fail to
comply with such an order, the agency may seek to enforce such order in judicial
proceedings and to impose civil money penalties. The federal bank regulatory
agencies also proposed guidelines for asset quality earning standards.
DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide
depositor-preference rule in the event of a bank failure. Under this arrangement
all deposits and certain other claims against a bank, including the claim of the
FDIC as subrogee of insured depositors, would receive payment in full before any
general creditor of the bank, including the holders of its subordinated debt
securities, would be entitled to any payment in the event of an insolvency or
liquidation of the bank.
PROPOSED LEGISLATION
Because of concerns relating to the competitiveness and the safety and
soundness of the industry, the Congress continues to consider a number of
wide-ranging proposals for altering the structure, regulation, and competitive
relationships of the nation's financial institutions. Among such bills are
proposals to combine banks and thrifts into a unified charter, to alter the
statutory separation of commercial and investment banking, and to further expand
the powers of depository institutions, bank holding companies, and competitors
of depository institutions. It cannot be predicted whether, or in what form,
any of these proposals will be adopted or the extent to which the business of
the Corporation may be affected thereby.
PERSONNEL
As of February 28, 1997, the Corporation, including all subsidiaries,
had 5,236 employees (including 1,259 part-time employees).
10
<PAGE> 11
Statistical Disclosures
The statistical information required by Item 1 may be found in the 1996
Annual Report to Shareholders (Exhibit 13 hereto) which, to the extent
indicated, is hereby incorporated herein by reference, as follows:
<TABLE>
<CAPTION>
Page in the Corporation's
1996 Annual Report to
Guide 3 Disclosure Shareholders*
------------------ -------------
<S> <C>
I. Distribution of Assets, Liabilities, and
Shareholders' Equity; Interest Rates and Interest Differential
A. Average Balance Sheet 26
B. Net Interest Earnings Analysis 26
C. Rate/Volume Analysis 27
II. Investment Portfolio
A. Book Value of Investment Securities 31, 46, 47, and 48
B. Maturities of Investment Securities 48
C. Investment Securities Concentrations Not applicable
III. Loan Portfolio
A. Types of Loans 28 and 49
B. Maturities and Sensitivity of
Loans to Changes in Interest Rates Follows this table
C. Risk Elements
1. Nonaccrual, Past Due 90 Days
or More, and Restructured Loans 28 and 29
2. Potential Problem Loans 17
3. Foreign Outstandings Not significant
4. Loan Concentrations 16
D. Other Interest-Bearing Assets Not significant
IV. Summary of Loan Loss Experience
A. Analysis of Allowance for Loan Losses 29
B. Allocation of the Allowance for Loan Losses 28
V. Deposits
A. Average Balances 26 and 27
B. Maturities of Large Denomination
Certificates of Deposit Follows this table
C. Foreign Deposit Liability Disclosure Not significant
VI. Return on Equity and Assets
A. Return on Assets 4
B. Return on Equity 4
C. Dividend Payout Ratio 4
D. Equity to Assets Ratio 4
VII. Short-Term Borrowings 51
</TABLE>
*Unless otherwise noted
11
<PAGE> 12
The following table presents the maturities and sensitivities of the
Corporation's loans to changes in interest rates at December 31, 1996:
<TABLE>
<CAPTION>
Due Due After One Due After
Within But Within Five
One Year Five Years Years
---------- --------------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
Commercial, Financial, and Agricultural $ 926,700 $481,386 $129,449
Real Estate - Construction 351,349 70,253 25,344
---------- -------- --------
Total $1,278,049 $551,639 $154,793
========== ======== ========
Fixed Rate $416,613 $102,579
======== ========
Variable Rate $135,026 $ 52,214
======== ========
</TABLE>
The following table presents maturities of certificates of deposit of $100,000
and over and other time deposits of $100,000 and over:
<TABLE>
<CAPTION>
December 31, 1996
-------------------
(Dollars in thousands)
<S> <C>
Under 3 Months $ 409,874
3 to 6 Months 249,995
6 to 12 Months 261,412
Over 12 Months 235,997
----------
Total $1,157,278
==========
</TABLE>
12
<PAGE> 13
Item 1a. Executive Officers of the Registrant
The following lists the executive officers of the Corporation.
Information regarding the executive officers, their present positions held
with the Corporation and its subsidiaries, their ages, and their principal
occupations for the last five years are as follows:
<TABLE>
<CAPTION>
Position of Executive Officers
Name with the Corporation and UPNB Age
<S> <C> <C>
Benjamin W. Rawlins, Jr. Chairman of the Board and 59
Chief Executive Officer of the Corporation;
Vice Chairman and
Chief Executive Officer of UPNB
Jackson W. Moore President and Chief Operating Officer 48
of the Corporation
Jack W. Parker Executive Vice President and 50
Chief Financial Officer of the Corporation;
Executive Vice President and
Chief Financial Officer of UPNB
M. Kirk Walters Senior Vice President, Treasurer, and 56
Chief Accounting Officer of the Corporation;
Senior Vice President of UPNB
James A. Gurley Executive Vice President of the Corporation; 63
Executive Vice President of UPNB
</TABLE>
Mr. Rawlins has been Chairman of the Board of the Corporation since April 1989,
and Chairman of the Board of UPNB from January 1986 until December 1996 when he
was elected Vice Chairman. He has also served as Chief Executive Officer of the
Corporation and UPNB since September 1984. Mr. Rawlins was President of the
Corporation from September 1984 until he was elected Chairman.
Mr. Moore has been President of the Corporation since April 1989. In April 1994,
Mr. Moore was elected Chief Operating Officer of the Corporation. He is also
Chairman of PSB Bancshares, Inc., and is a Vice President and Director of its
subsidiary, The Peoples Savings Bank (not an affiliate bank of the Corporation),
located in Clanton, Alabama. He has served on the Boards of the Corporation and
UPNB since 1986.
Mr. Parker has been Executive Vice President and Chief Financial Officer of the
Corporation and UPNB since March 1990. From 1987 until being elected to these
positions with the Corporation, he was an Executive Vice President of UPNB and
President of the Mortgage Banking Group of UPNB.
Mr. Walters was elected Senior Vice President of the Corporation in November
1990 and has been Chief Accounting Officer since February 1990. He has been
Treasurer of the Corporation since 1985. He was a Vice President of the
Corporation from 1975 until he was elected to his current position. Mr. Walters
has been an officer of UPNB for more than twenty years and is currently a Senior
Vice President.
Mr. Gurley was elected Executive Vice President of the Corporation in November
1990. He was a Vice President of the Corporation from 1980 until he was elected
Executive Vice President. He has been an officer of UPNB for more than twenty
years and is currently an Executive Vice President.
Item 2. Properties
The Corporation's corporate headquarters are located in the company-owned
Union Planters Administrative Center at 7130 Goodlett Farms Parkway, Memphis,
Tennessee, a two-building complex located near the center of Shelby County. In
addition to being the corporate headquarters, it contains approximately 250,000
square feet of space and houses BankCards, Mortgage Servicing and Origination,
Funds Management, Data Processing, Operations, Human Resources, Financial,
Legal, Credit and Review, Marketing, and Alternative Investments and Insurance
Products. A 126,000-square-foot addition is being made to the Administrative
Center to accommodate the growth related to the recent acquisitions, primarily
the Leader Financial Corporation (Leader) acquisition. The
13
<PAGE> 14
total estimated cost of this addition, including site improvements, is $12.3
million. Certain space occupied previously by Leader will be vacated and its
occupants will be moved to the new building which is expected to be more
efficient than the existing space. Savings are expected from this move but the
amount thereof cannot be quantified at this time.
UPNB's headquarters is located in a 70,000 square-foot company-owned
building in East Memphis. In addition to its headquarters, the building also
houses UPNB's Commercial Group, Trust Group, Brokerage Services, and Retail
Group Administration.
As of March 1, 1997, the Corporation operated 198 banking offices in
Tennessee, 115 in Mississippi, 45 in Missouri, 42 in Arkansas, 16 in Louisiana,
17 in Alabama, and 5 locations in Kentucky. The majority of these locations are
owned. The subsidiaries also operate 544 twenty-four-hour automated teller
locations.
There are no material encumbrances on any of the company-owned
properties.
Item 3. Legal Proceedings
The Corporation and/or various subsidiaries are parties to various
pending civil actions, all of which are being defended vigorously. Additionally,
the Corporation and/or its subsidiaries are parties to various legal
proceedings that have arisen in the ordinary course of business. Management is
of the opinion, based upon present information including evaluations of outside
counsel, 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.
The Corporation's five banks located in Mississippi: Union Planters Bank of
Mississippi, Union Planters Bank of Southern Mississippi, Union Planters Bank of
Central Mississippi, Union Planters Bank of Northeast Mississippi,N.A., and
Union Planters Bank of Northwest Mississippi (UPC Banks) are defendants in
various suits related to the placement of collateral protection insurance(CPI)
by the UPC Banks in the 1980s and early 1990s. On September 28,1995 and October
18,1995, two purported class actions were filed in the U. S. District Court for
the Southern District of Mississippi. Both actions were consolidated and
identified Vivian McCaskill as the representative of a class of persons who
financed personal property through the UPC Banks and were force placed with
Prudential Property and Casualty Insurance Company's (Prudential) collateral
protection insurance. The consolidated action names as defendants the UPC Banks,
Prudential, National Underwriters of Delaware, Inc., and several Ross & Yerger
entities and includes allegations that premiums were excessive and improperly
calculated; coverages were improper and not disclosed; and improper payments
were paid to the UPC Banks by the insurance companies, allegedly constituting
violations of various state and federal laws and the common law. The relief
sought in the purported class actions includes actual damages, treble damages
under certain statutes, other statutory damages, and unspecified punitive
damages. The CPI programs appear to have been substantially similar in many
respects to CPI programs of other Mississippi banks, often with the same
insurance companies. Consequently, there are at least twelve similar putative
class actions pending against numerous Mississippi banks (including those
against the UPC Banks), various insurance agencies and companies arising from
their CPI programs. Nine individual actions filed in state and federal courts
against the UPC Banks, with similar allegations, and seeking compensatory and
punitive damages, are pendi ng. Other subsidiaries of the Corporation are
involved in similar litigation relating to CPI on mobile home loans to Alabama
borrowers. On June 8,1995, a suit was filed in Greene County, Alabama, by Jeri
Lynn Plowman and other individuals against American Bankers Insurance Company of
Florida, Inc., Leader Federal Savings and Loan Association of Memphis and
seventeen other defendants requesting $200 million in punitive damages against
each defendant (Plowman). On June 14, 1995, a counterclaim to a foreclosure suit
was filed by the defendants in Leader Federal Bank v. Brown, et al (Brown) in
the Circuit Court of Tuscaloosa County, Alabama, demanding judgment for
compensatory damages and punitive damages of $10 million for alleged wrongdoing
with respect to the CPI related to the defendant's loan. An agreement to settle
Plowman and Brown was reached, and approval of the Circuit Court of Tuscaloosa
County, Alabama, obtained (certifying as a class all Alabama residents whose
mobile home loans were originated or assigned to Leader Federal and were charged
for CPI from January 1, 1986 through October 1, 1996), in the fourth quarter of
1996, within amounts previously established. In January 1996, two individual
suits were filed by Queen Ford (who was excepted from the class described above)
in the Circuit Court of Greene, County Alabama, against Leader Federal Bank for
Savings, a subsidiary, and an unrelated insurance company alleging wrongful
placement of insurance on plaintiff's mobile home. One such case demands
compensatory damages of $5,000 and punitive damages of $20 million, while the
other seeks $10,000 in compensatory damages and $50 million in punitive damages.
These suits remain pending.
14
<PAGE> 15
In July 1991, UPNB was joined with nine other banks( including Leader
Federal) as defendants in a civil action in the Circuit Court of Shelby County,
Tennessee, which, as ultimately amended, alleged that the banks unlawfully
conspired to fix the charges for checks drawn on insufficient funds and sought
recovery for fees charged for deposited third-party checks which were returned
uncollected. In March 1992, the state court proceeding was dismissed, which
dismissal the Tennessee Court of Appeals affirmed. In 1995, the Tennessee
Supreme Court reversed its earlier decision declining to review the state court
action and agreed to hear plaintiffs' appeal. During the first quarter of 1997,
the Tennessee Supreme Court denied plaintiff's petition and petition to rehear,
thus terminating this action. A related federal court action was terminated
during the first quarter of 1996.
Part II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required by Item 5 is included in Table 14 captioned
"Selected Quarterly Data" included in the Corporation's 1996 Annual Report to
Shareholders on pages 32 and 33, which information is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is included under the heading
"Selected Financial Data" in the Corporation's 1996 Annual Report to
Shareholders on page 4, which information is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by Item 7 is included under the heading
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" in the Corporation's 1996 Annual Report to Shareholders on pages 5 -
35, which information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is included in the Corporation's 1996
Annual Report to Shareholders on pages 36 - 67, and in Table 14 captioned
"Selected Quarterly Data" on pages 32 and 33, which pages are incorporated
herein by reference.
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 as to the directors of the
Corporation is included under the heading "Proposal I: Election of Directors" on
pages 1 - 5 and under the heading "Director Compensation" on page 6 of the
definitive proxy statement of the Corporation to be used in soliciting proxies
for the Annual Meeting of shareholders to be held on April 17, 1997 ("Proxy
Statement"), which information is incorporated herein by reference.
The information concerning "Executive Officers of the Registrant" is
included in Part I (Item 1a) of this Form 10-K in accordance with Instruction 3
to paragraph (b) of Item 401 of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 as to compensation of directors and
executive officers is included under the heading "Proposal I: Election of
Directors" on pages 1 - 5 and under the heading "Certain Information as to
Management" on pages 12 - 20 of the Proxy Statement, which information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 as to certain beneficial owners and
management is included under the heading "Proposal I: Election of Directors" on
pages 1 - 5 of the Proxy Statement, which information is incorporated herein by
reference.
15
<PAGE> 16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 as to transactions and relationships
with certain directors and executive officers of the Corporation and their
associates is included under the heading "Certain Relationships and
Transactions" on page 20 of the Proxy Statement, which information is
incorporated herein by reference.
16
<PAGE> 17
Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following audited consolidated financial statements of Union
Planters Corporation and Subsidiaries, included in the Corporation's
1996 Annual Report to Shareholders, are incorporated herein by
reference in response to Part II, Item 8:
<TABLE>
<CAPTION>
Page in
Annual Report
<S> <C>
Report of Management 36
Report of Independent Accountants 37
Consolidated Balance Sheet - December 31, 1996 and 1995 38
Consolidated Statement of Earnings -
Years ended December 31, 1996, 1995, and 1994 39
Consolidated Statement of Changes in Shareholders' Equity -
Years ended December 31, 1996, 1995, and 1994 40
Consolidated Statement of Cash Flows -
Years ended December 31, 1996, 1995, and 1994 41
Notes to Consolidated Financial Statements 42
</TABLE>
(a)(2) All schedules have been omitted, since the required information is
either not applicable, not deemed material, or is included in the
respective consolidated financial statements or in the notes thereto.
(a)(3) Exhibits:
The exhibits listed in the Exhibit Index on pages i and ii, following
page 18 of this Form 10-K are filed herewith or are incorporated herein
by reference.
(b) Reports on Form 8-K:
Date of Current Report Subject
---------------------- -------------------------------------
October 7, 1996 Announcing consummation of Leader
Financial Corporation acquisition and
completion of three other acquisitions
October 17, 1996 Press Release announcing Third Quarter
1996
January 16, 1997 Press Release announcing Fourth Quarter
1996 and annual operating results
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
UNION PLANTERS CORPORATION
(Registrant)
By: /s/ Benjamin W. Rawlins, Jr.
----------------------------------------------------
Benjamin W. Rawlins, Jr., Chairman of the Board and
Chief Executive Officer
Date March 6, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 6th day of March, 1997.
/s/ Benjamin W. Rawlins, Jr. /s/ Jack W. Parker
- -------------------------------------- ------------------------------
Benjamin W. Rawlins, Jr. Jack W. Parker
Chairman of the Board, Executive Vice President and
Chief Executive Officer, Chief Financial Officer
and Director
/s/ Jackson W. Moore /s/ M. Kirk Wallers
- -------------------------------------- ------------------------------
Jackson W. Moore M. Kirk Walters
President, Chief Operating Officer, Senior Vice President,
and Director Treasurer and
Chief Accounting Officer
/s/ Stanley D. Overton
- -------------------------------------- -------------------------------
Albert M. Austin Stanley D. Overton
Director Director
/s/ Edgar H. Bailey /s/ Dr. V. Lane Rawlins
- -------------------------------------- -------------------------------
Edgar H. Bailey Dr. V. Lane Rawlins
Vice Chairman of the Board and Director Director
/s/ Donald F. Schuppe
- -------------------------------------- -------------------------------
Marvin E. Bruce Donald F. Schuppe
Director Director
/s/ George W. Bryan
- -------------------------------------- -------------------------------
George W. Bryan Mike P. Sturdivant
Director Director
/s/ Robert B. Colbert, Jr. /s/ Richard A. Trippeer, Jr.
- -------------------------------------- -------------------------------
Robert B. Colbert, Jr. Richard A. Trippeer, Jr.
Director Director
/s/ James E. Harwood /s/ Spence L. Wilson
- -------------------------------------- -------------------------------
James E. Harwood Spence L. Wilson
Director Director
/s/ Parnell S. Lewis, Jr.
- -------------------------------------- -------------------------------
Parnell S. Lewis, Jr. Milton J. Womack
Director Director
/s/ C.J. Lowrance III
- --------------------------------------
C.J. Lowrance III
Director
18
<PAGE> 19
Exhibit Index
3(a) Restated Charter of Incorporation, as most recently amended on February
20, 1997, of Union Planters Corporation (filed herewith)
3(b) Amended and Restated Bylaws, as most recently amended on February 20,
1997, of Union Planters Corporation (filed herewith)
4(a) Rights Agreement, dated January 19, 1989 between Union Planters
Corporation and Union Planters National Bank, including Form of Rights
Certificate (Exhibit A), and a Form Summary of Rights (Exhibit B)
(incorporated by reference to Exhibit 1 to Union Planters Corporation's
Registration Statement on Form 8-A dated as of January 19, 1989 and on
Form 8-K filed February 1, 1989, Commission File No. 0-6919)
4(b) Indenture dated as of October 1, 1992 between Union Planters Corporation
and The First National Bank of Chicago (Trustee) for $40,250,000 of 8
1/2% Subordinated Notes due 2002 (2)
4(c) Subordinated Indenture dated as of October 15, 1993 between the
Corporation and The First National Bank of Chicago as Trustee (3)
4(d) Form of Subordinated Debt Security (6.25% Subordinated Notes due 2003)
(4)
4(e) Form of Subordinated Debt Security (6 3/4% Subordinated Notes due 2005)
(5)
4(f) All instruments defining the rights of the holders of the
"Corporation-obligated Mandatorily Redeemable Capital Pass-through
Securities of Subsidiary Trust holding solely a Corporation Guaranteed
Related Subordinated Note issued by Union Planters Corporation,"
including the Indenture dated as of December 12, 1996, the First
Supplemental Indenture, the Amended and Restated Declaration of Trust,
the Capital Securities Guarantee Agreement and the Global Securities
representing the interests of such holders, which instruments are not
being filed herewith in reliance upon Item 601(b)(4)(iii)(A) of
Regulation S-K and the related AGREEMENT PURSUANT TO ITEM
601(b)(4)(iii)(A) OF REGULATION S-K dated March 16, 1997 of Union
Planters Corporation filed with the Commission, a copy of which is
Exhibit 4(g) hereto
4(g) Copy of Registrant's AGREEMENT PURSUANT TO ITEM 601(b)(4)(iii)(A) OF
REGULATION S-K dated March 16, 1997 (filed herewith)
10(a) Employment Agreement between Union Planters Corporation and Benjamin W.
Rawlins, Jr., dated December 21, 1989 (incorporated by reference to
Exhibit 10(a) to the Annual Report on Form 10-K dated December 31, 1992,
Commission File No. 0-6919)
10(b) Employment Agreement between Union Planters Corporation and Jackson W.
Moore dated December 21, 1989 (incorporated by reference to Exhibit 10(c)
to the Annual Report on Form 10-K dated December 31, 1992, Commission
File No. 0-6919)
10(c) Deferred Compensation Agreements between Union Planters Corporation and
certain highly compensated officers (specimen copy) (incorporated by
reference to Exhibit 10(g) to the Annual Report on Form 10-K dated
December 31, 1989, filed on March 26, 1990, Commission File No. 0-6919)
10(d) Union Planters Corporation 1983 Stock Incentive Plan as amended January
18, 1990 and approved by shareholders on April 20, 1990 (1)
10(e) Union Planters Corporation 1992 Stock Incentive Plan (incorporated by
reference to Exhibit 10(g) to the Annual Report on Form 10-K dated
December 31, 1992 filed on March 26, 1993, (Commission File No. 0-6919)
10(f) Deferred Compensation Agreements between Union Planters Corporation and
Union Planters National Bank and certain outside directors (incorporated
by reference to Exhibit 10(m) to the Annual Report on Form 10-K dated
December 31, 1989 filed on March 26, 1990, Commission File No. 0-6919)
i
<PAGE> 20
Exhibit Index (continued)
10(g) Executive Deferred Compensation Agreement between Union Planters
Corporation and certain highly compensated officers (incorporated by
reference to Exhibit 10(n) to the Annual Report on Form 10-K dated
December 31, 1989 filed on March 26, 1990, Commission File No. 0-6919)
10(h) Union Planters Corporation Supplemental Executive Retirement Plan for
Executive Officers (incorporated by reference to Exhibit 10 to the
Quarterly Report on Form 10-Q dated March 31, 1995, Commission File No.
1-10160)
10(i) Union Planters Corporation Executive Deferred Compensation Plan for
Executives dated February 23, 1996 (incorporated by reference to Exhibit
10(j) to the Annual Report on Form 10-K dated December 31, 1995 filed on
March 19, 1996, Commission File No. 1-10160)
10(j) Agreement and Plan of Merger, dated as of March 8, 1996, by and between
Union Planters Corporation and Leader Financial Corporation (incorporated
by reference to Exhibit 2.1 to Union Planters Corporation's Current
Report on Form 8-K dated March 8, 1996, filed on March 13, 1996,
Commission File No. 1-10160)
10(k) Stock Option Agreement, dated March 9, 1996, issued by Leader Financial
Corporation to Union Planters Corporation (incorporated by reference to
Exhibit 2.2 to Union Planters Corporation's Current Report on Form 8-K
dated March 8, 1996, filed on March 13, 1996, Commission File No.
1-10160)
11 Computation of Per Share Earnings (filed herewith)
13 1996 Annual Report to Security Holders (filed herewith)
21 Subsidiaries of the Registrant (filed herewith)
23 Consent of Price Waterhouse LLP (filed herewith)
27 Financial Data Schedule (for SEC use only) (filed herewith)
____________________
(1) Incorporated by reference to Exhibit 4(a) filed as part of Registration
Statement No. 33-35928, filed July 23, 1990
(2) Incorporated by reference to Exhibit 4 filed as part of Registration
Statement No. 33-52434, filed October 19, 1992
(3) Incorporated by reference to Exhibit 4(a) filed as part of Registration
Statement No. 33-50655, filed October 21, 1993
(4) Incorporated by reference to Exhibit 4(b) filed as part of Registration
Statement No. 33-50655, filed October 21, 1993
(5) Incorporated by reference to Exhibit 4(b) filed as part of Registration
Statement No. 33-63791, filed October 27, 1995
ii
<PAGE> 1
AMENDED AND RESTATED CHARTER
EXHIBIT 3(a)
OF
UNION PLANTERS CORPORATION
__________________________
FIRST: CORPORATE NAME:
The name of the Corporation is:
* * * UNION PLANTERS CORPORATION * * *
(hereinafter sometimes referred to as the "Corporation").
SECOND: DURATION:
The duration of the Corporation is perpetual.
THIRD: PRINCIPAL OFFICE:
The address of the principal office of the Corporation in the State of
Tennessee shall be 7130 Goodlett Farms Parkway, in the City of Cordova, County
of Shelby. The registered agent is E. James House, Jr., 7130 Goodlett Farms
Parkway, Cordova, Shelby County, Tennessee 38018.
FOURTH: TYPE OF CORPORATION:
The corporation is for profit.
FIFTH: CORPORATE PURPOSES:
Subject to any limitations which may be imposed upon its activities by
applicable law, the Corporation is formed to engage in any lawful act or
activity for which corporations may be organized under the Tennessee Business
Corporation Act. Specifically, but not by way of limitation, the Corporation is
formed for the following purposes:
(a) To acquire by purchase; by subscription; by exchange; in exchange for
its Common Stock, Preferred Stock, bonds, debentures or other obligations; or to
acquire in any other manner; or to organize de novo; and to take, receive, hold,
own, sell, assign, transfer, exchange, pledge, hypothecate, dispose of or
otherwise deal with any interest in any business whether or not represented by
shares of stock, shares, bonds, debentures, notes, participation certificates,
warrants, rights, options, and without limitation any securities or instruments
evidencing rights or options to receive, purchase or subscribe for any interest
in any business (wherever located or organized) or any securities, whether
issued by or created by any person, firm, association, corporation, national
banking association, state-chartered bank, trust company, savings bank, business
trust, syndicate, limited partnership, organization, or by any other entity; and
to possess and exercise in respect thereof any and all of the rights, powers and
privileges of owners or holders who are natural persons including, without
limitation, the exercise of any voting rights pertaining thereto;
(b) To purchase or otherwise acquire any property, tangible or intangible,
whether real, personal or mixed and wherever located and to receive, hold,
manage, use, dispose of and otherwise exercise all rights, powers and privileges
of ownership thereof;
(c) To promote, finance, advise, counsel and assist in any way, any
person or any business entity in which the Corporation shall have any interest
of any kind;
(d) To do all things necessary or desirable to enhance the value of or to
protect or preserve the interest of the Corporation in any business entity,
securities or other property of any type which it may own or in which it may
have any interest of any kind; and
(e) To render assistance, counsel and advice to any person or entity and
to serve or represent the same in any capacity whatsoever, whether or not the
Corporation shall have any ownership interest in such person or entity.
SIXTH: CAPITAL STOCK:
The total number of shares of all classes of stock to which the Corporation
shall have authority to issue is hundred and ten million (110,000,000) shares,
which shall be divided into two classes as follows: ten million (10,000,000)
shares of Preferred Stock without par value (Preferred Stock) and one hundred
million (100,000,000) shares of Common Stock of the par value of $5.00 per share
(Common Stock). The
Page 1 of Union Planters Corporation Charter
<PAGE> 2
designations, voting powers, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions of the
above classes of stock and other general provisions relating thereto shall be as
follows:
PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series at such
time or times and for such consideration or considerations as the Board of
Directors may determine. All shares of any one series shall be of equal rank
and identical in all respects except the dates from which dividends accrue or
accumulate with respect thereto may vary.
(b) The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of Preferred Stock in one or
more series, with such voting powers, full or limited, but not to exceed one
vote per share, or without voting powers and with such designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issuance thereof
adopted by the Board of Directors, and as are not stated and expressed in this
Charter, or any Amendment thereto, including, (but without limiting the
generality of the foregoing) the following:
(1) The distinctive designation and number of shares comprising such
series, which number may (except where otherwise provided by the Board of
Directors in creating such series) be increased or decreased (but not below the
number of shares then outstanding) from time to time by action of the Board of
Directors;
(2) The dividend rate or rates on the shares of such series and the
relation which such dividends shall bear to the dividends payable on any other
class or classes of capital stock; the terms and conditions upon which and the
periods in respect of which dividends shall be payable; whether and upon what
conditions such dividends shall be cumulative, non-cumulative or partially
cumulative and, if cumulative or partially cumulative, the date or dates from
which dividends shall accumulate;
(3) Whether the shares of such series shall be callable or
redeemable, the limitations and restrictions with respect to such call or
redemption, the time or times when, the price or prices at which, and the manner
in which such shares shall be callable or redeemable, including the manner of
selecting shares of such series for call or redemption if less than all shares
are to be called or redeemed;
(4) The amount payable upon shares of such series upon the voluntary
or involuntary liquidation, dissolution, distribution of assets or winding up of
the Corporation;
(5) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund, and, if so, whether and
upon what conditions such purchase, retirement sinking fund shall be cumulative,
partially cumulative or non-cumulative, the extent to which and the manner in
which such fund shall be applied to the purchase, call or redemption of the
shares or such series for retirement or to other corporate purposes and the
terms and provisions relative to the operation thereof;
(6) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or classes or of any other series of
any class or classes of capital stock of the Corporation, and, if so convertible
or exchangeable, the price or prices or the rate or rates of conversion or
exchange, and the method, if any, of adjusting the same, and any other terms and
conditions of such conversion or exchange, provided, however, that no shares of
any such series shall be convertible into shares of any other class or series
having prior or superior rights and preferences as to dividends or distributions
of assets upon liquidation, and provided further that shares without par value
shall not be convertible into shares with par value unless that part of the
stated capital of the Corporation represented by such shares without par value
is, at the time of conversion, at least equal to the aggregate par value of the
shares into which the shares without par value are to be converted;
(7) The voting powers, full and/or limited, if any, of the shares of
such series; and whether and under what conditions the shares of such series
(alone or together with the shares of one or more other series having similar
provisions) shall be entitled to vote separately as a single class, for the
election of one or more additional directors of the Corporation in case of
dividend arrearage or other specified events, or upon other specified matters;
(8) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other series;
and
(9) Any other preferences, privileges and powers, and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions of such series, as the Board of Directors may deem advisable and
as shall be consistent with the provisions of the laws of the State of Tennessee
and of this Charter.
(c) No dividends shall be paid or declared or set apart on any particular
series of Preferred Stock in respect of any period unless accumulated dividends
shall be or shall have been paid, or declared and set apart for payment, pro
rata on all shares of Preferred Stock at the time outstanding of each other
series, so that the amount of dividends declared on such particular series shall
bear the same ratio to the amount declared on each such other series as the
dividend rate of such particular series shall bear to the dividend rate of such
other series.
(d) Unless and except to the extent otherwise required by law or provided
in the resolution or resolutions of the Board of Directors creating any series
of Preferred Stock pursuant to this ARTICLE SIXTH, the holders of the Preferred
Stock shall have no voting power with respect to any matter whatsoever.
Page 2 of Union Planters Corporation Charter
<PAGE> 3
(e) Shares of Preferred Stock called, redeemed, converted, exchanged,
purchased, retired or surrendered to the Corporation, or which have been issued
and reacquired in any manner, shall, upon compliance with any applicable
provisions of the Tennessee Business Corporation Act, have the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
Board of Directors as part of the series of which they were originally a part or
may be reclassified into and reissued as part of a new series or as a part of
any other series, all subject to the protective conditions or restrictions of
any outstanding series of Preferred Stock.
SERIES A PREFERRED STOCK
(f) Pursuant to the authority vested in the Board of Directors in
accordance with the provisions of this ARTICLE SIXTH of the Charter, the Board
of Directors does hereby create, authorize and provide for the issuance of
Series A Preferred Stock out of the class of 10,000,000 shares of preferred
stock, no par value (the "Preferred Stock"), having the voting powers,
designation, relative, participating, optional and other special rights,
preferences, and qualifications, limitations and restrictions thereof that are
set forth as follows:
(1) Designation and Amount. The shares of such series shall be
designated as Series A Preferred Stock ("Series A Preferred Stock") and the
number of shares constituting such series shall be 750,000. Such number of
shares may be adjusted by appropriate action of the Board of Directors.
(2) Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any other series of Preferred Stock or any other shares of
preferred stock of the Corporation ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, each holder of one
one-hundredth (1/100) of a share (a "Unit") of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, (i) dividends payable in cash on the
1st day of January, April, July and October in each year (each such date being a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of such Unit of Series A Preferred Stock,
in an amount per Unit (rounded to the nearest cent) equal to the greater of (x)
$.01 or (y) subject to the provision for adjustment hereinafter set forth, the
aggregate per share amount of all cash dividends declared on shares of the
common stock of the Corporation, par value $5.00 per share, (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of a Unit of Series A Preferred Stock, and (ii) subject to the provision for
adjustment hereinafter set forth, quarterly distributions (payable in kind) on
each Quarterly Dividend Payment Date in an amount per Unit equal to the
aggregate per share amount of all non-cash dividends or other distributions
(other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding share of Common Stock, by reclassification or otherwise) declared on
shares of Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or with respect to the first Quarterly Dividend Payment Date,
since the first issuance of a Unit of Series A Preferred Stock. In the event
that the Corporation shall at any time after January 19, 1989 (the "Rights
Declaration Date") (i) declare or pay any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, or (ii) subdivide outstanding
shares of Common Stock or (iii) combine outstanding shares of Common Stock into
a smaller number of shares, then in each such case the amount to which the
holder of a Unit of Series A Preferred Stock was entitled immediately prior to
such event pursuant to the preceding sentence shall be adjusted by multiplying
such amount of a fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on
Units of Series A Preferred Stock as provided in paragraph (a) above immediately
after it declares a dividend or distribution on the shares of Common Stock
(other than a dividend payable in shares of Common Stock); provided, however
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend payment Date, a dividend of $.01 per Unit
on the Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and shall be cumulative on
each outstanding Unit of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such Unit of Series A
Preferred Stock, unless the date of issuance of such Unit is prior to the record
date for the First Quarterly Dividend Payment Date, in which case, dividends on
such Unit shall begin to accrue from the date of issuance of such Unit, or
unless the date of issuance is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Units of Series A
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on Units
of Series A Preferred Stock in an amount less than the aggregate amount of all
such dividends at the time accrued and payable on such Units shall be allocated
pro rata on a unit-by-unit basis amount all Units of Series A Preferred Stock at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of Units of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
(3) Voting Rights. The holders of Units of Series A Preferred
Stock shall have the following voting rights.
(a) Subject to the provision for adjustment hereinafter set
forth, each Unit of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii)
Page 3 of Union Planters Corporation Charter
<PAGE> 4
subdivide outstanding shares of Common Stock or (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, then in each such case
the number of votes per Unit to which holders of Units of Series A Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders
of Units of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(c) Except as set forth herein or required by law, holders of
Units of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of shares of Common Stock as set forth herein) for the taking
of any corporate action.
(4) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on Units of Series A Preferred Stock as provided in
paragraph 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units of
Series A Preferred Stock shall have been paid (or set aside for payment) in
full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to dividends with
the Series A Preferred Stock, except for dividends paid ratably on Units of
Series A Preferred Stock and shares of all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of such Units and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided, however, that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock ranking junior (both as to dividends and upon liquidation, dissolution or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
Units of Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such Units.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.
(5) Reacquired Shares. Any Units of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
Units shall, upon their cancellation, become authorized but unissued Units of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, no distribution shall be made (i) to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless
the holders of Units of Series A Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (b), the greater of either (y)
$90.00 per Unit plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or (z) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of stock ranking on a parity upon liquidation, dissolution or winding up
with the Series A Preferred Stock, unless simultaneously therewith distributions
are made ratably on Units of Series A Preferred Stock and all other shares of
such parity stock in proportion to the total amounts to which the holders of
Units of Series A Preferred Stock are entitled under Clause (i)(y) of this
sentence and to which the holders of such shares of such parity stock are
entitled, in each case upon such liquidation dissolution or winding up.
(b) in the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on outstanding shares of Common
Stock payable in shares of Common Stock, or (ii) subdivide outstanding shares of
Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the aggregate amount to which holders
of Units of Series A Preferred Stock were entitled immediately prior to such
event pursuant to clause (i)(z) of paragraph (1) of this paragraph 6 shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of Common Stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
Page 4 of Union Planters Corporation Charter
<PAGE> 5
(7) Share Exchange, Merger, Etc. In case the Corporation shall enter
into any share exchange, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted into other stock or
securities, cash and/or any other property, then in any such case Units of
Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal to the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is converted or exchanged. In the event
the Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on outstanding shares of Common Stock payable in shares of Common
Stock, or (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the immediately preceding sentence with respect to the
exchange or conversion of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
(8) Redemption. The Units of Series A Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Units of Series A Preferred Stock in any other manner permitted by law
and the Charter or Bylaws of the Corporation.
(9) Ranking. The Units of Series A Preferred Stock shall rank junior
to all other series of the Preferred Stock and to any other class of preferred
stock that hereafter may be issued by the Corporation as to the payment of
dividends and the distribution of assets, unless the terms of any such series or
class shall provide otherwise.
(10) Amendment. The Charter, including without limitation the
provisions hereof, shall not hereafter be amended, either directly or
indirectly, or through merger or share exchange with another corporation, in any
manner that would alter or change the powers, preferences or special rights of
the Series A Preferred Stock so as to affect the holders thereof adversely
without the affirmative vote of the holders of a majority or more of the
outstanding Units of Series A Preferred Stock, voting separately as a class.
(11) Fractional Shares. The Series A Preferred Stock may be issued
in Units or other fractions of a share, which Units or fractions shall entitle
the holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock.
SERIES B PREFERRED STOCK
(g) Pursuant to the authority vested in the Board of Directors in
accordance with the provisions of this Article VI of the Charter, the Board of
Directors of Union Planters Corporation (the "Corporation") does hereby create,
authorize and provide for the issuance of a new series of preferred stock out of
the authorized class of 10,000,000 shares of preferred stock, no par value (the
"Preferred Stock"), having the voting powers, designations, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions thereof that are set forth as follows:
1. Designation and Amount. The shares of such series shall be
designated as Series B $8.00 Nonredeemable Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock") and the number of shares constituting
such series shall be 44,000. Such number of shares may be adjusted by
appropriate action of this Board of Directors.
2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any other series of Preferred Stock of the Corporation ranking
prior and superior to the shares of Series B Preferred Stock with respect to
dividends, the holders of the Series B Preferred Stock, in preference to the
holders of the $5.00 par value common stock of the Corporation (the "UPC Common
Stock"), and any other capital stock of the Corporation ("Capital Stock")
ranking junior to the Series B Preferred Stock as to the payment of dividends,
shall be entitled to receive as and if declared by the Board of Directors out of
funds legally available for that purpose, cumulative cash dividends at, but not
exceeding, $8.00 per share per annum and no more.
(b) Dividends upon shares of Series B Preferred Stock shall be
cumulative so that if in respect of any past quarterly dividend period or
periods, full dividends accrued on the outstanding shares of Series B Preferred
Stock shall not have been paid, the aggregate deficiency shall be fully paid or
declared or set aside for payment before (i) any dividend shall be declared and
paid or set aside for payment on UPC Common Stock, or any other Capital Stock
ranking junior to the Series B Preferred Stock as to the payment of dividends,
(ii) any other distribution of assets shall be made with respect to UPC Common
Stock or any other Capital Stock ranking junior to the Series B Preferred Stock
as to the payment of dividends, and (iii) the redemption or purchase of any
shares of Series B Preferred Stock, UPC Common Stock, or any other Capital Stock
ranking on a parity with or junior to the Series B Preferred Stock as to the
payment of dividends by the Corporation.
(c) Cash dividends on the Series B Preferred Stock shall
commence to accrue and shall be cumulative from the Effective Date of the Merger
between Union Planters - Steiner Acquisition Company and Steiner Holdings
pursuant to that Merger Agreement dated June 9, 1989 between UPC, Subsidiary,
Steiner Bank, Arnold Steiner and Mary Steiner (the "Merger Agreement"); and,
otherwise, from the Quarterly Dividend Payment Date on which cash dividends were
paid on Series B Preferred Stock (in respect of a dividend on Series B Preferred
Stock) next preceding the date of issuance of such shares of Series B Preferred
Stock.
Page 5 of Union Planters Corporation Charter
<PAGE> 6
(d) Cash dividends on shares of Series B Preferred Stock shall
be payable quarterly on the third Friday of February, May, August and November
(a "Quarterly Dividend Payment Date") and will have the same record date for the
payment of dividends as the record date for payment of dividends on UPC Common
Stock, and, if there is no record date for the payment of dividends on UPC
Common Stock, then the record date for the payment of dividends of the Series B
Preferred Stock shall be that date which is 15 days prior to a given Quarterly
Dividend Payment Date.
3. No Preemptive Rights. No holders of Series B Preferred Stock
shall be entitled, as of right, to purchase or subscribe for any part of the
unissued Series B Preferred Stock, UPC Common Stock, or Capital Stock, or to
purchase or subscribe for any bonds, certificates of indebtedness, debentures,
or other securities convertible into or carrying options, warrants or rights to
purchase stock or other securities of the Corporation, or to purchase or
subscribe for any stock or any securities of the Corporation purchased by the
Corporation or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of the State of Tennessee; provided,
however, that this section shall not be deemed to prohibit the exercise by the
holders of UPC Series B Preferred Stock of Rights issued pursuant to the UPC
Share Purchase Rights Agreement.
4. Liquidation. (a) In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series B Preferred Stock shall be entitled to receive, after payment
or provision for payment of all debts, but before any distribution of assets may
be made to the holders of UPC Common Stock, or any other Capital Stock of the
Corporation ranking junior to the Series B Preferred Stock as to liquidation,
out of assets of the Corporation available for distributions to its
stockholders, $100 per share, plus, in each case, accrued and unpaid dividends
thereon to the date of payment thereof. After such payment has been made in
full to the holders of the outstanding shares of Series B Preferred Stock (or
funds necessary for the payment have been set aside in trust for the account of
such holders so as to be and continue to be available therefor), the holders of
Series B Preferred Stock shall be entitled to no further distribution, and the
remaining assets of the Corporation shall be divided and distributed among the
holders of UPC Common Stock (subject to any prior rights of any holders of any
other Capital Stock of the Corporation entitled to participate with the UPC
Common Stock as to the distribution of assets) then outstanding according to
their respective shares. If on liquidation, dissolution or winding up, the net
assets of the Corporation available for distribution among the holders of Series
B Preferred Stock are insufficient to permit full payment to them, the entire
net assets of the Corporation so available for distribution shall be distributed
ratably among the holders of Series B Preferred Stock and the holders of any
other Capital Stock ranking on a parity with the Series B Preferred Stock as to
liquidation and distribution of assets. Nothing herein contained shall be
construed to prohibit the retirement of Series B Preferred Stock by purchase,
and neither the purchase of Series B Preferred Stock, the consolidation or
merger of the Corporation, nor the sale or transfer of all or substantially all
of the assets of the Corporation as an entirety shall be deemed a "liquidation,
dissolution or winding up of the Corporation" within the meaning of this
paragraph 4.
5. Right to Vote. Except to the extent that the power or right to
vote is granted or required pursuant to the Tennessee Business Corporation Act,
as amended from time to time, the Series B Preferred Stock shall have no power
or right to vote.
6. Conversion of Series B Preferred Stock. The holders of shares of
Series B Preferred Stock shall have the right, at their option, any time after
that date which is five (5) years after the Effective Date of the Merger, to
convert such shares into shares of UPC Common Stock on the following terms and
conditions:
(a) Except as provided in subsection (c) of this Section 6, each
share of Series B Preferred Stock shall be convertible into that number of
shares of UPC Common Stock determined by dividing (i) the product of the
multiplication of the number of Series B Preferred Shares issued in the Merger
by $100, by (ii) $12.95, then dividing that number by the number of Series B
Preferred Shares issued in the Merger (the "Conversion Ratio").
(b) Except as provided in subsection (c) of this Section 6, the
estate of Arnold Steiner and the trustees of the trusts which receive
assets of the Estate of Bernard S. Steiner, Jr. pursuant to the provisions of
the last will and testament of Bernard S. Steiner, Jr., and which shall
have received Series B Preferred Stock pursuant to the Merger and such last
will and testament, shall have the right to convert the shares of Series B
Preferred Stock they own in accordance with the Conversion Ratio within five
(5) years from the Effective Date of the Merger, (i) as to the estate of Arnold
Steiner, upon the death of Arnold Steiner, and as to each such trust, upon the
death(s) of the oldest permissible income beneficiary of that particular trust;
(ii) should there be a change in control (as defined in Section 2(a) of the
Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841(a) of UPC;
and (iii) should UPC issue any other preferred stock having priority as to the
payment of dividends or as to liquidation preference over that of the Series B
Preferred Stock.
(c) If any Series B Preferred Stock shall be converted into UPC
Common Stock at a time when the UPC Common Stock into which such Series B
Preferred Stock is convertible has attached or attributable thereto Rights
issued pursuant to the UPC Share Purchase Rights Agreement, the surrender of
such Series B Preferred Stock shall effectively cancel all Rights attached or
attributable to the share(s) of Series B Preferred Stock so converted.
(d) If at any time, or from time to time, the Corporation shall
(i) declare and pay, on or in respect of, UPC Common Stock any dividend payable
in shares of UPC Common Stock, (ii) subdivide the outstanding shares of UPC
Common Stock into a greater number of shares, or contract the number of
outstanding shares of Series B Preferred Stock by combining such shares into a
smaller number of shares, or (iii) contract the number of outstanding shares of
UPC Common Stock by combining such shares into a smaller number of shares, or
subdivide the outstanding shares of Series B Preferred Stock into a greater
number of shares of Series B Preferred Stock, the Conversion Ratio shall be
proportionately adjusted as of such time.
Page 6 of Union Planters Corporation Charter
<PAGE> 7
(e) If the Corporation consolidates with or merges into any
corporation or reclassifies outstanding shares of UPC Common Stock (other than
by way of subdivision or contraction of such shares) each share of Series B
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property of the Corporation, or of the entity
resulting from such consolidation or merger, to which a holder of the number
of shares of UPC Common Stock deliverable upon conversion of such share of
Series B Preferred Stock would have been entitled upon such consolidation,
merger or reclassification, had the holder of such share of Series B Preferred
Stock exercised his right of conversion and had such shares been issued and
outstanding and had such holder been the holder of record of such UPC Common
Stock at the time of such consolidation, merger or reclassification; and the
Corporation shall make lawful provision therefor as a part of such
consolidation, merger or reclassification.
(f) Whenever the Conversion Ratio is required to be adjusted, as
herein provided, the Corporation shall promptly file with the transfer agent for
the UPC Common Stock and simultaneously provide to each holder of record of
Series B Preferred Stock a statement signed by the President or a Vice President
or the Secretary or the Treasurer setting forth the adjusted Conversion Ratio,
determined as so provided. Such statement shall set forth in reasonable detail
such facts as may be necessary to show the reason for and the manner of
computing such adjustment.
(g) On presentation and surrender to the Corporation at any
office or agency maintained for the transfer of Series B Preferred Stock or the
certificates of Series B Preferred Stock so to be converted, duly endorsed for
transfer, the holder of such Series B Preferred Stock shall be entitled, subject
to the limitations herein contained, to receive in exchange therefor a
certificate or certificates for fully paid and nonassessable shares, and cash
for fractional shares of UPC Common Stock or other securities pursuant to
subsection (e) above, on the basis aforesaid. The Series B Preferred Stock
shall be deemed to have been converted and the person converting the same to
have become the holder of record of UPC Common Stock, for the purpose of
receiving dividends and for all other purposes whatever as of the date when the
certificate or certificates for such Series B Preferred Stock are surrendered to
the Corporation as aforesaid. The Corporation shall not be required to make any
such conversion, and no surrender of the Series B Preferred Stock shall be
effective for such purposes, while the books for the transfer of either class of
stock are closed for any purpose, but the surrender of such shares of Series B
Preferred Stock for conversion during any period while such books are closed
shall become effective for all purposes of conversion immediately upon the
reopening of such books, as if the conversion had been made on the date such
shares of Series B Preferred Stock were surrendered.
(h) The Corporation shall pay any and all taxes which may be
imposed upon it with respect to the issuance and delivery of UPC Common Stock
upon the conversion of the Series B Preferred Stock as herein provided. The
Corporation shall not be required in any event to pay any transfer or other
taxes by reason of the issuance of such UPC Common Stock in names other than
those in which the Series B Preferred Stock surrendered for conversion may
stand, and no such conversion or issuance of UPC Common Stock shall be made
unless and until the person requesting such issuance has paid to the Corporation
the amount of any such tax, or has established to the satisfaction of the
Corporation and its transfer agent, if any, that such tax has been paid or is
not required. Upon any conversion of Series B Preferred Stock as herein
provided, no adjustment or allowance shall be made for dividends on the Series B
Preferred Stock so converted, and all rights to dividends, if any, shall cease
and be deemed satisfied; however, except as provided in the next sentence
hereof, nothing in this section shall be deemed to relieve the Corporation from
its obligation to pay any dividends which shall have been declared and shall be
payable to holders of Series B Preferred Stock of record as of a date prior to
such conversion even though the payment date for such dividend is subsequent to
the date of conversion.
7. Reservation of UPC Common Stock. The Corporation shall, so long
as any of the Series B Preferred Stock is outstanding, reserve and keep
available out of its authorized and unissued UPC Common Stock, solely for the
purpose of effecting the conversion of the Series B Preferred Stock, such number
of shares of UPC Common Stock as shall, from time to time, be sufficient to
effect the conversion of all shares of the Series B Preferred Stock then
outstanding. The Corporation shall, from time to time, increase its authorized
UPC Common Stock and take such other actions as may be necessary to permit the
issuance from time to time of the shares of the UPC Common Stock, as fully paid
and nonassessable shares, upon the conversion of the Series B Preferred Stock as
herein provided.
8. Definitions. For purposes hereof:
(a) The term "outstanding", when used in reference to shares of
stock, shall mean issued shares, excluding shares held by the Corporation or a
subsidiary thereof, and shares called for redemption, funds for the redemption
of which shall have been set aside by the Corporation or deposited in trust;
(b) The amount of dividends "accrued" on any share of Series B
Preferred Stock as of any quarterly dividend date shall be deemed to be the
amount of any unpaid dividends accumulated thereon to and including such
quarterly dividend date, whether or not earned or declared, and the amount of
dividends "accrued" on any shares of Series B Preferred Stock as at any date
other than a quarterly dividend date shall be deemed to be (i) the amount of any
unpaid dividends accumulated thereon to and including the last preceding
quarterly dividend date, whether or not earned or declared, plus (ii) an amount
calculated on the basis of the annual dividend rate fixed for the shares of
Series B Preferred Stock (8%) for the period after such last preceding quarterly
dividend date to and including the date as of which the calculation is made,
based on a 360-day year or 12 consecutive 30-day months.
9. Redemption. The shares of Series B Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Series B Preferred Stock in any other manner permitted by law and its
Charter or Bylaws.
Page 7 of Union Planters Corporation Charter
<PAGE> 8
10. Ranking. The Series B Preferred Stock shall rank superior to
that of the Corporation's Series A Preferred Stock as well as to all other
series of the Corporation's preferred stock, unless the designation of rights
and preferences for any other series of the Corporation's preferred stock
expressly provides otherwise.
11. Amendment. The Charter, including without limitations the
provisions hereof, shall not hereafter be amended, either directly or
indirectly, or through merger or share exchange with another corporation, in any
manner that would alter or change the powers, preferences or special rights of
the Series B Preferred Stock so as to affect the holders thereof adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series B Preferred Stock, voting separately as a class;
provided, however, that this paragraph shall have no affect on the ability of
the Corporation to amend the Rights Agreement or redeem the UPC Preferred Share
Purchase Rights in accordance therewith.
12. Fractional Shares. The Series B Preferred Shares may be issued
in units or other fractions of a share, which units or fractions shall entitle
the holder, in proportion to such holder's fractional shares, to exercise such
rights, receive dividends, and participate in all distributions and derive the
benefit of all other rights of holders of Series B Preferred Stock.
SERIES C PREFERRED STOCK
(h) Pursuant to the authority vested in the Board of Directors of Union
Planters Corporation (the "Corporation") by the provisions of this Article Sixth
of the Charter and by the provisions of the Tennessee Business Corporation Act,
the Board of Directors of the Corporation does hereby create, authorize and
provide for the issuance of a new series of preferred stock out of the
Corporation's authorized class of 10,000,000 shares of no par value preferred
stock (the "Preferred Stock"), having the designation, relative participating,
optional and other special rights, preferences, qualifications, limitations and
restrictions provided hereafter:
1. Designation and Amount. The shares of such series shall be
designated as 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred Stock,
Series C (the "Series C Preferred Stock") and the number of shares of Preferred
Stock constituting such Series C Preferred Stock shall be 690,000. Such number
of shares of Series C Preferred Stock may be adjusted hereafter by appropriate
action of the Board of Directors. The Series C Preferred Stock shall have a
stated value (the "Stated Value") of $25.00 per share.
2. Dividends and Distributions.
(a) The holders of shares of Series C Preferred Stock, in
preference to the holders of the $5.00 par value common stock of the Corporation
(the "UPC Common Stock") shall be entitled to receive when and as declared by
the Board of Directors, out of funds legally available for the purpose,
cumulative cash dividends payable quarterly at the rate per share set forth in
paragraph 2(c) below, on the fifteenth day (or, if such fifteenth day is not a
Business Day, on the next Business Day) of February, May, August and November in
each year (a "Quarterly Dividend Payment Date"), in respect of the Quarterly
Dividend Period next preceding such fifteenth day, and no other dividend or
dividends. Such dividends shall be payable to holders of the Series C Preferred
Stock on such date as is not more than 30 nor less than 10 days prior to the
particular Quarterly Dividend Payment Date. As used herein, a "Quarterly
Dividend Period" means a period of three months ending on the last day of
January, April, July or October. Subject to the provisions of paragraph (c) of
Section Sixth of the Charter, dividends on account of arrears for any past
Quarterly Dividend Period(s) may be declared and paid at any time, without
reference to any regular Quarterly Dividend Payment Date to holders of record on
such date not exceeding 30 or less than 10 days preceding the payment date
thereof as may be fixed by the Board of Directors. The amount of dividend per
share payable for any Quarterly Dividend Period less than a full Quarterly
Dividend Period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which
payable.
(b) Preferred dividends upon shares of Series C Preferred Stock
shall commence to accrue and be cumulative from (but not including) the day upon
which the initial issuance of shares of Series C Preferred Stock occurs.
(c) For each Quarterly Dividend Period ending on or before
October 31, 1994, preferred dividends payable with respect to each such
Quarterly Dividend Period shall be $0.648438 per share. For each Quarterly
Dividend Period ending after November 1, 1994 and on or before October 31, 1995,
preferred dividends payable with respect to each such Quarterly Dividend Period
shall be $0.679688 per share. For each Quarterly Dividend Period ending after
November 1, 1995, and on or before October 31, 1996, preferred dividends payable
with respect to each such Quarterly Dividend Period shall be $0.710938 per
share. For each Quarterly Dividend Period ending after November 1, 1996,
preferred dividends payable with respect to such Quarterly Dividend Periods
shall be $0.742188 per share. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments which may be in
arrears.
(d) For purposes hereof, "Business Day" shall mean any day upon
which commercial banks in the City of Memphis, Tennessee, are required to be
open for the transaction of their general banking business.
3. No Preemptive Rights. Holders of shares of Series C Preferred
Stock shall not be entitled, as of right, to purchase or subscribe for any part
of the unissued Series C Preferred Stock, any UPC Common Stock, or any other
capital stock of the Corporation, or to purchase or subscribe for any bonds,
certificates of indebtedness, debentures, or other securities convertible into
or carrying options, warrants or rights to purchase any stock or other
securities of the Corporation, or to purchase or subscribe for any stock or any
securities of the Corporation purchased by the Corporation or by its nominee or
nominees, or to have any other preemptive rights now or hereafter defined by the
laws of the State of Tennessee.
Page 8 of Union Planters Corporation Charter
<PAGE> 9
4. Liquidation. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series C Preferred Stock shall be entitled to receive, after payment
or provision for payment of all debts, but before any distribution of assets may
be made to the holders of UPC Common Stock or any other stock of the Corporation
ranking junior to the Series C Preferred Stock as to the distribution of assets
on liquidation, dissolution or winding up of the Corporation, out of assets of
the Corporation available for distributions to its shareholders, $25.00 per
share (the "Liquidation Value"), plus, in each case, accrued and unpaid
dividends thereon from (but not including) the day of initial issuance to the
date of payment thereof. After such payment has been made in full to the
holders of the outstanding shares of Series C Preferred Stock (or funds
necessary for the payment have been set aside in trust for the account of such
holders so as to be and continue to be available therefor), the holders of
Series C Preferred Stock shall be entitled to no further distributions, and the
remaining assets of the Corporation shall be divided and distributed among the
holders of UPC Common Stock (subject to any prior rights of any holders of any
other capital stock of the Corporation entitled to participate with the UPC
Common Stock as to the distribution of assets) then outstanding according to
their respective rights as shareholders. If, upon any liquidation, dissolution
or winding up of the Corporation, the net assets of the Corporation, or proceeds
thereof available for distribution among the holders of Series C Preferred Stock
should be insufficient to permit payment in full of the preferential amount
aforesaid and liquidating payments on any other Preferred Stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Series C Preferred
Stock, then such assets, or the proceeds thereof, shall be distributed among the
holders of Series C Preferred Stock and the holders of any such other Preferred
Stock ratably in accordance with the respective amounts which would be payable
on such shares of Series C Preferred Stock and on any such other Preferred Stock
if all amounts payable thereon were paid in full. Neither the consolidation or
merger of the Corporation with or into any other corporation or corporations,
nor a reorganization of the Corporation alone, nor the sale or transfer by the
Corporation of all or substantially all of its assets shall be deemed a
"liquidation, dissolution or winding up of the Corporation" within the meaning
of this paragraph 4.
5. Right to Vote.
(a) Except as hereinafter provided for and as otherwise from
time to time required by law, the Series C Preferred Stock shall have no voting
rights.
(b) So long as any shares of the Series C Preferred Stock remain
outstanding, the consents of the holders of at least two-thirds (2/3ds) of the
shares of Series C Preferred Stock outstanding at the time (voting separately as
a class together with all other series of Preferred Stock of the Corporation
ranking on a parity with the Series C Preferred Stock either as to payment of
dividends or the distribution of assets upon liquidation, dissolution or winding
up and upon which like voting rights have been conferred and are exercisable)
given in person or by proxy, either in writing or at any special or annual
meeting called for the purpose, shall be necessary to permit, effect or validate
any one or more of the following:
(i) the authorization, creation or issuance of a new class
or series of shares of capital stock having rights, preferences or privileges
prior to the Series C Preferred Stock, or any increase in the number of
authorized shares of any class or series having rights, preferences or
privileges prior to the Series C Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Corporation's
Charter which would materially and adversely affect any right, preference,
privilege or voting power of the Series C Preferred Stock or of the holders
thereof; provided, however, that any increase in the amount of authorized UPC
Common Stock or Preferred Stock or the authorization, creation or issuance of
any other series of UPC Common Stock or Preferred Stock, in each case ranking on
a parity with or junior to the Series C Preferred Stock with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of Series C Preferred
Stock shall have been redeemed or called for redemption and funds shall have
been deposited in trust in an amount sufficient to effect such redemption.
6. Redemption.
(a) The shares of Series C Preferred Stock shall be redeemable,
in whole or in part, only at the option of the Corporation by resolution of its
Board of Directors and with the prior written consent of the Board of Governors
of the Federal Reserve System, or of the appropriate Federal Reserve Bank acting
under delegated authority, or their successors, at any time and from time to
time on or after October 31, 1994 at $25.00 per share, plus all dividends
accrued and unpaid on such Series C Preferred Stock from (but not including) the
day of issuance up to the day fixed for redemption. Notwithstanding the
foregoing sentence of this Section, the Corporation may acquire Series C
Preferred Stock in any other manner permitted by law and its Charter or Bylaws.
(b) In the event that less than the entire amount of the Series
C Preferred Stock outstanding is to be redeemed at any one time, the shares to
be redeemed shall be selected by lot or pro rata (as nearly as may be) or by any
other method determined by the Board of Directors of the Corporation in its sole
discretion to be equitable. Notice of any redemption shall be given by first
class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior
to the redemption date, to each holder of record of the shares selected for
redemption at such holders' respective addresses as the same shall appear on the
stock register of the Corporation. Each such notice shall state: (1) the
redemption date; (2) the number of shares of Series C Preferred Stock to be
redeemed and, if less than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) the
redemption price and the manner in which the redemption price
Page 9 of Union Planters Corporation Charter
<PAGE> 10
is to be paid and delivered; (4) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (5) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date. No failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for redemption. Any notice
mailed in the manner herein provided shall be conclusively presumed to have been
duly given whether or not the holder receives the notice. Upon such redemption
date, or upon such earlier date as the Board of Directors shall designate for
payment of the redemption price (unless the Corporation shall default in the
payment of the redemption price as set forth in such notice), the holders of
shares of Series C Preferred Stock selected for redemption and to whom notice
has been duly given shall cease to be shareholders with respect to such shares
of Series C Preferred Stock and shall have no interest in or claim against the
Corporation by virtue thereof and shall have no dividend, voting or other rights
with respect to such shares except the right to receive the moneys payable upon
such redemption from the Corporation or otherwise, without interest thereon,
upon surrender (and endorsement, if required by the Corporation) of the
certificates, and the shares evidenced and represented thereby shall no longer
be deemed to be outstanding. The Corporation's obligation to provide funds for
redemption shall be deemed fulfilled if, on or before the redemption date, the
Corporation shall deposit with a bank or trust company (which may be an
affiliate of the Corporation), having an office or agency in Memphis, Tennessee
and having a capital and surplus of at least $50,000,000, or with any other such
bank or trust company located in the continental United States as may be
designated from time to time by the Corporation, funds necessary for such
redemption, in trust, with irrevocable instructions that such funds be applied
to the redemption of the shares of Series C Preferred Stock so called for
redemption. Any interest accrued on such funds shall be paid to the Corporation
from time to time. Any funds so deposited and unclaimed at the end of six years
from such redemption date shall be repaid or released to the Corporation, after
which the holder or holders of such shares of Series C Preferred Stock so called
for redemption shall look only to the Corporation for payment of the redemption
price. Upon redemption of Series C Preferred Stock in the manner set out
herein, or upon the purchase of Series C Preferred Stock by the Corporation, the
Series C Preferred Stock so acquired by the Corporation shall be retired and
canceled and shall be restored to the status of authorized but unissued shares
of Preferred Stock, without designation as to series, and may thereafter be
issued, but not as shares of Series C Preferred Stock.
7. Ranking.
(a) Any class or series of stock of the Corporation shall be
deemed to rank:
(i) "prior to" the Series C Preferred Stock if the holders
of such class or series shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of Series C Preferred Stock;
and
(ii) "on a parity with" the Series C Preferred Stock if the
holders of such class or series of stock and the holders of the Series C
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority one over the other whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share of such
other class or series of stock are different from those of the Series C
Preferred Stock.
(b) The Series C Preferred Stock shall rank on a parity with
both the Corporation's Series B Preferred Stock and the Series A Preferred
Stock, if and when such Series A Preferred Stock should be issued.
8. Debt Obligations. The Corporation, at any time and from time to
time, may authorize the issue of debt obligations, whether or not subordinated,
without the approval of the shareholders.
9. Conversion or Exchange. The holders of the Series C Preferred
Stock shall not have any rights herein to convert such shares into, or exchange
such shares for, shares of any other class or classes or any other series of any
class or classes of capital stock (or any other equity or debt security) of the
Corporation.
SERIES D PREFERRED STOCK
(i) Pursuant to the authority vested in the Board of Directors of Union
Planters Corporation (the "Corporation") by the provisions of this Article Sixth
of its Charter and by the provisions of the Tennessee Business Corporation Act,
the Board of Directors of the Corporation does hereby create, authorize and
provide for the issuance of a new series of preferred stock out of the
Corporation's authorized class of 10,000,000 shares of preferred stock having no
par value (the "Preferred Stock"), having the designation, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions provided hereafter:
1. Designation and Amount. The shares of such series shall be
designated as the: 9.5% REDEEMABLE, CUMULATIVE, CONVERTIBLE, PREFERRED STOCK,
SERIES D (the "Series D Preferred Stock") and the number of shares of Preferred
Stock constituting such Series D Preferred Stock shall be 253,659. Such number
of shares of Series D Preferred Stock may be adjusted hereafter by appropriate
action of the Board of Directors. The Series D Preferred Stock shall have a
stated value of $20.50 per share (the "Stated Value").
2. Dividends and Distributions. (a) The holders of shares of
Series D Preferred Stock, in preference to the holders of the $5.00 par value
common stock of the Corporation (the "UPC Common Stock") shall be entitled to
receive when, as and if declared by the Board of Directors, out of funds legally
available for the purpose, cumulative cash dividends payable quarterly at the
annual rate of 9.5% of the Stated Value thereof on the fifteenth day (or, if
such fifteenth day should not be a Business Day, on the next Business Day) of
February, May, August and November in each year (a "Quarterly Dividend Payment
Date"), in respect of the Quarterly Dividend Period next preceding such
Page 10 of Union Planters Corporation Charter
<PAGE> 11
fifteenth day, and no other dividend or dividends. Such dividends shall be
payable to holders of record of the Series D Preferred Stock on such date as may
be fixed by the Board of Directors which date shall not be more than 30 nor less
than 10 days prior to the applicable Quarterly Dividend Payment Date. As used
herein, a "Quarterly Dividend Period" means a period of three calendar months
ending on the last day of January, April, July and October. Subject to the
provisions of paragraph (c) of Article Sixth of the Charter, dividends on
account of arrears for any past Quarterly Dividend Period(s) may be declared and
paid at any time designated by the Board of Directors, without reference to any
regular Quarterly Dividend Payment Date, to holders of record on such date as
may be fixed by the Board of Directors, which date shall not be more than 30 nor
less than 10 days preceding the designated payment date. The amount of dividend
per share payable for any Quarterly Dividend Period less than a full Quarterly
Dividend Period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period with respect
to which it is payable.
(b) Preferred dividends upon shares of Series D Preferred Stock
shall commence to accrue and be cumulative from the day upon which the original
issuance of shares of Series D Preferred Stock shall occur which shall be deemed
to be the effective date of the merger of Southeastern Bancshares, Inc. with and
into Union Planters - SBI Acquisition Company, both of which are Tennessee
corporations.
(c) No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments which may be in arrears.
(d) For purposes hereof, a "Business Day" shall mean any day on
which commercial banks in the City of Memphis, Tennessee, are required to be
open for the transaction of their general banking businesses.
3. No Preemptive Rights. The holders of shares of Series D
Preferred Stock shall not be entitled, as of right, to purchase or subscribe for
any part of the unissued Series D Preferred Stock, any UPC Common Stock, or any
other capital stock of the Corporation, or to purchase or subscribe for any
bonds, certificates of indebtedness, debentures, or other securities convertible
into, or carrying options, warrants or rights to purchase, any stock or other
securities of the Corporation, or to purchase or subscribe for any stock or any
securities of the Corporation purchased by the Corporation or by its nominee or
nominees, or to have any other preemptive rights now or hereafter defined by the
laws of the State of Tennessee.
4. Liquidation. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series D Preferred Stock shall be entitled to receive, after payment
or provision for payment of all debts but before any distribution of assets may
be made to the holders of UPC Common Stock or any other stock of the Corporation
ranking junior to the Series D Preferred Stock as to the distribution of assets
on liquidation, dissolution or winding up of the Corporation, out of assets of
the Corporation available for distributions to its shareholders, $20.50 per
share (the "Liquidation Value"), plus, in each case, accrued and unpaid
dividends thereon from (but not including) the day of original issuance to the
date of payment thereof. After such payment has been made in full to the
holders of the outstanding shares of Series D Preferred Stock (or funds
necessary for such payment have been set aside in trust for the account of such
holders so as to be and to continue to be available therefor), the holders of
Series D Preferred Stock shall be entitled to no further distributions, and the
remaining assets of the Corporation shall be divided and distributed among the
holders of UPC Common Stock (subject to any senior rights of any holders of any
other capital stock of the Corporation entitled to participate with the UPC
Common Stock as to the distribution of assets) then outstanding according to
their respective rights as shareholders. If, upon any liquidation, dissolution
or winding up of the Corporation, the net assets of the Corporation, or proceeds
thereof available for distribution among the holders of Series D Preferred Stock
should be insufficient to permit payment in full of the preferential amount
aforesaid and liquidating payments on any other Preferred Stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Series D Preferred
Stock, then such assets, or the proceeds thereof, shall be distributed among the
holders of Series D Preferred Stock and the holders of any such other Preferred
Stock ranking on a parity with the Series D Preferred Stock ratably in
accordance with the respective amounts which would be payable on such shares of
Series D Preferred Stock and on any such other Preferred Stock ranking on a
parity with the Series D Preferred Stock if all amounts payable thereon were
paid in full. Neither the consolidation or merger of the Corporation with or
into any other corporation or corporations, nor a reorganization of the
Corporation alone, nor the sale or transfer by the Corporation of all or
substantially all of its assets shall be deemed a "liquidation, dissolution or
winding up of the Corporation" within the meaning of this paragraph 4.
5. Right of Holders of Series D Shares to Vote.
(a) Except as hereinafter provided for and as otherwise from
time to time required by law, the Series D Preferred Stock shall have no voting
rights except for those which may be required by the laws of the State of
Tennessee.
(b) So long as any shares of Series D Preferred Stock remain
outstanding, the consents of the holders of at least two-thirds (2/3ds) of the
shares of Series D Preferred Stock outstanding at the time (voting separately as
a class together with all other series of Preferred Stock of the Corporation
ranking on a parity with the Series D Preferred Stock either as to dividends or
the distribution of assets upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable) given in
person or by proxy, either in writing or at any special or annual meeting called
for the purpose, shall be necessary to permit, effect or validate any one or
more of the following actions:
(i) the authorization, creation or issuance of a new class
or series of shares of capital stock of the Corporation having rights,
preferences or privileges senior to the Series D Preferred Stock, or any
increase in the number of authorized shares of any class or series having
rights, preferences or privileges senior to the Series D Preferred Stock; or
Page 11 of Union Planters Corporation Charter
<PAGE> 12
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of the
Corporation's Charter which would materially and adversely affect any right,
preference, privilege or voting power of the Series D Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized UPC Common Stock or Preferred Stock or the authorization, creation or
issuance of any other series of UPC Common Stock or Preferred Stock, in each
case ranking on a parity with, or junior to the Series D Preferred Stock with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to "materially and
adversely affect" such rights, preferences, privileges or voting powers of the
Series D Preferred Stock.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise
be required shall be effected (i) all outstanding shares of Series D Preferred
Stock shall have been redeemed or called for redemption and (ii) funds shall
have been deposited in trust in an amount sufficient to effect such redemption
as provided herein.
6. Redemption.
(a) The shares of Series D Preferred Stock shall be redeemable,
in whole or in part, only at the option of the Corporation by resolution of its
Board of Directors but only with the prior consent of the Board of Governors of
the Federal Reserve System, or of the appropriate Federal Reserve Bank acting
under delegated authority, or their successors, at any time and from time to
time on or after the third anniversary of the Effective Time of the Merger of
SBI with and into Union Planters - SBI Acquisition Company at Twenty and 50/100
Dollars ($20.50) per share (the "Redemption Price"), plus all dividends accrued
and unpaid on such Series D Preferred Stock from (but not including) the day of
original issuance up to the Redemption Date (as defined below). Notwithstanding
the foregoing sentence of this Section, the Corporation may acquire Series D
Preferred Stock in any other lawful manner permitted by its Charter or Bylaws.
(b) In the event that less than the entire amount of Series D
Preferred Stock outstanding is to be redeemed at any one time, the shares to be
redeemed shall be selected by lot or pro rata (as nearly as may be) or by any
other method determined by the Board of Directors of the Corporation in its sole
discretion to be equitable.
(c) Notice of any redemption, whether whole or partial, shall
be given by United States first class mail, postage prepaid, deposited in the
mail not less than 30 nor more than 60 days prior to the Redemption Date,
addressed to each holder of record of the shares selected for redemption at
such holders' respective addresses as the same shall appear on the stock
register of the Corporation. Each such notice shall state: (1) the date
designated by the Board of Directors as the "Redemption Date"; (2) the number
of shares of Series D Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (3) the Redemption Price and the manner in which the
Redemption Price is to be paid and delivered; (4) the place or places where
certificates representing and evidencing such shares are to be surrendered for
payment of the Redemption Price; and (5) that dividends on the shares to be
redeemed will cease to accrue on such Redemption Date. No failure to mail such
notice or any defect therein or in the mailing thereof shall affect the
validity of the proceedings for redemption. Any notice mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice. On the Redemption Date, or on such
earlier date as the Board of Directors shall designate for payment of the
Redemption Price (unless the Corporation shall default in the payment of the
Redemption Price as set forth in such notice), the holders of shares of Series
D Preferred Stock selected for redemption and to whom notice has been duly
given shall cease to be shareholders with respect to such shares of Series D
Preferred Stock and shall have no interest in, or claim against the Corporation
by virtue thereof and shall have no dividend, voting or other rights with
respect to such shares except the right to receive the moneys payable upon such
redemption from the Corporation or otherwise, without interest thereon, upon
surrender (and proper endorsement, if required by the Corporation) of the
certificates, and the shares represented thereby shall no longer be deemed to
be outstanding. The Corporation's obligation to provide funds for redemption
shall be deemed fulfilled if, on or before the Redemption Date, the Corporation
shall have deposited with a bank or trust company (which may be an affiliate of
the Corporation), having an office or agency in Memphis, Tennessee, having a
capital and surplus of at least $50,000,000, or with any other such bank or
trust company located in the continental United States as may be designated
from time to time by the Corporation, funds necessary for such redemption, in
trust, with irrevocable instructions that such funds be applied to the
redemption of the shares of Series D Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time
to time. Any funds so deposited and unclaimed at the end of six years from
such Redemption Date shall be repaid or released to the Corporation, after
which the holder or holders of such shares of Series D Preferred Stock so
called for redemption shall look only to the Corporation for payment of the
Redemption Price. Upon redemption of Series D Preferred Stock in the manner
set out herein, or upon the purchase of Series D Preferred Stock by the
Corporation, the Series D Preferred Stock so acquired by the Corporation shall
be retired and canceled and shall be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to series, and may
thereafter be issued, but not as shares of Series D Preferred Stock.
7. Ranking.
(a) Any class or series of stock of the Corporation shall be
deemed to rank:
(i) "senior to" the Series D Preferred Stock if the holders
of such class or series shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of Series D Preferred Stock;
and
(ii) "on a parity with" the Series D Preferred Stock if the
holders of such class or series of stock and the holders of the Series D
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority one over
Page 12 of Union Planters Corporation Charter
<PAGE> 13
the other whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share of such other class or series of
stock are different from those of the Series D Preferred Stock.
(b) The Series D Preferred Stock shall rank on a parity with the
Corporation's Series B Preferred Stock, the Corporation's Series C Preferred
Stock and the Corporation's Series A Preferred Stock, if and when shares of such
Series A Preferred Stock should be issued.
8. Conversion of Series D Preferred Stock. The registered holders
of shares of Series D Preferred Stock shall have the right, at their option, to
convert such shares into shares of UPC Common Stock (and, upon the occurrence of
a certain type of merger, into other assets) on the following terms and
conditions:
(a) The registered holders of the Series D Preferred Stock shall
have the right at any time after the date of its original issuance but prior to
the Redemption Date designated in the notice of redemption given to such holders
in accordance with the provisions of Section 6, to convert each share of the
Corporation's Series D Preferred Stock registered in the name of such holders
into one (1) share of the Corporation's Common Stock having a par value of $5.00
per share. The Series D Preferred Stock shall not be convertible into any other
class or classes or any other series of any class or classes of capital stock
(or any other equity or debt security) of the Corporation.
(b) On presentation and surrender to the Corporation at any
office or agency maintained for the transfer of the Series D Preferred Stock
(the "Transfer Agent") of the certificates representing and evidencing Series D
Preferred Stock so to be converted, duly endorsed for conversion, the holder of
such Series D Preferred Stock shall be entitled, subject to the limitations
herein contained, to receive in exchange therefor a certificate or certificates
for fully paid and nonassessable shares, and cash for fractional shares (if any)
of UPC Common Stock or other securities pursuant to subsection (d) below on the
basis set forth. The Series D Preferred Stock shall be deemed to have been
converted and the person converting the same shall be deemed to have become the
holder of record of UPC Common Stock, for the purpose of receiving dividends and
for all other purposes whatsoever as of the date when the certificate or
certificates representing and evidencing such Series D Preferred Stock shall
have been surrendered to the Transfer Agent as aforesaid. The holder of Series
D Preferred Stock shall be responsible for selection of the method of delivery
to the Transfer Agent of any share certificates intended to be surrendered for
conversion and the Corporation shall have no risk or liability for the loss or
late delivery of certificates for conversion. Properly endorsed certificates
must be physically received by the Transfer Agent no later than the close of
business on the Business Day next preceding the designated Redemption Date in
order for the conversion to become effective. The Corporation shall not be
required to make any such conversion, and no surrender of the Series D Preferred
Stock shall be effective for such purposes, while the books for the transfer of
either class of stock are closed for any purpose, but the surrender of such
shares of Series D Preferred Stock for conversion during any period while such
books are closed shall become effective for all purposes of conversion
immediately upon the reopening of such books, as if the conversion had been made
on the date such shares of Series D Preferred Stock were surrendered.
(c) If at any time, or from time to time, the Corporation should
(i) declare and pay on, or in respect of, the UPC Common Stock any dividend
payable in shares of UPC Common Stock; or (ii) subdivide the outstanding shares
of UPC Common Stock into a greater number of shares, or contract the number of
outstanding shares of Series D Preferred Stock by combining such shares into a
smaller number of shares; or (iii) contract the number of outstanding shares of
the UPC Common Stock by combining such shares into a smaller number of shares,
or (iv) subdivide the outstanding shares of Series D Preferred Stock into a
greater number of shares of Series D Preferred Stock, the Conversion Ratio shall
be proportionately adjusted as of such time.
(d) If the Corporation should consolidate with, or merge into
any corporation or reclassify outstanding shares of UPC Common Stock (other than
by way of subdivision or contraction of such shares), each share of Series D
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property of the Corporation, or of the entity
resulting from such consolidation or merger, to which a holder of the number of
shares of UPC Common Stock deliverable upon conversion of such share of Series D
Preferred Stock would have been entitled upon such consolidation, merger or
reclassification, had the holder of such share of Series D Preferred Stock
exercised his right of conversion and had such shares been issued and
outstanding and had such holder been the holder of record of such UPC Common
Stock at the time of such consolidation, merger or reclassification and the
Corporation shall make lawful provision therefor as a part of such
consolidation, merger or reclassification.
(e) Whenever the conversion ratio or the type of consideration
other than UPC Common Stock receivable by the holder upon conversion of the
Series D Preferred Stock is required to be adjusted, as herein provided, the
Corporation shall promptly file with the transfer agent for the UPC Common Stock
and simultaneously provide to each holder of record of Series D Preferred Stock
a statement signed by the President or a Vice President or the Secretary or the
Treasurer setting forth the adjusted conversion ratio and, if applicable, a
description of the consideration receivable upon consummation, determined as so
provided. Such statement shall set forth in reasonable detail such facts as may
be necessary to show the reason for and the manner of computing such
adjustments.
(f) The Corporation shall pay any and all taxes which may be
imposed upon it with respect to the issuance and delivery of UPC Common Stock
upon the conversion of the Series D Preferred Stock as herein provided. The
Corporation shall not be required in any event to pay any transfer or other
taxes by reason of the issuance of such UPC Common Stock in names other than
those in which the Series D Preferred Stock surrendered for conversion may
stand, and no such conversion or issuance of UPC Common Stock shall be made
unless and until the person requesting such issuance has paid to the Corporation
the amount of any such tax, or has established to the satisfaction of the
Corporation and its transfer agent, if any, that such tax has been paid or is
not required. Upon any conversion of Series D Preferred Stock as herein
provided, no adjustment or allowance shall be made for dividends on the Series D
Preferred Stock so converted, and all rights to
Page 13 of Union Planters Corporation Charter
<PAGE> 14
dividends, if any, shall cease and be deemed satisfied; provided, however, that
nothing in this section shall be deemed to relieve the Corporation from its
obligation to pay any dividends which shall have been declared and shall be
payable to holders of Series D Preferred Stock of record as of a date prior to
such conversion even though the payment date for such dividend may be subsequent
to the date of conversion.
(g) If any shares of Series D Preferred Stock should be
converted into UPC Common Stock at a time when the UPC Common Stock into which
such Series D Preferred Stock is convertible has attached or attributable
thereto Rights issued pursuant to the UPC Share Purchase Rights Agreement, the
surrender of such Series D Preferred Stock shall effectively cancel all Rights
attached or attributable to the share(s) of Series D Preferred Stock so
converted.
9. Reservation of UPC Common Stock. The Corporation shall, so long
as any of the Series D Preferred Stock shall remain outstanding, reserve and
keep available out of its authorized and unissued UPC Common Stock, solely for
the purpose of effecting the conversion of the Series D Preferred Stock, such
number of shares of UPC Common Stock as shall, from time to time, be sufficient
to effect the conversion of all shares of the Series D Preferred Stock then
outstanding. The Corporation shall, from time to time, increase its authorized
UPC Common Stock and take such other actions as may be necessary to permit the
issuance from time to time of the shares of the UPC Common Stock, as fully paid
and nonassessable shares, upon the conversion of the Series D Preferred Stock in
the manner herein provided.
10. Debt Obligations. The Corporation, at any time and from time to
time, may authorize the issuance of debt obligations, whether or not
subordinated, without the approval of any of its shareholders.
11. Definitions. For purposes of subparagraph (i) of Article Sixth
of the Charter:
(a) The term "outstanding", when used in reference to shares of
stock, shall mean shares which are authorized and issued, excluding shares held
by the Corporation or by a subsidiary of the Corporation (other than in a
fiduciary capacity), and excluding shares called for redemption, funds for the
redemption of which shall have been set aside by the Corporation or deposited in
trust in the manner provided herein;
(b) The amount of dividends "accrued" on any share of Series D
Preferred Stock as of the last day of the applicable Quarterly Dividend Period
(the "Quarterly Dividend Date") shall be deemed to be the amount of any unpaid
dividends accumulated thereon to and including such Quarterly Dividend Date,
whether or not earned or declared, and the amount of dividends "accrued" on any
shares of Series D Preferred Stock as at any date other than a Quarterly
Dividend Date shall be deemed to be (i) the amount of any unpaid dividends
accumulated thereon to and including the last preceding Quarterly Dividend Date,
whether or not earned or declared, plus (ii) an amount calculated on the basis
of the annual dividend rate fixed for the shares of Series D Preferred Stock
(9.5%) for the period subsequent to such last preceding Quarterly Dividend Date
to and including the date as of which the calculation is made, based on a
360-day year of 12 consecutive 30-day months and the actual number of days
elapsed in the latter period.
SERIES E PREFERRED STOCK
(j) Pursuant to the authority vested in the Board of Directors of Union
Planters Corporation (the "Corporation") by the provisions of this Article Sixth
of its Charter and by the provisions of the Tennessee Business Corporation Act,
the Board of Directors of the Corporation does hereby create, authorize and
provide for the issuance of a new series of preferred stock out of the
Corporation's authorized class of 10,000,000 shares of preferred stock having no
par value (the "Preferred Stock"), having the designation, relative
participating, optional and other special rights, preferences, qualifications,
limitations and restrictions provided hereafter:
1. Designation and Amount. The shares of such series shall be
designated as the: 8% CUMULATIVE, CONVERTIBLE, PREFERRED STOCK, SERIES E (the
"Series E Preferred Stock") and the number of shares of Preferred Stock
constituting such Series E Preferred Stock shall be 4,500,000. Such number of
shares of Series E Preferred Stock may be adjusted hereafter by appropriate
action of the Board of Directors. The Series E Preferred Stock shall have a
stated value of $25.00 per share (the "Stated Value").
2. Dividends and Distributions.
(a) The holders of shares of Series E Preferred Stock, in
preference to the holders of the $5.00 par value common stock of the Corporation
(the "UPC Common Stock") shall be entitled to receive when, as and if declared
by the Board of Directors, out of funds legally available for the purpose,
cumulative cash dividends payable quarterly at the annual rate of 8% of the
Stated Value thereof on the fifteenth day (or, if such fifteenth day should not
be a Business Day, on the next Business Day) of February, May, August and
November in each year (a "Quarterly Dividend Payment Date"), in respect of the
Quarterly Dividend Period next preceding such fifteenth day, and no other
dividend or dividends. Such dividends shall be payable to holders of record of
the Series E Preferred Stock on such date as may be fixed by the Board of
Directors which date shall not be more than 30 nor less than 10 days prior to
the applicable Quarterly Dividend Payment Date. As used herein, a "Quarterly
Dividend Period" means a period of three calendar months ending on the last day
of January, April, July and October. Subject to the provisions of paragraph (c)
of Article Sixth of the Charter, dividends on account of arrears for any past
Quarterly Dividend Period(s) may be declared and paid at any time designated by
the Board of Directors, without reference to any regular Quarterly Dividend
Payment Date, to holders of record on such date as may be fixed by the Board of
Directors, which date shall not be more than 30 nor less than 10 days preceding
the designated payment date. The amount of dividend per share payable for any
Quarterly Dividend Period less than a full Quarterly Dividend Period shall be
computed on the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in the period with respect to which it is payable.
Page 14 of Union Planters Corporation Charter
<PAGE> 15
(b) Preferred dividends upon shares of Series E Preferred Stock
shall commence to accrue and be cumulative from the day upon which the original
issuance of shares of Series E Preferred Stock shall occur.
(c) No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments which may be in arrears.
(d) For purposes hereof, a "Business Day" shall mean any day on
which commercial banks in the City of Memphis, Tennessee, are required to be
open for the transaction of their general banking businesses.
3. No Preemptive Rights. The holders of shares of Series E Preferred
Stock shall not be entitled, as of right, to purchase or subscribe for any part
of the unissued Series E Preferred Stock, any UPC Common Stock, or any other
capital stock of the Corporation, or to purchase or subscribe for any bonds,
certificates of indebtedness, debentures, or other securities convertible into,
or carrying options, warrants or rights to purchase, any stock or other
securities of the Corporation, or to purchase or subscribe for any stock or any
securities of the Corporation purchased by the Corporation or by its nominee or
nominees, or to have any other preemptive rights now or hereafter defined by the
laws of the State of Tennessee.
4. Liquidation. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series E Preferred Stock shall be entitled to receive, after payment
or provision for payment of all debts but before any distribution of assets may
be made to the holders of UPC Common Stock or any other stock of the Corporation
ranking junior to the Series E Preferred Stock as to the distribution of assets
on liquidation, dissolution or winding up of the Corporation, out of assets of
the Corporation available for distributions to its shareholders, $25.00 per
share (the "Liquidation Value"), plus, in each case, accrued and unpaid
dividends thereon from (but not including) the day of original issuance to the
date of payment thereof. After such payment has been made in full to the
holders of the outstanding shares of Series E Preferred Stock (or funds
necessary for such payment have been set aside in trust for the account of such
holders so as to be and to continue to be available therefor), the holders of
Series E Preferred Stock shall be entitled to no further distributions, and the
remaining assets of the Corporation shall be divided and distributed among the
holders of UPC Common Stock (subject to any senior rights of any holders of any
other capital stock of the Corporation entitled to participate with the UPC
Common Stock as to the distribution of assets) then outstanding according to
their respective rights as shareholders. If, upon any liquidation, dissolution
or winding up of the Corporation, the net assets of the Corporation, or proceeds
thereof available for distribution among the holders of Series E Preferred Stock
should be insufficient to permit payment in full of the preferential amount
aforesaid and liquidating payments on any other Preferred Stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Series E Preferred
Stock, then such assets, or the proceeds thereof, shall be distributed among the
holders of Series E Preferred Stock and the holders of any such other Preferred
Stock ranking on a parity with the Series E Preferred Stock ratably in
accordance with the respective amounts which would be payable on such shares of
Series E Preferred Stock and on any such other Preferred Stock ranking on a
parity with the Series E Preferred Stock if all amounts payable thereon were
paid in full. Neither the consolidation or merger of the Corporation with or
into any other corporation or corporations, nor a reorganization of the
Corporation alone, nor the sale or transfer by the Corporation of all or
substantially all of its assets shall be deemed a "liquidation, dissolution or
winding up of the Corporation" within the meaning of this paragraph 4.
5. Right of Holders of Series E Shares to Vote.
(a) Except as hereinafter provided for and as otherwise from
time to time required by law, the Series E Preferred Stock shall have no voting
rights except for those which may be required by the laws of the State of
Tennessee.
(b) So long as any shares of Series E Preferred Stock remain
outstanding, the consents of the holders of at least two-thirds (2/3ds) of the
shares of Series E Preferred Stock outstanding at the time (voting separately as
a class together with all other series of Preferred Stock of the Corporation
ranking on a parity with the Series E Preferred Stock either as to dividends or
the distribution of assets upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable) given in
person or by proxy, either in writing or at any special or annual meeting called
for the purpose, shall be necessary to permit, effect or validate any one or
more of the following actions:
(i) the authorization, creation or issuance of a new class
or series of shares of capital stock of the Corporation having rights,
preferences or privileges senior to the Series E Preferred Stock, or any
increase in the number of authorized shares of any class or series having
rights, preferences or privileges senior to the Series E Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of the
Corporation's Charter which would materially and adversely affect any right,
preference, privilege or voting power of the Series E Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized UPC Common Stock or Preferred Stock or the authorization, creation or
issuance of any other series of UPC Common Stock or Preferred Stock, in each
case ranking on a parity with, or junior to the Series E Preferred Stock with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to "materially and
adversely affect" such rights, preferences, privileges or voting powers of the
Series E Preferred Stock.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise
be required shall be effected (i) all outstanding shares of Series E Preferred
Stock shall have been redeemed or called for redemption and (ii) funds shall
have been deposited in trust in an amount sufficient to effect such redemption
as provided herein.
Page 15 of Union Planters Corporation Charter
<PAGE> 16
6. Redemption.
(a) The shares of Series E Preferred Stock shall be redeemable,
in whole or in part, only at the option of the Corporation by resolution of its
Board of Directors but only with the prior consent of the Board of Governors of
the Federal Reserve System, or of the appropriate Federal Reserve Bank acting
under delegated authority, or their successors, at any time and from time to
time on or after March 31, 1997, at a price "Redemption Price" of $25.00 per
share, plus all dividends accrued and unpaid on such Series E Preferred Stock
from (but not including) the day of original issuance up to the Redemption Date
(as defined below). Notwithstanding the foregoing sentence of this Section, the
Corporation may acquire Series E Preferred Stock in any other lawful manner
permitted by its Charter or Bylaws.
(b) In the event that less than the entire amount of Series E
Preferred Stock outstanding is to be redeemed at any one time, the shares to be
redeemed shall be selected by lot or pro rata (as nearly as may be) or by any
other method determined by the Board of Directors of the Corporation in its sole
discretion to be equitable.
(c) Notice of any redemption, whether whole or partial,
shall be given by United States first class mail, postage prepaid, deposited in
the mail not less than 30 nor more than 60 days prior to the Redemption Date,
addressed to each holder of record of the shares selected for redemption at such
holders' respective addresses as the same shall appear on the stock register of
the Corporation. Each such notice shall state: (1) the date designated by the
Board of Directors as the "Redemption Date"; (2) the number of shares of Series
E Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the Redemption Price and the manner in which the Redemption Price is
to be paid and delivered; (4) the place or places where certificates
representing and evidencing such shares are to be surrendered for payment of the
Redemption Price; and (5) that dividends on the shares to be redeemed will cease
to accrue on such Redemption Date. No failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of the proceedings
for redemption. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the holder receives
the notice. On the Redemption Date, or on such earlier date as the Board of
Directors shall designate for payment of the Redemption Price (unless the
Corporation shall default in the payment of the Redemption Price as set forth in
such notice), the holders of shares of Series E Preferred Stock selected for
redemption and to whom notice has been duly given shall cease to be shareholders
with respect to such shares of Series E Preferred Stock and shall have no
interest in, or claim against the Corporation by virtue thereof and shall have
no dividend, voting or other rights with respect to such shares except the right
to receive the moneys payable upon such redemption from the Corporation or
otherwise, without interest thereon, upon surrender (and proper endorsement, if
required by the Corporation) of the certificates, and the shares represented
thereby shall no longer be deemed to be outstanding. The Corporation's
obligation to provide funds for redemption shall be deemed fulfilled if, on or
before the Redemption Date, the Corporation shall have deposited with a bank or
trust company (which may be an affiliate of the Corporation), having an office
or agency in Memphis, Tennessee, having a capital and surplus of at least
$50,000,000, or with any other such bank or trust company located in the
continental United States as may be designated from time to time by the
Corporation, funds necessary for such redemption, in trust, with irrevocable
instructions that such funds be applied to the redemption of the shares of
Series E Preferred Stock so called for redemption. Any interest accrued on such
funds shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of six years from such Redemption Date shall
be repaid or released to the Corporation, after which the holder or holders of
such shares of Series E Preferred Stock so called for redemption shall look only
to the Corporation for payment of the Redemption Price. Upon redemption of
Series E Preferred Stock in the manner set out herein, or upon the purchase of
Series E Preferred Stock by the Corporation, the Series E Preferred Stock so
acquired by the Corporation shall be retired and canceled and shall be restored
to the status of authorized but unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued, but not as shares of
Series E Preferred Stock.
7. Ranking.
(a) Any class or series of stock of the Corporation shall be
deemed to rank:
(i) "senior to" the Series E Preferred Stock if the holders
of such class or series shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of Series E Preferred Stock;
and
(ii) "on a parity with" the Series E Preferred Stock if the
holders of such class or series of stock and the holders of the Series E
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority one over the other whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share of such
other class or series of stock are different from those of the Series E
Preferred Stock.
(b) The Series E Preferred Stock shall rank on a parity with the
Corporation's Series B Preferred Stock, the Corporation's Series C Preferred
Stock, the Corporation's Series D Preferred Stock and the Corporation's Series
A Preferred Stock, if and when shares of such Series A Preferred Stock should be
issued.
8. Conversion of Series E Preferred Stock. The registered holders
of shares of Series E Preferred Stock shall have the right, at their option, to
convert such shares into shares of UPC Common Stock (and, upon the occurrence of
a certain type of merger, into other assets) on the following terms and
conditions:
Page 16 of Union Planters Corporation Charter
<PAGE> 17
(a) The registered holders of the Series E Preferred Stock shall
have the right at any time after the date of its original issuance but prior to
the Redemption Date designated in the notice of redemption given to such holders
in accordance with the provisions of Section 6, to convert each share of the
Corporation's Series E Preferred Stock registered in the name of such holders
into 1.25 shares of the Corporation's Common Stock having a par value of $5.00
per share. The Series E Preferred Stock shall not be convertible into any other
class or classes or any other series of any class or classes of capital stock
(or any other equity or debt security) of the Corporation.
(b) On presentation and surrender to the Corporation at any
office or agency maintained for the transfer of the Series E Preferred Stock
(the "Transfer Agent") of the certificates representing and evidencing Series E
Preferred Stock so to be converted, duly endorsed for conversion, the holder of
such Series E Preferred Stock shall be entitled, subject to the limitations
herein contained, to receive in exchange therefor a certificate or certificates
for fully paid and nonassessable shares, and cash for fractional shares (if any)
of UPC Common Stock or other securities pursuant to subsection (d) below on the
basis set forth. The Series E Preferred Stock shall be deemed to have been
converted and the person converting the same shall be deemed to have become the
holder of record of UPC Common Stock, for the purpose of receiving dividends and
for all other purposes whatsoever as of the date when the certificate or
certificates representing and evidencing such Series E Preferred Stock shall
have been surrendered to the Transfer Agent as aforesaid. The holder of Series
E Preferred Stock shall be responsible for selection of the method of delivery
to the Transfer Agent of any share certificates intended to be surrendered for
conversion and the Corporation shall have no risk or liability for the loss or
late delivery of certificates for conversion. Properly endorsed certificates
must be physically received by the Transfer Agent no later than the close of
business on the Business Day next preceding the designated Redemption Date in
order for the conversion to become effective. The Corporation shall not be
required to make any such conversion, and no surrender of the Series E Preferred
Stock shall be effective for such purposes, while the books for the transfer of
either class of stock are closed for any purpose, but the surrender of such
shares of Series E Preferred Stock for conversion during any period while such
books are closed shall become effective for all purposes of conversion
immediately upon the reopening of such books, as if the conversion had been made
on the date such shares of Series E Preferred Stock were surrendered.
(c) If at any time, or from time to time, the Corporation should
(i) declare and pay on, or in respect of, the UPC Common Stock any dividend
payable in shares of UPC Common Stock; or (ii) subdivide the outstanding shares
of UPC Common Stock into a greater number of shares, or contract the number of
outstanding shares of Series E Preferred Stock by combining such shares into a
smaller number of shares; or (iii) contract the number of outstanding shares of
the UPC Common Stock by combining such shares into a smaller number of shares,
or (iv) subdivide the outstanding shares of Series E Preferred Stock into a
greater number of shares of Series E Preferred Stock, the Conversion Ratio shall
be proportionately adjusted as of such time.
(d) If the Corporation should consolidate with, or merge into
any corporation or reclassify outstanding shares of UPC Common Stock (other than
by way of subdivision or contraction of such shares), each share of Series E
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property of the Corporation, or of the entity
resulting from such consolidation or merger, to which a holder of the number of
shares of UPC Common Stock deliverable upon conversion of such share of Series E
Preferred Stock would have been entitled upon such consolidation, merger or
reclassification, had the holder of such share of Series E Preferred Stock
exercised his right of conversion and had such shares been issued and
outstanding and had such holder been the holder of record of such UPC Common
Stock at the time of such consolidation, merger or reclassification and the
Corporation shall make lawful provision therefor as a part of such
consolidation, merger or reclassification.
(e) Whenever the conversion ratio or the type of consideration
other than UPC Common Stock receivable by the holder upon conversion of the
Series E Preferred Stock is required to be adjusted, as herein provided, the
Corporation shall promptly file with the transfer agent for the UPC Common Stock
and simultaneously provide to each holder of record of Series E Preferred Stock
a statement signed by the President or a Vice President or the Secretary or the
Treasurer setting forth the adjusted conversion ratio and, if applicable, a
description of the consideration receivable upon consummation, determined as so
provided. Such statement shall set forth in reasonable detail such facts as may
be necessary to show the reason for and the manner of computing such
adjustments.
(f) The Corporation shall pay any and all taxes which may be
imposed upon it with respect to the issuance and delivery of UPC Common Stock
upon the conversion of the Series E Preferred Stock as herein provided. The
Corporation shall not be required in any event to pay any transfer or other
taxes by reason of the issuance of such UPC Common Stock in names other than
those in which the Series E Preferred Stock surrendered for conversion may
stand, and no such conversion or issuance of UPC Common Stock shall be made
unless and until the person requesting such issuance has paid to the Corporation
the amount of any such tax, or has established to the satisfaction of the
Corporation and its transfer agent, if any, that such tax has been paid or is
not required. Upon any conversion of Series E Preferred Stock as herein
provided, no adjustment or allowance shall be made for dividends on the Series E
Preferred Stock so converted, and all rights to dividends, if any, shall cease
and be deemed satisfied; provided, however, that nothing in this section shall
be deemed to relieve the Corporation from its obligation to pay any dividends
which shall have been declared and shall be payable to holders of Series E
Preferred Stock of record as of a date prior to such conversion even though the
payment date for such dividend may be subsequent to the date of conversion.
(g) If any shares of Series E Preferred Stock should be
converted into UPC Common Stock at a time when the UPC Common Stock into which
such Series E Preferred Stock is convertible has attached or attributable
thereto Rights issued pursuant to the UPC Share Purchase Rights Agreement, the
surrender of such Series E Preferred Stock shall effectively cancel all Rights
attached or attributable to the share(s) of Series E Preferred Stock so
converted.
9. Reservation of UPC Common Stock. The Corporation shall, so long
as any of the Series E Preferred Stock shall remain outstanding, reserve and
keep available out of its authorized and unissued UPC Common Stock, solely for
the purpose of effecting the
Page 17 of Union Planters Corporation Charter
<PAGE> 18
conversion of the Series E Preferred Stock, such number of shares of UPC Common
Stock as shall, from time to time, be sufficient to effect the conversion of all
shares of the Series E Preferred Stock then outstanding. The Corporation shall,
from time to time, increase its authorized UPC Common Stock and take such other
actions as may be necessary to permit the issuance from time to time of the
shares of the UPC Common Stock, as fully paid and nonassessable shares, upon the
conversion of the Series E Preferred Stock in the manner herein provided.
10. Debt Obligations. The Corporation, at any time and from time to
time, may authorize the issuance of debt obligations, whether or not
subordinated, without the approval of any of its shareholders.
11. Definitions. For purposes of subparagraph (j) of Article Sixth
of the Charter:
(a) The term "outstanding", when used in reference to shares of
stock, shall mean shares which are authorized and issued, excluding shares held
by the Corporation or by a subsidiary of the Corporation (other than in a
fiduciary capacity), and excluding shares called for redemption, funds for the
redemption of which shall have been set aside by the Corporation or deposited in
trust in the manner provided herein;
(b) The amount of dividends "accrued" on any share of Series E
Preferred Stock as of the last day of the applicable Quarterly Dividend Period
(the "Quarterly Dividend Date") shall be deemed to be the amount of any unpaid
dividends accumulated thereon to and including such Quarterly Dividend Date,
whether or not earned or declared, and the amount of dividends "accrued" on any
shares of Series E Preferred Stock as at any date other than a Quarterly
Dividend Date shall be deemed to be (i) the amount of any unpaid dividends
accumulated thereon to and including the last preceding Quarterly Dividend Date,
whether or not earned or declared, plus (ii) an amount calculated on the basis
of the annual dividend rate fixed for the shares of Series E Preferred Stock
(8%) for the period subsequent to such last preceding Quarterly Dividend Date to
and including the date as of which the calculation is made, based on a 360-day
year of 12 consecutive 30-day months and the actual number of days elapsed in
the latter period.
COMMON STOCK
(a) Shares of Common Stock may be issued at such time or times and for
such consideration or considerations (not less than the par value thereof) as
the Board of Directors may deem advisable subject to such limitations as may be
set forth in the laws of the State of Tennessee or the Charter or the Bylaws of
the Corporation.
(b) Except as provided by law or this Charter, each holder of Common Stock
shall have one vote in respect of each share of stock held by him of record on
the books of the Corporation on all matters voted upon by the shareholders.
(c) Subject to the preferential dividend rights, if any, applicable to
shares of Preferred Stock and subject to applicable requirements, if any, with
respect to the setting aside of sums for purchase, retirement or sinking funds
for Preferred Stock, the holders of Common Stock shall be entitled to receive,
to the extent permitted by law, such dividends as may be declared from time to
time by the Board of Directors.
(d) In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of Preferred Stock, holders of Common Stock shall be entitled to receive
all of the remaining assets of the Corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively. The Board of Directors may distribute
in kind to the holders of Common Stock such remaining assets of the Corporation
or may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other person, corporation, trust, or other entity and receive
payment therefor in cash, stock or obligations of such other corporation, trust
or entity, or any combination thereof, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of Common Stock. Neither the merger or consolidation of the Corporation into or
with any other corporation, nor the merger of any other corporation into it, nor
any purchase or redemption of shares of stock of the Corporation of any class,
shall be deemed to be a dissolution, liquidation or winding up of the
Corporation for the purposes of this paragraph.
(e) Such numbers of shares of Common Stock as may from time to time be
required for such purpose shall be reserved for issuance (i) upon conversion of
any shares of Preferred Stock or any other obligation of the Corporation
convertible into shares of Common Stock which is at the time outstanding or
issuable upon exercise of any options or warrants at the time outstanding, and
(ii) upon exercise of any options or warrants at the time outstanding to
purchase shares of Common Stock.
SEVENTH: MINIMUM CAPITAL TO COMMENCE BUSINESS:
The Corporation will not commence business until consideration of one
thousand dollars ($1,000) has been received for the issuance of shares.
EIGHTH: NO PREEMPTIVE RIGHTS:
Neither the holders of Common Stock, nor the holders of Preferred Stock nor
the holders of any securities convertible into, exchangeable for or carrying any
rights to subscribe to any class of capital stock of the Corporation shall, as
such holders, have any right to acquire, purchase or subscribe for any shares of
the Common Stock or Preferred Stock of the Corporation or any class of capital
stock or any
Page 18 of Union Planters Corporation Charter
<PAGE> 19
securities convertible into, exchangeable for, or carrying any rights to
subscribe to, shares of Common Stock or any such other class of capital stock of
the Corporation, which it may hereafter issue or sell (whether out of the number
of shares now or hereafter authorized by this Charter, or out of any shares of
the Common Stock or other capital stock of the Corporation acquired by it after
the issuance thereof, or otherwise), other than such right, if any, as the Board
of Directors of the Corporation in its discretion may determine.
NINTH: DIRECTORS:
The number of directors of the Corporation shall be such number, not less
than seven (7) nor more than twenty-five (25), as shall be provided from time to
time in the Bylaws, provided that no amendment to the Bylaws decreasing the
number of directors shall have the effect of shortening the term of any
incumbent director, and provided further that no action shall be taken by the
directors (whether through amendment of the Bylaws or otherwise) to increase the
number of directors as provided in the Bylaws from time to time unless at least
sixty-six and two-thirds percent (66-2/3%) of the directors then in office shall
concur in said action. Directors need not be shareholders of the Corporation
nor need they be residents of Tennessee.
The Board of Directors shall be divided into three classes of directors
which shall be designated Class I, Class II and Class III. Such classes shall
be as nearly equal in number as the then total number of directors constituting
the entire board shall permit, with the terms of office of all members of one
class expiring each year. Should the number of directors fixed by the Bylaws
not be equally divisible by three, the excess director or directors shall be
assigned to Classes III or II as follows: (i) if there shall be an excess of
one directorship over a number equally divisible by three, such extra
directorship shall be classified in Class III; and (ii) if there be an excess of
two directorships over a number equally divisible by three, one shall be
classified in Class II and the other in Class III. At the annual meeting of
shareholders in 1981: directors of Class I shall be elected to hold office for a
term expiring at the next succeeding annual meeting; directors of Class II shall
be elected to hold office for a term expiring at the second succeeding annual
meeting; and directors of Class III shall be elected to hold office for a term
expiring at the third succeeding annual meeting. At each annual meeting of
shareholders after 1981, the successors to the members of the class of directors
whose terms shall then expire shall be elected to hold office for a term
expiring at the third succeeding annual meeting, except that the successor to
any director who shall have been elected by the directors to fill a vacancy
whose term shall expire at such meeting shall be elected by the shareholders for
a term expiring at the same time as the terms of other members of the same
class. Any director elected by the Board of Directors to fill a vacancy
(whether or not such vacancy shall have been created by an increase in the
number of directors) shall serve only until the next annual meeting of the
shareholders. Notwithstanding the foregoing, any director whose term shall
expire at any annual meeting shall continue to serve until such time as his
successor shall have been duly elected and shall have qualified unless his
position on the Board shall have been abolished by action taken to reduce the
size of the Board prior to said meeting.
Should the number of members of the Corporation's Board as fixed by the
Bylaws be reduced by amendment thereof, the Board shall designate, by the name
of the incumbent(s), the position(s) to be abolished, the first being selected
from Class II should the number of members of that Class exceed the number of
members of Class I, the second being selected from Class III should the number
of its members exceed the number of members of Class I, and others, in sequence
from Classes I, II, III, I, II, III, etc. in that order. Should additional
directorships be created pursuant to amendment of the Bylaws, they shall be
allocated first to Class II and then to Class I as may be required to make equal
the number of directorships in each class. Should the number of directorships
be equal as among the three classes, newly created positions shall be assigned
first to Class III, then to Class II, then to Class I, etc.
Notwithstanding any other provisions of this Charter or the Bylaws (and
notwithstanding the fact that some lesser percentage may be specified by law,
the Charter or the Bylaws of this Corporation), the affirmative vote of the
holders of sixty-six and two-thirds percent (66-2/3%) or more of the outstanding
shares of capital stock of this Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class) shall be
required (a) to amend, alter, change or repeal this ARTICLE NINTH of the Charter
or (b) to remove from office any director of this Corporation whether with or
without cause.
TENTH: NO CUMULATIVE VOTING FOR DIRECTORS:
Directors shall be elected by a plurality of the votes cast in the
election. No cumulative voting shall be permitted with respect to the election
of directors.
ELEVENTH: CERTAIN POWERS DEFINED:
The following provisions are hereby adopted for the purpose of defining,
limiting and regulating the powers of the Corporation and of its directors and
shareholders:
(a) All corporate powers of the Corporation shall be exercised by its
Board of Directors except as otherwise provided by law, provided, however, that
the Board of Directors, by a resolution adopted by a majority of the entire
Board, may designate an Executive Committee consisting of five (5) or more
directors, and other committees, consisting of five (5) or more directors, and
may delegate to such committee or committees all such authority of the Board
that it deems desirable, except that no such committee or committees, unless
specifically so authorized by the Board, shall have and exercise the authority
of the Board to:
(1) adopt, amend or repeal the Bylaws;
Page 19 of Union Planters Corporation Charter
<PAGE> 20
(2) submit to the shareholders of the Corporation any action
requiring shareholders' authorization under the Tennessee Business
Corporation Act;
(3) fill vacancies in the Board or in any committee;
(4) declare dividends or make other corporate distributions; nor
(5) issue or reissue any Common Stock, or Preferred Stock, or any
obligation of the Corporation exchangeable for or convertible into its
capital stock of any class or any warrant, right or option to acquire the
same.
The Board may designate one or more directors as alternate members of any
such committee, who may replace any absent member or members at any meeting of
such committee. Each such committee shall serve at the pleasure of the Board.
The designation of any such committee shall serve at the pleasure of the Board.
The designation of any such committee and the delegation thereto of authority
shall not relieve any director of any responsibility imposed by law. To the
extent consistent with law, this Charter and the Bylaws of the Corporation
relating to the conduct of meetings of the Board shall govern meetings of the
Executive and other committees.
(b) Whenever under the Tennessee Business Corporation Act shareholders are
required or permitted to take any action by vote, such action may be taken
without a meeting on written consent, setting forth the action so taken, signed
by all of the persons or entities entitled to vote thereon. Directors may take
any action which they are required or permitted to take under the Tennessee
Business Corporation Act without a meeting in the same manner.
(c) The Board of Directors shall have the power to adopt, amend or
repeal the Bylaws of the Corporation by a majority vote of the entire Board,
but any Bylaw so adopted by the Board may be further amended or repealed by
action of the shareholders of the Corporation. The Bylaws may contain any
provision for the regulation and management of the business or affairs of the
Corporation not inconsistent with law and this Charter.
(d) The Board of Directors shall have power from time to time to set apart
out of any funds of the Corporation available for dividends a reserve or
reserves for any proper purpose, and to abolish any such reserve.
(e) The Board of Directors from time to time shall determine whether and
to what extent and at what times and places and under what conditions and
regulations the accounts and books of the Corporation, or any of them, shall be
open to the inspection of the shareholders, and no shareholder shall have any
right to inspect any account, book or document of the Corporation except as
conferred by statute, the Bylaws or as authorized by resolution of the Board of
Directors.
(f) The Board of Directors of the Corporation, without the vote of the
shareholders, may distribute to its shareholders out of its capital surplus a
portion of its assets, in cash or in property, in accordance with and subject to
the limitations imposed by Section 48-16-401 of the Tennessee Business
Corporation Act, provided however, that no such distribution shall be made to
the holders of any class of shares until adequate provision shall be made for
any sinking fund requirements applicable to the retirement of Preferred Stock of
the Corporation.
(g) The Corporation shall have the right to purchase or otherwise acquire
its own shares in accordance with Section 48-16-302 of the Tennessee Business
Corporation Act to the extent of unreserved and unrestricted earned surplus
available therefor, or, if such unreserved and unrestricted earned surplus is
not available, to the extent of unreserved and unrestricted capital surplus
available therefor.
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the Corporation may
indemnify or purchase and maintain insurance to indemnify any of its directors,
officers, employees or agents and any persons who may serve at the request of
the Corporation as directors, officers, employees, trustees or agents of any
other corporation, firm, association, national banking association,
state-chartered bank, trust company, business trust, organization or any other
type of entity whether or not the Corporation shall have any ownership interest
in such entity. Such indemnification(s) may be provided for in the Bylaws, or
by resolution of the Board of Directors or by appropriate contract with the
person involved.
THIRTEENTH: CHARTER AMENDMENTS:
The Corporation reserves the right to amend, alter, change or repeal any
provision made in this Charter, in the manner now or hereafter prescribed by the
laws of the State of Tennessee, and all rights conferred herein upon
shareholders and the Board of Directors are granted subject to this reservation.
FOURTEENTH: SPECIAL VOTE IN CERTAIN CASES:
(a) Except as otherwise expressly provided in Paragraph 4 of this ARTICLE
FOURTEENTH, the affirmative vote of the holders of sixty-six and two-thirds
percent (66-2/3%) or more of the outstanding shares of capital stock of this
Corporation entitled to vote generally in the election of directors, considered
for the purposes of this ARTICLE FOURTEENTH as one class, shall be required to
authorize:
Page 20 of Union Planters Corporation Charter
<PAGE> 21
(1) any merger or consolidation of this Corporation with or into any
other corporation, or other entity; or
(2) any sale, lease, exchange, or other disposition of all or
substantially all of the assets of this Corporation to or with any other
corporation, person, or other entity, if, as of the "Date of Determination" as
defined in this ARTICLE FOURTEENTH, such other corporation, person, or entity is
the "Beneficial Owner," directly or indirectly, of ten percent (10%) or more of
the outstanding shares of capital stock of this Corporation entitled to vote
generally in the election of directors, considered for the purposes of this
ARTICLE FOURTEENTH as one class. Such affirmative vote shall be required
notwithstanding the fact that some lesser percentage may be specified in law or
any agreement with any national securities exchange.
(b) For purposes of this ARTICLE FOURTEENTH, any corporation, person, or
other entity shall be deemed to be the "Beneficial Owner" of any shares of
capital stock of this Corporation (i) which it or any "Affiliate" or "Associate"
of it (as defined in this ARTICLE FOURTEENTH) has the right to acquire pursuant
to any agreement, or upon exercise of conversion rights, warrants, or options,
or otherwise, or (ii) which are "Beneficially Owned," directly or indirectly
(including shares being owned through application of clause (i) above), by any
other corporation, person or entity which is its "Affiliate" or "Associate" (as
defined in this ARTICLE FOURTEENTH) or with which it or any "Affiliate" or
"Associate" or it has any agreement, arrangement, or understanding for the
purpose of acquiring, holding, voting, or disposing of the capital stock of this
Corporation. For the purposes of this ARTICLE FOURTEENTH, the outstanding
shares of any class of capital stock of this Corporation shall include shares
deemed owned through the application of clauses (i) and (ii) above but shall not
include any other shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants, or options, or otherwise.
(c) The Board of Directors of this Corporation shall have the power and
duty to determine for the purposes of this ARTICLE FOURTEENTH, on the basis of
information then known to it, whether any corporation, person, or other entity
"Beneficially Owns" ten percent (10%) or more of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, or is an "Affiliate" or an "Associate" (as defined in this ARTICLE
FOURTEENTH) or another. Any such determination by the Board of Directors made
in good faith shall be conclusive and binding for all purposes of this ARTICLE
FOURTEENTH.
(d) The provisions of this ARTICLE FOURTEENTH shall not apply to any
merger or consolidation of this Corporation with or into, or any sale, lease,
exchange, or other disposition of any assets of this Corporation to, any
corporation or entity of which a majority of the outstanding shares of all
classes of capital stock entitled to vote generally in the election of
directors, considered for this purpose as one class, is owned of record or
beneficially by this Corporation and its subsidiaries.
(e) As used in this ARTICLE FOURTEENTH, the following terms shall have the
following meanings:
(1) Affiliate. An "Affiliate" of, or a person "affiliated" with, a
specific person, means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
(2) Associate. The term "Associate" used to indicate a relationship
with any person, means (i) any corporation or organization (other than this
Corporation or a majority-owned subsidiary of this Corporation) of which such
person is an officer or partner or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity securities, (ii) any
trust or other estate in which such person has a substantial beneficial interest
or as to which such person serves as trustee or in a similar fiduciary capacity,
(iii) any relative or spouse of such person, or any relative of such spouse, who
has the same home as such person, or (iv) any investment company registered
under the Investment Company Act of 1940 for which such person or any affiliate
of such person serves as investment adviser.
(3) Date of Determination. The term "Date of Determination" means
(i) the date on which a binding agreement (except for the fulfillment of
conditions precedent, including, without limitation, votes of shareholders to
approve such transaction) is entered into by this Corporation, as authorized by
its Board of Directors, and another corporation, person or other entity
providing for any merger or consolidation of this Corporation or any sale,
lease, exchange or disposition of all or substantially all of the assets of this
Corporation, as referred to in Paragraph 1 in this ARTICLE FOURTEENTH; or, (ii)
if such an agreement as referred to in item (i) is amended so as to make it less
favorable to this Corporation and its shareholders, the date on which such
amendment is approved by the Board of Directors of this Corporation, or, (iii)
in cases where neither item (i) nor item (ii) shall be applicable, the record
date for the determination of shareholders of this Corporation entitled to
notice of and to vote upon the transaction in question. The Board of Directors
of this Corporation shall have the power and duty to determine for the purposes
of this ARTICLE FOURTEENTH the Date of Determination as to any transaction. Any
such determination by the Board of Directors made in good faith shall be
conclusive and binding for all purposes of this ARTICLE FOURTEENTH.
(f) The provisions of this ARTICLE FOURTEENTH as to the vote required for
any action described herein, shall apply in addition to any other provision for
a vote required with respect to such action by law or otherwise.
Notwithstanding any other provisions of this Charter or the Bylaws (and
notwithstanding the fact that some lesser percentage may be specified in law,
the Charter, or the Bylaws), the affirmative vote of the holders of sixty-six
and two-thirds percent (66-2/3%) or more of the outstanding shares of capital
stock of this Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) shall be required to amend,
alter, or repeal this ARTICLE FOURTEENTH.
Restated January 16, 1997
Amended February 20, 1997
Page 21 of Union Planters Corporation Charter
<PAGE> 1
EXHIBIT 3(b)
AMENDED AND RESTATED BYLAWS
OF
UNION PLANTERS CORPORATION
(A TENNESSEE CORPORATION)
_______________________________________
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of the
Corporation for the election of Directors and for the transaction of such other
business as may come before the meeting shall be held on the third Thursday in
April of each year if not a legal holiday, and if a legal holiday, at such time
as shall be designated by the Board. If the annual meeting shall not be held on
the day hereinabove provided for, the Board shall call a special meeting for the
election of Directors as soon thereafter as convenient, and in any event not
later than 30 days after said day.
Section 2. Special Meetings. Special meetings of the shareholders, unless
otherwise prescribed by law, may be called for any purpose or purposes
whatsoever at any time by the Chairman of the Board, the President, the
Secretary or the holders of not less than one tenth (1/10) of the shares
entitled to vote at such meeting.
Section 3. Notice of Meeting; Waiver of Notice. Written or printed notice
stating the place, day, hour, purpose or purposes for which the meeting is
called and the person or persons calling the meeting shall be delivered either
personally or by mail or at the direction of the Chairman of the Board, the
President, the Secretary or other person or persons calling the meeting to each
shareholder entitled to vote at the meeting. If mailed, such notice shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting and shall be deemed to be delivered when deposited in the United
States Mail addressed to the shareholder at his address as it appears on the
stock transfer records of the Corporation, with postage thereon prepaid. If
delivered personally, such notice shall be delivered not less than five (5) nor
more than sixty (60) days before the date of the meeting and shall be deemed
delivered when actually received by the shareholder. A certificate of the
Secretary or other person giving the notice, or of a transfer agent of the
Corporation, that the notice required by this Section has been given, in the
absence of fraud, shall be prima facie evidence of the facts therein stated.
Whenever the shareholders of this Corporation are authorized to take any action
after notice or after the lapse of a prescribed period of time, such action may
be taken without notice and without the lapse of such period of time, if at any
time before or after such action is completed each shareholder entitled to such
notice or
1
<PAGE> 2
entitled to participate in the action to be taken, (or his attorney-in-fact or
proxy holder), shall submit a signed waiver of notice of such requirement. When
a meeting is adjourned to another time or place, it shall not be necessary to
give any notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted on the original date of the meeting. However, if after the
adjournment the Board shall fix a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of record on
the new record date entitled to vote at the meeting.
Section 4. Place of Meetings. Meetings of the shareholders may be held at
such place, either within or without the State of Tennessee, as may be set by
the Board. If the Board shall fail to set the place of the meeting, the meeting
shall be held at the principal office of the Corporation.
Section 5. Quorum. At all meetings of the shareholders, the holders of a
majority of the shares of stock of the Corporation entitled to vote, present in
person or by proxy, shall constitute a quorum for the transaction of any
business, except as otherwise provided by statute or by the Charter or these
Bylaws. When a quorum is once present to organize a meeting, it is not broken
by the subsequent withdrawal of any of those present. A meeting may be
adjourned despite the absence of a quorum. The absence from any meeting of
holders of the number of shares of stock of the Corporation in excess of a
majority thereof which may be required by the laws of the State of Tennessee or
other applicable statute, the Charter, or these Bylaws, for action upon any
given matter, shall not prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if there shall be present
thereat, in person or by proxy, holders of the number of shares of stock of the
Corporation required for action in respect of such other matter or matters.
Section 6. Organization. At each meeting of the shareholders, the
Chairman of the Board or in his absence or inability to act, the Vice chairman,
or in the absence or inability to act of the Chairman of the Board and the Vice
Chairman, the President, shall act as Chairman of the meeting. The Secretary,
or in his absence or inability to act, any person appointed by the Chairman of
the meeting shall act as Secretary of the meeting and keep the minutes thereof.
Section 7. Order of Business. The order of business at all meetings of
the shareholders shall be as determined by the Chairman of the meeting.
Section 8. Voting; Consent of Shareholders in lieu of Meeting. Except as
otherwise provided by statute or the Charter, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each meeting
of the shareholders to one vote upon each matter submitted to a vote for every
share of such stock standing in his name on the record of shareholders of the
Corporation:
2
<PAGE> 3
a. On the date fixed by the Board in accordance with Section 6 of
Article VI hereof as the record date for the determination of the
shareholders who shall be entitled to notice of and to vote at such
meeting; or
b. If such record date shall not have been fixed for the
determination of shareholders entitled to notice of or entitled to vote at
a meeting of shareholders, the date on which notice of the meeting is
mailed shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination
shall apply to any adjournment thereof.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy. Every proxy must be signed by the shareholder
or his attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable prior to its use at the pleasure of the shareholder
executing it, except as otherwise provided in this Section or by law. The
authority of the holder of a proxy to act shall not be revoked by the
incompetence or the death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or the death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or written notice of such death is received by the corporate
officer responsible for maintaining the list of shareholders. A proxy
authorized by a shareholder which is entitled "irrevocable proxy" and which
states it is irrevocable is irrevocable when it is held by one of the following
or a nominee of any of the following:
(a) a pledge;
(b) a person who has purchased or agreed to purchase the shares;
(c) a person designated by or under an agreement comporting with
the law.
Notwithstanding a provision in a proxy stating that it is irrevocable, the
proxy becomes revocable after the pledge is redeemed or such agreement has
terminated.
A proxy may be revoked notwithstanding a provision making it irrevocable,
by a purchaser of shares without knowledge of the existence of the provision
unless the existence of the proxy and its irrevocability is noted conspicuously
on the face or back of the certificate representing such shares.
Whenever shareholders are required or permitted to take any action by vote,
such action may be taken without a meeting on written consent, setting forth the
action so taken, signed by all of the persons or entities entitled to vote
thereon.
3
<PAGE> 4
If a vote shall be taken on any question, then unless required by statute,
or determined by the Chairman of the meeting to be advisable, any such vote need
not be by ballot. On a vote by ballot, each ballot shall be signed by the
shareholder voting, or by his proxy, if there be such proxy, and shall state the
number of shares voted.
Section 9. List of Shareholders. A list of shareholders of the
Corporation as of the record date, certified by the officer responsible for the
preparation or by the Corporation's transfer agent, shall be open for inspection
at any meeting of the shareholders. If the right to vote at any meeting is
challenged, the Chairman of the meeting may rely on such list as evidence of the
right of the persons challenged to vote at such meeting.
Section 10. Inspectors of Election. The Board may, in advance of any
meeting of shareholders, appoint two or more inspectors to act at such meeting
or at any adjournment thereof. If the inspectors shall not be so appointed, or
if any of them shall fail to appear or act, the Chairman of the meeting may, and
on request of any shareholder entitled to vote thereat shall, appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the results, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the Chairman
of the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, request or matter determined by them,
and shall execute a certificate of the facts found by them. No director or
candidate for the office of director shall act as inspector of an election of
directors. Inspectors need not be shareholders of the Corporation.
Section 11. Examination of Corporate Records by Shareholders. Any person
who shall have been a shareholder of record for at least six (6) months
immediately preceding his demand, or who shall be the holder of record of at
least five percent (5%) of all of the outstanding shares of the Corporation,
upon written demand stating the purpose thereof, shall have the right to
examine, in person, or by agent or attorney, at any reasonable time or times,
for any proper purpose, the Corporation's books and records of account and the
minutes and records of meetings of shareholders, the Board and the Committees of
the Board, and to make extracts therefrom. Notwithstanding the foregoing, upon
proof of proper purpose by a shareholder of the Corporation, irrespective of the
period of time during which such shareholder shall have been a shareholder of
record and irrespective of the percentage of outstanding shares held by him, a
court having equity jurisdiction in Shelby County, Tennessee, may compel the
production for examination by such shareholder of the books, documents and
records of the Corporation. By resolution, the Board may adopt further policies
in respect of
4
<PAGE> 5
the right of the shareholders of the Corporation to inspect said books and
records provided that said policies shall not be more restrictive than the
provisions of applicable law at the time.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. Except as otherwise provided by law or by the
Charter, the business and affairs of the Corporation shall be managed by the
Board of Directors. The Board may exercise all such authority and powers of the
Corporation and do all such lawful acts and things as are not by statute or the
charter directed or required to be exercised or done by the shareholders.
Section 2. Number, Classification, Election, etc. The number of directors
of the corporation shall not be more than eighteen (18) and, pursuant to Article
NINTH of the Amended and Restated Charter of the Corporation, shall be divided
into three classes as equally as possible and designated Class I, Class II and
Class III as follows:
Class I shall consist of directors elected to hold office for a term
expiring at the 1997 Annual Meeting of Shareholders at which their respective
successors are to be elected for a term expiring at the 2000 Annual Meeting; and
Class II shall consist of directors elected to hold office for a term
expiring at the 1998 Annual Meeting of Shareholders at which their respective
successors are to be elected for a term expiring at the 2001 Annual Meeting; and
Class III shall consist of directors elected to hold office for a term
expiring at the 1999 Annual Meeting of Shareholders at which their respective
successors are to be elected for a term expiring at the 2002 Annual Meeting.
Thereafter, each class of directors shall be elected to hold office for
terms expiring on the third annual meeting succeeding the annual meeting at
which they were last elected. The successor to any director who shall have
been elected by the directors to fill a vacancy on the Board shall serve only
until the next annual meeting of shareholders for a term expiring at the same
time as the terms of the other members of the same class. Notwithstanding the
foregoing, any director whose term shall expire at any annual meeting shall
continue to serve until such time as his successor shall have been duly elected
and shall have qualified unless his position on the Board shall have been
abolished by action taken to reduce the size of the Board prior to said meeting.
No amendment of the Bylaws decreasing the number of directors shall have the
effect of shortening the term of any director. All directors shall be at least
21 years of age. Except as to persons who were Directors on February 21, 1985,
mandatory retirement is established at age 70, to be effective at the regular
Annual Shareholders Meeting following the 70th birthday; provided, however, a
Director who is elected to the Board
5
<PAGE> 6
in connection with an acquisition by the Corporation and is 70 years of age or
reaches his 70th birthday during said initial term as a member of the Board
shall serve until the expiration of the term of the Class in which he was
elected. Directors need not be shareholders of the Corporation nor need they be
residents of Tennessee. Except as otherwise provided by law or by Charter, the
directors shall be elected by written ballot at annual meetings of shareholders.
Article NINTH of the Corporation's Charter, as amended by the shareholders on
April 16, 1981, provides that the number of directors of the Corporation shall
be as provided in these Bylaws from time to time but shall not be less that 7
nor more than 25 and establishes guidelines for increasing the number of
directors by amendment of the Bylaws by two-thirds vote of the directors then in
office.
Section 3. Place of Meeting. Regular meetings of the Board shall be held
at such place within or without the State of Tennessee as the Board may from
time to time determine. Special meetings may be held at such place in Shelby
County, Tennessee, as may be determined by the person calling said meeting. In
all cases the place of the meeting shall be specified in the notice thereof.
Section 4. Organization Meeting. The Board of Directors shall meet for
the purpose of organization, the election of officers, and the transaction of
other business as soon as practicable after each annual meeting of the
shareholders, on the same day and at the same place where such annual meeting
shall be held. Notice of such meeting need not be given if held at said time
and place. Such meeting may be held at any other time or place (within or
without the State of Tennessee) which shall be specified in a notice thereof
given as hereinafter provided in Section 7 of this ARTICLE II.
Section 5. Regular Meetings. Regular meetings of the Board of Directors
of this Corporation shall be held on the third Thursday of each month at 9:30
a.m., in the Fourth Floor Executive Conference Room, Union Planters
Administrative Center, 7130 Goodlett Farms Parkway, Memphis, Tennessee. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which otherwise would be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board need not be given except as otherwise required
by law.
Section 6. Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board, the President, Executive Vice President, the
Secretary or any three or more Directors of the Corporation.
Section 7. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary or by or under the supervision of the persons calling the
meeting as hereinafter provided in this Section 7, in which notice shall be
stated the time and place of the meeting. Notice of each such meeting shall be
delivered to each director, either personally
6
<PAGE> 7
or by telephone, telegraph, cable or other method of communication, at least 24
hours before the time at which such meeting is to be held, or by first-class
mail, postage prepaid, addressed to him at his residence or usual place of
business, and deposited in the mail at least two days before the day on which
the meeting is to be held. Notice of any such meeting need not be given to any
director who shall, either before or after the meeting, submit a signed waiver
of notice or who shall attend such meeting (other than for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened). Neither the business to be transacted at, nor the
purpose of any regular or special meeting of the Board, need be specified in the
notice or waiver of notice of such meeting unless otherwise required by law of
the Bylaws.
Section 8. Quorum and Manner of Acting. A majority of the entire Board
shall be present in person at any meeting of the Board in order to constitute a
quorum for the transaction of business at such meeting, and except as otherwise
expressly required by the Charter, these Bylaws or any applicable statute, the
act of a majority of the directors present at any meeting at which a quorum is
present shall be act of the Board. In the absence of a quorum at any meeting of
the Board, a majority of the directors present thereat may adjourn such meeting
to another time and place until a quorum shall be present thereat. Notice of
the time and place of any such adjourned meeting shall be given to the directors
who were not present at the time of the adjournment and, unless such time and
place were announced at the meeting at which the adjournment was taken, to the
other directors. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 9. Organization. At each meeting of the Board, the Chairman of
the Board, or, in his absence or inability to act, the Vice Chairman, or, in his
absence or inability to act, the President, or in his absence or inability to
act, another director chosen by a majority of the directors present shall act as
Chairman of the meeting and preside thereat. The Secretary or, in his absence
or inability to act, any person appointed by the Chairman shall act as Secretary
of the meeting and keep the minutes thereof.
Section 10. Resignations. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board or to the
Chairman of the Board, the Vice Chairman or to the President or to the Secretary
of the Corporation. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 11. Vacancies. Newly created directorships resulting from an
increase in the number of directors and vacancies occurring in the Board for any
reason, without cause or for cause, may be filled by the shareholders or by the
Board of Directors. If the number of Directors remaining in office constitutes
fewer than a quorum, then
7
<PAGE> 8
the vacancy may be filled by a vote of the majority of those Directors then in
office. No person who has attained the age of seventy (70) years shall be
appointed to fill any vacancy.
Section 12. Removal of Directors. Any or all of the directors of the
Corporation may be removed with or without cause by vote of the holders of
sixty-six and two-thirds percent (66 2/3%) or more of the outstanding shares of
the capital stock of the Corporation entitled to vote generally in the election
of directors.
Section 13. Action by Written Consent. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting on written consent, setting forth the action so taken, signed by all of
the directors entitled to vote thereon. The instrument of consent shall be
filed with the minutes of the proceedings of the Board of Directors.
ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive Committee. The Board may, by resolution adopted by a
majority of the entire Board, designate an Executive Committee consisting of
five (5) or more of the directors of the Corporation, which Committee shall have
and may exercise all of the authority of the Board of Directors with respect to
all matters other than:
(a) The adoption, amendment or repeal of any Bylaw;
(b) The submission to shareholders of any action requiring
shareholders' authorization;
(c) The filling of vacancies in the Board of Directors or in any
committee thereof;
(d) The declaration of dividends or making of other corporate
distributions;
(e) The issuance of Common Stock, Preferred Stock or any other
obligation of the Corporation exchangeable for or convertible into its
capital stock of any class or any warrant, right or option to acquire the
same; or
(f) The removal or replacement of any officer elected by the Board or
appointed by the Chairman of the Board or President pursuant to authority
conferred upon them or either of them by the Board.
8
<PAGE> 9
The Board may designate one or more directors as alternate members of the
Executive Committee, who may replace any absent member or members at any meeting
of such committee. The Executive Committee shall serve at the pleasure of the
Board. The Executive Committee shall keep written minutes of its proceedings and
shall report such minutes to the Board. All such proceedings shall be subject
to revision or alteration by the Board; provided, however, that third parties
shall not be prejudiced by such revision or alteration.
Section 2. Other Committees. The Board may, by resolution adopted by a
majority of the entire Board, designate other Committees, each consisting of
three or more of the directors of the Corporation, which Committees, except as
otherwise proscribed by statute, shall have and may exercise the authority of
the Board to the extent that such authority shall be conferred by resolutions
designating such Committee or Committees adopted by vote of a majority of the
entire Board.
Section 3. General. A majority of any committee may determine its action
and fix the time and place of its meetings, unless the Board shall otherwise
provide. In the absence or disqualification of any member of any committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place and
stead of any such absent or disqualified member. In determining the existence
of a quorum, the Secretary of the Corporation shall not be counted unless he
shall be a director of the Corporation and shall have been duly appointed as a
member of such committee. The Board shall have the power at any time to change
the membership of any committee, to fill all vacancies, to designate alternate
members to replace any absent or disqualified member, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the Board from appointing
one or more committees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such committee shall
have or may exercise any authority or power of the Board in the management of
the business or affairs of the Corporation.
ARTICLE IV
OFFICERS
Section 1. Number and Qualifications. The officers of the Corporation
shall include the Chairman of the Board, the Vice Chairman, the President, one
or more Executive Vice Presidents, one or more Vice Presidents, the Treasurer
and the Secretary. Any two or more offices may be held by the same person,
except the offices of President and Secretary. Such officers shall be elected by
the Board of Directors each year at the organizational meeting held after the
Annual Meeting of shareholders, each to hold office until the meeting of the
Board following the next Annual Meeting of the shareholders and until his
successor shall have been duly elected and shall have qualified, or until his
death, or until he shall have resigned or have been removed in the manner
provided
9
<PAGE> 10
by law and these Bylaws. The Board may from time to time elect, or delegate to
the Chairman of the Board the power to appoint such other officers (including
one or more Assistant Vice Presidents, one or more Assistant Treasurers, and one
or more Assistant Secretaries) and such agents, as may be necessary or desirable
to carry on the business of the Corporation. Such other officers and agents
shall have such duties and shall hold their offices for such terms as may be
prescribed by the Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of his resignation to the Board, the Chairman of
the Board, the Vice Chairman, the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3. Removal. Any officer or agent of the Corporation may be
removed, either with or without cause, at any time, by the vote of the majority
of the entire Board at any meeting of the Board, or, except in the case of an
officer or agent elected or appointed by the Board, by the Chairman of the Board
or the President.
Section 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled by the Board at
any regular or special meeting for the unexpired portion of the term of the
office which shall be vacant, in the manner prescribed in these Bylaws for the
regular election or appointment to such office.
Section 5. The Chairman. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation and shall have the general and active
management of the business of the Corporation and shall have general and active
supervision and direction over the business and affairs of the Corporation and
over its several officers, agents and employees, subject, however, to the
control of the Board. He shall, if present, preside at each meeting of the
Shareholders and of the Board. He shall perform all duties incident to the
office of the Chairman of the Board and such other duties as may, from time to
time, be assigned to him by the Board. The Chairman of the Board shall be
authorized to do or cause to be done all things appropriate, including
preparation, execution and filing of any Registration Statements or other
documents to effectuate the registration of the Corporation's securities (when
necessary or desirable) with the Securities and Exchange Commission pursuant to
the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended,
and to effectuate the registration of the Corporation's securities as may be
necessary or desirable pursuant to the securities laws of any state. The
Chairman is also authorized to execute and cause to be filed on behalf of the
Corporation any reports which may be required by the securities laws or other
laws of the United States or of any state pursuant to any regulations adopted
with respect thereto.
10
<PAGE> 11
Section 5(a). The Vice Chairman. The Vice Chairman shall have those
duties assigned to him by the Chairman or the Board. In the case of the absence
of the Chairman or his inability to act, the Vice Chairman shall perform the
duties of the Chairman, and when so acting shall have all of the powers of, and
be subject to all the restrictions upon, the Chairman.
Section 6. The President. The President shall have general and active
supervision and direction over the other officers, agents and employees and
shall see that their duties are properly performed, subject, however, to the
control of the Board. Concurrently with the Chairman of the Board, the
President is hereby authorized to do or cause to be done all things appropriate,
including preparation, execution and filing of the registration of the
Corporation's securities (when necessary or desirable) with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended, and to effectuate registration of the
Corporation's Securities as may be necessary or desirable pursuant to the
securities laws of any state. The President is also authorized to execute and
cause to be filed on behalf of the Corporation any reports which may be required
by the securities laws or other laws of the United States or any state or
pursuant to any regulations adopted with respect thereto. In the case of the
absence of the Chairman of the Board and the Vice Chairman or their inability to
act, the President shall perform the duties of the Chairman of the Board, and
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the Chairman of the Board. He shall perform all duties
incident to the office of the Chairman of the Board and such other duties as,
from time to time, may be assigned to him by the Board or these Bylaws.
Section 7. Executive Vice-President. At the request of the Chairman of
the Board, the Vice Chairman and the President, or in the case of their absence
or inability to act, the Executive Vice-President shall perform the duties of
the Chairman of the Board, the Vice Chairman and the President, and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the Chairman of the Board, the Vice Chairman and the President. The
Executive Vice-President shall perform all duties incident to the office of
Executive Vice-President and such other duties as from time to time may be
assigned to him by the Board, the Chairman of the Board, the Vice Chairman, the
President, or by these Bylaws. One Executive Vice-President shall be the chief
financial officer of the Corporation.
Section 8. Vice Presidents. Each Vice-President shall perform all such
duties as from time to time may be assigned to him by the Board, the Chairman of
the Board, the Vice Chairman or the President. Vice-Presidents shall have
seniority based upon length of service as Vice-President. Unless the Board
shall otherwise provide, the Senior Vice-President shall perform the duties of
the Executive Vice-President in case of his absence or inability to act, or if
an Executive Vice-President shall not have been appointed by the Board.
Section 9. The Treasurer. The Treasurer shall:
11
<PAGE> 12
(a) Have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) Keep full and accurate records of receipts and disbursements in
books belonging to the Corporation.
(c) Cause all monies and other valuables to be deposited to the
credit of the Corporation;
(d) Receive, and give receipts for, monies due and payable to the
Corporation from any source whatsoever;
(e) Disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the proper vouchers
therefor; and
(f) In general, perform all the duties incident to the office of
Treasurer, and such other duties as from time to time may be assigned to
him by the Board, the President, the Vice Chairman or the Chairman of the
Board.
Section 10. The Secretary. The Secretary shall:
(a) Keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the committees of the
Board and the shareholders;
(b) See that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law;
(c) Be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation
(unless the seal of the Corporation on such certificates shall be facsimile
as hereinafter provided) and affix and attest the seal to all other
documents to be executed on behalf of the Corporation under its seal;
(d) See that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly
kept and filed;
(e) In general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Board, the Chairman of the Board, the Vice Chairman or the
President.
Section 11. Officers' Bond or Other Security. If required by the Board,
any officer of the Corporation shall give a bond or other security for the
faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
12
<PAGE> 13
ARTICLE V
INDEMNIFICATION
The Corporation does hereby indemnify its directors and officers to the
fullest extent permitted by the laws of the State of Tennessee and by Article
TWELVE of its Charter. The Corporation may indemnify any other person to the
extent permitted by the Charter and by applicable law.
ARTICLE VI
SHARES, ETC.
Section 1. Stock Certificates. Each shareholder of the Corporation shall
be entitled upon request to have a certificate in such form conforming to law as
shall be approved by the Board, representing the number of shares of stock of
the Corporation owned by him. The certificates representing shares of stock
shall be signed in the name of the Corporation by the Chairman of the Board or
the President or a Vice-President or an Assistant Vice-President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer,
and sealed with the seal of the Corporation (which seal may be a facsimile
engraved or printed); provided, however, that where any such certificate is
countersigned by a transfer agent and/or a registrar (other than the Corporation
or one of its employees), the signatures of the Chairman of the Board,
President, Vice-President, Secretary, or Treasurer upon such certificates may be
facsimiles, engraved or printed. In case any officer who shall have signed such
certificate shall have ceased to be such officer before such certificates shall
be issued, they may nevertheless be issued by the Corporation with the same
effect as if such officer were still in office at the date of their issue.
Section 2. Books of Account and Record of Shareholders. There shall be
kept correct and complete books and records of account, minutes of the
proceedings of its shareholders, Board of Directors and the committees of the
Board, and of all the business and transactions of the Corporation. There shall
also be kept at the office of its transfer agent or at both, a record containing
the names and addresses of all shareholders of the Corporation, the number of
shares of stock held by each, and the dates when they became the owners of
record thereof. Such shareholder records may be in written form, on magnetic
tape, disk pack storage, or in any other form capable of being converted into
written form within a reasonable time for visual inspection.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent or transfer clerk, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all applicable
13
<PAGE> 14
taxes with respect to the transfer. Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of a person in
whose name any share or shares stand on the record of shareholders as the owner
of such shares or shares for all purposes, including, without limitation, the
right to receive dividends or other distributions, and to vote as such owner,
and the Corporation shall not be bound to recognize any equitable or legal claim
to or interest in any such share or shares on the part of any other person.
Whenever any transfers of shares shall be made for collateral security and not
absolutely, and written notice thereof shall be given to the Secretary or to
such transfer agent or transfer clerk, such facts shall be stated in the entry
of the transfer.
Section 4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with applicable law, the Charter or these Bylaws,
as it may deem expedient concerning the issue, transfer, and registration of
certificates for shares of stock of the Corporation. It may appoint one or more
transfer agents or one or more transfer clerks and one or more registrars, and
may require all certificates for shares of stock to bear the signature or
signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificate(s) representing shares of the Corporation shall immediately notify
the Corporation of any loss, destruction or mutilation of such certificate(s),
and the corporation may issue a new certificate or certificates of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated. As a
condition precedent to the issuance of replacement certificates, such owner or
his legal representative as principal shall give to the Corporation a bond with
"open" (unlimited) penalty and in such form and with such surety or sureties as
the person designated by the Board in his absolute discretion shall determine to
be sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or the issuance of a new certificate. Any transfer agent which may
be appointed by the Corporation shall be and is hereby designated as the person
to make the determination whether the bond furnished meets the requirements of
this Section 5 unless the Board, by resolution, shall designate some other
person to do so. Anything herein to the contrary notwithstanding, the Board, in
its absolute discretion, may refuse to issue any such new certificate, except
pursuant to legal proceedings under the laws of the State of Tennessee.
Section 6. Fixing of Record Dates. The Board may fix, in advance, a date
not less than ten (10) days prior to the date then fixed for the holding of any
meeting of the shareholders as the time as of which the shareholders entitled to
notice of and to vote at such meeting or whose consent or dissent is required or
may be expressed for any purpose, as the case may be, shall be determined, and
all persons who as holders or record of voting stock at such time, and no
others, shall be entitled to such notice of, and to vote at such meeting or to
express their consent or dissent, as the case may be. The Board may fix in
advance a date not more than sixty (60) days and
14
<PAGE> 15
not less than ten (10) days prior to the date fixed for the payment of any
dividends; or for the making of any distribution; or for the allotment of rights
to subscribe for securities of the Corporation; or for the delivery of evidences
of rights or evidence of interests arising out of any change, conversion or
exchange of capital stock or other securities; as the record date for the
determination of shareholders entitled to receive any such dividend,
distribution, allotment, rights or interests, and in such case only the
shareholders of record at the time so fixed shall be entitled to receive such
dividend, distribution, allotment, rights or interests.
ARTICLE VII
OFFICES
Section 1. Principal Office. The principal office of the Corporation
shall be at 7130 Goodlett Farms Parkway, Memphis, Tennessee 38018, County of
Shelby, or at such other address as may be fixed by the Board.
Section 2. Other Offices. The Corporation may also have an office or
offices other than said principal office at such place or places, either within
or without the State of Tennessee, as the Board shall from time to time
determine or the business of the Corporation may require.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
ARTICLE IX
SEAL
The form of seal of the Corporation shall be determined by the Board of
Directors.
ARTICLE X
MISCELLANEOUS
Section 1. Reports to Shareholders. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual period of the Corporation and at such other times, if
any, as may be directed by the Board. A report to the shareholders based upon
such examination shall be mailed to each shareholder of the Corporation of
record on such date with respect to each report as may be determined by the
Board, at his address as the same appears on the stock transfer records of the
Corporation. Each such report shall show the assets
15
<PAGE> 16
and liabilities of the Corporation as of the close of the annual or other
period covered by the report. This report shall also show the Corporation's
income and expenses from the period from the end of the Corporation's preceding
fiscal year to the close of the annual or other period covered by the report,
any other information which may be required by law or regulation lawfully
adopted and shall set forth such other matters as the Board or such independent
firm of public accountants shall determine.
Section 2. Selection and Termination of Firm of Independent Public
Accountants. The independent auditors and accountants for the Corporation shall
be selected by the Board at a meeting held within thirty (30) days before the
beginning of the fiscal year and before the Annual Meeting of Shareholders
except that any vacancy occurring between Annual Meetings as a result of the
resignation of the accountants may be filled by the vote of a majority of those
members of the entire Board who are not salaried officers or employees of the
Corporation or of any affiliate of the Corporation. Such selection shall be
submitted for ratification or rejection at the next succeeding Annual Meeting of
Shareholders if such meeting be held, or at the next succeeding Special Meeting
of Shareholders in said fiscal year if the Annual Meeting shall not be held on
the date designated in the Bylaws therefor; provided, however, that a Special
Meeting of Shareholders need not be called to ratify or reject the selection by
the Board of independent auditors and accountants in the above manner to fill a
vacancy occurring between Annual Meeting as a result of the resignation of said
auditors and accountants. The employment of such accountants shall be
conditioned upon the right of the Corporation, either by the unanimous vote of
the entire Board of Directors or by vote of a majority of the outstanding voting
securities at any meeting called for the purpose, to terminate such employment
without penalty. If the selection of accountants shall be rejected by the
Shareholders or their employment be terminated by the Shareholders in the manner
provided above, the vacancy so occurring may be filled by the vote of a majority
of the outstanding voting securities either at the meeting at which the
rejection or termination by the Shareholders occurred or, if not so filled, at a
subsequent meeting which shall be called for the purpose.
ARTICLE XI
AMENDMENTS
These Bylaws may be amended or repealed, in whole or in part, or new Bylaws
may be adopted, by the Board of Directors at any meeting thereof by vote of a
majority of the entire Board, unless a greater affirmative vote is required by
the Charter; provided, however, that notice of such meeting shall have been
given as provided in these Bylaws, which notice shall mention that amendment or
repeal of the Bylaws, or the adoption of new Bylaws, is one of the purposes of
the meeting. Any such Bylaws adopted by the Board may be amended or repealed,
or new Bylaws may be adopted by vote of the shareholders of the Corporation, at
any annual or special meeting thereof; provided, however, that notice of such
meeting shall have been given as provided in these Bylaws,
16
<PAGE> 17
which notice shall mention that amendment or repeal of these Bylaws, or the
adoption of new Bylaws, is one of the purposes of such meeting.
ARTICLE XII
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT ANNUAL MEETINGS
Any proposal of a shareholder which is to be presented at any annual
meeting of shareholders shall be sent so as to be received by the Corporation at
its principal offices not less than one hundred twenty (120) days in advance of
the date of the Corporation's proxy statement issued in connection with the
previous year's annual meeting of shareholders.
February 20, 1997
17
<PAGE> 1
Exhibit 4(g)
AGREEMENT PURSUANT TO ITEM 601(b)(4)(iii)
OF REGULATION S-K
The Registrant hereby undertakes and agrees to furnish to the Securities
and Exchange Commission upon request a copy of any instrument relating to, or
defining the rights of the holders of, any long-term debt of the Registrant
and/or its subsidiaries, a copy of which has not been filed in reliance upon
Item 601(b)(4)(iii)(A) of Regulation S-K or which, although previously filed,
shall have become stale in the sense of Item 10(d) of Regulation S-K or which
shall have been disposed of by the Commission pursuant to its Record Control
Schedule. This Agreement and undertaking is intended to be effective with
respect to Registrant's Long-term Debt instruments whether securities have been
issued thereunder or are yet to be issued thereunder.
Date: March 14, 1997
By: /s/ Benjamin W. Rawlins, Jr.
_____________________________________
Benjamin W. Rawlins, Jr.
Chairman and Chief Executive Officer
<PAGE> 1
Exhibit 11
Page 1 of 2
Union Planters Corporation
Computation of Primary Earnings per Share
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
(Dollars in thousands, except per share data)
Computation for Statement of Earnings
Reconciliation of net earnings to amounts
used for primary earnings per share:
Net earnings $ 133,738 $ 172,756 $ 100,423
Less: Preferred stock dividends
Series B (45) (352) (352)
Series C - - (1,491)
Series D - (165) (494)
Series E (6,899) (6,734) (6,216)
Preferred stock of
acquired entity - (1,361) (1,345)
Net earnings applicable to primary ----------- ----------- -----------
earnings per share $ 126,794 $ 164,144 $ 90,525
=========== =========== ===========
Reconciliation of weighted average number
of shares to amount used in primary earnings
per share computation:
Average shares outstanding 63,728,753 59,146,826 58,487,901
Average common equivalent shares:
Assumed exercise of options 1,258,270 1,238,535 1,099,360
----------- ----------- -----------
Primary average shares outstanding 64,987,023 60,385,361 59,587,261
=========== =========== ===========
Primary earnings per share $ 1.95 $ 2.72 $ 1.52
=========== =========== ===========
</TABLE>
<PAGE> 2
<TABLE>
EXHIBIT 11
Page 2 of 2
Union Planters Corporation
Computation of Fully Diluted Earnings per Share
Years Ended December 31,
-----------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
Computation for Statement of Earnings
Reconciliation of net earnings to amounts used for
fully diluted earnings per share:
Net earnings $ 133,738 $ 172,756 $ 100,423
Less: Preferred stock dividends
Series C - - (1,491)
Series D - - (494)
Series E - - (6,216)
Preferred stock of
acquired entity - (1,361) (1,345)
----------- ----------- -----------
Net earnings applicable to fully
diluted earnings per share $ 133,738 $ 171,395 $ 90,877
=========== =========== ===========
Reconciliation of weighted average number of shares
to amount used in fully diluted earnings
per share computation:
Average shares outstanding 63,728,753 59,146,826 58,487,901
Average common equivalent shares:
Assumed exercise of options 1,350,738 1,252,908 1,101,637
Assumed conversion of preferred stock:
Series B 111,399 339,768 339,768
Series D - 125,785 -
Series E 4,327,433 4,129,709 -
----------- ----------- -----------
Fully diluted average shares outstanding 69,518,323 64,994,996 59,929,306
=========== =========== ===========
Fully diluted earnings per share $ 1.92 $ 2.64 $ 1.52
=========== =========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 13
1996 ANNUAL REPORT
(UNION PLANTERS CORPORATION LOGO)
<PAGE> 2
UNION PLANTERS CORPORATION LOGO
MARKET AREAS SERVED
TENNESSEE, MISSISSIPPI, MISSOURI, ARKANSAS,
LOUISIANA, ALABAMA, AND KENTUCKY
(Figure 1 - The inside front cover of Exhibit 13 (Union Planters Corporation's
Annual Report to Shareholders for 1996) contains a map of the states of
Tennessee, Mississippi, Missouri, Arkansas, Louisiana, Alabama, and Kentucky
showing the counties and a parish where Union Planters Corporation affiliates
have banking locations and the headquarters for Union Planters Corporation.
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
December 31, 1996 1995 % Change
- ----------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
FOR THE YEAR
Net earnings $ 133,738 $ 172,756 (22.59)%
PER COMMON SHARE
Net earnings
Primary $ 1.95 $ 2.72 (28.31)%
Fully diluted 1.92 2.64 (27.27)
Cash dividends 1.08 .98 10.20
Book value 19.55 18.52 5.56
AT YEAR END
Assets $15,222,563 $14,383,222 5.84%
Earning assets 13,836,011 13,284,698 4.15
Loans, net of unearned income 10,434,070 9,041,059 15.41
Allowance for losses on loans 166,853 156,388 6.69
Deposits 11,490,262 11,074,722 3.75
Shareholders' equity 1,352,874 1,213,162 11.52
Common shares outstanding (in thousands) 64,927 60,536 7.25
KEY RATIOS
Return on average assets .88% 1.26%
Return on average common equity 10.61 16.16
Net interest income (taxable-equivalent) as a percentage
of average earning assets 4.41 4.38
Expense ratio 1.58 1.74
Efficiency ratio 55.43 58.24
Allowance for losses on loans as a percentage of loans 1.86 1.92
Nonperforming loans as a percentage of loans .74 .56
Nonperforming assets as a percentage of loans and
foreclosed properties .92 .67
Allowance for losses on loans as a percentage of
nonperforming loans 253 344
Shareholders' equity to total assets 8.89 8.43
Leverage ratio 9.61 8.08
Tier 1 capital to risk-weighted assets 15.29 13.39
Total capital to risk-weighted assets 18.32 16.68
- ----------------------------------------------------------------------------------------------------
</TABLE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Letter to Shareholders...................................... 2
Selected Financial Data..................................... 4
Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ 5
Financial Tables............................................ 23
Selected Quarterly Data..................................... 32
Banks and Communities Served................................ 35
Report of Management........................................ 36
Report of Independent Accountants........................... 37
Consolidated Financial Statements........................... 38
Notes to Consolidated Financial Statements.................. 42
Executive Officers and Directors............................ 68
</TABLE>
1
<PAGE> 4
TO OUR SHAREHOLDERS
Last year was an exciting and productive year for your company. The banking
industry is continuing to undergo significant change and consolidation. Investor
expectations have forced the entire industry to place far more emphasis on
efficiency, productivity, and return on equity than was previously the case.
Union Planters has been an active participant in these changes. The
restructuring efforts begun in the third quarter of 1994 continue to produce
significant benefits. Best practices adopted throughout the Corporation's
subsidiary banks have helped us maintain good efficiency and customer service
trends. Growth through acquisitions has also permitted us to achieve economies
of scale in various services and product lines not available to smaller
institutions. As a result, we ended 1996 with the strongest balance sheet and
earnings potential in Union Planters' history. We are pleased to present our
1996 annual report and encourage you to review the financial statements and
management's discussion and analysis for details on our results.
FINANCIAL RESULTS
Through the first nine months of 1996, we had reported operating earnings
of $120.5 million (excluding the one-time SAIF assessment), or $2.38 per fully
diluted common share. This represented a record return on assets of 1.42% and a
return on common equity of 17.2% for the period and placed the Corporation at or
near the top quartile of its peer group on profitability.
Full year 1996 results include pooling of interests accounting on five
fourth quarter acquisitions, and include merger-related and other charges of
approximately $66 million after taxes. As a result, reported net earnings for
1996 were $133.7 million, or $1.92 per fully diluted common share, compared to
net earnings of $172.8 million, or $2.64 per fully diluted common share in 1995.
Before these charges, our return on assets and return on common equity were
1.31% and 16.2%, respectively.
Net interest income was $606 million for the year compared to $536 million
in 1995. Average loans increased 11% from $8.9 billion to $9.9 billion and the
net interest margin was 4.41% compared to 4.38% in 1995. Noninterest income,
excluding investment securities gains, increased to $222 million compared to
$203 million in 1995. Mortgage servicing and bank card income accounted for a
large part of the increase. Noninterest expense increased from $453 million to
$571 million primarily because of merger-related and other charges, including
the one-time SAIF assessment.
The provision for losses on loans for 1996 was $57.4 million compared to
$27.4 million for 1995. The increase relates both to the acquisitions and the
level of charge-offs in the credit card and consumer portfolio that has been
adversely impacted by the record number of nationwide bankruptcy filings. At
year end the allowance for losses on loans was $166.9 million or 1.86% of loans
and 253% of nonperforming loans. Nonperforming assets at December 31, 1996, were
$82.4 million or .92% of loans and foreclosed properties, compared to $54.6
million or .67% of loans and foreclosed properties at December 31, 1995.
FRANCHISE GROWTH
Union Planters Corporation ended the year with $15.2 billion in total
assets, an increase of 35% over the originally reported year end 1995 total of
$11.3 billion. We now serve customers in seven states with 438 banking locations
and 544 automated teller machines. Our acquisition program focused on classic
in-market mergers significantly increasing our market share in Memphis and a
number of other local markets in the region. For the first time, the Corporation
now ranks among the nation's 50 largest bank holding companies. Our breakdown of
loans and deposits by state is as follows:
<TABLE>
<CAPTION>
STATE LOANS DEPOSITS
- --------------------- ------ --------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Tennessee............ $6,712 $6,897
Mississippi.......... 1,474 1,980
Missouri............. 932 1,125
Arkansas............. 492 588
Louisiana............ 417 495
Alabama.............. 344 419
Kentucky............. 80 108
</TABLE>
Our most significant acquisition in 1996 was Memphis-based Leader Financial
Corporation that added approximately $1.6 billion deposits and doubled our
deposit market share in Memphis to 26%. The combined mortgage banking operations
of Leader and Union Planters originated approximately $850 million of loans
during 1996 and serviced $10.5 billion of loans at year end.
SHAREHOLDERS' EQUITY
Shareholders' equity at year end was a record $1.4 billion and represented
8.9% of total
2
<PAGE> 5
assets. Tier 1 regulatory capital, reflecting our recent Trust Preferred
Securities issuance, was $1.5 billion at year end giving us a leverage ratio of
9.6%, a tier 1 risk-based capital ratio of 15.3%, and a total risk-based capital
ratio of 18.3%. These ratios are substantially in excess of required regulatory
minimums.
With 68.3 million common and convertible preferred shares outstanding, our
year end market capitalization was $2.7 billion compared with $1.6 billion at
year end 1995.
QUARTERLY DIVIDEND INCREASE
Reflecting our strong capital position and confidence in core earnings, our
quarterly common stock dividend was recently increased 18.5% from $.27 per share
to $.32 per share or an annual rate of $1.28 per share.
DIRECTORS
During the year we were pleased to add five new directors to the Union
Planters Corporation Board. Edgar H. Bailey, James E. Harwood, and Spence L.
Wilson were former directors of Leader Financial Corporation and we welcome
their valuable experience. Parnell S. Lewis, Jr. and Donald F. Schuppe also
joined the corporate board, having previously served as directors of Union
Planters National Bank of Memphis.
We will miss the leadership and contributions of Robert B. Colbert, Jr. who
will be retiring from the Board this year. Bob has served as a director for
either Union Planters National Bank or Union Planters Corporation since 1968 and
as Chairman of the Corporation's Directors Audit Committee since 1984. We will
also miss Milton J. Womack, who joined our Board through our Grenada Sunburst
affiliation in 1994, and who has contributed greatly to the integration of
Sunburst with Union Planters. Milton will be retiring in April from the
Corporation's Board but will continue as Chairman of Union Planters Bank of
Louisiana.
OUTLOOK
We are very proud of the quality and involvement of our bank leadership at
the community level. Our affiliate banks have continued to produce record
profitability. As we ended 1996 the economy in all of our markets remained
strong. Absent a renewal of inflation or a significant increase in interest
rates, our expectation is for continued economic growth in the region during
1997. We anticipate good loan growth again this year and will be targeting our
long term goal of being in the top quartile of our peer group on both return on
assets and return on shareholders' equity.
We will continue to focus on the complete integration of our recent
acquisitions and the achievement of budgeted cost savings. At the same time, we
will also continue to focus on sales training and the sale of more financial
products through our extensive retail branch network.
We welcome our new shareholders and invite you to participate in our
automatic dividend reinvestment program that offers a 5% discount and no
brokerage fees on share purchases.
Thank you for your continued support.
Yours very truly,
/s/ Benjamin W. Rawlins, Jr.
Benjamin W. Rawlins, Jr.
Chairman and Chief Executive Officer
3
<PAGE> 6
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, (1)
-------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income.................................... $ 605,962 $ 535,997 $ 504,500 $ 439,290 $ 357,365
Provision for losses on loans.......................... 57,395 27,381 9,661 22,660 37,367
Investment securities gains (losses)................... 4,081 409 (22,515) 3,508 11,880
Other noninterest income............................... 222,250 203,014 160,109 154,254 136,162
Noninterest expense.................................... 570,634 452,635 486,836 408,888 362,028
----------- ----------- ----------- ----------- -----------
Earnings before income taxes, extraordinary item, and
accounting changes................................... 204,264 259,404 145,597 165,504 106,012
Applicable income taxes................................ 70,526 86,648 45,174 51,864 30,219
----------- ----------- ----------- ----------- -----------
Earnings before extraordinary item and accounting
changes.............................................. 133,738 172,756 100,423 113,640 75,793
Extraordinary item and accounting changes, net of
taxes................................................ -- -- -- 637 2,847
----------- ----------- ----------- ----------- -----------
Net earnings........................................... $ 133,738 $ 172,756 $ 100,423 $ 114,277 $ 78,640
=========== =========== =========== =========== ===========
PER COMMON SHARE DATA(2) & (5)
Primary
Earnings before extraordinary item and accounting
changes............................................ $ 1.95 $ 2.72 $ 1.52 $ 2.19 $ 1.75
Net earnings......................................... 1.95 2.72 1.52 2.20 1.75
Fully diluted
Earnings before extraordinary item and accounting
changes............................................ 1.92 2.64 1.52 2.14 1.73
Net earnings......................................... 1.92 2.64 1.52 2.15 1.73
Cash dividends......................................... 1.08 .98 .88 .72 .60
Book value............................................. 19.55 18.52 15.42 14.80 14.08
BALANCE SHEET DATA (AT PERIOD END)
Total assets........................................... $15,222,563 $14,383,222 $13,425,063 $11,866,609 $10,180,375
Loans, net of unearned income.......................... 10,434,070 9,041,059 8,436,650 6,615,884 5,364,377
Allowance for losses on loans.......................... 166,853 156,388 154,131 141,999 114,130
Investment securities.................................. 2,956,234 3,573,054 3,592,482 3,854,767 3,370,321
Deposits............................................... 11,490,262 11,074,722 10,702,569 9,879,780 8,714,306
Short-term borrowings.................................. 449,146 838,283 699,838 300,414 343,452
Short- and medium-term subsidiary bank notes........... 400,000 -- -- -- --
Long-term debt(3)
Parent company....................................... 373,459 214,758 114,790 114,729 74,292
Subsidiary banks..................................... 900,257 811,819 693,002 463,055 202,847
Total shareholders' equity............................. 1,352,874 1,213,162 1,008,594 935,730 670,267
Average assets......................................... 15,274,782 13,661,748 13,105,179 11,565,505 9,475,049
Average shareholders' equity........................... 1,283,575 1,119,232 1,042,990 813,140 623,869
Average shares outstanding (in thousands)
Primary.............................................. 64,987 60,385 59,587 43,192 35,463
Fully Diluted........................................ 69,518 64,995 59,929 47,422 38,307
PROFITABILITY AND CAPITAL RATIOS
Return on average assets............................... .88% 1.26% .77% .99% .83%
Return on average common equity........................ 10.61 16.16 9.76 14.92 13.15
Net interest income (taxable-equivalent)/average
earning assets(4).................................... 4.41 4.38 4.31 4.29 4.26
Loans/deposits......................................... 90.81 81.64 78.83 66.96 61.56
Common and preferred dividend payout ratio............. 50.64 32.74 40.99 28.34 32.95
Equity/assets (period end)............................. 8.89 8.43 7.51 7.89 6.58
Average shareholders' equity/average total assets...... 8.40 8.19 7.96 7.03 6.58
Leverage ratio......................................... 9.61 8.08 7.53 7.62 6.36
Tier 1 capital/risk-weighted assets.................... 15.29 13.39 12.75 14.07 11.70
Total capital/risk-weighted assets..................... 18.32 16.68 14.97 16.51 13.64
ASSET QUALITY RATIOS(6)
Allowance/period end loans............................. 1.86 1.92 1.98 2.27 2.20
Nonperforming loans/total loans........................ .74 .56 .44 .65 1.16
Allowance/nonperforming loans.......................... 253 344 444 346 189
Nonperforming assets/loans and foreclosed properties... .92 .67 .58 .96 1.83
Provision/average loans................................ .66 .34 .14 .37 .74
Net charge-offs/average loans.......................... .60 .34 .09 .27 .52
</TABLE>
- ---------------
(1) Reference is made to "Basis of Presentation" in Note 1 to the consolidated
financial statements.
(2) Share and per share amounts have been retroactively restated for significant
acquisitions accounted for as poolings of interests. (See Note 2 to the
consolidated financial statements).
(3) Long-term debt includes Medium-Term Bank Notes, Federal Home Loan Bank
(FHLB) advances, subordinated notes and debentures, obligations under
capital leases, mortgage indebtedness, Trust Preferred Securities, and notes
payable with maturities greater than one year.
(4) Average balances and calculations do not include the impact of the net
unrealized gain or loss on available for sale securities.
(5) Leader Financial Corporation was organized as a holding company on March 18,
1993 in connection with the conversion of its principal subsidiary, Leader
Federal Bank for Savings, from a federal mutual savings bank to a
federally-chartered capital stock savings bank. (See Note 2 to the
consolidated financial statements). Accordingly, earnings per share for the
year ended December 31, 1992 is calculated using only the Corporation's
historical net earnings and the calculation of earnings per share for the
year ended December 31, 1993 is based on the Corporation's historical net
earnings for 1993 plus Leader's fourth quarter net earnings, since the stock
conversion occurred on September 30, 1993.
(6) FHA/VA government-insured/guaranteed loans have been excluded, since they
represent minimal credit risk to the Corporation. See Tables 9 and 10 and
the "Loans" discussion which follow.
4
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
This section of the Annual Report provides a narrative discussion and
analysis of Union Planters Corporation's (the Corporation) results of operations
and financial condition. The discussion should be read with the consolidated
financial statements and accompanying notes and the financial tables at the end
of this section.
Certain of the information included in this discussion contains
forward-looking statements and information that are based on management's belief
as well as certain assumptions made by, and information currently available to
management. When used in this discussion, the words "anticipate," "project,"
"expect," and similar expressions are intended to identify forward-looking
statements. Although management of the Corporation believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations and projections will prove to have been
correct. Such forward-looking statements are subject to certain risks,
uncertainties, and assumptions. Should one or more of these risks materialize,
or should any such underlying assumptions prove to be incorrect, actual results
may vary materially from those anticipated, estimated, projected or expected.
Among key factors that may have a direct bearing on the Corporation's operating
results are fluctuations in the economy; the actions taken by the Federal
Reserve for the purpose of influencing the economy; the Corporation's ability to
realize anticipated cost savings related to both recently completed and pending
acquisitions; the ability of the Corporation to achieve anticipated revenue
enhancements; its success in assimilating acquired operations into the
Corporation's culture, including its ability to instill the Corporation's credit
culture and approach to operating efficiencies into acquired operations; the
continued growth of the markets in which the Corporation operates consistent
with recent historical experience; the absence of undisclosed material
contingencies inherent in acquired operations including asset quality and
litigation contingencies; the enactment of federal legislation impacting the
operations of the Corporation; and the Corporation's ability to expand into new
markets and to maintain profit margins in the face of pricing pressure.
THE COMPANY
Union Planters Corporation is a $15.2-billion, multi-state bank holding
company whose primary business is banking. The Corporation is the largest bank
holding company headquartered in Tennessee and is one of the fifty largest bank
holding companies headquartered in the United States. Union Planters National
Bank (UPNB), a $6.0-billion bank headquartered in Memphis, Tennessee, is the
Corporation's largest subsidiary. The principal markets of the Corporation are
in Tennessee, Mississippi, Missouri, Arkansas, Louisiana, Alabama, and Kentucky.
These areas are served by the Corporation's 37 banking subsidiaries and their
438 banking offices and 544 ATMs. The map on the inside front cover of this
report, Table 15, and the listing of Communities Served on page 35 provide
information regarding the size, locations, and markets served by the
Corporation's banking subsidiaries.
As part of the Corporation's banking services, its subsidiaries are engaged
in mortgage origination and servicing; investment management and trust services;
the issuance of credit and debit cards; the origination, packaging, and
securitization of loans, primarily the government-guaranteed portions of Small
Business Administration (SBA) loans; the purchase of delinquent FHA/VA
government-insured/guaranteed loans from third parties and GNMA pools serviced
for others; full-service and discount brokerage services; and the sale of
bank-eligible insurance products and services.
1996 EARNINGS OVERVIEW
The Corporation reported net earnings for 1996 of $133.7 million, versus
$172.8 million and $100.4 million, respectively, in 1995 and 1994. On a fully
diluted basis, earnings per common share were $1.92 in 1996 compared to $2.64 in
1995 and $1.52 in 1994. Results for 1996 were reduced $101.7 million
(approximately $66.4 million after taxes) by merger-related and other
significant net charges. Similarly, 1995 results were reduced by merger-related
charges, net of investment securities gains, of $11.5 million (approximately
$9.5 million after taxes). Results in 1994 were reduced by merger-related,
restructuring, and other significant charges of approximately $78.5 million
(approximately $51.4 million after taxes). The "Noninterest Income" and
"Noninterest Expense" discussions which follow provide details of the components
of these charges.
5
<PAGE> 8
Excluding the impact of the above described net charges on the
Corporation's results, earnings would have been approximately $200.1 million,
$182.3 million, and $151.8 million, respectively for 1996, 1995, and 1994.
Presenting the Corporation's results before these significant net charges
provides, in management's opinion, a better indication of the Corporation's core
earnings performance over the past three years. However, there can be no
assurance that similar charges will not occur in the future as the Corporation
continues its acquisition program which is described below. Reference is made to
Table 1 which provides a summary of the Corporation's operating results for the
past five years.
The growth in 1996 earnings before the above charges was due to the
continued growth of net interest income, which increased 13% between 1996 and
1995, and the continued growth of noninterest income which increased 5%.
Partially offsetting this growth was a higher provision for losses on loans
which increased $30 million between 1996 and 1995. The increase in the provision
for losses on loans resulted from the level of charge-offs in the credit card
portfolio and from provisions for losses on loans taken by institutions the
Corporation acquired in 1996. Noninterest expenses excluding the above charges
increased only 3.5% in 1996. The following sections provide a more detailed
discussion of the Corporation's financial condition and results of operations.
During 1996, the Corporation acquired seven financial institutions which
are identified in the table below. All but two of the acquisitions were
accounted for using the pooling of interests method of accounting. Current year
results have been restated for all of the acquisitions and prior year results
have been restated only for the Leader Financial Corporation (Leader)
acquisition, since the other pooling transactions were not considered material
in the aggregate to the Corporation's financial condition or results of
operations.
ACQUISITIONS
Acquisitions have been, and are expected to continue to be a significant
part of the Corporation's growth and have enhanced the market positions of the
Corporation in the various states it serves. The Corporation completed four
acquisitions in 1992, twelve in 1993, thirteen in 1994, three in 1995, and seven
in 1996 adding approximately $1.6 billion in total assets in 1992, $1.7 billion
in 1993, $3.8 billion in 1994, $1.3 billion in 1995, and $4.2 billion in 1996.
The table below provides a summary of the acquisitions completed over the last
three years and their impact on the Corporation's total assets. The Corporation
completed the acquisition of a third-party marketer of non-traditional bank
products after December 31, 1996 and currently has two acquisitions of financial
institutions pending with aggregate total assets of approximately $150 million.
No significant charges against earnings are expected in 1997 related to the
pending acquisitions. Additional significant charges of the types discussed in
the "1996 Earnings Overview" above would be expected only if a significant
in-market acquisition or other significant acquisition were to be consummated.
6
<PAGE> 9
UNION PLANTERS CORPORATION
ACQUISITIONS COMPLETED IN 1994, 1995, AND 1996
<TABLE>
<CAPTION>
ACCOUNTING
INSTITUTION ACQUIRED DATE STATE ASSETS CONSIDERATION METHOD
- ------------------------------- ----- ------------ ---------- -------------------------------------------- ----------
(MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Mid-South Bancorp, Inc. 1/94 Kentucky/ $ 184.7 .8 million shares of Common Stock Pooling
Tennessee
Anderson County Bank 3/94 Tennessee 22.5 $ 2.5 million cash Purchase
First National Bancorp of 3/94 Tennessee 170.0 1.0 million shares of Common Stock Pooling
Shelbyville, Inc.
Clin-Ark Bancshares, Inc. 4/94 Arkansas 50.3 .2 million shares of Common Stock Pooling
Security Federal Savings and 4/94 Tennessee 14.6 $ .4 million cash Purchase
Loan Association
Tennessee Bancorp, Inc. 5/94 Tennessee 99.0 $13.5 million cash Purchase
Liberty Bancshares, Inc. 7/94 Tennessee 180.1 1.2 million shares of Common Stock Pooling
Earle Bankshares, Inc. 8/94 Arkansas 42.5 .3 million shares of Common Stock Pooling
BNF Bancorp, Inc. 9/94 Alabama 276.4 2.0 million shares of Common Stock Pooling
Cherokee Valley Federal 9/94 Tennessee 58.5 $ 4.4 million cash Purchase
Savings Association
Commercial Bancorp, Inc. 11/94 Tennessee 28.6 .2 million shares of Common Stock Pooling
Mid South Bancshares, Inc. 12/94 Arkansas 126.0 .6 million shares of Common Stock Pooling
Grenada Sunburst System 12/94 Mississippi/ 2,518.0 13.8 million shares of Common Stock Pooling
Corporation Louisiana
First State Bancorporation, 7/95 Tennessee 116.2 .4 million shares of Series E Preferred Purchase
Inc.
Planters Bank and Trust Company 9/95 Arkansas 59.0 .3 million shares of Common Stock Pooling
Capital Bancorporation, Inc. 12/95 Missouri 1,105.1 4.1 million shares of Common Stock Pooling
First Bancshares of Eastern 1/96 Arkansas 64.1 $10.9 million cash Purchase
Arkansas, Inc.
First Bancshares of N. E. 1/96 Arkansas 65.4 $ 9.2 million cash Purchase
Arkansas, Inc.
Leader Financial Corporation 10/96 Tennessee 3,410.9 15.3 million shares of Common Stock Pooling
Franklin Financial Group, Inc. 10/96 Tennessee 137.1 .7 million shares of Common Stock Pooling
Valley Federal Savings Bank 10/96 Alabama 122.1 .4 million shares of Common Stock Pooling
BancAlabama, Inc. 10/96 Alabama 97.9 .4 million shares of Common Stock Pooling
Financial Bancshares, Inc. 12/96 Missouri 325.9 1.2 million shares of Common Stock Pooling
--------
Total assets of completed acquisitions $9,274.9
========
</TABLE>
Management's philosophy has been to provide additional diversification of
the revenue sources and earnings of the Corporation through the acquisition of
well-managed financial institutions. The strategy generally targets in-market
institutions, institutions in contiguous markets, and institutions having
significant local market share.
Historically and where practical, the Corporation permits an acquired
institution to remain a separate entity and to retain its local board of
directors and officers. Local independence in their day-to-day operations is
encouraged to allow the acquired institutions to grow loans and deposits
commensurately with their local markets. Certain functions, such as data
processing, investment management, payroll and benefits administration, loan
review, and audit are centralized to achieve operating efficiencies and risk
management objectives. This strategy has made the Corporation an attractive
potential acquirer of financial institutions.
With the changing environment in the banking industry regarding interstate
banking and branching, management envisions being able to continue its separate
bank charter strategy with respect to acquired institutions. However, the
strategy will continue only if the institutions, in management's opinion,
continue to perform at higher levels than would a single charter organization.
During the past two years, a number of the Corporation's smaller banking
subsidiaries located in contiguous markets have been merged to effect
efficiencies in their operations and to eliminate duplicate efforts.
Additionally, a majority of the Corporation's banking subsidiaries have changed
their names to include "Union Planters" to increase the effectiveness of
advertising efforts.
7
<PAGE> 10
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income is the principal source of earnings for the
Corporation. Net interest income is comprised of interest income and
loan-related fees less interest expense. Net interest income is affected by a
number of factors including the level, pricing, mix, and maturity of earning
assets and interest-bearing liabilities; interest-rate fluctuations; and asset
quality. For purposes of this discussion, net interest income is presented on a
fully-taxable-equivalent basis (FTE), which restates tax-exempt income to an
amount that would yield the same after-tax income had the income been subject to
taxation at the federal statutory income tax rate. Reference is made to Table 4
and Table 5 which present the Corporation's average balance sheet and
rate/volume analysis for each of the three years ended December 31, 1996.
Net interest income (FTE) was $622.7 million in 1996, an increase of $69.2
million, or 12.5% over 1995. Net interest income in 1994 was $523.0 million. The
growth over the three year period is attributable primarily to the growth of
average earning assets, higher yields on earning assets, and a higher percentage
of loans in earning assets.
The net interest margin (net interest income as a percentage of average
earning assets) for 1996 was 4.41% compared to 4.38% and 4.31%, respectively,
for 1995 and 1994. The interest-rate spread between earning assets and
interest-bearing liabilities increased two basis points between 1995 and 1996 to
3.71% following an eleven-basis-point decrease between 1994 and 1995 from 3.80%
to 3.69%.
The Corporation has used, to a limited extent, interest-rate swaps and caps
to manage certain elements of its interest-rate risk. At December 31, 1996,
there were no such instruments outstanding. Note 17 to the consolidated
financial statements provides a reconciliation of the changes in these
instruments for the past two years. The impact of interest-rate swaps and caps
on net interest income was to reduce net interest income $1.5 million and $2.9
million, respectively, in 1996 and 1995 and to increase net interest income
$600,000 in 1994.
INTEREST INCOME
A breakdown of the components of average earning assets is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Average earning assets (in billions)........................ $14.1 $12.6 $12.1
Comprised of:
Loans..................................................... 70% 70% 63%
Investment securities..................................... 27 26 34
Other earning assets...................................... 3 4 3
- ---------------
Yield earned on average earning assets...................... 8.48% 8.45% 7.49%
</TABLE>
Fully-taxable-equivalent interest income increased $128.5 million in 1996
to $1.2 billion. The increase is attributable to the growth of average earning
assets which increased interest income by approximately $125.0 million in 1996.
Average earning assets in 1996 were $14.1 billion, an increase of $1.5 billion
over 1995. Also contributing to the increase were higher yields on average
earning assets which increased interest income approximately $3.5 million.
Higher loan volumes and yields accounted for 75% of the increase while
investment securities, net of declines in the other earning asset categories,
accounted for the balance of the growth. The mix of average earning assets has
remained constant over the past two years with a 7% increase in the percentage
of loans to total earning assets occurring between 1994 and 1995.
The growth of loans, which accounted for most of the increase, is due
primarily to acquisitions and to an increase in the purchase of delinquent
FHA/VA government-insured/guaranteed loans. The average yield on loans increased
two basis points between 1995 and 1996 to 9.18%. Between 1995 and 1996, average
investment securities increased $543 million to $3.8 billion and the average
yield increased eight basis points to 6.90%.
The $160.9-million increase in interest income from 1994 to 1995 was
attributable to higher yields on earning assets, primarily loans, which
accounted for approximately $98.1 million of the increase and
8
<PAGE> 11
to the growth of average earning assets which increased interest income
approximately $62.8 million. Average loans increased $1.2 billion between 1994
and 1995 and the average yield increased 68 basis points to 9.16%.
Management expects some growth in interest income in 1997 assuming interest
rates remain level during the first part of the year and gradually rise over the
latter half of 1997 and if the level of nonperforming loans does not increase
significantly. Another key factor that will affect interest income is the
economy. A moderately growing economy should favorably impact interest income
over the next twelve months. Reference is made to the "Asset/Liability"
discussion for information regarding how the Corporation was positioned at
December 31, 1996 to react to changing interest rates.
INTEREST EXPENSE
A breakdown of the components of average interest-bearing liabilities is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Average interest-bearing liabilities (in billions).......... $12.0 $10.8 $10.4
Comprised of:
Deposits.................................................. 82% 86% 87%
Short-term borrowings..................................... 8 5 6
FHLB advances, short- and medium-term bank notes and other
long-term debt......................................... 10 9 7
- ---------------
Rate on average interest-bearing liabilities................ 4.77% 4.76% 3.69%
</TABLE>
Interest expense increased 11.5% in 1996 to $574.6 million. The increase is
attributable to an increase in interest-bearing liabilities which accounted for
$64.0 million of the increase, partially offset by a negative rate variance of
$4.7 million. Interest-bearing liabilities increased $1.2 billion during 1996 to
$12.0 billion. The growth of these liabilities was required to fund the growth
of average earning assets. The average rate on interest-bearing liabilities
increased one basis point.
During 1996, the Corporation experienced continued growth of
interest-bearing deposits, primarily through acquisitions. Certain short-term
borrowings under repurchase agreements were repaid during the fourth quarter of
1996 in connection with the sale of certain investment securities to reduce the
Corporation's interest-rate risk. The Corporation also enhanced its short- and
medium-term borrowing capacity with a $1 billion bank note program through UPNB.
The Corporation issued approximately $200 million liquidating amount of 8.20%
Capital Pass-through Securities(SM) (Trust Preferred Securities) to enhance the
Corporation's liquidity and increase Tier 1 regulatory capital. Note 9 to the
consolidated financial statements provides details regarding these programs.
During the fourth quarter of 1996, the Corporation in-substance defeased the $37
million outstanding of one of its subordinated note issues.
The increase in interest expense between 1994 and 1995 was attributable to
a 107-basis-point increase in the rates paid on interest-bearing liabilities to
4.76% from 3.69%, which accounted for approximately $105.1 million of the
increase. This increase related primarily to interest-bearing deposits and
occurred during a period of rising interest rates. Average interest-bearing
liabilities also increased and accounted for approximately $25.2 million of the
increase.
Management expects interest expense to increase in 1997 in line with the
growth of interest-bearing liabilities which are expected to increase to fund
anticipated earning asset growth. Rates paid on interest-bearing liabilities are
expected to remain fairly stable during 1997 assuming no significant increase in
interest rates. The Corporation's primary funding source is its base of core
deposits.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans increased $30.0 million in 1996 to $57.4
million as compared to $27.4 million and $9.7 million, respectively, in 1995 and
1994. The increase related primarily to the level of charge-offs in the credit
card portfolio and other consumer loans which had been adversely impacted by a
record level of bankruptcies. The level of the provision was also impacted by
acquisitions which accounted for approximately $14.0 million of the increase.
For a discussion of the
9
<PAGE> 12
allowance for losses on loans, net charge-offs, and nonperforming assets, refer
to the "Allowance for Losses on Loans" and "Nonperforming Assets" sections which
follow.
The increase in the provision for losses on loans between 1994 and 1995
related primarily to loan growth, acquisitions, and an increasing level of
charge-offs in the consumer loan portfolio. Approximately $6.3 million of the
increase related to 1995 acquisitions.
Management does not expect the provision for losses on loans to increase at
the same rate in 1997 as it did in 1996. In 1996, the provision for losses on
loans was 66 basis points of average loans compared to 34 basis points and 14
basis points, respectively, in 1995 and 1994. There are a number of factors that
impact the level of the provision for losses on loans, some of which are beyond
management's control, such as current and anticipated economic conditions and
the related impact on specific borrowers, the level of personal bankruptcies,
the level of nonperforming assets, and changes in the nature of the loan
portfolio.
NONINTEREST INCOME
Investment Securities Gains and Losses
Investment securities gains in 1996 were $4.1 million compared to $409,000
in 1995 and investment securities losses of $22.5 million in 1994. The
investment securities gains realized in 1996 arose from the sale of
approximately $760 million of investment securities to reduce the interest-rate
risk of the Corporation after its fourth quarter acquisitions. The sale
consisted of longer maturity mortgage-backed pools, as well as lower yield,
relatively long-term agency securities. The proceeds were used to pay off
short-term borrowings under repurchase agreements. The investment securities
losses in 1994 related to a partial restructuring of the investment securities
portfolio in response to rising interest rates and to fund anticipated loan
growth.
Other Noninterest Income
Noninterest income, excluding investment securities gains and losses, was
$222.3 million in 1996, an increase of 9.5% over $203.0 million for 1995.
Noninterest income, excluding investment securities gains and losses, was $160.1
million in 1994. The major components of noninterest income are presented on the
face of the consolidated income statement and in Note 14 to the consolidated
financial statements.
Noninterest income in 1996 included gains of approximately $7.2 million
related to the sales of certain branches and other selected assets in connection
with acquisitions and to a $1.3 million one-time trust fee related to a court
award. These gains were netted against the charges discussed in the earnings
overview. Excluding these gains, the increase in noninterest income was 5.3%.
In 1996, there were improvements in almost all categories of noninterest
income with mortgage servicing income and bank card income experiencing the
largest growth. Mortgage servicing income in 1996 increased $8.7 million to
$46.1 million. The growth relates to the larger servicing portfolio as a result
of servicing portfolio acquisitions in late 1995 and 1996. Bank card income
increased $4.2 million in 1996 due primarily to a higher volume of transactions.
The increased volume of transactions was augmented by the increased level of
credit cards outstanding over the past three years.
Partially offsetting the growth in 1996 was a $4.8 million decrease in
profits and commissions from trading activities to $5.6 million which related to
the SBA broker/dealer operation. Between 1994 and 1995 the profits and
commissions increased $3.8 million to $10.4 million. This operation purchases,
pools, and securitizes the government-guaranteed portions of SBA loans. As is
demonstrated from the change in these revenues over the past three years,
revenues are volatile and future levels cannot be predicted. Favorable market
conditions in 1995 resulted in the significant increase in that year and the
decline in 1996 was due to a shortage of government funding which impacted the
trading operations.
The significant items increasing noninterest income between 1994 and 1995
were service charges on deposit accounts, bank card income, and mortgage
servicing income. At the end of 1994, a review was made of banking services with
a view to implementing "best" practices in all areas. As a result, the
Corporation's banking subsidiaries evaluated their practice related to service
charges on deposit accounts and increased certain fees, implemented new fees,
and reduced the number of fees being
10
<PAGE> 13
waived. These changes, along with growth due to acquisitions, increased service
charges on deposit accounts $15.7 million.
The $9.4-million growth in bank card income during 1995 resulted from an
increase in the number of transactions augmented by an increase in the level of
credit card loans outstanding. The $6.4-million increase in mortgage servicing
income between 1994 and 1995 was attributable to the growth of the servicing
portfolio.
Management is continuing to place emphasis on seeking additional sources of
noninterest income. It is planned that in the future, additional emphasis will
be placed on sale of bank-eligible insurance products, primarily annuities and
credit life insurance, as well as new products. Mortgage servicing revenues are
not expected to continue to grow at the same rate in 1997. Bank card income
revenues should continue to grow but at a slower rate.
NONINTEREST EXPENSE
Noninterest expense was $570.6 million in 1996, an increase of $118.0
million from 1995. Noninterest expense for 1994 was $486.8 million. The major
components of noninterest expense are detailed on the face of the consolidated
income statement and in Note 14 to the consolidated financial statements. In
1996, the largest components of the increase were merger-related and other
significant charges (mentioned in the "1996 Earnings Overview" above) which
impacted noninterest expense approximately $114.3 million and salaries and
employee benefits which increased $12.1 million, or 6%.
In 1996 the merger-related charges of $52.8 million included the following:
$18.3 million for salaries, employee benefits and other employment-related
charges (e.g. employment contract payments, severance, postretirement benefits,
and pension expenses); $15.8 million for write-downs of office buildings and
equipment (e.g. assets sold, lease buyouts, obsolete assets or assets no longer
of use, and equipment not compatible or being changed as a result of the
acquisition); $4.7 million for professional fees related to the acquisitions;
$1.4 million of other real estate expenses related to the acquisitions; and
$12.6 million for miscellaneous merger-related expenses.
The other significant charges in 1996 were as follows: $22.3 million for a
one-time regulatory assessment related to the recapitalization of the Savings
Association Insurance Fund (SAIF); $19.8 million for provisions for losses on
the servicing of delinquent FHA/VA loans; and $19.4 million for the write-down
of mortgage servicing rights, goodwill, and other intangibles, including
purchased credit card premiums.
In 1995, merger-related charges of $11.9 million included the following:
(i) employment contract payments, severance, and postretirement benefit expenses
of $4.8 million; (ii) write-downs and impairments of assets held for sale or
disposal and cancellation of vendor contracts of $4.7 million; (iii) legal,
accounting, and financial advisory services of $1.4 million; and (iv) other
merger-related expenses of $1.0 million.
Noninterest expense in 1994 included merger-related, restructuring, and
other significant charges totaling $58.2 million. Merger-related charges were
comprised of the following: (i) employment contract payments, severance
payments, and other benefit related charges of $5.2 million; (ii) legal,
accounting, and financial advisory fees of $2.5 million; (iii) impairment of
assets held for sale or disposal and cancellation of vendor contracts of $3.6
million; and (iv) other merger-related expenses of $3.6 million. Restructuring
charges included the following: (i) expense for employee severance of $16.3
million; (ii) charges for asset impairments of $10.4 million; and (iii) other
restructuring-related charges of $2.2 million. The other significant charges of
$14.4 million related to a consumer loan marketing program.
Excluding the above-described operating expenses, noninterest expense in
1996 increased $15.6 million, a 3.5% increase. Noninterest expenses in 1995 and
1994 would have been $440.7 million and $428.6 million, respectively.
Regulatory Assessment
The one-time SAIF-assessment resulted from the enactment of the Deposit
Insurance Funds Act of 1996 (Funds Act) which is expected to substantially
reduce the assessments that will be made on
11
<PAGE> 14
banks and thrifts in 1997 and future years to fund the SAIF and Bank Insurance
Fund (BIF). The Funds Act also provides for the SAIF and BIF to be merged on
January 1, 1999, provided there are no SAIF-insured savings associations on that
date. Additionally, the Funds Act imposes assessments for the payment of
interest on Financing Corporation (FICO) bonds issued in connection with earlier
Congressional efforts to support the then-failing thrift industry.
Total FDIC assessments, including the one-time assessment for 1996, 1995,
and 1994 were $30.2 million, $15.8 million, and $23.5 million, respectively. The
decrease in FDIC assessments during 1995 was due to a reduction of the
assessment on BIF-insured deposits. This reduction also partially offset the
one-time assessment made in 1996.
The following per annum assessments will be made in the future upon
deposits of SAIF-insured institutions and SAIF-insured deposits held by banks
("Oakar" deposits): (i) the assessment will range from zero for well-capitalized
banks to 27 basis points for the weakest institutions and (ii) the assessable
deposits of SAIF-insured institutions will be assessed 6.4 basis points to
service the interest on the FICO bonds. For BIF-insured deposits the following
per annum assessment will be made in the future: (i) the BIF assessment on
deposits will range from zero for well-capitalized banks to 27 basis points for
the weakest institutions; and (ii) all institutions will be assessed 1.3 basis
points to service the interest on FICO bonds.
For three years, the assessment for the FICO bonds will be set so that
SAIF-insured institutions will pay 80% of the interest and BIF-insured
institutions will pay 20% of the interest. Thereafter, until the bonds mature in
2017, the assessment will be the same, regardless of which fund insures an
institution's deposits. Going forward the FDIC will continue to set a risk-based
assessment rate for each fund to maintain that fund at its designated reserve
ratio of 1.25% of insured deposits. Since each fund now meets that ratio,
assessment rates should remain at zero for well-capitalized institutions unless
such fund experiences future losses from failed institutions.
Based on the Corporation's current levels of SAIF-insured and BIF-insured
deposits and with all of the Corporation's institutions deemed to be
well-capitalized, it is estimated that the changes discussed will reduce the
Corporation's 1997 annual assessment, excluding the one-time SAIF-assessment,
approximately $4.8 million ($2.9 million after taxes or approximately $.04 per
fully diluted common share). At December 31, 1996, the Corporation had $3.4
billion of SAIF-insured deposits ($875 million of which qualify for the 20%
"Oakar" deposit discount) and $8.1 billion of BIF-insured deposits.
Provisions for Losses on FHA/VA Foreclosure Claims
The provisions for losses on FHA/VA foreclosure claims arise from the
Corporation's mortgage servicing operations. In its capacity as servicer of
loans, including FHA/VA government-insured/ guaranteed loans, the Corporation
collects and processes payments made by borrowers; remits funds to investors,
taxing authorities, and insurers; and coordinates foreclosure and disposition of
collateral properties. In connection with its responsibilities, the Corporation
advances funds which are repaid through foreclosure-sale proceeds and through
claims made against the Federal Housing Authority and/or Veterans Administration
(FHA/VA claims). Under certain circumstances, the FHA/VA claims are sometimes
rejected or otherwise cannot be collected in full. The provisions for FHA/VA
foreclosure claims represent management's estimate of losses attributable to
these current and future FHA/VA claims inherent in the servicing portfolio at
each reporting date. The significant increase in the provisions for these claims
in 1996 is attributable to the rapid growth of the FHA/VA government-
insured/guaranteed loans and the growth of the servicing portfolio, incidental
to one of the Corporation's recent acquisitions. The level of the provisions for
FHA/VA foreclosure claims is expected to decline significantly in 1997, as
management does not anticipate the same level of growth. For an additional
discussion of the FHA/VA government-insured/guaranteed loans, see the "Loans"
section which follows.
Write-off of Mortgage Servicing Rights, Goodwill, and Other Intangibles
The write-off of mortgage servicing rights, goodwill, and other intangibles
related primarily to purchased credit card relationships. In evaluating these
intangibles at year end, management determined that the assets were impaired and
wrote-off approximately $12.2 million. The remaining amount
12
<PAGE> 15
of write-offs of intangibles related to goodwill of acquired institutions and
mortgage servicing intangibles in accordance with the Corporation's policies for
recognizing impairment.
Salaries and Employee Benefits
Salaries and employee benefits expense represents the largest component of
noninterest expense. In 1996, salaries and employee benefits expense increased
$12.1 million, or 6.1%, to $209.6 million. This compared to $197.5 million in
1995 and $201.5 million in 1994. The decrease in salaries and employee benefits
between 1994 and 1995 arose primarily from implementation of the Corporation's
restructuring plan (discussed in the following paragraph) which resulted in a
reduction of approximately 690 employees. The reduction was partially offset by
growth due to the 1995 acquisitions and growth of existing operations, primarily
the credit card operations. The increase in 1996 relates primarily to
acquisitions, incentive pay, and normal annual merit increases. At December 31,
1996, the Corporation had 5,914 full-time-equivalent employees compared to 5,847
at December 31, 1995, restated for the Leader acquisition. The Corporation's
other 1996 acquisitions added approximately 300 full-time-equivalent employees.
1994 Restructuring Plan
In connection with the acquisition of Grenada Sunburst System Corporation
(Grenada) in 1994, management adopted a specific plan of restructuring related
to its operations in order to facilitate the consolidation of the two
organizations and to improve operating efficiencies and profitability throughout
the Corporation. The plan included a review of branch operations to determine
appropriate staffing levels and to determine "best" practices for branch
operations. Individual branch operations were reviewed to determine whether
certain branches should be consolidated or divested. Additionally, all sources
of fee income were reviewed to identify opportunities to increase noninterest
income. The net interest margin was also evaluated to identify potential items
for improvement. A review was also made of the operations of the Corporation and
Grenada to identify consolidation opportunities and efficiencies to be achieved
from combining the two companies. The Corporation incurred fees and expenses of
approximately $2.2 million in 1994 related to the services provided by a
consulting firm assisting in implementing this plan.
Implementation of this plan resulted in the following pretax charges in
1994: (i) an early retirement and voluntary separation plan in which 388
employees elected to participate resulted in a charge of $12.5 million; (ii) an
involuntary separation plan was also developed which identified approximately
600 positions to be eliminated and resulted in a charge of $3.8 million; and
(iii) approximately 38 branches were identified for consolidation or divestiture
resulting in a charge of $10.5 million. No additional charges were incurred in
1995 or 1996.
The Corporation achieved a net reduction of total staff in 1994 and 1995 of
approximately 690 employees, excluding the impact of acquisitions consummated in
1995, which has resulted in estimated annual savings of approximately $16
million. At December 31, 1996, the Corporation had consolidated or otherwise
closed 44 branch locations in connection with this plan, excluding the impact of
subsequent acquisitions.
In addition to achieving the above savings, implementation of this plan
resulted in an increase in noninterest income, primarily service charges on
deposit accounts, of approximately $15.7 million in 1995. See the "Noninterest
Income" discussion above. The changes implemented under this plan continue to be
monitored by management. Management of the Corporation considers the
restructuring plan to have been completed at December 31, 1996.
Expense and Efficiency Ratios
The Corporation monitors its expense levels using the expense ratio and
utilizes the efficiency ratio as a measure of its success in increasing
revenues, while controlling expenses. The expense ratio (noninterest expense
minus noninterest income, excluding significant nonrecurring revenues and
expenses and investment securities gains and losses divided by average assets)
was 1.58% in 1996 compared to 1.74% for 1995. The efficiency ratio which is
calculated excluding the same items divides noninterest expenses by net interest
income (FTE) plus noninterest income. The efficiency ratio was 55.43% in 1996
compared to 58.24% in 1995.
13
<PAGE> 16
Management will continue to monitor closely the level of noninterest
expenses as part of its effort to continue to improve the profitability of the
Corporation. Significant cost savings are expected by management related to the
five acquisitions completed in the fourth quarter of 1996, since all of those
acquisitions were in-market mergers. Some of the savings will not be realized
until later in the year, as the consolidation of certain of the entities with
other entities will not occur until late 1997.
TAXES
Applicable income taxes consist of provisions for federal and state income
taxes totaling $70.5 million in 1996, an effective rate of 34.5%. This compares
to applicable income taxes of $86.6 million in 1995 and $45.2 million in 1994.
These amounts equate to effective tax rates of 33.4% and 31.0%, respectively, in
1995 and 1994. The variances from statutory rates (35% for all three years) are
attributable to tax-exempt income from investment securities and loans and the
effect of state income taxes. For additional information regarding the
Corporation's effective tax rates for all periods, see Note 16 to the
consolidated financial statements.
The realization of approximately $11.3 million of the net deferred tax
asset of $80.0 million is dependent upon the generation of future taxable income
sufficient to offset future deductions. Management believes that, based upon
historical earnings and anticipated future earnings, normal operations will
continue to generate sufficient future taxable income to realize all of these
benefits. Therefore, no extraordinary strategies are deemed necessary by
management to generate sufficient income for purposes of realizing the net
deferred tax asset.
The criteria for recognition of net deferred tax assets for regulatory
capital purposes are more stringent than for financial statement purposes and
allow only limited anticipation of future taxable income. Accordingly, $1.9
million of the Corporation's net deferred tax asset does not qualify as capital
for regulatory purposes.
FINANCIAL CONDITION ANALYSIS
At December 31, 1996, the Corporation reported $15.2 billion of total
assets compared to $14.4 billion ($11.3 billion prior to the restatement for the
Leader acquisition) at December 31, 1995. During 1996, the Corporation acquired
institutions with total assets of $4.2 billion. Average assets were $15.3
billion for 1996, compared to $13.7 billion and $13.1 billion, respectively, for
1995 and 1994. Table 3, which follows this discussion, presents the balance
sheet impact of acquired institutions for the last three years.
INVESTMENT SECURITIES
The Corporation's investment securities portfolio of $3.0 billion at
December 31, 1996, consisted entirely of securities "available for sale" which
are carried on the consolidated balance sheet at fair value. These securities
had net unrealized gains at year end of $40.2 million. At December 31, 1995, the
investment portfolio was $3.6 billion and consisted of $3.4 billion of available
for sale securities and $186.3 million of held to maturity securities
(securities related to the Leader acquisition) which were carried on the
consolidated balance sheet at amortized cost. The decrease in the amount of
investment securities in 1996 was due to the additional funding required to
support significant loan growth during the year. Note 4 to the consolidated
financial statements provides the composition of the portfolio and a breakdown
of the maturities of the portfolio at December 31, 1996.
U.S. Treasury and U.S. Government agency obligations represented
approximately 78% of the investment securities portfolio at December 31, 1996.
The Corporation has some credit risk in the investment securities portfolio,
however, management does not consider that risk to be significant and does not
believe that cash flows will be significantly impacted.
The REMIC and CMO issues held in the investment securities portfolio are
98% U.S. Government agency issues; the remaining 2% 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 & Poor's or Moody's. Approximately 59% of the REMIC and CMO portions of
the portfolio are in floating-rate issues, the majority being indexed to LIBOR
or PRIME. The Corporation's normal practice is to purchase investment securities
at or near par value to reduce risk of premium
14
<PAGE> 17
write-offs resulting from unexpected prepayments. The limited credit risk in the
investment securities portfolio at December 31, 1996 consisted of the holdings
of municipal obligations (17.1%), nonagency CMOs and mortgage-backed securities
(.6%), and corporate stocks, notes, debentures, and mutual funds (4.5%).
At December 31, 1996, the Corporation had approximately $40.2 million of
structured notes (as currently defined by regulatory agencies), which
constituted approximately 1.3% of the investment securities portfolio.
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 U.S.
Government agency issues (primarily Federal Home Loan Banks and Federal National
Mortgage Association). The structured notes vary in type but primarily include
step-up bonds and index-amortizing notes. These securities had an unrealized
loss of $175,000 at December 31, 1996. The market risk of these securities is
not considered material to the Corporation's financial position, results of
operations, or liquidity.
LOANS
At December 31, 1996, loans, net of unearned income, were $10.4 billion
compared to $9.0 billion at year end 1995. Average loans for 1996 were $9.9
billion compared to $8.9 billion and $7.6 billion, respectively, for 1995 and
1994. The Corporation's loan to deposit ratio was 91% at December 31, 1996,
compared to 82% at the end of 1995. For 1996, loans were 70% of the
Corporation's average earning assets compared to 70% and 63%, respectively, for
1995 and 1994. Table 7 provides the composition of the loan portfolio for each
of the last five years.
The largest segment of the Corporation's loan portfolio is single family
residential mortgage loans (excluding the FHA/VA government-insured/guaranteed
loans which are also single family residential loans), which totaled $3.2
billion, or 31% of the loan portfolio at December 31, 1996, an increase of $242
million over December 31, 1995. The growth is attributable to the Corporation's
acquisitions during the year. The Corporation's acquisitions, primarily the
Leader acquisition, increased this segment of the portfolio approximately $900
million from the originally reported amounts. This segment is expected to
continue to be the largest segment and is expected to grow gradually unless
economic conditions change significantly.
Consumer loans, which constituted 21% of the loan portfolio at December 31,
1996, and are the second largest component of the loan portfolio, include loans
to individuals, home equity loans, and credit card loans. Credit card loans
increased $201 million to $627 million, other consumer loans increased $117
million to $1.3 billion, and home equity loans increased approximately $18
million to $229 million at December 31, 1996. The growth of credit card loans is
attributable to continued marketing efforts that were instituted in 1994 and to
the purchase of approximately $90 million of credit card receivables in 1996.
Commercial loans, which include commercial, financial, and agricultural
loans, and direct lease financing, and constituted 15% of the loan portfolio at
December 31, 1996, decreased approximately 2% between 1995 and 1996. The
decrease is due to the very competitive market for these loans and the
Corporation's reduction of its exposure to certain large relationships.
The Corporation's FHA/VA government-insured/guaranteed loans relate
primarily to the continuation of a program of Leader which was acquired October
1, 1996 and constituted 14% of the loan portfolio at December 31, 1996. These
loans totaled $1.5 billion at December 31, 1996, an increase of $561 million
from $917 million at December 31, 1995. As a loan servicer, the Corporation is
obligated to pass through to the holders of a GNMA mortgage-backed security, the
coupon rate, whether or not the interest due on the underlying loans has been
paid by the borrower. When an FHA/VA government-insured/guaranteed single-family
loan which carries an above-market rate of interest has been in default for more
than 90 days, it is the Corporation's current policy to buy the delinquent
FHA/VA loans out of the GNMA pools serviced by the Corporation. This action
eliminates the Corporation's obligation to pay the coupon rate. The Corporation
thereby gains the benefit of the net interest rate differential between the
coupon rate which it would otherwise be obligated to pay to the GNMA holder and
the Corporation's lower cost of funds. Furthermore, management has purchased, on
a negotiated basis, delinquent FHA/VA government-insured/guaranteed loans from
other GNMA
15
<PAGE> 18
servicers to leverage the operating costs of this operation. Management expects
that the volume of these loans will remain at the current levels or will
decrease.
Since all of these loans are FHA/VA government-guaranteed loans, the
Corporation's investment is expected to be recoverable through claims made
against FHA or VA. Management believes the credit risk and the risk of principal
loss is minimal. For this reason, management has excluded these loans from the
credit quality data and resulting ratios. Any losses incurred would be no
greater or less than if the Corporation had continued solely as servicer of the
FHA/VA loans. The risk inherent in these loans arises from failure to comply
timely with FHA's and VA's foreclosure process and certain unreimbursable
foreclosure costs. The Corporation, by purchasing the delinquent FHA/VA loans
assumes only the interest-rate risk associated with funding a loan if timely
foreclosure should not occur. Risk also exists, under certain circumstances,
that claims might be rejected by FHA or VA or otherwise not be able to be
collected in full. Provisions for these types of losses are provided through
noninterest expense (provisions for losses on FHA/VA foreclosure claims -- see
previous discussion) and the corresponding liability is carried in other
liabilities. At December 31, 1996, the Corporation had reserves for these losses
of $35.6 million.
The remaining segments constituting 15% and 4%, respectively, of the loan
portfolio at December 31, 1996, consists of other mortgage loans (loans secured
by commercial properties, multifamily residential properties, and farmland) and
real estate construction loans. Other mortgage loans totaled $1.5 billion at
December 31, 1996, an increase of $246 million from $1.3 billion at December 31,
1995. Real estate construction loans totaled $447 million at December 31, 1996,
which compared to $403 million at year end 1995.
ALLOWANCE FOR LOSSES ON LOANS
The allowance for losses on loans (the allowance) at December 31, 1996 was
$166.9 million, or 1.86% of loans, compared to $156.4 million, or 1.92% of
loans, at December 31, 1995. For this calculation, FHA/VA
government-insured/guaranteed loans have been excluded from loans. Management's
policy is to maintain the allowance at a level deemed sufficient to absorb
estimated losses in the loan portfolio. The allowance is reviewed quarterly in
accordance with the methodology described in Note 1 to the consolidated
financial statements. Tables 8 and 10 provide detailed information regarding the
allowance for each of the last five years.
Net charge-offs increased $23.9 million to $51.8 million, or .60% of
average loans, for 1996. The increase in net charge-offs related primarily to
credit card loans and other consumer loans. Credit card net charge-offs
increased $13.2 million in 1996 to $25.7 million. Other consumer loan net
charge-offs increased $6.7 million to $15.4 million. The increase in both of
these categories of loans is due to the record level of personal bankruptcies
and to the increase in the volume of loans outstanding. Net charge-offs for
commercial, financial, and agricultural loans were $7.6 million in 1996, an
increase of $4.5 million. The level of charge-offs in this segment of the
portfolio is dependent upon economic conditions in the markets served by the
Corporation.
LOAN CONCENTRATIONS
Management believes that the loan portfolio is adequately diversified. The
loan portfolio is spread over seven states (Tennessee, Mississippi, Missouri,
Arkansas, Louisiana, Alabama, and Kentucky). Reference is made to Table 15 which
discloses total loans by subsidiary and by state at December 31, 1996. At
December 31, 1996, the Corporation had no concentrations of loans to a single
industry equaling 10% or more of total loans.
The largest concentration of loans is in single family residential loans,
comprising 31% of the loan portfolio, which historically has had low loss
experience. The Corporation also holds $1.5 billion of delinquent FHA/VA
government-insured/guaranteed loans which account for an additional 14% of the
loan portfolio. These loans are also single family residential loans. As
discussed previously, the risk of principal loss for delinquent FHA/VA loans is
believed by management to be minimal because of government-insurance/guarantee.
Management has emphasized diversification between large and smaller-sized
loans in an effort to lessen risk in the portfolio. At December 31, 1996, the
Corporation's largest loan relationship was $25.8
16
<PAGE> 19
million and there were only 20 relationships of $10 million or more, which
constituted in the aggregate less than 3% of the total loan portfolio.
NONPERFORMING ASSETS
Nonperforming assets consist of nonaccrual loans, restructured loans, and
foreclosed properties. As shown in Table 9, nonperforming assets totaled $82.4
million at year end 1996, compared to $54.6 million at December 31, 1995. The
year end 1996 total is comprised of $63.3 million of nonaccrual loans, which
increased $20.0 million from December 31, 1995, restructured loans of $2.5
million and foreclosed properties of $16.5 million. As a percentage of loans,
excluding FHA/VA government-insured/guaranteed loans, nonperforming assets were
.92% of loans and foreclosed properties at December 31, 1996, compared to .67%
at December 31, 1995. In management's opinion, asset-quality ratios remain at
acceptable levels, although an unfavorable trend has occurred from 1994's
historically low levels.
Loans 90 days or more past due and still accruing interest are comprised of
FHA/VA government-insured/guaranteed loans and all other loans 90 days past due.
As discussed in the "Loans" section of this report, the FHA/VA loans do not, in
management's opinion, have traditional credit risks similar to the rest of the
loan portfolio and risk of loss of principal is considered minimal. FHA/VA
government-insured/guaranteed loans 90 days or more past due totaled $709.4
million at December 31, 1996 compared to $534.6 million at year end 1995. The
increase is directly related to the increased volume of these loans. Other loans
90 days or more past due totaled $22.7 million at year end 1996 compared to
$18.6 million at December 31, 1995.
A breakdown of nonaccrual loans and loans 90 days or more past due and not
on nonaccrual status is as follows:
<TABLE>
<CAPTION>
LOANS 90 DAYS
NONACCRUAL LOANS OR MORE PAST DUE
----------------- -------------------
DECEMBER 31, DECEMBER 31,
----------------- -------------------
LOAN TYPE 1996 1995 1996 1995
- -------------------------------------------------------- ------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Secured by single family residential
FHA/VA government-insured/guaranteed loans............ $ -- $ -- $709,424 $534,633
Other loans........................................... 34,464 20,830 1,727 4,767
Secured by nonfarm nonresidential....................... 8,272 6,350 1,716 452
Other real estate....................................... 3,929 4,578 1,492 560
Commercial, financial, and agricultural, including
direct lease financing................................ 12,115 7,848 1,841 2,468
Credit card and related plans........................... 39 15 11,520 5,269
Other consumer.......................................... 4,531 3,678 4,411 5,093
------- ------- -------- --------
Total......................................... $63,350 $43,299 $732,131 $553,242
======= ======= ======== ========
</TABLE>
POTENTIAL PROBLEM ASSETS
Potential problem assets consist of assets which are generally secured and
are not currently considered nonperforming and include those assets where
information about possible credit problems has raised serious doubts as to the
ability of the borrowers to comply with present repayment terms. Historically,
such assets have been loans which have ultimately become nonperforming. At
December 31, 1996, the Corporation had potential problem assets (all loans)
aggregating $11.4 million, comprised of 17 loans, the largest being $3.9
million.
OTHER EARNING ASSETS
Other earning assets include interest-bearing deposits at financial
institutions, federal funds sold, securities purchased under agreements to
resell, trading account assets, and loans held for resale. At December 31, 1996,
these assets totaled $446 million, 3.22% of the Corporation's earning assets.
This compares to $671 million, or 5.05% of earning assets at December 31, 1995.
17
<PAGE> 20
The decline in other earning assets from 1995 is attributable to a $294
million decrease in federal funds sold. This decrease was due to excess
liquidity being used to fund other earning assets, primarily loans. The other
significant component of this category was trading account assets which
represents the government-guaranteed portions of SBA loans. Trading assets
totaled $225 million at December 31, 1996, an increase of $103 million from year
end 1995. Management considers the interest-rate and credit risk related to all
of these assets to be minimal.
DEPOSITS
The Corporation's deposit base is its primary source of liquidity and
consists of deposits from the communities served by the Corporation. At December
31, 1996, the Corporation had the largest deposit base of any bank holding
company headquartered in Tennessee. Tables 4 and 6 present the components of the
Corporation's average deposits.
Deposits were $11.5 billion at December 31, 1996 and averaged the same
amount for the year. The increase in deposits is attributable primarily to
acquisitions. As shown in Table 6, average core deposits have increased for each
of the past five years which has provided the Corporation a stable funding
source.
The composition of average deposits over the last three years was as
follows:
<TABLE>
<CAPTION>
TYPE OF DEPOSITS 1996 1995 1994
- ------------------------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Noninterest-bearing deposits................................ 14% 14% 14%
Money market deposits....................................... 16 15 17
Savings deposits............................................ 18 18 19
Other time deposits......................................... 44 45 43
Certificates of deposit of $100,000 and over................ 8 8 7
</TABLE>
CAPITAL AND DIVIDENDS
Shareholders' equity increased $139.7 million in 1996 to $1.4 billion, or
8.89% of total assets at December 31, 1996. This compares to shareholders'
equity of $1.2 billion, or 8.43% of total assets at December 31, 1995. The
primary sources of growth in shareholders' equity in 1996 were the retention of
net earnings of $66.0 million, issuance of stock in connection with acquisitions
of $53.8 million, and net stock transactions in connection with the dividend
reinvestment plan and employee benefit plans of $26.8 million. Partially
offsetting these increases was the impact of the net change in unrealized gains
(losses) on available for sale securities of $6.9 million. The consolidated
statement of changes in shareholders' equity details the changes in equity for
the last three years.
The fair-value adjustment of the Corporation's available for sale
securities portfolio, which is recorded as a component of shareholders' equity,
may change significantly as market conditions change. At December 31, 1994, the
adjustment resulted in a reduction of shareholders' equity of $29.0 million
compared to an increase of $31.1 million at December 31, 1995 and an increase of
$24.6 million at December 31, 1996. Further volatility in shareholders' equity
may occur in the future as market conditions change. This adjustment is excluded
from the calculation of regulatory capital.
The Corporation and its subsidiaries must comply with the capital
guidelines established by the regulatory agencies that supervise their
operations. These agencies have adopted a system to monitor the capital adequacy
of all insured financial institutions. The system includes ratios based on the
risk-weighting of on- and off-balance-sheet transactions. If an institution's
ratios should fall below certain levels, it would become subject to regulatory
action. The system adopted by the agencies classifies institutions into five
capital categories ranging from well-capitalized to critically undercapitalized.
The well-capitalized category requires a leverage ratio of at least 5%, a Tier 1
regulatory capital to risk-weighted assets ratio of at least 6%, and a total
regulatory capital to risk-weighted assets ratio of at least 10%. Table 13
presents the Corporation's regulatory capital ratios for the last three years
and Note 12 to the consolidated financial statements presents a comparison of
the Corporation's and UPNB's capital levels and ratios to the minimums for an
institution to be considered well-capitalized and adequately capitalized. At
December 31, 1996, the Corporation and all of its insured financial institutions
met the requirements for well-capitalized institutions.
18
<PAGE> 21
At December 31, 1996, the Corporation's leverage ratio was 9.61% and its
Tier 1 and total regulatory capital to risk-weighted assets capital ratios were
15.29% and 18.32%, respectively, which are well above the regulatory minimums.
These ratios compare to 8.08%, 13.39%, and 16.68%, respectively, at December 31,
1995. The improvement in these ratios is attributable to the continued
profitability of the Corporation and the issuance of $200 million of Trust
Preferred Securities which qualified as Tier 1 regulatory capital. The ratio of
total capital to risk-weighted assets increased significantly in 1995 due to the
issuance of $100 million of subordinated capital notes in the fourth quarter of
1995 which qualified as Tier 2 regulatory capital. Reference is made to Note 9
to the consolidated financial statements for additional information regarding
these notes.
The Corporation declared cash dividends on its Common Stock of $54.3
million in 1996 and $39.9 million in 1995. On a per share basis, this
represented a 10% increase to $1.08 per share for 1996 compared to $.98 per
share in 1995. Effective January 16, 1997, the regular quarterly cash dividend
on the Corporation's Common Stock was increased by the Board of Directors by
18.5% to $.32 per share ($1.28 per share annually). Cash dividends declared on
the Corporation's Preferred Stocks outstanding in 1996 totaled $6.9 million
compared to $7.3 million in 1995. The reduction was due to the redemption of one
series of preferred stock and the conversion of another series of preferred
stock to common stock. Various institutions acquired by the Corporation paid
cash dividends on common and preferred stock prior to acquisition, which are
detailed in the consolidated statement of changes in shareholders' equity.
The primary sources for payment of dividends by the Corporation to its
shareholders are management fees and dividends received from its subsidiaries,
interest on loans to subsidiaries, and interest on its available for sale
investment securities. Payment of dividends by the Corporation's banking
subsidiaries is subject to various statutory limitations which are described in
Note 12 to the consolidated financial statements. Reference is made to the
"Liquidity" discussion for additional information regarding the parent company's
liquidity.
ASSET/LIABILITY MANAGEMENT
The Corporation's assets and liabilities are principally financial in
nature and the resulting earnings thereon, primarily net interest income, are
subject to changes as a result of changes in market interest rates and the mix
of the various assets and liabilities. Interest rates in the financial markets
affect the Corporation's decisions on pricing its assets and liabilities which
impacts net interest income, the Corporation's primary cash flow stream. As a
result, a substantial part of the Corporation's risk-management activities are
devoted to managing interest-rate risk.
Interest-Rate Risk
One of the most important aspects of management's efforts to sustain
long-term profitability for the Corporation is the management of interest-rate
risk. Management's goal is to maximize net interest income within acceptable
levels of interest-rate risk and liquidity. To achieve this goal, a proper
balance must be maintained between assets and liabilities with respect to size,
maturity, repricing date, rate of return, and degree of risk.
The Corporation's Funds Management Committee oversees the conduct of
corporate-wide asset/liability management. The Committee reviews the
asset/liability structure and interest-rate risk of each subsidiary and the
consolidated Corporation at least quarterly. Each subsidiary is granted autonomy
in managing its balance sheet, however, the Corporation requires each subsidiary
to establish policies for proper conduct of its balance sheet management. These
policies must contain, at a minimum, limits on interest-rate sensitivity,
guidelines for liquidity management, and capital-level guidelines.
The Corporation uses interest-rate sensitivity (GAP) analysis to monitor
the amounts and timing of balances exposed to changes in interest rates, as
shown in Table 11. The analysis presented in Table 11 has been made at a point
in time and could change significantly on a daily basis. The GAP report is not
relied upon exclusively to evaluate the impact of, or predict how the
Corporation is positioned to react to, changing interest rates. Other methods
such as simulation analysis are also considered in evaluating the Corporation's
interest-rate risk.
19
<PAGE> 22
At December 31, 1996, the GAP report indicated that the Corporation was
liability sensitive with $643 million more liabilities than assets repricing
within one year. At 4% of total assets, this position was within management's
policy limit of 10% of total assets.
Balance sheet simulation analysis has been conducted at year end to
determine the impact on net interest income for the coming twelve months under
several interest-rate scenarios. One such scenario uses rates at December 31,
1996, and holds the rates and volumes constant for simulation. When this
position is subjected to immediate and parallel shifts in interest rates ("rate
shock") of 200 basis points rising and 200 basis points falling, the annual
impact on the Corporation's net interest income was a positive $8.8 million and
a negative $17.4 million pretax, respectively. Another simulation uses a "most
likely" scenario of interest rates increasing 50 basis points resulting in a
$7.9 million pretax increase in net interest income from the constant
rate/volume projection. These scenarios are within the Corporation's policy
limit of 5% of shareholders' equity.
The actual impact of changing interest rates on net interest income is
dependent on a number of factors such as the growth of earning assets, the mix
of earning assets and interest-bearing liabilities, the magnitude of the
interest rate changes, the timing of the repricing of assets and liabilities,
interest-rate spreads, and the asset/liability strategies implemented by
management.
Liquidity
Liquidity for the Corporation is its ability to meet cash requirements for
deposit withdrawals, to make new loans and satisfy loan commitments, to take
advantage of attractive investment opportunities, and to repay borrowings when
they mature. The Corporation's primary sources of liquidity are its deposit
base, available for sale securities, and money market investments. Liquidity is
also achieved through short-term borrowings, borrowing under available lines of
credit, and issuance of securities and debt instruments in the marketplace.
In 1996, the Corporation's principal subsidiary, UPNB, established a
$1-billion short- and medium-term bank note program to supplement UPNB's funding
sources. Note 9 to the consolidated financial statements provides additional
details regarding this program. At December 31, 1996, there were $265 million of
Short-Term Bank Notes and $135 million of Medium-Term Bank Notes outstanding
under this program.
Parent company liquidity is achieved and maintained by dividends received
from subsidiaries, interest on advances to subsidiaries, interest on the
available for sale investment securities portfolio, and management fees charged
to 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 December 31, 1996, the parent company had cash and cash equivalents
totaling $274.6 million. The parent company's net working capital position at
December 31, 1996 was $389.2 million.
At January 1, 1997, the parent company could have received dividends from
subsidiaries of $86.0 million without prior regulatory approval. The payment of
additional dividends by the Corporation's subsidiaries will be dependent on the
future earnings of the subsidiaries. Management believes that the parent company
has adequate liquidity to meet its cash needs, including the payment of its
regular dividends, servicing of its debt, and cash needed for acquisitions.
At December 31, 1996, the parent company had no outstanding lines of credit
and had no commercial paper outstanding. In the fourth quarter of 1996, the
Corporation issued $200 million of Trust Preferred Securities (see Note 9 to the
consolidated financial statements) which enhanced the Corporation's liquidity.
These securities are carried on the balance sheet in long-term debt and qualify
as Tier 1 regulatory capital. In 1995, the Corporation issued $100 million of
6 3/4% Subordinated Capital Notes which qualified as Tier 2 regulatory capital.
The proceeds of these issues are available for general corporate purposes,
including the acquisition of other financial institutions. Additionally, during
1996 the Corporation in-substance defeased all of its outstanding 8 1/2%
subordinated capital notes. These notes did not qualify for Tier 2 regulatory
capital. The defeasance resulted in an immaterial loss which was recorded in
noninterest expense.
20
<PAGE> 23
OFF-BALANCE-SHEET INSTRUMENTS
The Corporation, on a limited basis, has used off-balance-sheet financial
instruments to manage interest-rate risk. At December 31, 1996, the Corporation
had no such instruments outstanding. Note 17 to the consolidated financial
statements provides a reconciliation of the Corporation's interest-rate swap
information for the past two years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The disclosures regarding the fair value of financial instruments are
included in Note 18 to the consolidated financial statements along with a
summary of the methods and assumptions used by the Corporation in determining
fair value. The differences between the fair values and book values result
primarily from differences between contractual and market interest rates.
Fluctuations in the fair values will occur from period to period due to changes
in the composition of the balance sheet and changes in interest rates.
Management does not use the fair value information disclosed in Note 18 to
manage the Corporation. Other methods, including the asset/liability management
philosophy discussed previously, are used. Comparisons of the fair value
information with other financial institutions may not be meaningful due to the
different assumptions used in determining fair value.
FOURTH QUARTER RESULTS
The Corporation's net income for the fourth quarter of 1996 was $11.4
million, or $.15 per fully diluted common share, compared to $35.3 million, or
$.53 per fully diluted common share, for the same period in 1995. Results for
both periods reflected significant charges which have been discussed and
quantified in the "1996 Earnings Overview" and "Noninterest Expense"
discussions. Net earnings for the fourth quarter of 1996 were reduced $58.8
million ($39.0 million after taxes) by merger-related and other significant net
charges. The fourth quarter of 1995 results were reduced by merger-related
charges of $12.4 million ($9.5 million after taxes).
Fourth quarter of 1996 charges included the following: (i) charges for
merger-related employment matters of approximately $18.1 million ($12.0 million
after taxes); (ii) provisions for losses on servicing FHA/VA
government-insured/guaranteed loans of approximately $5.2 million ($3.0 million
after taxes); (iii) write-off of intangibles of approximately $13.7 million
($9.0 million after taxes); write-downs of buildings, property, and equipment of
approximately $16.3 million ($10.0 million after taxes); professional fees of
approximately $4.0 million ($4.0 million after taxes); and other charges of
approximately $5.8 million ($3.9 million after taxes). These charges were offset
by investment securities gains of $4.3 million ($2.9 million after taxes).
Net interest income for the fourth quarter of 1996 was $154.8 million which
represented a 12% increase over the $138.2 million for the same period in 1995.
The increase is attributable to growth of average earning assets which increased
9% to $14.2 billion. Moreover, the net interest margin for the fourth quarter of
1996 was 4.44% compared to 4.35% for the same period in 1995.
Investment securities gains of $4.3 million were realized from the fourth
quarter sale of approximately $760 million of U.S. Government agency securities
and long-term mortgage-backed securities to reduce interest-rate risk and pay
off short-term wholesale borrowings.
The provision for losses on loans for the fourth quarter of 1996 was $15.7
million compared to $13.6 million for the same period in 1995. The provision for
losses on loans was higher in both years due to acquisitions and in 1996 due to
the increased level of charge-offs in the credit card portfolio.
Noninterest income for the last quarter of 1996 was $55.3 million compared
to $54.2 million in 1995, before investment securities gains. Noninterest
expense for the fourth quarter of 1996 was $181.2 million compared to $125.1
million for the fourth quarter of 1995. Excluding the significant charges
described above, noninterest expenses in 1996 were $118.1 million compared to
$112.7 million in 1995.
Table 14, Selected Quarterly Data, presents certain quarterly financial
data for 1996 and 1995.
IMPACT OF PROPOSED ACCOUNTING STANDARDS
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities". The Statement
21
<PAGE> 24
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings based on a
control-oriented "financial-components" approach. Under this approach, after a
transfer of financial assets, an entity recognizes the financial and servicing
assets it controls and liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. The provisions of SFAS No. 125 are effective for transactions
occurring after December 31, 1996, except those provisions relating to
repurchase agreements, securities lending, and other similar transactions and
pledged collateral, which have been delayed until after December 31, 1997 by
SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125, an amendment of FASB Statement No. 125". The adoption of
these statements is not expected to have a material impact on the Corporation's
financial position or results of operations.
22
<PAGE> 25
TABLE 1. SUMMARY OF CONSOLIDATED RESULTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest income....................... $1,180,609 $1,051,283 $ 889,425 $ 773,789 $ 702,830
Interest expense...................... (574,647) (515,286) (384,925) (334,499) (345,465)
---------- ---------- --------- --------- ---------
NET INTEREST INCOME......... 605,962 535,997 504,500 439,290 357,365
PROVISION FOR LOSSES ON LOANS......... (57,395) (27,381) (9,661) (22,660) (37,367)
---------- ---------- --------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES ON
LOANS..................... 548,567 508,616 494,839 416,630 319,998
NONINTEREST INCOME
Service charges on deposit
accounts......................... 76,527 75,261 59,564 53,723 41,687
Mortgage servicing income........... 46,098 37,427 31,060 28,266 31,237
Bank card income.................... 24,975 20,758 11,386 10,884 9,452
Trust service income................ 8,511 8,010 7,990 7,643 6,921
Profits and commissions from trading
activities....................... 5,636 10,441 6,639 13,787 13,417
Other income........................ 51,990 51,117 41,270 39,050 29,935
---------- ---------- --------- --------- ---------
Total noninterest income.... 213,737 203,014 157,909 153,353 132,649
---------- ---------- --------- --------- ---------
NONINTEREST EXPENSE
Salaries and employee benefits...... 209,604 197,526 201,532 186,703 145,849
Net occupancy expense............... 32,957 30,653 31,638 28,476 24,007
Equipment expense................... 35,175 33,672 32,618 30,345 24,874
Other expense....................... 178,573 178,873 162,811 153,233 142,799
---------- ---------- --------- --------- ---------
Total noninterest expense... 456,309 440,724 428,599 398,757 337,529
---------- ---------- --------- --------- ---------
EARNINGS BEFORE OTHER
OPERATING ITEMS, INCOME
TAXES, EXTRAORDINARY ITEM,
AND ACCOUNTING CHANGES.... 305,995 270,906 224,149 171,226 115,118
OTHER OPERATING ITEMS
Investment securities gains
(losses)......................... 4,081 409 (22,515) 3,508 11,880
Restructuring charges............... -- -- (28,929) -- --
Merger-related expenses............. (52,786) (11,911) (14,862) (2,113) --
Consumer loan marketing program
expenses......................... -- -- (14,446) -- --
Gain on sale of collateral related
to a troubled debt
restructuring.................... -- -- -- 901 3,513
Gain on sales of branches and other
selected assets.................. 7,245 -- -- -- --
One-time trust fees related to a
court award...................... 1,268 -- -- -- --
Special regulatory assessment to
recapitalize the SAIF............ (22,332) -- -- -- --
Write-off of mortgage servicing
rights, goodwill, and other
intangibles...................... (19,407) -- -- (3,094) (9,849)
Additional provisions for losses on
FHA/VA foreclosure claims of
acquired entity.................. (19,800) -- -- -- --
Provisions for data processing
systems conversions and
abandonment of property.......... -- -- -- (4,424) (5,200)
Litigation settlements.............. -- -- 2,200 (500) (9,450)
---------- ---------- --------- --------- ---------
EARNINGS BEFORE INCOME
TAXES, EXTRAORDINARY ITEM,
AND ACCOUNTING CHANGES.... 204,264 259,404 145,597 165,504 106,012
Applicable income taxes............... (70,526) (86,648) (45,174) (51,864) (30,219)
---------- ---------- --------- --------- ---------
EARNINGS BEFORE
EXTRAORDINARY ITEM AND
ACCOUNTING CHANGES........ 133,738 172,756 100,423 113,640 75,793
Extraordinary item and accounting
changes, net of taxes............... -- -- -- 637 2,847
---------- ---------- --------- --------- ---------
NET EARNINGS................ $ 133,738 $ 172,756 $ 100,423 $ 114,277 $ 78,640
========== ========== ========= ========= =========
</TABLE>
23
<PAGE> 26
TABLE 2. CONTRIBUTION TO FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1996 1995 1994 1993(1) 1992(1)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net interest income -- FTE....................... $ 8.96 $ 8.51 $ 8.73 $ 8.66 $ 8.31
Provision for losses on loans.................... (0.83) (0.42) (0.16) (0.40) (0.76)
------- ------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS -- FTE............... 8.13 8.09 8.57 8.26 7.55
NONINTEREST INCOME
Service charges on deposit accounts............ 1.10 1.16 0.99 1.07 0.99
Mortgage servicing income...................... 0.66 0.58 0.52 0.72 0.25
Bank card income............................... 0.36 0.32 0.19 0.22 0.23
Trust service income........................... 0.14 0.12 0.13 0.16 0.18
Profits and commissions from trading
activities.................................. 0.08 0.16 0.11 0.29 0.35
Investment securities gains (losses)........... 0.06 0.01 (0.38) 0.10 0.37
Other income................................... 0.86 0.78 0.73 0.73 0.70
------- ------- ------- ------- -------
Total noninterest income............... 3.26 3.13 2.29 3.29 3.07
------- ------- ------- ------- -------
NONINTEREST EXPENSE
Salaries and employee benefits................. (3.02) (3.04) (3.36) (3.58) (3.28)
Net occupancy expense.......................... (0.47) (0.47) (0.53) (0.55) (0.54)
Equipment expense.............................. (0.51) (0.52) (0.54) (0.57) (0.53)
Other expense.................................. (4.21) (2.93) (3.69) (3.32) (3.42)
------- ------- ------- ------- -------
Total noninterest expense.............. (8.21) (6.96) (8.12) (8.02) (7.77)
------- ------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES -- FTE,
EXTRAORDINARY ITEM, AND ACCOUNTING
CHANGES.............................. 3.18 4.26 2.74 3.53 2.85
Applicable income taxes -- FTE................... (1.26) (1.60) (1.06) (1.32) (1.05)
------- ------- ------- ------- -------
EARNINGS BEFORE EXTRAORDINARY ITEM AND
ACCOUNTING CHANGES................... 1.92 2.66 1.68 2.21 1.80
Extraordinary item and accounting changes, net of
taxes.......................................... -- -- -- 0.01 --
Preferred stock dividends........................ -- (0.02) (0.16) (0.07) (0.07)
------- ------- ------- ------- -------
NET EARNINGS........................... $ 1.92 $ 2.64 $ 1.52 $ 2.15 $ 1.73
======= ======= ======= ======= =======
Change in net earnings applicable to fully
diluted earnings per share using previous year
average shares outstanding..................... $ (0.58) $ 1.34 $ (0.24) $ 0.93 $ 0.55
Change in average shares outstanding............. (0.14) (0.22) (0.39) (0.51) (0.17)
------- ------- ------- ------- -------
Change in net earnings................. $ (0.72) $ 1.12 $ (0.63) $ 0.42 $ 0.38
======= ======= ======= ======= =======
AVERAGE FULLY DILUTED SHARES (IN THOUSANDS)...... 69,518 64,995 59,929 47,422 38,307
======= ======= ======= ======= =======
</TABLE>
- ---------------
FTE -- Fully taxable-equivalent
(1) Leader Financial Corporation was organized as a holding company on March 18,
1993 in connection with the conversion of its principal subsidiary, Leader
Federal Bank for Savings, from a federal mutual savings bank to a
federally-chartered capital stock savings bank. (See Note 2 to the
consolidated financial statements). Accordingly, earnings per share for the
year ended December 31, 1992 is calculated using only the Corporation's
historical net earnings and the calculation of earnings per share for the
year ended December 31, 1993 is based on the Corporation's historical net
earnings for 1993 plus Leader's fourth quarter net earnings, since the stock
conversion occurred on September 30, 1993.
24
<PAGE> 27
TABLE 3. BALANCE SHEET IMPACT OF ACQUISITIONS
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------- ------------------------------------ ----------
LEADER OTHERS TOTAL CAPITAL OTHERS TOTAL TOTAL
---------- -------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits at financial
institutions.......... $ 241 $ 2,540 $ 2,781 $ 2,199 $ 168 $ 2,367 $ 32,708
Loans, net of unearned
income................ 2,248,213 487,274 2,735,487 829,162 94,516 923,678 2,450,567
Allowance for losses on
loans................. (31,645) (6,479) (38,124) (18,356) (1,361) (19,717) (44,188)
---------- -------- ---------- ---------- ---------- ---------- ----------
Net loans........ 2,216,568 480,795 2,697,363 810,806 93,155 903,961 2,406,379
Investment securities... 836,583 212,303 1,048,886 118,518 50,855 169,373 885,183
Intangible assets....... 52,985 9,356 62,341 9,075 6,533 15,608 19,857
Cash and cash
equivalents........... 36,802 73,628 110,430 120,273 18,252 138,525 261,133
Other real estate,
net................... 1,070 1,414 2,484 2,494 96 2,590 4,499
Premises and equipment.. 19,013 20,293 39,306 25,864 3,309 29,173 65,850
Other assets............ 247,659 12,295 259,954 15,840 2,896 18,736 95,529
---------- -------- ---------- ---------- ---------- ---------- ----------
TOTAL ASSETS..... $3,410,921 $812,624 $4,223,545 $1,105,069 $ 175,264 $1,280,333 $3,771,138
========== ======== ========== ========== ========== ========== ==========
LIABILITIES
Deposits................ $1,697,496 $710,800 $2,408,296 $ 987,564 $ 151,080 $1,138,644 $3,345,968
Other interest-bearing
liabilities........... 1,384,610 18,585 1,403,195 30,682 -- 30,682 91,963
Other liabilities....... 72,755 9,319 82,074 12,004 4,032 16,036 44,836
---------- -------- ---------- ---------- ---------- ---------- ----------
TOTAL
LIABILITIES.... $3,154,861 $738,704 $3,893,565 $1,030,250 $ 155,112 $1,185,362 $3,482,767
========== ======== ========== ========== ========== ========== ==========
PURCHASE PRICE/CAPITAL
CONTRIBUTION/EQUITY..... $ 256,060 $ 73,920 $ 329,980 $ 74,819 $ 20,152 $ 94,971 $ 288,371
========== ======== ========== ========== ========== ========== ==========
</TABLE>
25
<PAGE> 28
TABLE 4. AVERAGE BALANCE SHEET AND AVERAGE INTEREST RATES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
INTEREST FTE INTEREST FTE
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....... $ 6,583 $ 550 8.35% $ 25,593 $ 2,114 8.26%
Federal funds sold and
securities purchased under
agreements to resell......... 239,887 13,139 5.48 294,457 17,041 5.79
Trading account assets......... 152,535 11,343 7.44 171,372 13,178 7.69
Investment securities(1) and
(2)..........................
Taxable securities........... 3,323,914 218,748 6.58 2,764,577 175,882 6.36
Tax-exempt securities........ 499,183 45,144 9.04 515,835 47,724 9.25
----------- ---------- ----------- ----------
Total investment
securities............. 3,823,097 263,892 6.90 3,280,412 223,606 6.82
Loans, net of unearned
income(1), (3), and (4)...... 9,894,427 908,464 9.18 8,874,417 812,916 9.16
----------- ---------- ----------- ----------
TOTAL EARNING ASSETS(1),
(2), (3), AND (4)...... 14,116,529 1,197,388 8.48 12,646,251 1,068,855 8.45
---------- ----------
Cash and due from banks........ 475,662 463,357
Premises and equipment......... 266,827 247,885
Allowance for losses on
loans........................ (169,513) (157,154)
Other assets................... 585,277 461,409
----------- -----------
TOTAL ASSETS............. $15,274,782 $13,661,748
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Money market accounts.......... $ 1,788,280 $ 59,442 3.32% $ 1,672,738 $ 44,540 2.66%
Savings deposits............... 2,023,298 51,496 2.55 1,927,638 51,842 2.69
Certificates of deposit of
$100,000 and over............ 986,100 57,961 5.88 858,136 42,397 4.94
Other time deposits............ 5,102,089 280,965 5.51 4,877,532 283,885 5.82
Short-term borrowings.......... 902,764 49,603 5.49 578,547 33,486 5.79
Short-term bank notes.......... 88,361 5,136 5.81 -- -- --
Long-term debt
Federal Home Loan Bank
advances................... 863,261 49,412 5.72 747,268 46,082 6.17
Subordinated capital notes... 211,866 15,419 7.28 129,995 10,337 7.95
Medium-term bank notes....... 42,637 2,801 6.57 -- -- --
Trust Preferred Securities... 10,871 872 8.02 -- -- --
Other........................ 26,549 1,540 5.80 34,786 2,717 7.81
----------- ---------- ----------- ----------
TOTAL INTEREST-BEARING
LIABILITIES............ 12,046,076 574,647 4.77 10,826,640 515,286 4.76
Noninterest-bearing demand
deposits..................... 1,632,648 -- 1,519,185 --
----------- ---------- ----------- ----------
TOTAL SOURCES OF FUNDS... 13,678,724 574,647 12,345,825 515,286
---------- ----------
Other liabilities.............. 312,483 196,691
Shareholders' equity........... 1,283,575 1,119,232
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY... $15,274,782 $13,661,748
=========== ===========
NET INTEREST INCOME(1)......... $ 622,741 $ 553,569
========== ==========
INTEREST RATE SPREAD(1)........ 3.71% 3.69%
==== ====
NET INTEREST MARGIN(1)......... 4.41% 4.38%
==== ====
TAXABLE-EQUIVALENT ADJUSTMENTS
Loans........................ $ 2,268 $ 2,016
Securities................... 14,511 15,556
---------- ----------
Total.................... $ 16,779 $ 17,572
========== ==========
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994
-------------------------------
INTEREST FTE
AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE
----------- -------- ------
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions....... $ 14,183 $ 748 5.27%
Federal funds sold and
securities purchased under
agreements to resell......... 164,836 6,862 4.16
Trading account assets......... 161,634 9,143 5.66
Investment securities(1) and
(2)..........................
Taxable securities........... 3,598,249 192,171 5.34
Tax-exempt securities........ 541,491 50,203 9.27
----------- --------
Total investment
securities............. 4,139,740 242,374 5.85
Loans, net of unearned
income(1), (3), and (4)...... 7,648,649 648,810 8.48
----------- --------
TOTAL EARNING ASSETS(1),
(2), (3), AND (4)...... 12,129,042 907,937 7.49
--------
Cash and due from banks........ 453,749
Premises and equipment......... 251,001
Allowance for losses on
loans........................ (153,180)
Other assets................... 424,567
-----------
TOTAL ASSETS............. $13,105,179
===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Money market accounts.......... $ 1,792,393 $ 46,293 2.58%
Savings deposits............... 2,025,801 48,187 2.38
Certificates of deposit of
$100,000 and over............ 766,859 34,020 4.44
Other time deposits............ 4,532,793 189,221 4.17
Short-term borrowings.......... 648,455 28,277 4.36
Short-term bank notes.......... -- -- --
Long-term debt
Federal Home Loan Bank
advances................... 518,112 27,258 5.26
Subordinated capital notes... 116,272 8,547 7.35
Medium-term bank notes....... -- -- --
Trust Preferred Securities... -- -- --
Other........................ 36,072 3,122 8.65
----------- --------
TOTAL INTEREST-BEARING
LIABILITIES............ 10,436,757 384,925 3.69
Noninterest-bearing demand
deposits..................... 1,489,100 --
----------- --------
TOTAL SOURCES OF FUNDS... 11,925,857 384,925
--------
Other liabilities.............. 136,332
Shareholders' equity........... 1,042,990
-----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY... $13,105,179
===========
NET INTEREST INCOME(1)......... $523,012
========
INTEREST RATE SPREAD(1)........ 3.80%
====
NET INTEREST MARGIN(1)......... 4.31%
====
TAXABLE-EQUIVALENT ADJUSTMENTS
Loans........................ $ 1,724
Securities................... 16,788
--------
Total.................... $ 18,512
========
</TABLE>
- ---------------
(1) Fully taxable-equivalent yields are calculated assuming a 35% federal income
tax rate.
(2) Yields are calculated on historical cost and exclude the impact of the
unrealized gain (loss) on available for sale securities.
(3) Includes loan fees, immaterial in amount, in both interest income and the
calculation of the yield on loans.
(4) Includes loans on nonaccrual status.
26
<PAGE> 29
TABLE 5. ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
1996 VERSUS 1995 1995 VERSUS 1994
-------------------------------- --------------------------------
INCREASE INCREASE
(DECREASE) (DECREASE)
DUE TO CHANGE DUE TO CHANGE
IN:(1) IN:(1)
------------------- TOTAL ------------------- TOTAL
AVERAGE AVERAGE INCREASE AVERAGE AVERAGE INCREASE
VOLUME RATE (DECREASE) VOLUME RATE (DECREASE)
-------- -------- ---------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits at financial
institutions.................................... $ (1,588) $ 24 $ (1,564) $ 801 $ 565 $ 1,366
Federal funds sold and securities purchased under
agreements to resell............................ (3,027) (875) (3,902) 6,804 3,375 10,179
Trading account assets............................ (1,412) (423) (1,835) 579 3,456 4,035
Investment securities -- FTE...................... 37,426 2,860 40,286 (54,925) 36,157 (18,768)
Loans, net of unearned income -- FTE.............. 93,649 1,899 95,548 109,521 54,585 164,106
-------- -------- -------- -------- -------- --------
TOTAL INTEREST INCOME....................... 125,048 3,485 128,533 62,780 98,138 160,918
-------- -------- -------- -------- -------- --------
INTEREST EXPENSE
Money market accounts............................. 3,243 11,659 14,902 (3,156) 1,403 (1,753)
Savings deposits.................................. 2,507 (2,853) (346) (2,418) 6,073 3,655
Certificates of deposit of $100,000 and over...... 6,850 8,714 15,564 4,285 4,092 8,377
Other time deposits............................... 12,746 (15,666) (2,920) 15,309 79,355 94,664
Short-term borrowings............................. 22,852 (1,599) 21,253 (3,295) 8,504 5,209
Long-term debt.................................... 15,840 (4,932) 10,908 14,499 5,710 20,209
-------- -------- -------- -------- -------- --------
TOTAL INTEREST EXPENSE...................... 64,038 (4,677) 59,361 25,224 105,137 130,361
-------- -------- -------- -------- -------- --------
CHANGE IN NET INTEREST INCOME....................... $ 61,010 $ 8,162 $ 69,172 $ 37,556 $ (6,999) $ 30,557
======== ======== ======== ======== ======== ========
PERCENTAGE INCREASE IN NET INTEREST INCOME OVER
PRIOR PERIOD...................................... 12.50% 5.84%
======== ========
</TABLE>
- ---------------
FTE -- Fully taxable-equivalent
(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.
TABLE 6. AVERAGE DEPOSITS(1)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Noninterest-bearing demand.............................. $ 1,632,648 $ 1,519,185 $ 1,489,100 $1,308,248 $1,017,927
Money market(2)......................................... 1,788,280 1,672,738 1,792,393 2,062,019 1,742,919
Savings(3).............................................. 2,023,298 1,927,638 2,025,801 1,434,777 980,514
Other time(4)........................................... 5,102,089 4,877,532 4,532,793 4,130,540 3,671,600
----------- ----------- ----------- ---------- ----------
TOTAL AVERAGE CORE DEPOSITS..................... 10,546,315 9,997,093 9,840,087 8,935,584 7,412,960
Certificates of deposit of $100,000 and over............ 986,100 858,136 766,859 802,429 721,486
----------- ----------- ----------- ---------- ----------
TOTAL AVERAGE DEPOSITS.......................... $11,532,415 $10,855,229 $10,606,946 $9,738,013 $8,134,446
=========== =========== =========== ========== ==========
</TABLE>
- ---------------
(1) Table 4 presents the average rate paid on the above deposit categories for
each of the three years ended December 31, 1996.
(2) Includes money market savings accounts and super NOW accounts.
(3) Includes regular savings accounts, NOW accounts, and premium savings
accounts.
(4) Includes certificates of deposit of less than $100,000, investment savings
deposits, IRAs, and Club accounts.
27
<PAGE> 30
TABLE 7. COMPOSITION OF THE LOAN PORTFOLIO
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial, financial, and agricultural....... $ 1,537,535 $1,573,790 $1,599,374 $1,379,430 $1,192,655
Real estate -- construction................... 446,946 403,492 351,711 249,314 183,806
Real estate -- mortgage
Secured by 1-4 family residential........... 3,218,651 2,976,180 2,999,835 2,328,313 1,961,634
FHA/VA government-insured/guaranteed........ 1,477,459 916,681 639,216 346,622 184,556
Other mortgage.............................. 1,530,110 1,283,937 1,244,773 1,084,884 820,103
Home equity................................... 228,511 210,834 192,052 169,731 172,894
Consumer
Credit cards and related plans.............. 627,406 426,241 296,158 131,478 106,005
Other consumer.............................. 1,324,252 1,207,666 1,100,695 923,589 744,285
Direct lease financing........................ 73,306 74,551 50,479 34,717 26,097
----------- ---------- ---------- ---------- ----------
TOTAL LOANS.......................... 10,464,176 9,073,372 8,474,293 6,648,078 5,392,035
Less: Unearned income......................... 30,106 32,313 37,643 32,194 27,658
----------- ---------- ---------- ---------- ----------
TOTAL LOANS, NET OF UNEARNED
INCOME............................. $10,434,070 $9,041,059 $8,436,650 $6,615,884 $5,364,377
=========== ========== ========== ========== ==========
</TABLE>
TABLE 8. ALLOCATION OF THE ALLOWANCE FOR LOSSES ON LOANS BY CATEGORY OF LOANS
AND THE PERCENTAGE OF LOANS BY CATEGORY TO TOTAL LOANS OUTSTANDING
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------------------------------------
1996 1995 1994 1993
---------------------- ---------------------- ---------------------- ----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF LOANS TO OF LOANS TO OF LOANS TO OF LOANS TO
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
-------- ----------- -------- ----------- -------- ----------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial,
financial, and
agricultural....... $ 30,741 17% $ 40,105 19% $ 47,811 20% $ 58,434 22%
Real estate --
construction....... 7,090 5 8,626 5 7,188 5 4,531 4
Real estate --
mortgage........... 69,647 53 54,412 52 58,409 54 53,040 54
Consumer............. 58,387 24 52,054 23 40,195 20 25,469 19
Direct lease
financing.......... 988 1 1,191 1 528 1 525 1
-------- --- -------- --- -------- --- -------- ---
Total........ $166,853 100% $156,388 100% $154,131 100% $141,999 100%
======== === ======== === ======== === ======== ===
<CAPTION>
DECEMBER 31,
----------------------
1992
----------------------
PERCENTAGE
OF LOANS TO
AMOUNT TOTAL LOANS
-------- -----------
<S> <C> <C>
Commercial,
financial, and
agricultural....... $ 47,484 23%
Real estate --
construction....... 2,795 3
Real estate --
mortgage........... 43,247 53
Consumer............. 20,274 20
Direct lease
financing.......... 330 1
-------- ---
Total........ $114,130 100%
======== ===
</TABLE>
- ---------------
Note: The allocation of the allowance is presented based in part on evaluations
of specific loans, past history, and economic conditions within specific
industries or geographic areas. Since all of these factors are subject to
change, the current allocation of the allowance is not necessarily
indicative of the breakdown of future losses. No portion of the allowance
for losses on loans has been allocated to FHA/VA
government-insured/guaranteed loans since they represent minimal credit
risk. FHA/VA government-insured/guaranteed loans have been excluded from
total loans for the above calculations. See the "Loans" discussion for
additional details regarding these loans.
TABLE 9. NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED
PROPERTIES
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans....................................... $ 63,346 $ 43,299 $ 28,615 $ 28,038 $53,302
Restructured loans..................................... 2,546 2,135 6,082 12,986 6,936
-------- -------- -------- -------- -------
TOTAL NONPERFORMING LOANS..................... 65,892 45,434 34,697 41,024 60,238
-------- -------- -------- -------- -------
Foreclosed properties
Other real estate, net............................... 15,531 8,057 9,737 18,414 34,619
Other foreclosed properties.......................... 989 1,138 669 883 551
-------- -------- -------- -------- -------
TOTAL FORECLOSED PROPERTIES................... 16,520 9,195 10,406 19,297 35,170
-------- -------- -------- -------- -------
TOTAL NONPERFORMING ASSETS.................... $ 82,412 $ 54,629 $ 45,103 $ 60,321 $95,408
======== ======== ======== ======== =======
Loans 90 days or more past due and not on nonaccrual
status
FHA/VA government-insured/guaranteed loans........... $709,424 $534,633 $252,575 $105,682 $59,275
All other loans...................................... 22,707 18,609 7,344 11,663 17,107
-------- -------- -------- -------- -------
TOTAL LOANS 90 DAYS OR MORE PAST DUE.......... $732,131 $553,242 $259,919 $117,345 $76,382
======== ======== ======== ======== =======
</TABLE>
28
<PAGE> 31
TABLE 10. ALLOWANCE FOR LOSSES ON LOANS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD........... $ 156,388 $ 154,131 $ 141,999 $ 114,130 $ 84,312
LOANS CHARGED OFF
Commercial, financial, and
agricultural......................... 10,808 8,234 5,822 12,427 23,523
Real estate -- construction............ 367 318 312 105 411
Real estate -- mortgage................ 4,863 5,732 4,216 3,772 5,940
Consumer............................... 20,346 13,213 8,690 9,511 10,168
Credit cards and related plans......... 27,657 13,422 2,676 2,649 2,867
Direct lease financing................. 48 52 6 52 399
----------- ---------- ---------- ---------- ----------
Total charge-offs............... 64,089 40,971 21,722 28,516 43,308
----------- ---------- ---------- ---------- ----------
RECOVERIES ON LOANS PREVIOUSLY CHARGEDOFF
Commercial, financial, and
agricultural........................... 3,247 5,138 6,692 5,750 10,801
Real estate -- construction............ 16 429 468 59 161
Real estate -- mortgage................ 2,190 2,143 2,845 926 562
Consumer............................... 4,940 4,475 4,010 4,557 4,553
Credit cards and related plans......... 1,912 848 793 810 869
Direct lease financing................. 4 52 133 54 135
----------- ---------- ---------- ---------- ----------
Total recoveries................ 12,309 13,085 14,941 12,156 17,081
----------- ---------- ---------- ---------- ----------
Net charge-offs.......................... 51,780 27,886 6,781 16,360 26,227
Provision charged to expense............. 57,395 27,381 9,661 22,660 37,367
Allowance related to the sale of certain
loans.................................. (1,628) -- -- -- --
Increase due to acquisitions............. 6,478 2,762 9,252 21,569 18,678
----------- ---------- ---------- ---------- ----------
BALANCE AT END OF PERIOD................. $ 166,853 $ 156,388 $ 154,131 $ 141,999 $ 114,130
=========== ========== ========== ========== ==========
Total loans, net of unearned income, at
end of period.......................... $10,434,070 $9,041,059 $8,436,650 $6,615,884 $5,364,377
Less: FHA/VA government-
insured/guaranteed loans............... 1,477,459 916,681 639,216 346,622 184,556
----------- ---------- ---------- ---------- ----------
LOANS USED TO CALCULATE RATIOS......... $ 8,956,611 $8,124,378 $7,797,434 $6,269,262 $5,179,821
=========== ========== ========== ========== ==========
Average total loans, net of unearned
income, during period.................. $ 9,894,427 $8,874,417 $7,648,649 $6,375,900 $5,217,025
Less: Average FHA/VA government-
insured/guaranteed loans............... 1,197,070 777,949 492,919 265,589 145,243
----------- ---------- ---------- ---------- ----------
AVERAGE LOANS USED TO CALCULATE
RATIOS............................... $ 8,697,357 $8,096,468 $7,155,730 $6,110,311 $5,071,782
=========== ========== ========== ========== ==========
CREDIT QUALITY RATIOS(1)
Allowance at end of period to loans,
net of unearned income............... 1.86% 1.92% 1.98% 2.27% 2.20%
Allowance at end of period to average
loans, net of unearned income........ 1.92 1.93 2.15 2.32 2.25
Allowance for losses on loans as a
percentage of nonperforming loans.... 253 344 444 346 189
Net charge-offs to average loans, net
of unearned income................... .60 .34 .09 .27 .52
Nonperforming loans as a percentage of
loans................................ .74 .56 .44 .65 1.16
Nonperforming assets as a percentage of
loans plus foreclosed properties..... .92 .67 .58 .96 1.83
Loans 90 days or more past due and not
on nonaccrual status as a percentage
of loans............................. .25 .23 .09 .19 .33
</TABLE>
- ---------------
(1) Ratio calculations exclude FHA/VA government-insured/guaranteed loans since
they represent minimal credit risk to the Corporation. See the "Loans"
discussion for additional information regarding the FHA/VA
government-insured/guaranteed loans and Table 9 for the detail of
nonperforming assets.
29
<PAGE> 32
TABLE 11. RATE SENSITIVITY ANALYSIS AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTEREST-SENSITIVE WITHIN (1) AND (7)
----------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 1-2 2-5 OVER NONINTEREST-
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 (2), (3),
and (4)................. $2,439 $ 639 $ 729 $1,342 $1,025 $2,881 $1,343 $ 66 $10,464
Investment securities (5)
and (6)................. 380 251 384 487 419 450 585 -- 2,956
Other earning assets...... 293 151 2 -- -- -- -- -- 446
Other assets.............. -- -- -- -- -- -- -- 1,357 1,357
------ ------- ------ ------ ------ ------ ------ ------- -------
TOTAL ASSETS....... $3,112 $ 1,041 $1,115 $1,829 $1,444 $3,331 $1,928 $ 1,423 $15,223
====== ======= ====== ====== ====== ====== ====== ======= =======
SOURCES OF FUNDS
Money market deposits (7)
and (8)................. $ -- $ 554 $ -- $ 554 $ -- $ 739 $ -- $ -- $ 1,847
Other savings and time
deposits................ 837 1,517 978 1,057 674 1,808 30 -- 6,901
Certificates of deposit of
$100,000 and over....... 222 202 199 205 131 51 1 -- 1,011
Short-term borrowings..... 447 -- 2 -- -- -- -- -- 449
Short and medium-term bank
notes................... 100 100 65 -- 30 105 -- -- 400
Federal Home Loan Bank
advances................ 137 555 2 4 10 37 145 -- 890
Other long-term debt...... -- 1 1 1 3 3 375 -- 384
Noninterest-bearing
deposits................ -- -- -- -- -- -- -- 1,731 1,731
Other liabilities......... -- -- -- -- -- -- -- 257 257
Shareholders' equity...... -- -- -- -- -- -- -- 1,353 1,353
------ ------- ------ ------ ------ ------ ------ ------- -------
TOTAL SOURCES OF
FUNDS............ $1,743 $ 2,929 $1,247 $1,821 $ 848 $2,743 $ 551 $ 3,341 $15,223
====== ======= ====== ====== ====== ====== ====== ======= =======
INTEREST-RATE SENSITIVITY
GAP....................... $1,369 $(1,888) $ (132) $ 8 $ 596 $ 588 $1,377 $(1,918)
CUMULATIVE INTEREST RATE
SENSITIVITY GAP........... 1,369 (519) (651) (643) (47) 541 1,918 --
CUMULATIVE GAP AS A
PERCENTAGE OF TOTAL
ASSETS(8)................. 9% (3)% (4)% (4)% --% 4% 13% --%
</TABLE>
- ---------------
MANAGEMENT HAS MADE THE FOLLOWING ASSUMPTIONS IN THE ABOVE ANALYSIS:
(1) Assets and liabilities are generally scheduled according to their earliest
repricing dates regardless of their contractual maturities.
(2) Nonaccrual loans are included in the noninterest-bearing category.
(3) Fixed-rate mortgage loan maturities are estimated based on the currently
prevailing principal-prepayment patterns of comparable mortgage-backed
securities.
(4) Delinquent FHA/VA loans are scheduled based on foreclosure and repayment
patterns.
(5) 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.
(6) Securities are scheduled according to their call dates when valued at a
premium to par.
(7) 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.
(8) 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 (16%), (21%), (22%), (18%), (14%), and positive 4%
and 13%, 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 December 31,
1996.
30
<PAGE> 33
TABLE 12. INVESTMENT SECURITIES AND OTHER EARNING ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
U.S. Government obligations
U.S. Treasury............................................ $ 837,386 $ 833,061 $ 975,221
U.S. Government agencies................................. 1,462,670 2,101,717 1,919,302
---------- ---------- ----------
Total U.S. Government obligations................ 2,300,056 2,934,778 2,894,523
Obligations of states and political subdivisions........... 505,970 519,134 537,193
Other investment securities................................ 150,208 119,142 160,766
---------- ---------- ----------
Total investment securities...................... 2,956,234 3,573,054 3,592,482
Interest-bearing deposits at financial institutions........ 9,082 14,114 11,132
Federal funds sold and securities purchased under
agreements to resell..................................... 152,667 446,655 54,178
Trading account assets..................................... 225,336 121,927 155,951
Loans held for resale...................................... 58,622 87,889 33,812
---------- ---------- ----------
Total investment securities and other earning
assets......................................... $3,401,941 $4,243,639 $3,847,555
========== ========== ==========
</TABLE>
TABLE 13. RISK-BASED CAPITAL
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
TIER 1 CAPITAL
Shareholders' equity..................................... $1,352,874 $1,213,162 $1,008,594
Trust Preferred Securities and minority interest in
consolidated subsidiary............................... 200,026 1,088 1,088
Less: Goodwill.......................................... (46,129) (46,913) (46,541)
Disallowed deferred tax asset..................... (1,867) (2,237) (2,494)
Unrealized (gain) loss on available for sale
securities............................................... (24,592) (31,068) 29,001
---------- ---------- ----------
TOTAL TIER 1 CAPITAL............................. 1,480,312 1,134,032 989,648
TIER 2 CAPITAL
Allowance for losses on loans............................ 121,623 104,393 97,666
Qualifying long-term debt................................ 174,121 174,166 74,747
---------- ---------- ----------
TOTAL CAPITAL BEFORE DEDUCTIONS.................. 1,776,056 1,412,591 1,162,061
Less investment in unconsolidated subsidiaries........... (1,743) (214) (36)
---------- ---------- ----------
TOTAL CAPITAL.................................... $1,774,313 $1,412,377 $1,162,025
========== ========== ==========
RISK-WEIGHTED ASSETS....................................... $9,684,621 $8,467,922 $7,762,084
========== ========== ==========
RATIOS
Equity to assets......................................... 8.89% 8.43% 7.51%
Leverage ratio(1)........................................ 9.61 8.08 7.53
Tier 1 capital to risk-weighted assets(1)................ 15.29 13.39 12.75
Total capital to risk-weighted assets(1)................. 18.32 16.68 14.97
</TABLE>
- ---------------
(1) Regulatory minimums for institutions considered "well-capitalized" are 5%,
6%, and 10% for the leverage, Tier 1 capital to risk-weighted assets, and
Total capital to risk-weighted assets ratios, respectively. As of December
31, 1996, all of the Corporation's banking subsidiaries were considered
"well-capitalized." See Note 12 to the consolidated financial statements for
a comparison of the Corporation's capital levels and ratios to the
regulatory minimums for "adequately capitalized" and "well capitalized."
31
<PAGE> 34
TABLE 14. SELECTED QUARTERLY DATA
<TABLE>
<CAPTION>
1996 QUARTERS ENDED(1)
--------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
----------- ----------- ------------ ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net interest income............. $ 147,742 $ 151,800 $ 151,661 $ 154,759 $ 605,962
Provision for losses on loans... (12,949) (12,720) (16,070) (15,656) (57,395)
Investment securities gains
(losses)...................... 61 (29) (261) 4,310 4,081
Noninterest income.............. 53,696 55,589 57,632 55,333 222,250
Noninterest expense............. (117,971) (120,274) (151,180) (181,209) (570,634)
----------- ----------- ----------- ----------- -----------
Earnings before income taxes.... 70,579 74,366 41,782 17,537 204,264
Applicable income taxes......... 23,427 25,742 15,170 6,187 70,526
----------- ----------- ----------- ----------- -----------
Net earnings.................... $ 47,152 $ 48,624 $ 26,612 $ 11,350 $ 133,738
=========== =========== =========== =========== ===========
PER COMMON SHARE DATA
Net earnings
Primary.................... $ .70 $ .72 $ .38 $ .15 $ 1.95
Fully diluted.............. .68 .70 .38 .15 1.92
Dividends..................... .27 .27 .27 .27 1.08
UPC COMMON STOCK DATA(2)
High trading price............ $ 31.75 $ 31.25 $ 36.25 $ 41.38 $ 41.38
Low trading price............. 29.00 29.63 28.63 34.63 28.63
Closing price................. 30.25 30.38 35.50 39.00 39.00
Trading volume (in thousands)
(3)........................ 5,862 5,221 9,506 7,795 28,383
KEY FINANCIAL DATA
Return on average assets...... 1.25% 1.29% .69% .29% .88%
Return on average common
equity..................... 15.86 16.01 8.18 3.10 10.61
Expense ratio................. 1.62 1.59 1.53 1.37 1.58
Efficiency ratio.............. 55.63 55.23 56.11 52.63 55.43
Equity/assets (period end).... 8.52 8.62 8.58 8.89 8.89
Average earning assets........ $13,972,060 $14,047,907 $14,239,275 $14,204,554 $14,116,529
Interest income -- FTE........ 295,358 298,323 300,703 303,004 1,197,388
Yield on average earning
assets -- FTE.............. 8.50% 8.54% 8.40% 8.49% 8.48%
Average interest-bearing
liabilities................ $11,828,347 $12,008,611 $12,245,712 $12,098,858 $12,046,076
Total interest expense........ 143,430 142,188 144,699 144,330 574,647
Rate on average interest-
bearing liabilities........ 4.88% 4.76% 4.70% 4.75% 4.77%
Net interest income -- FTE.... $ 151,928 $ 156,135 $ 156,004 $ 158,674 $ 622,741
Net interest margin -- FTE.... 4.37% 4.47% 4.36% 4.44% 4.41%
</TABLE>
32
<PAGE> 35
TABLE 14. SELECTED QUARTERLY DATA (CONTINUED)
<TABLE>
<CAPTION>
1995 QUARTERS ENDED(1)
--------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
----------- ----------- ------------ ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net interest income............. $ 129,143 $ 132,128 $ 136,565 $ 138,161 $ 535,997
Provision for losses on loans... (3,428) (3,672) (6,662) (13,619) (27,381)
Investment securities gains
(losses)...................... (21) 18 (478) 890 409
Noninterest income.............. 46,487 50,403 51,935 54,189 203,014
Noninterest expense............. (106,268) (109,816) (111,422) (125,129) (452,635)
----------- ----------- ----------- ----------- -----------
Earnings before income taxes.... 65,913 69,061 69,938 54,492 259,404
Applicable income taxes......... 21,509 23,512 22,470 19,157 86,648
----------- ----------- ----------- ----------- -----------
Net earnings.................... $ 44,404 $ 45,549 $ 47,468 $ 35,335 $ 172,756
=========== =========== =========== =========== ===========
PER COMMON SHARE DATA
Net earnings
Primary.................... $ .71 $ .72 $ .74 $ .55 $ 2.72
Fully diluted.............. .69 .70 .72 .53 2.64
Dividends..................... .23 .25 .25 .25 .98
UPC COMMON STOCK DATA(2)
High trading price............ $ 24.50 $ 28.13 $ 30.75 $ 32.25 $ 32.25
Low trading price............. 20.88 23.13 26.13 29.63 20.88
Closing price................. 23.13 26.75 29.63 31.88 31.88
Trading volume (in thousands)
(3)........................ 3,731 2,877 6,153 4,082 16,843
KEY FINANCIAL DATA
Return on average assets...... 1.35% 1.36% 1.37% 1.00% 1.26%
Return on average common
equity..................... 18.05 17.90 17.59 12.50 16.16
Expense ratio................. 1.82 1.77 1.71 1.66 1.74
Efficiency ratio.............. 59.02 58.78 57.79 57.44 58.24
Equity/assets (period end).... 8.06 8.21 8.59 8.43 8.43
Average earning assets........ $12,384,047 $12,465,001 $12,711,118 $13,017,162 $12,646,251
Interest income -- FTE........ 251,260 263,863 274,208 279,524 1,068,855
Yield on average earning
assets -- FTE.............. 8.23% 8.49% 8.56% 8.52% 8.45%
Average interest-bearing
liabilities................ $10,625,445 $10,623,292 $10,942,627 $11,108,617 $10,826,640
Total interest expense........ 117,682 127,442 133,336 136,826 515,286
Rate on average interest-
bearing liabilities........ 4.49% 4.81% 4.83% 4.89% 4.76%
Net interest income -- FTE.... $ 133,578 $ 136,421 $ 140,872 $ 142,698 $ 553,569
Net interest margin -- FTE.... 4.37% 4.39% 4.40% 4.35% 4.38%
</TABLE>
- ---------------
FTE -- Fully taxable-equivalent basis
(1) Quarterly amounts have been restated for all 1996 acquisitions accounted for
using the pooling of interests method of accounting. In addition, quarterly
amounts for 1995 have been restated for the 1996 acquisition of Leader (see
Note 2 to the consolidated financial statements). Certain 1996 quarterly
amounts for acquired entities have been restated from originally reported
amounts due to certain adjustments to conform to the Corporation's reporting
policies.
(2) Union Planters Corporation's Common Stock is listed on the New York Stock
Exchange (NYSE) and is traded under the symbol UPC. All share prices
represent closing prices as reported by the NYSE. There were approximately
17,500 holders of the Corporation's Common Stock as of December 31, 1996.
(3) Trading volume represents total volume for the period shown as reported by
the NYSE.
33
<PAGE> 36
TABLE 15. UNION PLANTERS CORPORATION'S BANKING SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996(1)
-------------------------------------
ASSETS LOANS DEPOSITS EQUITY
------- ------ -------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
TENNESSEE
Union Planters National Bank (Memphis)...................... $ 6,001 $4,030 $3,125 $433.3
Union Planters Bank of Middle Tennessee, N.A. (Nashville)... 1,077 713 984 71.4
Union Planters Bank of West Tennessee (Humboldt)............ 453 275 400 39.6
Union Planters Bank of East Tennessee, N.A. (Knoxville)..... 426 311 381 32.2
Union Planters Bank of Jackson, N.A......................... 319 191 295 21.6
Union Planters Bank of the Lakeway Area (Morristown)........ 247 168 208 20.4
Union Planters Bank of the Cumberlands (Cookeville)......... 242 153 222 18.1
First National Bank of Shelbyville.......................... 190 106 165 15.2
Union Planters Bank of the Tennessee Valley (Harriman)...... 189 117 171 13.4
The First National Bank of Crossville....................... 183 81 164 12.5
Union Planters Bank of Northwest Tennessee FSB (Paris)...... 168 124 147 11.1
Bank of Goodlettsville...................................... 167 106 155 10.9
Union Planters Bank of Chattanooga, N.A..................... 130 75 117 12.6
Central State Bank (Lexington).............................. 110 76 99 7.0
First State Bank of Brownsville............................. 89 49 72 5.2
Bank of Commerce (Woodbury)................................. 81 56 74 7.0
First Citizens Bank of Hohenwald............................ 56 33 47 4.5
Union Planters Bank of North Central Tennessee (Erin)....... 52 30 45 5.5
First State Bank of Fayette County (Somerville)............. 29 18 26 2.1
------- ------ ------ ------
Total Tennessee................................... $10,209 $6,712 $6,897 $743.6
======= ====== ====== ======
MISSISSIPPI
Union Planters Bank of Central Mississippi (Jackson)........ $ 594 $ 410 $ 516 $ 41.1
Union Planters Bank of Northwest Mississippi (Clarksdale)... 550 299 479 40.6
Union Planters Bank of Mississippi (Grenada)................ 538 345 452 43.8
Union Planters Bank of Southern Mississippi (Hattiesburg)... 363 238 299 26.3
Union Planters Bank of Northeast Mississippi (New Albany)... 274 182 234 18.0
------- ------ ------ ------
Total Mississippi................................. $ 2,319 $1,474 $1,980 $169.8
======= ====== ====== ======
MISSOURI
Union Planters Bank of Southeast Missouri (Cape
Girardeau)................................................ $ 520 $ 422 $ 465 $ 35.1
Union Planters Bank of Southwest Missouri (Springfield)..... 203 151 183 18.6
Union Planters Bank of Missouri (Clayton)(2)................ 128 99 106 14.1
Citizens First Financial Bank (Dexter)(3)................... 96 56 87 7.3
First Financial Bank of Southeast Missouri (Sikeston)(3).... 96 52 88 6.9
Union Planters Bank of Mid-Missouri (Columbia).............. 89 76 75 5.7
First Financial Bank of St. Louis(2)........................ 71 36 64 5.8
First Financial Bank of Mississippi County (East
Prairie)(3)............................................... 35 19 32 2.7
First Financial Bank of Ste. Genevieve County(3)............ 27 21 25 2.2
------- ------ ------ ------
Total Missouri.................................... $ 1,265 $ 932 $1,125 $ 98.4
======= ====== ====== ======
ARKANSAS
Union Planters Bank of Northeast Arkansas (Jonesboro)....... $ 574 $ 431 $ 508 $ 51.4
Union Planters Bank of Central Arkansas, N.A. (Clinton)..... 91 61 80 6.5
------- ------ ------ ------
Total Arkansas.................................... $ 665 $ 492 $ 588 $ 57.9
======= ====== ====== ======
LOUISIANA
Union Planters Bank of Louisiana (Baton Rouge).............. $ 579 $ 417 $ 495 $ 39.3
======= ====== ====== ======
ALABAMA
Union Planters Bank of Alabama (Decatur).................... $ 451 $ 344 $ 419 $ 28.0
======= ====== ====== ======
KENTUCKY
Simpson County Bank (Franklin).............................. $ 118 $ 80 $ 108 $ 7.4
======= ====== ====== ======
</TABLE>
- ---------------
(1) Individual amounts do not total to consolidated amounts due to intercompany
eliminations.
(2) First Financial Bank of St. Louis was merged with Union Planters Bank of
Missouri March 1, 1997.
(3) Scheduled to merge with existing Missouri banks in 1997.
34
<PAGE> 37
UNION PLANTERS CORPORATION
BANKS AND COMMUNITIES SERVED
<TABLE>
<CAPTION>
OFFICES
-------
<S> <C>
TENNESSEE
UNION PLANTERS NATIONAL BANK
Bartlett, Bristol, Collierville, Cordova,
Germantown, Kingsport, Johnson City, and Memphis.... 47
UNION PLANTERS BANK OF MIDDLE TENNESSEE, N.A.
Antioch, Brentwood, Columbia, Dickson, Donelson,
Eagleville, Franklin, Gallatin, Goodlettsville,
Hendersonville, Lebanon, Madison, Mt. Juliet,
Murfreesboro, Nashville, and Smyrna................. 27
UNION PLANTERS BANK OF WEST TENNESSEE
Dyersburg, Elbridge, Gibson, Humboldt, Martin,
Newbern, Obion, Ridgely, Ripley, Rutherford,
Tiptonville, Trenton, Union City, and Yorkville..... 27
UNION PLANTERS BANK OF EAST TENNESSEE, N.A.
Alcoa, Clinton, Greenback, Knoxville, Maryville, and
Oak Ridge........................................... 13
UNION PLANTERS BANK OF JACKSON, N.A.
Jackson and Milan................................... 9
UNION PLANTERS BANK OF THE LAKEWAY AREA
Greenville, Jefferson City, Morristown, Newport, and
Talbott............................................. 9
UNION PLANTERS BANK OF THE CUMBERLANDS
Alexandria, Algood, Baxter, Byrdstown, Celina,
Cookeville, Dowelltown, Monterey, and Smithville.... 12
FIRST NATIONAL BANK OF SHELBYVILLE
Fayetteville, Monteagle, Shelbyville, and Tracy
City................................................ 7
UNION PLANTERS BANK OF THE TENNESSEE VALLEY
Harriman, Kingston, Lenoir City, Oliver Springs,
Rockwood, Sunbright, and Wartburg................... 7
THE FIRST NATIONAL BANK OF CROSSVILLE
Crossville and Fairfield Glade...................... 5
UNION PLANTERS BANK OF NORTHWEST TENNESSEE FSB
Camden, Huntingdon, McKenzie, Paris, and Waverly.... 6
BANK OF GOODLETTSVILLE
Goodlettsville, Springfield, and White House........ 4
UNION PLANTERS BANK OF CHATTANOOGA, N.A.
Chattanooga, Cleveland, and East Ridge.............. 8
CENTRAL STATE BANK
Jackson and Lexington............................... 4
THE FIRST STATE BANK
Brownsville and Stanton............................. 4
BANK OF COMMERCE
Auburntown and Woodbury............................. 3
FIRST CITIZENS BANK OF HOHENWALD........................ 3
UNION PLANTERS BANK OF NORTH CENTRAL TENNESSEE
Cumberland City and Erin............................ 2
FIRST STATE BANK OF FAYETTE COUNTY IN SOMERVILLE........ 1
MISSISSIPPI
UNION PLANTERS BANK OF CENTRAL MISSISSIPPI
Byram, Clinton, Collinsville, Crystal Springs,
Decatur, Forest, Hazlehurst, Jackson, Meridian,
Newton, Pearl, Philadelphia, Ridgeland, Terry, and
Union............................................... 27
UNION PLANTERS BANK OF NORTHWEST MISSISSIPPI
Batesville, Charleston, Clarksdale, Cleveland, Drew,
Friars Point, Greenville, Greenwood, Itta Bena,
Lambert, Leland, Lula, Moorhead, Pope, Shaw, Sledge,
and Sumner.......................................... 29
</TABLE>
<TABLE>
<CAPTION>
OFFICES
-------
<S> <C>
UNION PLANTERS BANK OF MISSISSIPPI
Ackerman, Calhoun City, Columbus, Derma, Eupora,
Grenada, Houston, Kosciusko, Louisville, Water
Valley, West Point, and Winona...................... 21
UNION PLANTERS BANK OF SOUTHERN MISSISSIPPI
Bassfield, Bay St. Louis, Biloxi, Collins,
Ellisville, Gulfport, Hattiesburg, Laurel, Moss
Point, Mount Olive, Ocean Springs, Pascagoula,
Petal, and
Prentiss............................................ 19
UNION PLANTERS BANK OF NORTHEAST MISSISSIPPI, N.A.
Ashland, Baldwyn, New Albany, Oxford, Ripley, and
Tupelo.............................................. 13
UNION PLANTERS NATIONAL BANK
Olive Branch and Southaven.......................... 6
MISSOURI
UNION PLANTERS BANK OF SOUTHEAST MISSOURI
Cape Girardeau, Jackson, Marble Hill, Perryville,
Poplar Bluff, Ste. Genevieve, and Sikeston.......... 13
UNION PLANTERS BANK OF SOUTHWEST MISSOURI
Branson, Ozark, and Springfield..................... 10
UNION PLANTERS BANK OF MISSOURI
Affton, Clayton, Rock Hill, and St. Louis........... 6
CITIZEN'S FIRST FINANCIAL BANK*
Advance and Dexter.................................. 3
FIRST FINANCIAL BANK OF SOUTHEAST MISSOURI*
Benton, Matthews, New Madrid, Oran, Scott City, and
Sikeston............................................ 6
UNION PLANTERS BANK OF MID-MISSOURI
Ashland and Columbia................................ 4
FIRST FINANCIAL BANK OF MISSISSIPPI COUNTY*
Charleston and East Prairie......................... 2
FIRST FINANCIAL BANK OF STE. GENEVIEVE COUNTY*.......... 1
ARKANSAS
UNION PLANTERS BANK OF NORTHEAST ARKANSAS
Bono, Brookland, Hardy, Jonesboro, Mammoth Spring,
Marmaduke, Newport, Paragould, Rector, Sidney, and
Weiner.............................................. 21
UNION PLANTERS BANK OF CENTRAL ARKANSAS, N.A.
Bee Branch, Clinton, Fairfield Bay, Leslie,
Marshall, and Mountain View......................... 6
UNION PLANTERS NATIONAL BANK
Cotton Plant, Crawfordsville, DeValls Bluff, Earle,
Forrest City, Joiner, Luxora, Marion, Osceola, and
West Memphis........................................ 15
LOUISIANA
UNION PLANTERS BANK OF LOUISIANA
Baton Rouge......................................... 16
ALABAMA
UNION PLANTERS BANK OF ALABAMA
Athens, Decatur, Florence, Hartselle, Huntsville,
Madison, Moulton, Muscle Shoals, Owens Cross Roads,
Sheffield, and Tuscumbia............................ 17
KENTUCKY
SIMPSON COUNTY BANK
Adairville and Franklin............................. 5
---
TOTAL BRANCH OFFICES.................................... 438
===
</TABLE>
- ---------------
This listing is as of March 1, 1997. The banks noted with an (*) are scheduled
to be merged with existing banks later in 1997.
35
<PAGE> 38
REPORT OF MANAGEMENT
The accompanying financial statements and related financial information in
this annual report were prepared by the management of Union Planters Corporation
in accordance with generally accepted accounting principles and, where
appropriate, reflect management's best estimates and judgment. Management is
responsible for the integrity, objectivity, consistency, and fair presentation
of the financial statements and all financial information contained in this
annual report.
Management maintains and depends upon internal accounting systems and
related internal controls. Internal controls are designed to ensure that
transactions are properly authorized and recorded in the Corporation's financial
records and to safeguard the Corporation's assets from material loss or misuse.
The Corporation utilizes internal monitoring mechanisms and an extensive
external audit to monitor compliance with, and assess the effectiveness of the
internal controls. Management believes the Corporation's internal controls
provide reasonable assurance that the Corporation's assets are safeguarded and
that its financial records are reliable.
The Audit Committee of the Board of Directors meets periodically with
representatives of the Corporation's independent accountants, the corporate
audit manager, and management to review accounting policies, control procedures,
and audit and regulatory examination reports. The independent accountants and
corporate audit manager have free access to the Committee, with and without the
presence of management, to discuss the results of their audit work and their
evaluation of the internal controls and the quality of financial reporting.
The financial statements have been audited by Price Waterhouse LLP,
independent accountants, who were engaged to express an opinion as to the
fairness of presentation of such financial statements.
<TABLE>
<S> <C>
/s/ BENJAMIN RAWLINS, JR. /s/ JACK W. PARKER
Benjamin W. Rawlins, Jr. Jack W. Parker
Chairman of the Board and Executive Vice President and
Chief Executive Officer Chief Financial Officer
</TABLE>
36
<PAGE> 39
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Union Planters Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of earnings, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Union Planters Corporation (the Corporation) and its subsidiaries at December
31, 1996 and 1995, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Corporation's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the
Corporation changed its method of accounting for investment securities in 1994.
/s/PRICE WATERHOUSE LLP
- -----------------------
PRICE WATERHOUSE LLP
Memphis, Tennessee
January 16, 1997
37
<PAGE> 40
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks................................... $ 594,535 $ 459,964
Interest-bearing deposits at financial institutions....... 9,082 14,114
Federal funds sold and securities purchased under
agreements to resell................................... 152,667 446,655
Trading account assets.................................... 225,336 121,927
Loans held for resale..................................... 58,622 87,889
Investment securities
Available for sale (Amortized cost: $2,916,051 and
$3,336,390, respectively)............................ 2,956,234 3,386,785
Held to maturity (Fair value: $188,433 in 1995)........ -- 186,269
Loans..................................................... 10,464,176 9,073,372
Less: Unearned income.................................. (30,106) (32,313)
Allowance for losses on loans.................... (166,853) (156,388)
----------- -----------
Net loans......................................... 10,267,217 8,884,671
Premises and equipment, net............................... 260,971 246,776
Accrued interest receivable............................... 211,082 172,751
FHA/VA claims receivable.................................. 78,241 46,174
Mortgage servicing rights................................. 57,206 59,631
Goodwill and other intangibles............................ 56,585 58,535
Other assets.............................................. 294,785 211,081
----------- -----------
TOTAL ASSETS...................................... $15,222,563 $14,383,222
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing.................................... $ 1,730,721 $ 1,592,490
Certificates of deposit of $100,000 and over........... 1,011,414 907,879
Other interest-bearing................................. 8,748,127 8,574,353
----------- -----------
Total deposits.................................... 11,490,262 11,074,722
Short-term borrowings..................................... 449,146 838,283
Short- and medium-term bank notes......................... 400,000 --
Federal Home Loan Bank advances........................... 889,985 798,039
Other long-term debt...................................... 383,731 228,538
Accrued interest, expenses, and taxes..................... 141,455 126,946
Other liabilities......................................... 115,110 103,532
----------- -----------
TOTAL LIABILITIES................................. 13,869,689 13,170,060
----------- -----------
Commitments and contingent liabilities (Notes 15, 17,
19).................................................... -- --
Shareholders' equity
Convertible preferred stock (Note 10).................. 83,809 91,810
Common stock, $5 par value; 100,000,000 shares
authorized; 64,927,320 issued and outstanding
(60,535,500 in 1995).................................. 324,637 302,677
Additional paid-in capital............................. 177,372 123,088
Retained earnings...................................... 752,963 670,605
Unearned compensation.................................. (10,499) (6,086)
Unrealized gain on available for sale securities....... 24,592 31,068
----------- -----------
TOTAL SHAREHOLDERS' EQUITY........................ 1,352,874 1,213,162
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $15,222,563 $14,383,222
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
38
<PAGE> 41
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans........................ $ 899,344 $ 806,042 $ 644,690
Interest on investment securities
Taxable........................................ 218,748 175,882 192,171
Tax-exempt..................................... 30,633 32,168 33,415
Interest on deposits at financial institutions.... 550 2,114 748
Interest on federal funds sold and securities
purchased under agreements to resell........... 13,139 17,041 6,862
Interest on trading account assets................ 11,343 13,178 9,143
Interest on loans held for resale................. 6,852 4,858 2,396
----------- ----------- -----------
Total interest income..................... 1,180,609 1,051,283 889,425
----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits.............................. 449,864 422,664 317,721
Interest on short-term borrowings................. 54,739 33,486 28,277
Interest on long-term debt........................ 70,044 59,136 38,927
----------- ----------- -----------
Total interest expense.................... 574,647 515,286 384,925
----------- ----------- -----------
NET INTEREST INCOME....................... 605,962 535,997 504,500
PROVISION FOR LOSSES ON LOANS....................... 57,395 27,381 9,661
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS......................... 548,567 508,616 494,839
NONINTEREST INCOME
Service charges on deposit accounts............... 76,527 75,261 59,564
Mortgage servicing income......................... 46,098 37,427 31,060
Bank card income.................................. 24,975 20,758 11,386
Trust service income.............................. 9,779 8,010 7,990
Profits and commissions from trading activities... 5,636 10,441 6,639
Investment securities gains (losses).............. 4,081 409 (22,515)
Other income...................................... 59,235 51,117 43,470
----------- ----------- -----------
Total noninterest income.................. 226,331 203,423 137,594
----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits.................... 209,604 197,526 201,532
Net occupancy expense............................. 32,957 30,653 31,638
Equipment expense................................. 35,175 33,672 32,618
Other expense..................................... 292,898 190,784 221,048
----------- ----------- -----------
Total noninterest expense................. 570,634 452,635 486,836
----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES.............. 204,264 259,404 145,597
Applicable income taxes............................. 70,526 86,648 45,174
----------- ----------- -----------
NET EARNINGS.............................. $ 133,738 $ 172,756 $ 100,423
=========== =========== ===========
NET EARNINGS APPLICABLE TO COMMON
SHARES.................................. $ 126,794 $ 164,144 $ 90,525
=========== =========== ===========
EARNINGS PER COMMON SHARE
Primary........................................... $ 1.95 $ 2.72 $ 1.52
Fully diluted..................................... 1.92 2.64 1.52
AVERAGE SHARES OUTSTANDING
Primary........................................... 64,987,023 60,385,361 59,587,261
Fully diluted..................................... 69,518,323 64,994,996 59,929,306
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
39
<PAGE> 42
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ON
ADDITIONAL AVAILABLE
PREFERRED COMMON PAID-IN RETAINED UNEARNED FOR SALE
STOCK STOCK CAPITAL EARNINGS COMPENSATION SECURITIES TOTAL
--------- -------- ---------- --------- ------------ ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994................ $118,348 $276,137 $ 98,520 $451,072 $ (8,766) $ -- $ 935,311
Net earnings.......................... -- -- -- 100,423 -- -- 100,423
Cash dividends
Common Stock, $.88 per share........ -- -- -- (20,144) -- -- (20,144)
Preferred Stock..................... -- -- -- (8,553) -- -- (8,553)
Pooled institutions prior to
pooling........................... -- -- -- (12,464) -- -- (12,464)
Common stock issued under employee
benefit plans and dividend
reinvestment plan, net of stock
exchanged........................... -- 2,241 10,546 (1,944) 1,340 -- 12,183
Issuance of stock for acquisitions
(Note 2)............................ -- 21,686 (388) 42,952 -- -- 64,250
Stock transactions of pooled
institutions prior to pooling....... -- (5,811) (10,350) -- -- -- (16,161)
Redemption of Series C Preferred
Stock............................... (17,250) -- -- -- -- -- (17,250)
Cumulative effect of adoption of SFAS
No. 115 on January 1, 1994.......... -- -- -- -- -- 12,414 12,414
Change in unrealized gain (loss) on
available for sale securities, net
of taxes............................ -- -- -- -- -- (41,415) (41,415)
-------- -------- -------- -------- -------- -------- ----------
BALANCE, DECEMBER 31, 1994.............. 101,098 294,253 98,328 551,342 (7,426) (29,001) 1,008,594
Net earnings.......................... -- -- -- 172,756 -- -- 172,756
Cash dividends
Common Stock, $.98 per share........ -- -- -- (39,925) -- -- (39,925)
Preferred Stock..................... -- -- -- (7,251) -- -- (7,251)
Pooled institutions prior to
pooling........................... -- -- -- (9,386) -- -- (9,386)
Common stock issued under employee
benefit plans and dividend
reinvestment plan, net of stock
exchanged........................... -- 3,487 12,049 (516) 1,340 -- 16,360
Issuance of stock for acquisitions
(Note 2)............................ 9,712 1,740 5,551 3,585 -- (436) 20,152
Stock transactions of pooled
institutions prior to pooling....... -- 1,929 3,228 -- -- -- 5,157
Conversion of Series D Preferred
Stock............................... (5,200) 1,268 3,932 -- -- -- --
Redemption of Preferred Stock of
acquired entity..................... (13,800) -- -- -- -- -- (13,800)
Change in unrealized gain (loss) on
available for sale securities, net
of taxes............................ -- -- -- -- -- 60,505 60,505
-------- -------- -------- -------- -------- -------- ----------
BALANCE, DECEMBER 31, 1995.............. 91,810 302,677 123,088 670,605 (6,086) 31,068 1,213,162
Net earnings.......................... -- -- -- 133,738 -- -- 133,738
Cash dividends
Common Stock $1.08 per share........ -- -- -- (54,333) -- -- (54,333)
Preferred Stock..................... -- -- -- (6,944) -- -- (6,944)
Pooled institutions prior to
pooling........................... -- -- -- (6,452) -- -- (6,452)
Common stock issued under employee
benefit plans and dividend
reinvestment plan, net of stock
exchanged........................... -- 5,735 32,000 (6,539) (4,413) -- 26,783
Issuance of stock for acquisitions
(Note 2)............................ -- 13,626 16,882 22,888 -- 419 53,815
Conversion of Series B Preferred
Stock............................... (4,400) 1,699 2,701 -- -- -- --
Conversion of Series E Preferred
Stock............................... (3,601) 900 2,701 -- -- -- --
Change in unrealized gain on available
for sale securities, net of taxes... -- -- -- -- -- (6,895) (6,895)
-------- -------- -------- -------- -------- -------- ----------
BALANCE, DECEMBER 31, 1996.............. $ 83,809 $324,637 $177,372 $752,963 $(10,499) $ 24,592 $1,352,874
======== ======== ======== ======== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
40
<PAGE> 43
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings.............................................. $ 133,738 $ 172,756 $ 100,423
Reconciliation of net earnings to net cash provided by
operating activities:
Provision for losses on loans, other real estate, and
FHA/VA foreclosure claims............................. 83,239 30,992 10,491
Depreciation and amortization of premises and
equipment............................................. 28,597 26,268 25,222
Amortization and write-offs of intangibles.............. 43,083 22,126 21,926
Provision for restructuring charges..................... -- -- 24,264
Provisions for merger-related expenses.................. 36,095 10,182 14,012
Write-down of available for sale securities............. -- -- 2,800
Net (accretion) amortization of investment securities... (8,993) (2,904) 4,075
Net realized (gains) losses on sales of investment
securities............................................ (4,081) 2,391 19,715
Deferred income tax (benefit) expense................... (37,573) (817) 2,892
(Increase) decrease in assets
Trading account assets and loans held for resale...... (74,142) (21,666) 114,865
Other assets.......................................... (124,681) 17,763 (13,564)
(Decrease)increase in accrued interest, expenses, taxes,
and other liabilities................................. (36,503) 43,032 (12,577)
Other, net.............................................. 575 39 (1,905)
----------- --------- -----------
Net cash provided by operating activities............. 39,354 300,162 312,639
----------- --------- -----------
INVESTING ACTIVITIES
Net decrease in short-term investments.................... 7,572 5,847 44,517
Proceeds from sales of available for sale securities...... 909,539 561,453 874,529
Proceeds from maturities, calls, and prepayments of
available for sale securities........................... 1,949,832 614,374 922,541
Purchases of available for sale securities................ (1,868,044) (744,426) (886,485)
Proceeds from maturities, calls, and prepayments of held
to maturity securities.................................. 130,290 233,903 377,119
Purchases of held to maturity securities.................. (112,384) (107,598) (726,539)
Net increase in loans..................................... (1,139,949) (964,644) (1,450,859)
Net cash received from acquisitions of financial
institutions............................................ 53,579 10,759 72,084
Purchases of premises and equipment, net.................. (23,178) (17,231) (35,267)
----------- --------- -----------
Net cash used by investing activities................. (92,743) (407,563) (808,360)
----------- --------- -----------
FINANCING ACTIVITIES
Net (decrease) increase in deposits....................... (295,260) 113,237 (29,167)
Net (decrease) increase in short-term borrowings.......... (147,391) 86,394 395,587
Proceeds from long-term debt, net......................... 688,276 507,736 506,349
Repayment and defeasance of long-term debt................ (302,848) (245,928) (293,293)
Redemption of preferred stock............................. -- (13,800) (17,250)
Proceeds from issuance of common stock.................... 19,000 20,281 10,246
Purchases of common stock by an acquired institution prior
to acquisition.......................................... -- (1,176) (16,329)
Cash dividends paid....................................... (67,805) (56,514) (41,460)
----------- --------- -----------
Net cash (used) provided by financing activities...... (106,028) 410,230 514,683
----------- --------- -----------
Net (decrease) increase in cash and cash equivalents........ (159,417) 302,829 18,962
Cash and cash equivalents at the beginning of the period.... 906,619 603,790 584,828
----------- --------- -----------
Cash and cash equivalents at the end of the period.......... $ 747,202 $ 906,619 $ 603,790
=========== ========= ===========
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest................................................ $ 575,756 $ 489,857 $ 373,523
Taxes................................................... 101,537 63,725 83,186
Unrealized gain (loss) on available for sale securities... 40,183 50,395 (47,886)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
41
<PAGE> 44
UNION PLANTERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Union Planters Corporation (the Corporation) is a multi-state bank holding
company headquartered in Memphis, Tennessee. The Corporation operates 37 banking
subsidiaries in Tennessee, Mississippi, Missouri, Arkansas, Louisiana, Alabama,
and Kentucky and has 438 banking offices and 544 ATMs. At December 31, 1996, the
Corporation had consolidated total assets of $15.2 billion, making it one of the
50 largest bank holding companies based in the United States and the largest
headquartered in Tennessee. Through its subsidiaries, the Corporation provides a
diversified range of financial services in the communities in which it operates
including consumer, commercial, and corporate lending; retail banking; and other
ancillary financial services traditionally furnished by full-service financial
institutions. Additional services offered include mortgage origination and
servicing; investment management and trust services; the issuance of credit and
debit cards; the origination, packaging, and securitization of loans, primarily
the government-guaranteed portion of Small Business Administration (SBA) loans;
the purchase of delinquent FHA/VA government-insured/guaranteed loans from third
parties and from GNMA pools serviced for others; full-service and discount
brokerage; and the sale of annuities and bank-eligible insurance products.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES. The accounting and reporting policies of the Corporation and
its subsidiaries conform with generally accepted accounting principles and
general practices within the financial services industry. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. The most
significant estimate relates to the adequacy of the allowance for losses on
loans. Actual results could differ from those estimates. The following is a
summary of the more significant accounting policies of the Corporation.
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of the Corporation and its subsidiaries after elimination of
significant intercompany accounts and transactions. Prior period consolidated
financial statements have been restated to include the accounts of significant
acquisitions accounted for using the pooling of interests method of accounting.
Other acquisitions accounted for as poolings of interests are included from the
beginning of the year of acquisition. Business combinations accounted for as
purchases are included in the consolidated financial statements from the
respective dates of acquisition. Assets and liabilities of financial
institutions accounted for as purchases are adjusted to their fair values as of
their dates of acquisition. Certain 1994 and 1995 amounts have been reclassified
to conform with the 1996 financial reporting presentation.
STATEMENT OF CASH FLOWS. Cash and cash equivalents include cash and due from
banks and federal funds sold. Federal funds sold in the amounts of $152.7
million, $446.7 million, and $49.4 million at December 31, 1996, 1995, and 1994,
respectively, are included in cash and cash equivalents. Noncash transfers to
foreclosed properties from loans for the years ended December 31, 1996, 1995,
and 1994 were $10.3 million, $9.4 million, and $8.4 million, respectively. Other
noncash transactions are detailed in Notes 2, 4, and 10.
SECURITIES AND TRADING ACCOUNT ASSETS. Effective January 1, 1994, the
Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." This
statement generally requires equity securities that have readily determinable
fair values and all debt securities to be classified and accounted for in one of
three categories: trading, available for sale, or held to maturity.
Debt and equity securities that are bought and principally held for the
purpose of selling them in the near term are classified as trading securities.
For the Corporation, these consist primarily of the government-guaranteed
portion of SBA loans and SBA participation certificates. Gains and losses on
sales and fair-value adjustments related to these securities are included in
profits and commissions from trading activities.
42
<PAGE> 45
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Debt and equity securities which the Corporation has not classified as held
to maturity or trading are classified as available for sale securities and, as
such, are reported at fair value, with unrealized gains and losses, net of
deferred taxes, reported as a component of shareholders' equity. Gains or losses
from sales of available for sale securities are computed using the specific
identification method and are included in investment securities gains (losses).
Debt securities that the Corporation has the positive intent and ability to
hold to maturity are classified as held to maturity securities and carried at
cost, adjusted for the amortization of premium and accretion of discount using
the level-yield method. Generally, the held to maturity portfolios of acquired
entities are reclassified to the available for sale portfolio upon acquisition.
At December 31, 1996, the Corporation had no securities classified as held to
maturity.
LOANS HELD FOR RESALE. Loans held for resale include mortgage and other loans
and are carried at the lower of cost or fair value on an aggregate basis.
LOANS. Loans are carried at the principal amount outstanding. Interest income
on loans is recognized using constant yield methods except for unearned income
which is recorded as income using a method which approximates the interest
method. Loan origination fees and direct loan origination costs are deferred and
recognized over the life of the related loans as adjustments to interest income.
NONPERFORMING LOANS. Nonperforming loans consist of nonaccrual loans and
restructured loans. Loans, other than installment loans, are generally placed on
nonaccrual status and interest is not recorded if, in management's opinion,
payment in full of principal or interest is not expected or when payment of
principal or interest is more than 90 days past due, unless the loan is both
well-secured and in the process of collection. FHA/VA
government-insured/guaranteed loans which are 90 days or more past due are not
placed on nonaccrual status since they are government-guaranteed. Upon the
occurrence of an adverse change in the account status (e.g., filing of
bankruptcy, repossession of collateral, foreclosure, or death of the borrower),
installment loans (including accrued interest) are written down to the net
realizable value of the underlying collateral. Such loans are reviewed
periodically for further write-downs until fully liquidated. Income recognized
on credit card loans is discontinued upon the occurrence of an adverse change in
the financial condition of the borrower. Credit card loans are charged-off
immediately upon notification of a customer's bankruptcy or death, while all
other credit card loans are charged off if no payment has been received for 150
days.
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
December 31, 1996 and 1995, the amount of impaired loans and disclosures related
thereto were not material.
ALLOWANCE FOR LOSSES ON LOANS. The allowance for losses on loans represents
management's best estimate of potential losses inherent in the existing loan
portfolio. The allowance for losses on loans is increased by the provision for
losses on loans charged to expense and reduced by loans charged off, net of
recoveries. The provision for losses on loans is determined based on
management's assessment of several factors: current and anticipated economic
conditions and the related impact on specific borrowers and industry groups,
historical loan loss experience, the level of classified and nonperforming
loans, reviews and evaluations of specific loans, changes in the nature and
volume of the loan portfolio, and the results of regulatory examinations.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation expense is computed
using the straight-line method and is charged to operating expense over the
estimated useful lives of the assets. Depreciation expense has been computed
principally using estimated lives of five to forty years for premises and three
to ten years for furniture and equipment. Leasehold improvements are amortized
using the straight-line method over the shorter of the initial term of the
respective lease or the estimated useful life of the improvement. Costs of major
additions and improvements are capitalized. Expenditures for maintenance and
repairs are charged to operations as incurred.
GOODWILL AND OTHER INTANGIBLES. The unamortized costs in excess of the fair
value of acquired net tangible assets are included in goodwill and other
intangibles. Identifiable intangibles, except for
43
<PAGE> 46
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
premiums on purchased deposits which are amortized on a straight-line method
over 10 years, are amortized over the estimated periods benefited. The remaining
costs (goodwill) are generally amortized on a straight-line basis over 15 years.
For acquisitions where the fair value of net assets acquired exceeds the
purchase price, the resulting negative goodwill is allocated proportionally to
noncurrent, nonmonetary assets.
IMPAIRMENT OF LONG-LIVED ASSETS. Effective January 1, 1996, the Corporation
adopted the provisions of SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations and
certain related identifiable intangibles when indications of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Additionally, long-lived
assets and certain related identifiable intangibles to be disposed of are
required to be reported at the lower of carrying amount or fair value, less
selling costs. The adoption of this statement did not have a material impact on
the Corporation, since existing policies for determining impairment of
long-lived assets were similar to the new standard.
MORTGAGE SERVICING RIGHTS. Effective July 1, 1995, the Corporation adopted
prospectively the provisions of SFAS No. 122, "Accounting for Mortgage Servicing
Rights, an Amendment to FASB Statement No. 65." This statement requires entities
to recognize as a separate asset, the right to service mortgage loans for
others, regardless of whether originated in-house or purchased from others. SFAS
No. 122 also requires that capitalized mortgage servicing rights be assessed for
impairment based on the fair value of those rights. The Corporation's policy for
evaluating mortgage servicing rights for impairment is to stratify the mortgage
servicing rights by age of the loan and term to maturity, rate of interest, and
loan type. Fair value is determined based on discounted cash flows using
incremental direct and indirect costs and forecasted consensus prepayment rates.
Prior period amounts are recorded using the previous practice of capitalizing
only the servicing purchased from others. Mortgage servicing rights are
amortized in proportion to, and over the period of, estimated net servicing
income based on the historical and projected prepayments of the underlying
loans. The adoption of SFAS No. 122 did not have a material effect on the
Corporation's earnings, liquidity, or capital resources.
OTHER REAL ESTATE. Properties acquired through foreclosure and unused bank
premises are stated at the lower of the recorded amount of the loan or the
property's estimated net realizable value, reduced by estimated selling costs.
Write-downs of the assets at, or prior to, the date of foreclosure are charged
to the allowance for losses on loans. Subsequent write-downs, income and expense
incurred in connection with holding such assets, and gains and losses realized
from the sales of such assets are included in noninterest income and expense.
STOCK COMPENSATION. The Corporation has elected not to adopt the recognition
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" which
requires a fair-value based method of accounting for stock options and similar
equity awards. The Corporation elected to continue applying Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
Opinion 25) and related interpretations in accounting for its stock compensation
plans and, accordingly, does not recognize compensation cost, except for stock
grants. See Note 15 for a summary of the pro forma effect if the accounting
provisions of SFAS No. 123 had been elected.
INCOME TAXES. The Corporation files a consolidated Federal income tax return
which includes all of its subsidiaries except for credit life insurance
companies and certain pass-through entities. Income tax expense is allocated
among the parent company and its subsidiaries as if each had filed a separate
return. The provision for income taxes is based on income reported for
consolidated financial statement purposes and includes deferred taxes resulting
from the recognition of certain revenues and expenses in different periods for
tax-reporting purposes. Deferred tax assets and liabilities are measured using
the enacted tax rates expected to apply to taxable income in the year in which
those temporary differences are expected to be realized or settled. Recognition
of certain deferred tax assets is based upon management's belief that, based
upon historical earnings and anticipated future earnings, normal operations will
continue to generate sufficient future taxable income to realize these benefits.
A valuation allowance is established for deferred tax assets when, in the
opinion of management, it is "more likely than not" that the asset will not be
realized.
44
<PAGE> 47
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE. Primary earnings per common share is adjusted for all
preferred stock dividends. Primary earnings per common share is computed based
on the weighted average number of common shares outstanding and common stock
equivalents arising from the assumed exercise of outstanding stock options
unless their effect would be antidilutive. Fully diluted earnings per common
share is computed using the weighted average common shares and equivalents.
Common stock equivalents are increased by the assumed conversion of convertible
preferred stock into common stock as if converted at the beginning of the period
unless the effect would be antidilutive. Earnings for fully diluted earnings per
common share are adjusted for preferred stock dividends on nonconvertible
preferred stock.
NOTE 2. ACQUISITIONS
CONSUMMATED ACQUISITIONS
POOLINGS OF INTERESTS
The Corporation consummated the following acquisitions which were accounted
for using the pooling of interests method of accounting. Financial information
for all periods has been restated for the Leader, Capital, Grenada, and BNF
acquisitions. Prior period amounts have not been restated for the remaining
acquisitions which were not considered, in the aggregate, material to the
consolidated financial statements.
<TABLE>
<CAPTION>
COMMON
DATE SHARES
ACQUIRED ISSUED TOTAL ASSETS TOTAL EQUITY
-------- ---------- ------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1996 ACQUISITIONS
Leader Financial Corporation (Leader)............ 10/1/96 15,285,575 $3,410.9 $256.1
Other acquisitions (four acquisitions)........... Various 2,779,655 683.1 53.9
---------- -------- ------
Total.................................. 18,065,230 $4,094.0 $310.0
========== ======== ======
1995 ACQUISITIONS
Capital Bancorporation, Inc. (Capital)........... 12/31/95 4,087,124 $1,105.1 $ 74.8
Planters Bank and Trust Company.................. 9/1/95 348,029 59.0 6.6
---------- -------- ------
Total.................................. 4,435,153 $1,164.1 $ 81.4
========== ======== ======
1994 ACQUISITIONS
Grenada Sunburst System Corporation (Grenada).... 12/31/94 13,776,357 $2,518.0 $173.7
BNF Bancorp, Inc. (BNF).......................... 9/1/94 2,000,329 276.4 29.6
Other acquisitions (seven acquisitions).......... Various 4,337,167 782.2 64.2
---------- -------- ------
Total.................................. 20,113,853 $3,576.6 $267.5
========== ======== ======
</TABLE>
The following table summarizes the impact of the Leader acquisition on the
Corporation's net interest income, noninterest income, and net earnings.
<TABLE>
<CAPTION>
NET INTEREST NONINTEREST NET
INCOME INCOME EARNINGS
------------ ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
1995
Union Planters............................................ $447,431 $157,652 $135,402
Leader.................................................... 88,566 45,771 37,354
-------- -------- --------
Union Planters pooled............................. $535,997 $203,423 $172,756
======== ======== ========
1994
Union Planters............................................ $423,114 $100,805 $ 65,861
Leader.................................................... 81,386 36,789 34,562
-------- -------- --------
Union Planters pooled............................. $504,500 $137,594 $100,423
======== ======== ========
</TABLE>
45
<PAGE> 48
NOTE 2. ACQUISITIONS (CONTINUED)
PURCHASE ACQUISITIONS
The Corporation acquired seven institutions in the three years ended
December 31, 1996 that were accounted for under the purchase method of
accounting. Total assets of the institutions at their respective dates of
acquisition were $433 million. Consideration of $54.4 million paid for the
institutions included cash totaling $40.9 million and $13.5 million (388,497
shares) of the Corporation's Series E preferred stock, resulting in total
intangibles of $23.5 million. Because these purchase acquisitions are not
material to the consolidated results of the Corporation, pro forma information
has been omitted. After December 31, 1996, the Corporation completed the
acquisition of a third-party marketer of non-traditional bank products.
PENDING ACQUISITIONS
The Corporation through its acquisition program has two acquisitions of
financial institutions pending which are considered probable of consummation.
The Corporation would acquire aggregate total assets of approximately $150
million in those acquisitions. The Corporation's acquisition of Eastern National
Bank (ENB) in Miami, Florida, is no longer considered probable of consummation
because of disputes between ENB's shareholders and agencies of the Republic of
Venezuela and others which are pending in the United States District Court for
the Southern District of Florida.
NOTE 3. RESTRICTIONS ON CASH AND DUE FROM BANKS
The Corporation's banking subsidiaries are required to maintain
noninterest-bearing average reserve balances with the Federal Reserve Bank.
Average balances required to be maintained for such purposes during 1996 and
1995 were $70 million and $73 million, respectively.
NOTE 4. INVESTMENT SECURITIES
The following is a summary of investment securities:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------
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....................................... $ 834,054 $ 4,123 $ 791 $ 837,386
U.S. Government agencies
Collateralized mortgage obligations.............. 124,908 617 347 125,178
Mortgage-backed.................................. 806,160 21,106 978 826,288
Other............................................ 511,986 965 1,747 511,204
---------- ------- ------ ----------
Total U.S. Government obligations........... 2,277,108 26,811 3,863 2,300,056
Obligations of states and political subdivisions...... 487,489 20,746 2,265 505,970
Other stocks and securities........................... 151,454 240 1,486 150,208
---------- ------- ------ ----------
Total available for sale securities......... $2,916,051 $47,797 $7,614 $2,956,234
========== ======= ====== ==========
</TABLE>
46
<PAGE> 49
NOTE 4. INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 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....................................... $ 825,107 $ 8,300 $ 346 $ 833,061
U.S. Government agencies
Collateralized mortgage obligations.............. 197,913 1,033 868 198,078
Mortgage-backed.................................. 1,127,296 21,844 2,307 1,146,833
Other............................................ 577,691 2,252 960 578,983
---------- ------- ------ ----------
Total U.S. Government obligations........... 2,728,007 33,429 4,481 2,756,955
Obligations of states and political subdivisions...... 498,897 22,848 2,611 519,134
Other stocks and securities........................... 109,486 1,299 89 110,696
---------- ------- ------ ----------
Total available for sale securities......... $3,336,390 $57,576 $7,181 $3,386,785
========== ======= ====== ==========
HELD TO MATURITY SECURITIES
U.S. Government obligations
U.S. Government agencies
Collateralized mortgage obligations.............. $ 11,872 $ 23 $ 53 $ 11,842
Mortgage-backed.................................. 134,613 2,323 45 136,891
Other............................................ 31,338 -- -- 31,338
---------- ------- ------ ----------
Total U.S. Government obligations........... 177,823 2,346 98 180,071
Other stocks and securities........................... 8,446 31 115 8,362
---------- ------- ------ ----------
Total held to maturity securities........... $ 186,269 $ 2,377 $ 213 $ 188,433
========== ======= ====== ==========
</TABLE>
The following table presents the gross realized gains and losses on
investment securities for the years ended December 31, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
REALIZED GAINS REALIZED LOSSES
------------------------ ----------------------------
1996 1995 1994 1996 1995 1994
------ ------ ------ ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Available for sale securities.............. $8,143 $3,727 $1,159 $(3,969) $(6,187) $(20,985)
Held to maturity securities................ -- 70 132 (93) (1) (21)
------ ------ ------ ------- ------- --------
Total............................ $8,143 $3,797 $1,291 $(4,062) $(6,188) $(21,006)
====== ====== ====== ======= ======= ========
</TABLE>
Investment securities having a fair value of approximately $1.1 billion and
$1.8 billion at December 31, 1996 and 1995, respectively, were pledged to secure
public and trust funds on deposit, securities sold under agreements to
repurchase, and Federal Home Loan Bank (FHLB) advances.
On January 1, 1994, and in connection with the adoption of SFAS No. 115,
$1.6 billion of held to maturity securities were transferred to the available
for sale securities portfolio. In addition, approximately $446 million, (fair
value approximately $436 million), $110 million (fair value approximately $109
million), and $179 million (fair value approximately $181 million) of securities
were transferred to the available for sale securities portfolio related to
financial institutions acquired in 1994, 1995, and 1996, respectively, in order
to achieve and maintain the Corporation's existing interest-rate-risk position
and credit-risk policies.
Effective September 30, 1995, the Corporation transferred approximately
$1.0 billion of held to maturity securities to the available for sale securities
portfolio. This transfer constituted the Corporation's entire held to maturity
securities portfolio. The transfer was made in response to specific conditions
which arose during the third quarter of 1995 and led management and the Board of
Directors to change its intent to hold these securities to maturity. The changes
included a need to provide additional funding sources for current and
anticipated loan growth and the need to manage interest-rate risk and liquidity
considerations which arose during the quarter in connection with certain
acquisitions by the Corporation and the internal reorganizations of its banking
subsidiaries.
47
<PAGE> 50
NOTE 4. INVESTMENT SECURITIES (CONTINUED)
The transfer had no impact on earnings and the fair-value adjustment related to
these securities was $24.7 million, resulting in a net increase in shareholders'
equity of $15.1 million, net of taxes. In addition, in the fourth quarter of
1995, Leader transferred approximately $201 million of held to maturity
securities to its available for sale securities portfolio. This transfer had no
impact on earnings and the fair value adjustment related to these securities was
$3.7 million.
The fair values, contractual maturities, and weighted average yields of
investment securities as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
MATURING
-----------------------------------------------------------------------------
WITHIN ONE AFTER ONE BUT AFTER FIVE BUT
YEAR WITHIN FIVE YEARS WITHIN TEN YEARS AFTER TEN YEARS TOTAL
---------------- ------------------ ---------------- ------------------ ------------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
-------- ----- --------- ------ -------- ----- ---------- ----- ---------- -----
(FULLY TAXABLE-EQUIVALENT BASIS/DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
SECURITIES
U.S. Government obligations
U.S. Treasury............. $411,946 6.18% $422,108 5.97% $ -- --% $ -- --% $ 834,054 6.07%
U.S. Government agencies
Collateralized mortgage
obligations........... 5,430 5.99 10,757 6.15 12,030 6.39 96,691 6.55 124,908 6.47
Mortgage-backed......... 11,026 7.43 53,010 6.79 58,803 7.59 683,321 7.69 806,160 7.62
Other................... 232,999 5.47 160,000 6.02 66,321 6.85 52,666 6.52 511,986 5.93
-------- -------- -------- ---------- ----------
Total U.S.
Government
obligations....... 661,401 5.95 645,875 6.05 137,154 7.13 832,678 7.48 2,277,108 6.61
Obligations of states and
political subdivisions.... 51,187 10.88 82,331 9.58 140,344 9.36 213,627 8.99 487,489 9.39
Other stocks and securities
Federal Reserve Bank and
Federal Home Loan Bank
stock................... -- -- -- -- -- -- 113,026 6.70 113,026 6.70
Bonds, notes, and
debentures.............. 1,348 7.42 2,625 7.33 92 4.75 -- -- 4,065 7.30
Collateralized mortgage
obligations............. -- -- 11,672 6.44 127 6.47 7,496 7.67 19,295 6.92
Other..................... -- -- -- -- -- -- 15,068 8.85 15,068 8.85
-------- -------- -------- ---------- ----------
Total other stocks
and securities.... 1,348 7.42 14,297 6.60 219 5.74 135,590 7.00 151,454 6.96
-------- -------- -------- ---------- ----------
Total amortized cost
of available for
sale securities... $713,936 6.31% $742,503 6.45% $277,717 8.25% $1,181,895 7.70% $2,916,051 7.09%
======== ======== ======== ========== ==========
Total fair value.... $717,594 $746,781 $284,667 $1,207,192 $2,956,234
======== ======== ======== ========== ==========
</TABLE>
The weighted average yields are calculated by dividing the sum of the
individual security yield weights (effective yield times book value) by the
total book value of the securities. The weighted average yield for obligations
of states and political subdivisions is adjusted to a taxable-equivalent yield,
using a federal income tax rate of 35%. Expected maturities of securities will
differ from contractual maturities because some borrowers have the right to call
or prepay obligations without prepayment penalties. The investment securities
portfolio is expected to have a principal weighted average life of approximately
4 years.
48
<PAGE> 51
NOTE 5. LOANS
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial, financial, and agricultural..................... $ 1,537,535 $1,573,790
Real estate -- construction................................. 446,946 403,492
Real estate -- mortgage
Secured by 1-4 family residential......................... 3,218,651 2,976,180
FHA/VA government-insured/guaranteed...................... 1,477,459 916,681
Other mortgage............................................ 1,530,110 1,283,937
Home equity................................................. 228,511 210,834
Consumer
Credit cards and related plans............................ 627,406 426,241
Other consumer............................................ 1,324,252 1,207,666
Direct lease financing...................................... 73,306 74,551
----------- ----------
Total loans............................................ $10,464,176 $9,073,372
=========== ==========
</TABLE>
Nonperforming loans are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans............................................ $63,346 $43,299
Restructured loans.......................................... 2,546 2,135
------- -------
Total............................................. $65,892 $45,434
======= =======
</TABLE>
The impact on net interest income of the above nonperforming loans was not
material in either 1996 or 1995. Also, there were no significant outstanding
commitments to lend additional funds at December 31, 1996.
Certain of the Corporation's bank subsidiaries, principally Union Planters
National Bank (UPNB), have granted loans to the Corporation's directors,
executive officers, and their affiliates. These loans were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unrelated persons and do not involve
more than normal risks of collectability. The aggregate dollar amount of these
loans was $36.9 million and $41.8 million at December 31, 1996 and 1995,
respectively. During 1996, $8.5 million of existing loans were added to
related-party loans for individuals elected as directors in 1996; $12.9 million
of new loans and advances under credit lines were made to related parties;
repayments totaled approximately $24.3 million; and charge-offs of related party
loans were $2.0 million.
Included in related-party loans is a $5.5 million tax-exempt loan made in
1986 to a partnership in which a director, who is also a brother-in-law of an
executive officer, is a partner. At the time the loan was made, neither the
borrower nor any of its partners, officers, directors, or beneficial owners was
affiliated or associated with the Corporation or any of its subsidiaries. The
loan was made in the ordinary course of business on substantially the same
terms, including interest rate and collateral requirements, as those prevailing
at the time for comparable transactions. The loan has performed as required,
however, during 1996 because of significant depreciation in the value of the
collateral, the loan was written down by $2.0 million and the remaining $3.4
million was placed on nonaccrual status, although the loan is not in default.
Management anticipates that the borrowers will perform on all their personal
obligations under the terms and conditions of the loan and other arrangements.
49
<PAGE> 52
NOTE 6. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance, January 1......................................... $156,388 $154,131 $141,999
Increase due to acquisitions............................. 6,478 2,762 9,252
Decrease due to the sale of certain loans................ (1,628) -- --
Provision for losses on loans............................ 57,395 27,381 9,661
Recoveries of loans previously charged off............... 12,309 13,085 14,941
Loans charged off........................................ (64,089) (40,971) (21,722)
-------- -------- --------
Balance, December 31....................................... $166,853 $156,388 $154,131
======== ======== ========
</TABLE>
NOTE 7. PREMISES AND EQUIPMENT
A summary of premises and equipment follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 55,060 $ 52,057
Buildings and improvements.................................. 197,714 187,183
Leasehold improvements...................................... 18,540 13,925
Equipment................................................... 166,182 149,945
Construction in progress.................................... 16,499 9,011
-------- --------
453,995 412,121
Less accumulated depreciation and amortization.............. 193,024 165,345
-------- --------
Total premises and equipment...................... $260,971 $246,776
======== ========
</TABLE>
NOTE 8. INTEREST-BEARING DEPOSITS
The following table presents the maturities of interest-bearing deposits at
December 31, 1996 (Dollars in millions).
<TABLE>
<S> <C>
1997........................................................ $4,612
1998........................................................ 805
1999........................................................ 264
2000........................................................ 129
2001........................................................ 59
2002 and after.............................................. 32
-------
Total time deposits.................................... 5,901
Interest-bearing deposits with no stated maturity...... 3,858
-------
Total interest-bearing deposits................... $9,759
=======
</TABLE>
NOTE 9. BORROWINGS
SHORT-TERM BORROWINGS
Short-term borrowings include federal funds purchased and securities sold
under agreements to repurchase, commercial paper, and other short-term
borrowings. Federal funds purchased arise primarily from the Corporation's
market activity with its correspondent banks and generally mature in one
business day. Securities sold under agreements to repurchase are secured by U.
S. Government and agency securities.
50
<PAGE> 53
NOTE 9. BORROWINGS (CONTINUED)
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Year-end balances
Federal funds purchased and securities sold under
agreements to repurchase........................... $ 438,104 $ 838,189 $691,456
Commercial paper...................................... -- -- 2,951
Other short-term borrowings........................... 11,042 94 5,431
---------- ---------- --------
Total short-term borrowings................... $ 449,146 $ 838,283 $699,838
========== ========== ========
Federal funds purchased and securities sold under
agreements to repurchase
Daily average balance................................. $ 889,793 $ 574,412 $641,004
Weighted average interest rate........................ 5.41% 5.80% 4.37%
Maximum outstanding at any month end.................. $1,109,939 $1,083,263 $994,083
Weighted average interest rate at December 31......... 5.22% 5.57% 5.58%
</TABLE>
SHORT- AND MEDIUM-TERM BANK NOTES
In 1996, the Corporation's principal subsidiary, UPNB, established a
$1-billion short- and medium-term bank note program to supplement UPNB's funding
sources. Under the program UPNB may from time-to-time issue bank notes having
maturities ranging from 30 days to one year from their respective issue dates
(Short-Term Bank Notes) and bank notes having maturities of more than one year
to 30 years from their respective dates of issue (Medium-Term Bank Notes). A
summary of the bank notes follows.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------
SHORT-TERM MEDIUM-TERM
BANK NOTES BANK NOTES
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balances at year end........................................ $ 265,000 $ 135,000
Average balance for the year................................ 88,361 42,637
Weighted average interest rate.............................. 5.81% 6.57%
Weighted average interest rate at year end.................. 5.69 6.59
Fixed rate notes............................................ $ 265,000 $ 135,000
Variable rate notes......................................... -- --
Range of maturities......................................... 1/97 - 5/97 8/98 - 10/01
</TABLE>
The principal maturities of Medium-Term Bank Notes subsequent to December
31, 1996 are $30 million in 1998, $30 million in 1999, $15 million in 2000, and
$60 million in 2001.
FEDERAL HOME LOAN BANK (FHLB) ADVANCES
Certain of the Corporation's banking and thrift subsidiaries had
outstanding advances from the FHLB under Blanket Agreements for Advances and
Security Agreements (the Agreements). The Agreements enable these subsidiaries
to borrow funds from the FHLB to fund mortgage loan programs and to satisfy
certain other funding needs. The value of the mortgage-backed securities and
mortgage loans pledged under the Agreements must be maintained at not less than
115% and 150%, respectively, of the advances outstanding. At December 31, 1996,
the Corporation had an adequate amount of
51
<PAGE> 54
NOTE 9. BORROWINGS (CONTINUED)
mortgage-backed securities and loans to satisfy the collateral requirements. A
summary of the advances is as follows.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at year end......................................... $ 889,985 $ 798,039
Range of interest rates..................................... 3.25% - 9.00% 3.25% - 9.00%
Range of maturities......................................... 1997 - 2017 1996 - 2025
</TABLE>
The principal maturities of FHLB advances subsequent to December 31, 1996
are $152.6 million in 1997, $44.3 million in 1998, $269.6 million in 1999,
$133.7 million in 2000, $66.3 million in 2001, and $223.5 million after 2001.
OTHER LONG-TERM DEBT
The Corporation's other long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Corporation-Obligated Mandatorily Redeemable Capital
Pass-through Securities of Subsidiary Trust holding solely
a Corporation-Guaranteed Related Subordinated Note (Trust
Preferred Securities)..................................... $198,938 $ --
6 3/4% Subordinated Notes due 2005.......................... 99,477 99,418
6.25% Subordinated Notes due 2003........................... 74,644 74,592
8 1/2% Subordinated Notes due 2002.......................... -- 40,245
Other long-term debt........................................ 10,672 14,283
-------- --------
Total other long-term debt........................ $383,731 $228,538
======== ========
</TABLE>
The Corporation-Obligated Mandatorily Redeemable Capital Pass-through
Securities of Subsidiary Trust holding solely a Corporation-Guaranteed Related
Subordinated Note represents Capital Securities issued by Union Planters Capital
Trust A (the UPC Trust). In 1996, the UPC Trust issued $200 million liquidation
amount of 8.20% Capital Trust Pass-through Securities(SM) (Trust Preferred
Securities) at 99.468% which represented an undivided beneficial interest in the
assets of the UPC Trust, a statutory business trust created under the laws of
the state of Delaware. The Corporation owns all of the common securities of the
UPC Trust representing an undivided beneficial interest in the assets of the UPC
Trust. The sole asset of the UPC Trust is $206.2 million (carrying value of
$205.1 million at December 31, 1996) of 8.20% Junior Subordinated Deferrable
Interest Debentures of the Corporation issued at 99.468%, which will mature on
December 15, 2026. The distributions payable on the Trust Preferred Securities
are a fixed rate per annum, 8.20% of the stated liquidation amount, and are
cumulative from the date of issuance.
The Corporation has the right, at any time, subject to certain conditions,
to defer payments of interest on the Subordinated Debentures, in which case
distributions on Trust Preferred Securities would likewise be deferred. Upon
electing to defer such interest payments, the Corporation will be prohibited
from paying dividends on its Common and Preferred Stock and certain outstanding
borrowings. The Subordinated Debt and therefore, the Trust Preferred Securities
are redeemable by the Corporation at a call price, plus accrued and unpaid
interest to the date of redemption, in whole or in part and from time-to-time on
or after December 15, 2006, subject to certain conditions. In certain limited
circumstances, primarily related to certain tax events, the Subordinated Debt
and therefore, the Trust Preferred Securities are redeemable at par, plus
accrued interest to date of redemption. The Trust Preferred Securities qualify
as Tier 1 regulatory capital and are reported in bank regulatory reports as a
minority interest in a consolidated subsidiary.
In November 1993, the Corporation issued in a public offering $75 million
of 6.25% Subordinated Capital Notes due 2003 at 99.305%. In November 1995, the
Corporation issued in another public offering $100 million of 6 3/4%
Subordinated Capital Notes due 2005 at 99.408%. The Notes qualify as
52
<PAGE> 55
NOTE 9. BORROWINGS (CONTINUED)
Tier 2 regulatory capital. The Corporation entered into an interest-rate swap
agreement related to the November 1993 offering with a notional amount of $50
million which converted a portion of the fixed-rate debt to a floating LIBOR
rate for two and one-half years and it matured in 1996.
In 1992, the Corporation completed a public offering of $40.25 million of
8 1/2% Subordinated Notes (8 1/2% Notes) which mature on October 1, 2002. In
1996, the Corporation in-substance defeased $37 million of the 8 1/2% Notes by
placing approximately $39 million of cash in an irrevocable trust which
purchased direct obligations of the U. S. Government that will provide cash
flows matching the principal and interest debt service requirements and to
retire the 8 1/2% Notes on October 1, 1997. The transaction resulted in an
immaterial loss to the Corporation.
The principal maturities of other long-term debt subsequent to December 31,
1996 are $431,000 in 1997, $811,000 in 1998, $276,000 in 1999, $175,000 in 2000,
$32,000 in 2001, and $382.0 million after 2001.
The ability of the Corporation to service its long-term debt obligations is
dependent upon the future profitability of its banking subsidiaries and their
ability to pay dividends and management fees to the Corporation (see Note 12).
NOTE 10. SHAREHOLDERS' EQUITY
DIVIDENDS
The payment of dividends is determined by the Board of Directors taking
into account the earnings, capital levels, cash requirements, and the financial
condition of the Corporation and its subsidiaries, applicable government
regulations and policies, and other factors deemed relevant by the Board of
Directors, including the amount of dividends payable to the Corporation by its
subsidiaries. Various federal laws, regulations, and policies limit the ability
of the Corporation's subsidiary banks to pay dividends. See Note 12, "Regulatory
Capital and Restrictions on Dividends and Loans from Subsidiaries."
CONVERTIBLE PREFERRED STOCK
The Corporation's preferred stock is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
PREFERRED STOCK, WITHOUT PAR VALUE, 10,000,000 SHARES
AUTHORIZED FOR ALL ISSUES:
Series A Preferred Stock.................................. $ -- $ --
Series B Preferred Stock.................................. -- 4,400
Series E Preferred Stock.................................. 83,809 87,410
------- -------
Total preferred stock............................. $83,809 $91,810
======= =======
</TABLE>
SERIES A PREFERRED STOCK (SHARE PURCHASE RIGHTS PLAN). In 1989, the Board of
Directors of the Corporation adopted a Share Purchase Rights Plan and
distributed a dividend of one Preferred Share Purchase Right (Right) for each
outstanding share of the Corporation's $5 par value Common Stock and for each
share to be issued thereafter. The Rights are generally designed to deter
coercive takeover tactics and to encourage all persons interested in acquiring
control of the Corporation to deal with each shareholder on a fair and equal
basis. Each Right trades in tandem with its respective share of common stock
until the occurrence of certain events, in which case it would separate from the
common stock and entitle the registered holder, subject to the terms of the
Rights Agreement, to purchase certain equity securities at a price below their
market value. The Corporation has authorized 750,000 shares of Series A
Preferred Stock for issuance under the Share Purchase Rights Plan, none of which
have been issued.
SERIES B PREFERRED STOCK. All 44,000 outstanding shares of Series B Preferred
Stock were converted by the holders into 339,765 shares of the Corporation's
Common Stock in 1996, such that no Series B Preferred Stock remains outstanding.
53
<PAGE> 56
NOTE 10. SHAREHOLDERS' EQUITY (CONTINUED)
SERIES E PREFERRED STOCK. At December 31, 1996 and 1995, 3,352,347 and
3,496,419 shares, respectively, of the Corporation's 8% Cumulative, Convertible,
Preferred Stock, Series E (Series E Preferred Stock) were issued and
outstanding. Such shares have a stated value of $25 per share on which dividends
accrue at the rate of 8% per annum; dividends are cumulative and are payable
quarterly. The Series E Preferred Stock is not subject to any sinking fund
provisions and has no preemptive rights. Such shares have a liquidation
preference of $25 per share plus unpaid dividends accrued thereon, and with the
prior approval of the Federal Reserve, may be redeemed by the Corporation in
whole or in part at any time after March 31, 1997 at $25 per share. At any time
prior to redemption, each share of Series E Preferred Stock is convertible, at
the option of the holder, into 1.25 shares of the Corporation's Common Stock.
Holders of Series E Preferred Stock have no voting rights except for those
provided by law and in certain other limited circumstances.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Dividend Reinvestment and Stock Purchase Plan (the Plan) authorizes the
issuance of 2,000,000 shares (916,252 issued through December 31, 1996) of
previously unissued Common Stock to shareholders who choose to invest all or a
portion of their cash dividends or make optional cash purchases. On certain
investment dates, shares may be purchased with reinvested dividends and optional
cash payments at a price of 95% and 100%, respectively, of their fair market
value, without brokerage commissions. Shares issued under the Plan totaled
241,060, 189,921, and 116,678 shares in 1996, 1995, and 1994, respectively.
NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents at subsidiary banks............. $ 274,622 $ 68,195
Interest-bearing deposits at other financial
institutions........................................... -- 10,000
Investment securities available for sale.................. 213,491 171,102
Advances to and receivables from subsidiaries............. 9,535 24,785
Investment in bank and bank holding company
subsidiaries........................................... 1,223,435 1,138,368
Investment in nonbank subsidiaries........................ 17,137 9,732
Other assets.............................................. 27,583 23,868
---------- ----------
TOTAL ASSETS...................................... $1,765,803 $1,446,050
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt (Note 9)................................... $ 379,212 $ 214,255
Loans from and payables to subsidiaries................... 8,384 3,426
Other liabilities......................................... 25,333 15,207
Shareholders' equity (Note 10)............................ 1,352,874 1,213,162
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $1,765,803 $1,446,050
========== ==========
</TABLE>
54
<PAGE> 57
NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(CONTINUED)
CONDENSED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INCOME
Dividends from bank and bank holding company
subsidiaries.......................................... $152,534 $162,810 $164,544
Dividends from nonbank subsidiaries...................... 950 500 --
Fees and interest from subsidiaries...................... 46,326 32,219 22,421
Interest and dividends on investments, loans, and
interest-bearing deposits at other financial
institutions.......................................... 12,888 4,611 29
Other income............................................. 398 478 1,563
-------- -------- --------
Total income..................................... 213,096 200,618 188,557
-------- -------- --------
EXPENSES
Interest expense......................................... 16,351 10,400 8,662
Salaries and employee benefits........................... 22,233 16,190 11,185
Other expense............................................ 37,032 23,607 17,194
-------- -------- --------
Total expenses................................... 75,616 50,197 37,041
-------- -------- --------
EARNINGS BEFORE INCOME TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF SUBSIDIARIES......... 137,480 150,421 151,516
Tax benefit................................................ (5,701) (7,576) (4,847)
-------- -------- --------
EARNINGS BEFORE EQUITY IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES................................ 143,181 157,997 156,363
Equity in undistributed earnings of subsidiaries........... (9,443) 14,759 (55,940)
-------- -------- --------
NET EARNINGS..................................... $133,738 $172,756 $100,423
======== ======== ========
</TABLE>
55
<PAGE> 58
NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(CONTINUED)
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings.......................................... $ 133,738 $ 172,756 $ 100,423
Equity in undistributed earnings of subsidiaries...... 9,443 (14,759) 55,940
Deferred income tax (benefit) expense................. (2,770) 425 239
Other, net............................................ 7,472 9,409 (15,133)
--------- --------- ---------
Net cash provided by operating activities..... 147,883 167,831 141,469
--------- --------- ---------
INVESTING ACTIVITIES
Net decrease (increase) in short-term investments..... 10,000 (10,000) --
Purchases of available for sale securities............ (437,340) (389,624) --
Proceeds from sales of available for sale
securities......................................... 397,931 221,532 197
Net increase in investment in and receivables from
subsidiaries....................................... (36,778) (55,261) (119,921)
Purchases of premises and equipment, net.............. (126) (5,279) (5,156)
--------- --------- ---------
Net cash used in investing activities......... (66,313) (238,632) (124,880)
--------- --------- ---------
FINANCING ACTIVITIES
Net decrease in commercial paper...................... -- (2,971) (7,990)
Proceeds from issuance of long-term debt, net......... 205,089 99,956 --
Repayment and defeasance of long-term debt............ (40,349) (49) --
Net proceeds from loans from and payables
to subsidiaries.................................... 5,133 (9,668) 13,333
Redemption of preferred stock......................... -- -- (17,250)
Proceeds from issuance of common stock, net........... 16,336 12,934 8,081
Cash dividends paid................................... (61,352) (47,128) (28,996)
--------- --------- ---------
Net cash provided (used) by financing
activities.................................. 124,857 53,074 (32,822)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents.... 206,427 (17,727) (16,233)
Cash and cash equivalents at the beginning of the
year.................................................. 68,195 85,922 102,155
--------- --------- ---------
Cash and cash equivalents at the end of the year........ $ 274,622 $ 68,195 $ 85,922
========= ========= =========
</TABLE>
- ---------------
Noncash Activities. See Note 2 and Note 10, respectively, regarding acquisitions
in 1996, 1995, and 1994 and the conversions of Series B and E Preferred Stock.
NOTE 12. REGULATORY CAPITAL AND RESTRICTIONS ON DIVIDENDS AND LOANS FROM
SUBSIDIARIES
REGULATORY CAPITAL
The Corporation and its banking subsidiaries are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Corporation or its banking
subsidiaries' financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Corporation and its
banking subsidiaries must meet specific capital guidelines that involve
quantitative measures of the Corporation and its banking subsidiaries' assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Corporation and its banking subsidiaries' capital
amounts and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Corporation and its banking subsidiaries to maintain minimum amounts
and ratios (set forth in the table below for the Corporation and its significant
subsidiary, UPNB) of total and Tier 1 capital (as defined in the regulations) to
risk-weighted assets (as defined), and Tier 1 capital (as defined) to average
assets (as defined). As of December 31, 1996, management believes that the
Corporation, UPNB, and the
56
<PAGE> 59
NOTE 12. REGULATORY CAPITAL AND RESTRICTIONS ON DIVIDENDS AND LOANS FROM
SUBSIDIARIES (CONTINUED)
Corporation's other banking subsidiaries met all capital adequacy requirements
to which they are subject.
At December 31, 1996, the most recent notification from the Office of the
Comptroller of the Currency (OCC) categorized UPNB as well capitalized under the
regulatory framework for prompt corrective action. Additionally, all of the
Corporation's other banking subsidiaries were categorized as well capitalized
and the Corporation's capital levels and ratios would be considered well
capitalized. To be categorized as well capitalized, an institution must maintain
Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios as set
forth in the table below. There are no conditions or events since the latest
notification that management believes have changed any of the institutions'
categories.
The Corporation and UPNB's capital and ratios are also presented in the
table below. No amount was deducted from capital for interest-rate risk.
<TABLE>
<CAPTION>
FOR MINIMUM MINIMUM
CAPITAL TO BE WELL
ACTUAL ADEQUACY CAPITALIZED(2)
--------------- --------------- ---------------
AMOUNT RATIO ACTUAL RATIO ACTUAL RATIO
------ ----- ------ ----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996:
LEVERAGE (TIER 1 CAPITAL TO AVERAGE ASSETS)
Consolidated.................................. $1,480 9.61% $616 4.00% N/A N/A
UPNB.......................................... 414 6.95 238 4.00 $298 5.00%
TIER 1 CAPITAL (TO RISK-WEIGHTED ASSETS)
Consolidated.................................. $1,480 15.29% $387 4.00% N/A N/A
UPNB.......................................... 414 11.01 150 4.00 $226 6.00%
TOTAL CAPITAL (TO RISK-WEIGHTED ASSETS)
Consolidated.................................. $1,774 18.32% $775 8.00% N/A N/A
UPNB.......................................... 461 12.26 301 8.00 $376 10.00%
AS OF DECEMBER 31, 1995:(1)
LEVERAGE (TIER 1 CAPITAL TO AVERAGE ASSETS)
Consolidated.................................. $1,134 8.08% $561 4.00% N/A N/A
UPNB.......................................... 384 7.25 212 4.00 $265 5.00%
TIER 1 CAPITAL (TO RISK-WEIGHTED ASSETS)
Consolidated.................................. $1,134 13.39% $339 4.00% N/A N/A
UPNB.......................................... 384 13.92 110 4.00 $165 6.00%
TOTAL CAPITAL (TO RISK-WEIGHTED ASSETS)
Consolidated.................................. $1,412 16.68% $677 8.00% N/A N/A
UPNB.......................................... 416 15.11 220 8.00 $275 10.00%
</TABLE>
- ---------------
(1) UPNB for December 31, 1995 represents the combination of UPNB and Leader
Federal Bank for Savings (acquired October 1, 1996) as if they had been
combined January 1, 1995. Internal mergers and internal transfers of
branches have not been reflected, since their impact was not considered
significant to the financial position of UPNB.
(2) Not applicable (N/A) for bank holding companies such as the Corporation.
RESTRICTIONS ON DIVIDENDS AND LOANS FROM SUBSIDIARIES
The amount of dividends which the Corporation's subsidiaries may pay is
limited by applicable laws and regulations. For the subsidiary national banks,
prior regulatory approval is required if dividends to be declared in any year
would exceed net earnings of the current year (as defined under the National
Bank Act) plus retained net profits for the preceding two years. The payment of
dividends by state-chartered bank subsidiaries is regulated by applicable laws
in Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee
and the regulations of the Federal Deposit Insurance Corporation (FDIC). The
payment of dividends by savings and loan subsidiaries is subject to the
regulations of the Office of Thrift Supervision (OTS).
The Corporation has adopted for its state-chartered bank subsidiaries
internal dividend policies that have received approval from the various state
banking commissioners, subject to restrictions. The current policy for Alabama,
Arkansas, and Mississippi subsidiary banks requires a minimum ratio of 7%
tangible equity capital (equity less goodwill and other intangibles) to tangible
assets and paying dividends only equal to the excess without prior approval. The
internal policy adopted for Tennessee banks requires a 6% tangible equity
capital to tangible assets ratio and a 7% tangible primary capital (tangible
equity plus the allowance for losses on loans) to tangible assets ratio be
maintained by the
57
<PAGE> 60
NOTE 12. REGULATORY CAPITAL AND RESTRICTIONS ON DIVIDENDS AND LOANS FROM
SUBSIDIARIES (CONTINUED)
subsidiaries. The policy approved for the Corporation's Kentucky operations is
the same as for Tennessee except that Kentucky requires the use of Tier 1
capital instead of tangible equity and average quarterly assets instead of
period-end assets. Missouri requires a 6% tangible equity capital ratio. The
Corporation has not received approval from Louisiana for an internal policy. At
January 1, 1997, the banking subsidiaries could have paid dividends to the
Corporation aggregating $86.0 million without prior regulatory approval. Future
dividends will be dependent on the level of earnings of the subsidiary financial
institutions.
The Corporation's banking subsidiaries are limited by federal law in the
amount of credit which they may extend to their nonbank affiliates, including
the Corporation. Loans to a single nonbank affiliate may not exceed 10% nor
shall loans to all nonbank affiliates exceed 20% of an individual bank's capital
plus its allowance for losses on loans. Such loans must be collateralized by
assets having market values of 100% to 130% of the loan amount depending on the
nature of the collateral. The law imposes no restrictions upon extensions of
credit between FDIC-insured banks which are 80%-owned subsidiaries of the
Corporation.
NOTE 13. RESTRUCTURING CHARGES
In the fourth quarter of 1994, the Corporation adopted and began
implementation of a specific formal restructuring plan to improve operating
efficiencies and profitability throughout the Corporation. The Corporation
achieved a net reduction in total staff in 1995 of 690 employees, excluding the
acquisitions consummated in 1995. Additionally, at December 31, 1995, the
Corporation had identified 38 branch locations for consolidation, closure, or
divestiture. At December 31, 1996, the Corporation had consolidated or otherwise
divested 44 branch locations. There were no additional charges for restructuring
in 1995 or 1996. Management of the Corporation considers the restructuring plan
to be complete at December 31, 1996. The following table provides a
reconciliation of the restructuring charges and the liabilities and reserves at
December 31 for each of the past three years.
<TABLE>
<CAPTION>
RESTRUCTURING RESERVES
-----------------------------------------------
EMPLOYEE ASSET
SEVERANCE IMPAIRMENTS OTHER TOTAL
--------- ----------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Restructuring charges.......................... $ 16,262 $10,478 $ 2,189 $ 28,929
Less: Cash payments in 1994.................... (3,830) -- (835) (4,665)
Noncash items............................ -- (1,144)(1) -- (1,144)
-------- ------- ------- --------
Balance at December 31, 1994................... 12,432 9,334 1,354 23,120
Less: Cash payments in 1995.................... (11,829) -- (1,354) (13,183)
Noncash items............................ -- (6,591)(1) -- (6,591)
-------- ------- ------- --------
Balance at December 31, 1995................... 603 2,743 -- 3,346
Less: Cash payments in 1996.................... (195) -- -- (195)
Noncash items............................ -- (1,412)(1) -- (1,412)
Other.................................... (408) (1,331) -- (1,739)
-------- ------- ------- --------
Balance at December 31, 1996................... $ -- $ -- $ -- $ --
======== ======= ======= ========
</TABLE>
- ---------------
(1) Relates to the disposition of branch buildings, furniture, and equipment in
1995 and 1996.
58
<PAGE> 61
NOTE 14. OTHER NONINTEREST INCOME AND EXPENSE
The major components of other noninterest income and expense are summarized
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OTHER NONINTEREST INCOME
Credit life insurance commissions......................... $ 8,925 $ 8,728 $ 5,772
Gain on sale of residential mortgages..................... 6,146 4,837 2,944
Customer ATM usage fee.................................... 5,379 3,520 3,101
VSIBG partnership earnings................................ 2,890 1,992 1,819
Brokerage fee income...................................... 2,760 1,849 1,457
Annuity sales income...................................... 2,242 410 921
Sale of servicing......................................... 976 3,855 854
Litigation settlement..................................... -- -- 2,200
Other income.............................................. 29,917 25,926 24,402
-------- -------- --------
Total other noninterest income..................... $ 59,235 $ 51,117 $ 43,470
======== ======== ========
OTHER NONINTEREST EXPENSE
FDIC insurance............................................ $ 30,250 $ 15,810 $ 23,505
Provision for losses on FHA/VA foreclosure claims (1)..... 23,911 3,429 1,597
Amortization and write-off of goodwill, other intangibles,
and mortgage servicing rights:
Amortization of mortgage servicing rights............... 13,961 13,158 13,601
Amortization of goodwill and other intangibles.......... 9,716 9,246 7,559
Write-off of mortgage servicing rights, goodwill, and
other intangibles.................................... 19,407 -- --
Other contracted services................................. 14,463 9,107 7,875
Postage and carrier....................................... 14,149 12,924 10,819
Advertising and promotion................................. 13,754 13,913 13,728
Stationery and supplies................................... 13,665 12,992 11,559
Communications............................................ 11,485 8,589 7,575
Other personnel services.................................. 7,861 6,321 4,513
Miscellaneous charge-offs................................. 5,852 4,989 2,705
Legal fees................................................ 5,217 4,957 5,758
Merchant credit card charges.............................. 5,152 4,468 4,136
Taxes other than income................................... 4,247 4,330 4,029
Dues, subscriptions, and contributions.................... 3,848 4,256 4,498
Brokerage and clearing fees on trading activities......... 3,819 5,924 2,969
Travel.................................................... 3,749 3,636 2,895
Accounting and audit fees................................. 3,204 3,474 4,072
Insurance................................................. 3,062 3,046 3,997
Consultant fees........................................... 2,207 2,593 1,545
Federal Reserve fees...................................... 2,251 1,775 1,671
Other real estate expense................................. 2,343 1,189 1,099
Consumer loan marketing expenses.......................... -- -- 14,446
Merger-related expenses(2)
Salaries, employee benefits and other employment-related
charges.............................................. 18,330 4,829 5,138
Write-downs of office buildings and equipment........... 15,782 4,733 3,594
Professional fees....................................... 4,714 1,363 2,525
Other real estate expense............................... 1,364 -- --
Other................................................... 12,596 986 3,605
Restructuring charges (Note 13)........................... -- -- 28,929
Other expense............................................. 22,539 28,747 21,106
-------- -------- --------
Total other noninterest expense.................... $292,898 $190,784 $221,048
======== ======== ========
</TABLE>
- ---------------
(1) The amount for 1996 includes $19.8 million of provisions for losses on
FHA/VA foreclosure claims related to an acquired entity.
(2) Salaries, employee benefits, and other employment-related charges include
amounts for employment contract payments, severance, postretirement benefit
expenses, and pension expense of acquired entities. Write-downs of office
buildings and equipment includes assets to be sold, amounts for lease
buyouts, assets determined to be obsolete or no longer of use, and equipment
not compatible with the Corporation's equipment. Professional fees include
legal fees, accounting fees, and investment banker fees. Other expenses
include write-off of assets, charge-offs of prepaid expenses, and
miscellaneous merger-related expenses.
59
<PAGE> 62
NOTE 15. EMPLOYEE BENEFIT PLANS
401(K) RETIREMENT SAVINGS PLAN. The Corporation's 401(k) Retirement Savings
Plan (401(k) Plan) is available to employees having one or more years of service
and who work in excess of 1,000 hours per year. Employees may voluntarily
contribute 1 to 16 percent of their gross compensation on a pretax basis up to a
maximum of $9,500 in 1996 and the Corporation makes a matching contribution of
50 to 100 percent of the amounts contributed by the employee (up to 6% of
compensation) depending upon his or her eligible years of service. The
Corporation's contributions to the 401(k) Plan for 1996, 1995, and 1994 were
$3.0 million, $2.7 million, and $2.0 million, respectively.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Employee Stock Ownership Plan and
Trust (ESOP) is noncontributory and covers employees having one or more years of
service and who work in excess of 1,000 hours per year. The amounts of
contributions to the ESOP are determined annually at the discretion of the Board
of Directors and were $3.5 million, $3 million, and $2 million for 1996, 1995,
and 1994, respectively. At December 31, 1996, the ESOP held 1,044,199 shares of
the Corporation's Common Stock, all of which were allocated to participants.
STOCK INCENTIVE PLANS. Certain employees and directors of the Corporation and
its subsidiaries are eligible to receive options or restricted stock grants
under the 1992 Stock Incentive Plan. A maximum of 1,600,000 shares of the
Corporation's Common Stock may be issued through the exercise of nonstatutory or
incentive stock options and as restricted stock awards. In October 1996, the
Plan was amended to increase the maximum number of shares from 1,600,000 to
6,000,000. The amendment is subject to ratification by shareholders at the April
17, 1997 annual meeting of shareholders. The option price is the fair value of
the Corporation's shares at the date of grant. Options granted generally become
exercisable in installments of 20% to 33 1/3% each year beginning one year from
date of grant. Additional options under a former plan and options assumed in
connection with various acquisitions remain outstanding; however, no further
options will be granted under such plans. Additional information with respect to
the number of shares of the Corporation's Common Stock which are subject to
stock options is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995
------------------------- -------------------------
WEIGHTED- WEIGHTED-
AVERAGE PRICE NUMBER AVERAGE PRICE NUMBER
------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Options
Outstanding, beginning of year................ $12.90 2,426,722 $11.85 2,443,152
Granted....................................... 34.14 1,657,968 21.70 339,711
Exercised..................................... 16.48 (723,454) 13.06 (279,901)
Canceled or surrendered....................... 16.77 (39,948) 18.00 (76,240)
--------- ---------
Outstanding, end of year...................... 22.67 3,321,288 12.90 2,426,722
========= =========
Options becoming exercisable during the year.... $15.21 1,229,161 $10.46 664,018
====== ========= ====== =========
Options exercisable at end of year.............. $13.41 1,782,753 $13.27 1,240,758
====== ========= ====== =========
</TABLE>
Exercise prices ranged from $5.55 to $39.875 in 1996 and from $5.55 to
$32.25 in 1995. The contractual remaining life of all options was 8 years at
December 31, 1996.
Restricted stock grants aggregating 209,000 shares were awarded in the
fourth quarter of 1996 having a fair value of $7.5 million. Restrictions on the
grants lapse in annual increments over twelve years. The market value of the
restricted stock grants is charged to expense as the restrictions lapse. For the
year ended December 31, 1996, $238,000 was expensed and the ending balance at
December 31, 1996 was $7.3 million, which is included in unearned compensation
in shareholders' equity.
Had compensation cost for the Corporation's stock option plans been
determined based upon the fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS No. 123, the
Corporation's net income and earnings per share would have been reduced as shown
in the table below. The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
assumptions in 1996 and 1995, respectively: expected dividend yield 3.16% and
4.15%; expected volatility of 25.73% and 30.36%; risk-free interest
60
<PAGE> 63
NOTE 15. EMPLOYEE BENEFIT PLANS (CONTINUED)
rate of 5.94% and 6.92%; and an expected life of 4.55 years and 4.66 years.
Forfeitures are recognized as they occur.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1996 1995
------ ------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Net earnings -- as reported................................. $133.7 $172.8
Net earnings -- pro forma................................... 131.3 172.4
Earnings per share -- as reported
Primary................................................... 1.95 2.72
Fully diluted............................................. 1.92 2.64
Earnings per share -- pro forma
Primary................................................... 1.93 2.71
Fully diluted............................................. 1.90 2.63
</TABLE>
Due to the inclusion of only 1995 and 1996 option grants, the effects of
applying SFAS No. 123 in 1995 and 1996 may not be representative of the pro
forma impact in future years.
RETIREE HEALTHCARE AND LIFE INSURANCE. The Corporation provides certain
healthcare and life insurance benefits to retired employees who had completed 20
years of unbroken full-time service immediately prior to retirement and who have
attained age 60 or more. Healthcare benefits are provided partially through an
insurance company (for retirees age 65 and above) and partially through direct
payment of claims.
The following table reflects the Corporation's net periodic postretirement
benefit costs for 1996 and 1995 which were determined assuming a discount rate
of 7% for 1996 and 8% for 1995 and an expected return on Plan assets of 5%:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1996 1995
----- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Service cost................................................ $ 322 $ 203
Interest cost of accumulated postretirement benefit
obligation................................................ 938 1,005
Amortization of unrecognized net gain....................... (39) (5)
Return on Plan assets....................................... (534) (363)
----- ------
Total............................................. $ 687 $ 840
===== ======
</TABLE>
The following table sets forth the Plans' funded status and the amounts
reported in the Corporation's consolidated balance sheet:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Fair value of Plan assets................................... $10,927 $10,058
------- -------
Accumulated postretirement benefit obligation (APBO):
Retirees.................................................. 9,326 9,833
Fully eligible Plan participants.......................... 253 230
Other active Plan participants............................ 4,287 3,946
------- -------
Total APBO........................................ 13,866 14,009
------- -------
APBO in excess of Plan assets..................... $(2,939) $(3,951)
======= =======
Reconciliation of funded status to reported amounts:
Accrued liability included in consolidated balance sheet,
including unfunded portion of transition obligation.... $(6,000) $(4,736)
Unrecognized net gain..................................... 3,061 785
------- -------
APBO in excess of Plan assets..................... $(2,939) $(3,951)
======= =======
</TABLE>
61
<PAGE> 64
NOTE 15. EMPLOYEE BENEFIT PLANS (CONTINUED)
The assumed discount rate used to measure the APBO was 7% at both December
31, 1996 and 1995. The weighted average healthcare cost trend rate in 1996 was
10%, gradually declining to an ultimate projected rate in 2001 of 5%. A one
percent increase in the assumed healthcare cost trend rates for each future year
would have increased the aggregate of the service and interest cost components
of the 1996 net periodic postretirement benefit cost by $121,000 and would have
increased the APBO as of December 31, 1996 by $1.1 million.
ACQUIRED INSTITUTIONS. Certain of the acquired institutions have sponsored
various employee benefit and retirement plans. Such plans have been or are in
the process of being terminated and the employees now participate in the
Corporation's benefit and retirement plans. At December 31, 1996, certain
institutions acquired in 1996 had outstanding plans including defined benefit
pension plans, 401(k) plans, and ESOPs. The liabilities, if any, for such
terminations have been recorded as of December 31, 1996.
Included in unearned compensation in shareholders' equity at December 31,
1996 is $3.2 million for a leveraged ESOP maintained by an acquired institution.
At December 31, 1996, the ESOP held 494,100 unallocated shares of the
Corporation's Common Stock which will be allocated to the appropriate
participants as the related debt is paid.
NOTE 16. INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1996 1995 1994
-------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CURRENT TAX EXPENSE
Federal................................................... $ 93,126 $77,929 $36,692
State..................................................... 14,973 9,536 5,590
-------- ------- -------
Total current tax expense.............................. 108,099 87,465 42,282
-------- ------- -------
DEFERRED TAX (BENEFIT) EXPENSE
Federal................................................... (30,838) (2,607) 2,340
State..................................................... (6,735) 1,790 552
-------- ------- -------
Total deferred tax (benefit) expense................... (37,573) (817) 2,892
-------- ------- -------
Total income tax expense.......................... $ 70,526 $86,648 $45,174
======== ======= =======
</TABLE>
Deferred tax assets/liabilities are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX ASSETS
Losses on loans and other real estate..................... $ 63,413 $51,324
Postretirement and postemployment benefits................ 3,028 2,614
Amortization of intangibles............................... 7,922 1,859
Deferred compensation plans............................... 6,328 5,604
Restructuring and merger-related charges.................. 8,088 4,249
Allowance for losses on FHA/VA foreclosure claims......... 12,325 668
Mortgage servicing rights................................. 4,154 4,141
Other deferred items...................................... 15,218 26,872
-------- -------
Total deferred tax assets......................... 120,476 97,331
-------- -------
DEFERRED TAX LIABILITIES
Book over tax basis in purchased loans.................... 4,486 9,010
Stock basis difference.................................... 8,055 6,462
Unrealized gain on available for sale securities.......... 15,591 17,777
Other deferred items...................................... 12,339 23,408
-------- -------
Total deferred tax liabilities.................... 40,471 56,657
-------- -------
Deferred tax asset, net........................... $ 80,005 $40,674
======== =======
</TABLE>
62
<PAGE> 65
NOTE 16. INCOME TAXES (CONTINUED)
The change in the net deferred tax asset during the year is a result of the
addition of net deferred tax assets of acquired companies, the net change in
unrealized gain (loss) on available for sale securities, and the current period
deferred tax benefit.
Income tax expense as a percentage of earnings before income taxes is
reconciled with the statutory federal income tax rate of 35% as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Computed "expected" tax.................................... $ 71,492 $ 90,791 $ 50,959
State income taxes, net of federal tax benefit............. 5,354 7,362 4,034
Tax-exempt interest, net................................... (11,014) (11,464) (11,860)
Amortization of goodwill and other intangibles............. 2,760 2,030 1,838
Other, net................................................. 1,934 (2,071) 203
-------- -------- --------
Applicable income tax............................ $ 70,526 $ 86,648 $ 45,174
======== ======== ========
</TABLE>
Income tax (benefit) expense applicable to securities transactions was $1.6
million for 1996, ($.9) million for 1995, and ($8.0) million for 1994.
NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Corporation becomes a party to
various types of financial instruments in order to meet the financing needs of
its customers and to reduce its exposure to fluctuations in interest rates.
These instruments involve, to varying degrees, elements of credit and
interest-rate risk and are not reflected in the accompanying consolidated
financial statements. For these instruments, the exposure to credit loss is
limited to the contractual amount of the instrument. The Corporation follows the
same credit policies in making commitments and contractual obligations as it
does for on-balance-sheet instruments. In addition, controls for these
instruments related to approval, monetary limits, and monitoring procedures are
established by the Corporation's Directors' Loan Committee. The following table
presents the contractual amounts of these types of instruments.
<TABLE>
<CAPTION>
CONTRACT AMOUNT
DECEMBER 31,
------------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
FINANCIAL INSTRUMENTS WHOSE CONTRACT AMOUNTS REPRESENT
CREDIT RISK
Commitments to extend credit (excluding credit card
plans)................................................ $ 1,205 $ 1,240
Commitments to extend credit under credit card plans... 1,704 1,223
Standby, commercial, and similar letters of credit..... 107 90
</TABLE>
Commitments to extend credit are legally binding agreements to extend
credit to customers for specific purposes, at stipulated rates, with fixed
expiration and review dates if the conditions in the agreement are met, and may
require payment of a fee. Since many of the commitments normally expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. Collateral held, if any, varies but may include
accounts receivable, inventory, property, plant and equipment, income producing
properties, or securities. Loan commitments with an original maturity of one
year or less or which are unconditionally cancelable totaled $2.5 billion and
loan commitments with a maturity over one year which are not unconditionally
cancelable totaled $413 million.
Letters of credit are conditional commitments issued by the Corporation to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Corporation in some cases holds
various types of collateral to support those commitments for which collateral is
deemed necessary. The outstanding letters of credit expire between 1997 and
2006.
63
<PAGE> 66
NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)
Other outstanding off-balance-sheet instruments are forward contracts,
interest-rate swap agreements, and commitments to purchase or sell when-issued
securities. The following table presents the notional amounts of these types of
instruments.
<TABLE>
<CAPTION>
NOTIONAL AMOUNT
DECEMBER 31,
----------------
1996 1995
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
FINANCIAL INSTRUMENTS WHOSE NOTIONAL CONTRACT AMOUNTS EXCEED
THE AMOUNTS OF ACTUAL CREDIT RISK
Forward contracts...................................... $ 67 $ 52
Interest-rate swap agreements.......................... -- 530
When-issued securities
Commitments to sell.................................. 122 97
Commitments to purchase.............................. 88 94
</TABLE>
Forward contracts are contracts for delayed delivery of securities or money
market instruments in which the seller agrees to make delivery at a specified
future date of a specified instrument, at a specified price or yield. Risks
arise from the possible inability of the counterparties to meet the terms of
their contracts and from market movements in securities values and interest
rates. The Corporation as seller utilizes short-term forward commitments to
deliver mortgages to protect the Corporation against the risk of rate changes
which could impact the value of mortgage originations to be securitized or
otherwise sold to investors. Such commitments to deliver mortgages generally
have maturities of 90 days or less.
An interest-rate swap generally involves the exchange of floating-rate for
fixed-rate interest payment streams on a specified notional principal amount for
an agreed upon period of time without the exchange of the underlying principal
amounts. Notional principal amounts often are used to express the volume of
these transactions, however, the amounts potentially subject to credit risk
would be much smaller. The Corporation's credit risk involves the possible
default of the counterparty.
The Corporation has a policy for its use of derivative products, including
interest-rate swaps, which has been approved and is monitored by the Funds
Management Committee and the Board of Directors. The Corporation is not
currently trading derivative products. The policy requires that individual
positions for derivative products shall not exceed $100-million notional amount
and that open positions in the aggregate shall 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 ensure compliance with established policies. At December 31, 1996,
the Corporation had no interest-rate swap/cap agreements outstanding. The
following table provides a reconciliation of interest-rate swaps/cap between
1995 and 1996.
<TABLE>
<CAPTION>
NOTIONAL AMOUNT
DECEMBER 31,
----------------
1996 1995
----- -----
(IN MILLIONS)
<S> <C> <C>
BALANCE AT JANUARY 1........................................ $ 530 $ 340
Maturities................................................ (200) --
Interest-rate swaps entered into by an acquired entity.... -- 300
Interest-rate swaps terminated due to underlying
instruments being sold................................. -- (100)
Interest-rate swaps/cap of acquired entities terminated at
acquisition as the instruments were no longer
effective.............................................. (330) (10)
----- -----
BALANCE AT DECEMBER 31...................................... $ -- $ 530
===== =====
</TABLE>
The impact on the Corporation's net interest income of the interest-rate
swaps/cap outstanding was a net reduction of approximately $1.5 million in 1996
and $2.9 million in 1995 and had a net positive impact of approximately $600,000
in 1994. The impact of the termination of the interest rate swaps/cap related to
an acquired entity was a $1.1 million loss which was recorded in noninterest
expense.
64
<PAGE> 67
NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)
When-issued securities are commitments to either purchase or sell
securities when, as, and if they are issued. The trades are contingent upon the
actual issuance of the security. These transactions represent conditional
commitments made by the Corporation and risk arises from the possible inability
of the counterparties to meet the terms of their contracts and from market
movements in securities values and interest rates.
MORTGAGE LOAN SERVICING. The Corporation acts as servicing agent for
residential mortgage loans totaling approximately $10.5 billion ($8.6 billion
serviced for others) at December 31, 1996 compared to $9.2 billion ($8.6 billion
serviced for others) at December 31, 1995. The loans serviced for others are not
included in the Corporation's consolidated balance sheet. The following table
presents a reconciliation of the changes in mortgage servicing rights for the
two years ended December 31, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Beginning balance........................................... $ 59,631 $ 58,179
Additions................................................... 15,552 15,177
Sale of servicing rights.................................... -- (567)
Write-off of servicing rights............................... (4,016) --
Amortization of servicing rights............................ (13,961) (13,158)
-------- --------
Ending balance.............................................. $ 57,206 $ 59,631
======== ========
</TABLE>
In its capacity as servicer of certain of these loans, the Corporation is
responsible for foreclosure and the related costs of foreclosure. These costs
are estimated each period based on historical loss experience and are shown as
provisions for losses on FHA/VA foreclosure claims in noninterest expense. At
December 31, 1996, the Corporation had reserves for these losses of $35.6
million.
In the normal course of business, the Corporation sells mortgage loans and
makes certain limited representations and warranties to the purchaser.
Management does not expect any significant losses to arise from these
representations and warranties.
CONCENTRATIONS OF CREDIT RISK. Through its subsidiary banks in Tennessee,
Mississippi, Missouri, Arkansas, Louisiana, Alabama, and Kentucky, the
Corporation grants commercial, agricultural, residential, and consumer loans to
customers throughout those states. The amount and percentage of total loans
outstanding by the state in which the subsidiaries were headquartered at
December 31, 1996 were as follows: Tennessee $6.7 billion (64%), Mississippi
$1.5 billion (14%), Missouri $932 million (9%), Arkansas $492 million (5%) ,
Louisiana $417 million (4%), Alabama $344 million (3%), and Kentucky $80 million
(1%). Although the Corporation has a diversified loan portfolio, the ability of
its debtors to honor their contracts is to some extent dependent upon economic
conditions prevailing throughout the above states and the surrounding areas.
65
<PAGE> 68
NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and fair values of the Corporation's financial
instruments are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------- -----------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and short-term investments............. $ 756,284 $ 756,284 $ 920,733 $ 920,733
Trading account assets...................... 225,336 225,336 121,927 121,927
Loans held for resale....................... 58,622 58,622 87,889 87,889
Investment securities -- available for
sale..................................... 2,956,234 2,956,234 3,386,785 3,386,785
Investment securities -- held to maturity... -- -- 186,269 188,433
Net loans................................... 10,267,217 10,260,924 8,884,671 9,128,836
Mortgage servicing rights................... 57,206 76,688 59,631 84,841
FINANCIAL LIABILITIES
Demand deposits............................. 5,589,409 5,589,409 5,217,442 5,217,442
Time deposits............................... 5,900,853 5,918,072 5,857,280 5,472,157
Short-term borrowings....................... 449,146 449,146 838,283 838,283
Short- and medium-term notes................ 400,000 400,411 -- --
Federal Home Loan Bank advances............. 889,985 892,200 798,039 797,737
Other long-term debt, excluding capital
lease obligations........................ 382,122 375,896 225,900 228,978
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Forward contracts........................... -- 19 -- (665)
Interest-rate swaps......................... -- -- (836) (4,792)
</TABLE>
The following methods and assumptions were used by the Corporation in
estimating the fair value for financial instruments:
CASH AND SHORT-TERM INVESTMENTS. The carrying amount for cash and
short-term investments approximates the fair value of the assets. Included in
this classification are cash and due from banks (nonearning assets), federal
funds sold, securities purchased under agreements to resell, and interest-
bearing deposits at financial institutions.
TRADING ACCOUNT ASSETS. These instruments are carried in the consolidated
balance sheet at values which approximate their fair values based on quoted
market prices of similar instruments.
LOANS HELD FOR RESALE. These instruments are carried in the consolidated
balance sheet at the lower of cost or fair value. The fair values of these
instruments are based on subsequent liquidation values of the instruments which
did not result in any significant gains or losses.
INVESTMENT SECURITIES. Fair values of these instruments are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are based on the quoted values of similar instruments.
LOANS. The fair values of loans are estimated using discounted cash flow
analyses and using interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality and risk.
MORTGAGE SERVICING RIGHTS. The fair values of mortgage servicing rights
are estimated using discounted cash flow analyses.
DEMAND DEPOSITS. The fair values of these instruments (i.e., checking
accounts, savings accounts, money market deposit accounts, and NOW accounts)
are, by definition, equal to the amount payable on demand at the reporting date
(i.e., their carrying amount).
TIME DEPOSITS. The fair values of time deposits (i.e., certificates of
deposit, IRAs, investment savings, etc.) are estimated using a discounted cash
flow calculation that applies interest rates currently being offered on these
instruments to a schedule of aggregated expected monthly maturities on time
deposits.
66
<PAGE> 69
NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
SHORT-TERM BORROWINGS. The carrying amount of short-term borrowings (i.e.,
federal funds purchased, securities sold under agreements to repurchase,
commercial paper, and other short-term borrowings) approximates their fair
values.
SHORT- AND MEDIUM-TERM BANK NOTES. The fair value of these notes is
estimated using discounted cash flow analyses and using current LIBOR-based
indices.
FEDERAL HOME LOAN BANK ADVANCES. The fair value of these advances is
estimated using discounted cash flow analyses and using the FHLB-quoted rates of
borrowing for advances with similar terms.
OTHER LONG-TERM DEBT. The fair value of long-term debt was estimated from
dealer quotes.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS. Fair values of off-balance-sheet
instruments are based on current settlement values for forward contracts and
interest-rate swaps. The fair value of interest-rate swaps represents the gross
unrealized gain (loss) in these contracts. The fair value of commitments to
extend credit and letters of credit (see Note 17) is not presented, since
management believes the fair value to be insignificant.
NOTE 19. CONTINGENT LIABILITIES
The Corporation and/or various subsidiaries are parties to various pending
civil actions, all of which are being defended vigorously. Additionally, the
Corporation and/or its subsidiaries are parties to various legal proceedings
that have arisen in the ordinary course of business. Management is of the
opinion, based upon present information, including evaluations by outside
counsel, 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.
The Corporation's five banks (UPC Banks) located in Mississippi are
defendants in various related lawsuits pending in state and federal courts in
Mississippi related to the placement of collateral protection insurance (CPI) by
the UPC Banks in the 1980s and early 1990s. Three of the federal actions purport
to have been brought as class actions and include allegations that premiums were
excessive and improperly calculated; coverages were improper and not disclosed;
and improper payments were paid to the UPC banks by the insurance companies,
allegedly constituting violations of various state and federal statutes and
common law. The CPI programs appear to have been substantially similar in many
respects to CPI programs of other Mississippi banks, often with the same
insurance companies. Consequently, there are now similar putative class actions
pending against numerous Mississippi banks (including those against the UPC
Banks), various insurance agencies and companies based upon their CPI programs.
The relief sought in the purported class actions includes actual damages, treble
damages under certain statutes, other statutory damages, and unspecified
punitive damages. Other subsidiaries of the Corporation are involved in similar
litigation relating to CPI on mobile home loans. One such suit was filed as a
putative class action in June 1995 against Leader Federal Bank for Savings
(Leader Federal) and eighteen other unrelated defendants, requesting $200
million in punitive damages against each defendant. Another individual suit
filed in June 1995 against Leader Federal as a counterclaim to a foreclosure
suit demanded judgment for compensatory damages and punitive damages of $10
million. An agreement to settle these cases was reached, and court approval
obtained, in the fourth quarter of 1996, within amounts previously established.
Two other CPI-related actions were filed against Leader Federal, a subsidiary,
and an unrelated insurance company in January 1996 and remain pending. One such
case demands compensatory damages of $5,000 and punitive damages of $20 million,
while the other seeks $10,000 in compensatory damages and $50 million in
punitive damages.
67
<PAGE> 70
UNION PLANTERS CORPORATION
EXECUTIVE OFFICERS
BENJAMIN W. RAWLINS, JR.
Chairman and Chief Executive Officer
JACKSON W. MOORE
President and Chief Operating Officer
JACK W. PARKER
Executive Vice President and
Chief Financial Officer
JAMES A. GURLEY
Executive Vice President
M. KIRK WALTERS
Senior Vice President, Treasurer, and Chief Accounting Officer
BOARD OF DIRECTORS
ALBERT M. AUSTIN
Chairman of the Board
Cannon, Austin & Cannon, Inc.
EDGAR H. BAILEY
Vice Chairman of the Board
Union Planters Corporation
MARVIN E. BRUCE
Chairman of the Board (Retired)
TBC Corporation
GEORGE W. BRYAN
Senior Vice President
Sara Lee Corporation
ROBERT B. COLBERT, JR.
Chairman of the Board (Retired)
Signal Apparel Co., Inc.
JAMES E. HARWOOD
President
Sterling Equities
PARNELL S. LEWIS, JR.
President
Anderson-Tully Company
C. J. LOWRANCE III
President
Lowrance Brothers & Company Inc.
JACKSON W. MOORE
President and Chief Operating Officer
Union Planters Corporation
STANLEY D. OVERTON
Chairman of the Board
Union Planters Bank of
Middle Tennessee, N.A.
BENJAMIN W. RAWLINS, JR.
Chairman of the Board and
Chief Executive Officer
Union Planters Corporation
DR. V. LANE RAWLINS
President
The University of Memphis
DONALD F. SCHUPPE
DFS Service Company
MIKE P. STURDIVANT
President
Due West Gin Co., Inc.
RICHARD A. TRIPPEER, JR.
President
R. A. Trippeer, Inc.
SPENCE L. WILSON
President
Kemmons Wilson Companies
MILTON J. WOMACK
President
Milton J. Womack, Inc.
Chairman of the Board
Union Planters Bank of Louisiana
68
<PAGE> 71
Union Planters Logo
CORPORATE INFORMATION
ANNUAL MEETING
Thursday, April 17, 1997 at 10 a.m.
Union Planters Administrative Center
Assembly Room C
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
CORPORATE OFFICES
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
CORPORATE MAILING ADDRESS
P. O. Box 387
Memphis, Tennessee 38147
WEB SITE
http://www.unionplanters.com
TRANSFER AGENT AND REGISTRAR
Union Planters National Bank
Corporate Trust Operations
6200 Poplar Avenue, Suite 300
Memphis, Tennessee 38119
(901) 580-5523
DIVIDEND PAYING AGENT
Union Planters National Bank
Corporate Trust Operations
6200 Poplar Avenue, Suite 300
Memphis, Tennessee 38119
(901) 580-5523
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
STOCK AND OPTION LISTINGS
Common
NYSE Symbol: UPC
Wall Street Journal: UnPlantr
Series E Convertible Preferred
NASDAQ NMS Symbol: UPCPO
Wall Street Journal: UnPlantr pfE
Options
Philadelphia Stock Exchange
FOR FINANCIAL INFORMATION, CONTACT
Jack W. Parker
Executive Vice President and
Chief Financial Officer
(901) 580-6781
FORM 10-K
Copies of the Corporation's
Annual Report on Form 10-K
as filed with the Securities
and Exchange Commission are
available on request by
calling the Corporate Marketing
Division at (901) 580-6604.
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
The Plan allows Union Planters
shareholders to reinvest their
dividends in Union Planters
Common Stock at a 5% discount
from market. No brokerage
commissions or service charges
are paid by shareholders.
The Plan also permits those
participating in the Plan to
buy additional shares
with optional cash payments
and no brokerage commissions.
Full details are available
by calling (901) 580-5513 or
writing Union Planters
Corporate Trust Operations.
The Corporation's banking
subsidiaries are members of the
FDIC and are Equal Housing
Lenders. UPC and its subsidiaries
are Equal Opportunity Employers.
THE NEW YORK STOCK EXCHANGE LOGO
<PAGE> 72
UNION PLANTERS CORPORATION
P.O. BOX 387
MEMPHIS, TENNESSEE 38147
<PAGE> 1
UNION PLANTERS CORPORATION, Registrant, Exhibit 21
A registered bank holding company Page 1 of 2
<TABLE>
<CAPTION>
State or Percentage
Jurisdiction of Voting
Under Laws of Securities
Name of Registrant and Subsidiaries Which Organized Owned
- -------------------------------------- --------------- ----------
<S> <C> <C>
Union Planters Corporation (Registrant) Tennessee
Union Planters Holding Corporation (a) Tennessee 100.00%
Union Planters National Bank (b) United States 100.00%
Investment Group Mortgage Corporation (c and g) Tennessee 100.00%
Planters Investment Corporation, Inc. (c) Arkansas 100.00%
Leader Enterprises, Inc. (c) Tennessee 100.00%
Leader Services, Inc. (c) Tennessee 100.00%
Leader Federal Mortgage, Inc. (c) Tennessee 100.00%
Southeastern Mortgage of Alabama, LLC (d) Alabama 50.00%
ASMI, LLC (d) Indiana 50.00%
Leader Leasing, Inc. (c) Delaware 100.00%
Leader Funding Corporation I (c) Delaware 100.00%
Leader Funding Corporation III (c) Delaware 100.00%
Union Planters Brokerage Services, Inc. (c) Delaware 100.00%
PFIC Corporation (c) Tennessee 100.00%
PFIC Securities Corporation (a) Tennessee 100.00%
PFIC Alabama Agency, Inc. (e) Alabama 100.00%
PFIC Georgia Agency, Inc. (e) Georgia 100.00%
PFIC Agency New Mexico, Inc. (e) New Mexico 100.00%
PFIC Corporation of Kentucky (e) Kentucky 100.00%
PFIC Agency, Inc. (e) Illinois 100.00%
PFIC Arkansas Agency, Inc. (e) Arkansas 100.00%
PFIC Mississippi Agency, P.C. (e) Mississippi 100.00% indirectly
PFIC Michigan Agency, Inc. (e) Michigan 100.00%
PFIC Wisconsin Agency, Inc. (e) Wisconsin 100.00%
PFIC Louisiana Agency, Inc. (e) Louisiana 100.00%
PFIC Missouri Agency, Inc. (e) Missouri 100.00%
PFIC Virginia Agency, Inc. (e) Virginia 100.00%
PFIC Oregon Agency, Inc. (e) Oregon 100.00%
PFIC Ohio Agency, Inc. (e) Ohio 100.00%
Navigator Agency Incorporated (e) Texas 100.00% indirectly
Union Planters Bank of Middle Tennessee, National Association (b) United States 100.00%
Millcreek Development Partnership, LP (b) Tennessee 49.50%
Union Planters Bank of Northeast Arkansas, (b) Arkansas 100.00%
Union Planters Bank of Central Arkansas, National Association (b) Arkansas 100.00%
First North Central Insurance, Inc. (f and g) Arkansas 100.00%
Union Planters Bank of Jackson, National Association (a) Tennessee 100.00%
Union Planters Bank of East Tennessee, National Association (a) Tennessee 100.00%
Foothills Financial Services (h) Tennessee 100.00%
Union Planters Bank of Chattanooga, National Association (a) United States 100.00%
Union Planters Bank of the Tennessee Valley (a) Tennessee 100.00%
Union Planters Bank of the Cumberlands (a) Tennessee 100.00%
First National Bank of Crossville (a) United States 100.00%
First Citizens Bank of Hohenwald (a) Tennessee 100.00%
Franklin Financial Group, Inc. (a) Tennessee 100.00%
Union Planters Bank of the Lakeway Area (i) Tennessee 100.00%
Southeastern Credit Life Insurance Company (j) Arizona 100.00%
Colonial Loan Association (j) Tennessee 100.00%
First State Bank of Fayette County (a) Tennessee 100.00%
Bank of Goodlettsville (a) Tennessee 100.00%
Union Planters Bank of North Central Tennessee (a) Tennessee 100.00%
The First State Bank (a) Tennessee 100.00%
Bank of Commerce (a) Tennessee 100.00%
Central State Bank (a) Tennessee 100.00%
Simpson County Bank (a) Kentucky 100.00%
First National Bancorp of Shelbyville (a) United States 100.00%
Union Planters Bank of Northwest Tennessee FSB (a) United States 100.00%
BNF Bancorp, Inc. (a) Delaware 100.00%
Union Planters Bank of Alabama (k) United States 100.00%
</TABLE>
<PAGE> 2
Exhibit 21
Page 2 of 2
UNION PLANTERS CORPORATION, Registrant,
A registered bank holding company
<TABLE>
<CAPTION>
State or Percentage
Jurisdiction of Voting
Under Laws of Securities
Name of Registrant and Subsidiaries Which Organized Owned
- ----------------------------------- ---------------- -----------
<S> <C> <C>
Union Planters Community Bancorp, Inc. (a and g) Tennessee 100.00%
Union Planters Bank of West Tennessee (l) Tennessee 100.00%
Summit Insurance, Inc. (m) Tennessee 100.00%
Exchange Credit Corporation (m) Tennessee 100.00%
Union Planters Bank of Mississippi (a) Mississippi 100.00%
Sunburst Mortgage Corporation (n) Mississippi 100.00%
Union Planters Bank of Southern Mississippi (a) Mississippi 100.00%
Union Planters Bank of Central Mississippi (a) Mississippi 100.00%
Sunburst Financial Services, Inc. d/b/a Rapid Finance (o) Mississippi 100.00%
Union Planters Bank of Northwest Mississippi (a) Mississippi 100.00%
Union Planters Bank of Northeast Mississippi, National Association (a) United States 100.00%
Union Planters Bank of Louisiana (a) Louisiana 100.00%
Capital Equity Corporation (p) Louisiana 100.00%
Union Planters Investment Bankers Corporation (a and g) Tennessee 100.00%
UMIC, Inc. (g and q) Tennessee 100.00%
UMIC Securities Corporation (g and q) Tennessee 100.00%
Southwestern Investment Company (a) Tennessee 100.00%
Planters Life Insurance Company (a) Arizona 100.00%
Tennessee Equity Mortgage Corporation (a and g) Tennessee 100.00%
Guardian Realty Company (a and g) Alabama 100.00%
Capital Bancorporation, Inc. (a) Tennessee 100.00%
Union Planters Bank of Mid-Missouri (r) Missouri 100.00%
Maryland Avenue Bancorporation, Inc. (r) Missouri 100.00%
Union Planters Bank of Missouri(s) Missouri 100.00%
Union Planters Bank of Southeast Missouri (r) Missouri 100.00%
Union Planters Bank of Southwest Missouri (r) Missouri 100.00%
Capital Services Corporation (r) Missouri 100.00%
First Financial Bank of Southeast Missouri (r) Missouri 99.41%
First Financial Bank of Mississippi County (r) Missouri 100.00%
First Financial Bank of Ste. Genevieve County (r) Missouri 94.87%
Citizens First Financial Bank (r) Missouri 99.92%
First Financial Automation (t) Missouri 100.00%
Union Planters Capital Trust (a) Delaware 100.00%
(a) Subsidiary of Union Planters Corporation
(b) Subsidiary of Union Planters Holding Corporation
(c) Subsidiary of Union Planters National Bank
(d) Subsidiary of Leader Federal Mortgage, Inc.
(e) Subsidiary of PFIC Corporation
(f) Subsidiary of Union Planters Bank of Central Arkansas, National Association
(g) Inactive Subsidiary
(h) Subsidiary of Union Planters Bank of East Tennessee, National Association
(i) Subsidiary of Franklin Financial Group, Inc.
(j) Subsidiary of Union Planters Bank of the Lakeway Area
(k) Subsidiary of BNF Bancorp, Inc.
(l) Subsidiary of Union Planters Community Bancorp, Inc.
(m) Subsidiary of Union Planters Bank of West Tennessee
(n) Subsidiary of Union Planters Bank of Mississippi
(o) Subsidiary of Union Planters Bank of Central Mississippi
(p) Subsidiary of Union Planters Bank of Louisiana
(q) Subsidiary of Union Planters Investment Bankers Corporation
(r) Subsidiary of Capital Bancorporation, Inc.
(s) Subsidiary of Maryland Avenue Bancorporation, Inc.
(t) Subsidiary of Union Planters Bank of Missouri, First Financial Bank of Southeast Missouri, First Financial Bank of
Mississippi County, First Finanancial Bank of Ste. Genevieve County, and Citizens First Financial Bank
</TABLE>
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the previously
filed Registration Statements on Form S-3 (Nos. 333-02377, 333-11817, and
33-27814) and Form S-8 (Nos. 333-17363, 333-13207, 333-13205, 333-02363,
2-87392, 33-23306, 33-35928, 33-53454, 33-55257, 33-56269, and 33-65467) of
Union Planters Corporation of our report dated January 16, 1997 appearing on
page 33 of the Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K.
/s/PRICE WATERHOUSE LLP
Memphis, Tennessee
March 14, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 594,535
<INT-BEARING-DEPOSITS> 9,082
<FED-FUNDS-SOLD> 152,667
<TRADING-ASSETS> 225,336
<INVESTMENTS-HELD-FOR-SALE> 2,956,234
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 10,434,070
<ALLOWANCE> 166,853
<TOTAL-ASSETS> 15,222,563
<DEPOSITS> 11,490,262
<SHORT-TERM> 714,146
<LIABILITIES-OTHER> 256,565
<LONG-TERM> 1,408,716
0
83,809
<COMMON> 324,637
<OTHER-SE> 944,428
<TOTAL-LIABILITIES-AND-EQUITY> 15,222,563
<INTEREST-LOAN> 899,344
<INTEREST-INVEST> 249,381
<INTEREST-OTHER> 31,884
<INTEREST-TOTAL> 1,180,609
<INTEREST-DEPOSIT> 449,864
<INTEREST-EXPENSE> 574,647
<INTEREST-INCOME-NET> 605,962
<LOAN-LOSSES> 57,395
<SECURITIES-GAINS> 4,081
<EXPENSE-OTHER> 570,634
<INCOME-PRETAX> 204,264
<INCOME-PRE-EXTRAORDINARY> 133,738
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,738
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.92
<YIELD-ACTUAL> 4.41
<LOANS-NON> 63,346
<LOANS-PAST> 732,131
<LOANS-TROUBLED> 2,546
<LOANS-PROBLEM> 11,400
<ALLOWANCE-OPEN> 156,388
<CHARGE-OFFS> 64,089
<RECOVERIES> 12,309
<ALLOWANCE-CLOSE> 166,853
<ALLOWANCE-DOMESTIC> 166,853
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
