<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ________ to ________
Commission File No. 1-10160
-------
UNION PLANTERS CORPORATION
(Exact name of registrant as specified in its charter)
Tennessee 62-0859007
- ------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
Union Planters Administrative Center
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (901) 580-6000
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at April 30, 1999
- ---------------------------------------- -----------------------------
<S> <C>
Common stock $5 par value 142,622,665
</TABLE>
<PAGE> 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheet - March 31, 1999,
March 31, 1998, and December 31, 1998.......................................................................3
b) Consolidated Statement of Earnings -
Three Months Ended March 31, 1999 and 1998..................................................................4
c) Consolidated Statement of Changes in Shareholders' Equity -
Three Months Ended March 31, 1999 ..........................................................................5
d) Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1999 and 1998..................................................................6
e) Notes to Unaudited Consolidated Financial Statements........................................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............................................................14
Item 3. Quantitative and Qualitative Disclosures about
Market Risk................................................................................................30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................................................33
Item 2. Changes in Securities......................................................................................33
Item 3. Defaults Upon Senior Securities............................................................................33
Item 4. Submission of Matters to a Vote of Security Holders........................................................33
Item 5. Other Information..........................................................................................33
Item 6. Exhibits and Reports on Form 8-K...........................................................................33
Signatures...........................................................................................................35
</TABLE>
2
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
----------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash and due from banks ..................................... $ 1,168,722 $ 1,082,930 $ 1,271,614
Interest-bearing deposits at financial institutions ......... 51,652 24,692 47,583
Federal funds sold and securities purchased under agreements
to resell ................................................. 114,790 522,474 94,568
Trading account assets ...................................... 280,689 164,943 275,992
Loans held for resale ....................................... 380,413 259,844 441,214
Available for sale investment securities (Amortized cost:
$8,721,121, $6,608, 426, and $8,208,570, respectively) .... 8,798,432 6,666,235 8,301,703
Loans ....................................................... 20,538,456 20,298,326 19,611,168
Less: Unearned income ..................................... (33,513) (36,714) (34,342)
Allowance for losses on loans ....................... (345,011) (334,143) (321,476)
------------ ------------ ------------
Net loans .............................................. 20,159,932 19,927,469 19,255,350
Premises and equipment, net ................................. 582,973 535,617 553,251
Accrued interest receivable ................................. 290,226 271,452 293,066
FHA/VA claims receivable .................................... 139,411 138,959 126,164
Mortgage servicing rights ................................... 107,639 99,833 101,466
Goodwill and other intangibles .............................. 725,746 220,379 386,994
Other assets ................................................ 868,557 507,344 542,988
------------ ------------ ------------
TOTAL ASSETS ........................................ $ 33,669,182 $ 30,422,171 $ 31,691,953
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing ...................................... $ 4,664,334 $ 3,536,791 $ 4,194,402
Certificates of deposit of $100,000 and over ............. 2,429,551 2,891,047 2,614,694
Other interest-bearing ................................... 19,367,796 16,719,084 18,087,359
------------ ------------ ------------
Total deposits ...................................... 26,461,681 23,146,922 24,896,455
Short-term borrowings ....................................... 2,172,498 1,346,964 1,648,039
Short- and medium-term bank notes ........................... 105,000 135,000 105,000
Federal Home Loan Bank advances ............................. 210,804 1,133,191 279,992
Other long-term debt ........................................ 969,410 1,040,215 1,053,740
Accrued interest, expenses, and taxes ....................... 292,126 278,673 278,237
Other liabilities ........................................... 413,754 421,043 446,412
------------ ------------ ------------
TOTAL LIABILITIES ................................... 30,625,273 27,502,008 28,707,875
------------ ------------ ------------
Commitments and contingent liabilities ...................... -- -- --
Shareholders' equity
Convertible preferred stock ............................... 22,897 36,972 23,353
Common stock, $5 par value; 300,000,000 shares authorized;
142,570,077 issued and outstanding (136,479,980 at March
31, 1998, and 141,924,958 at December 31, 1998) ........ 712,850 682,400 709,625
Additional paid-in capital ................................ 767,396 607,960 691,789
Retained earnings ......................................... 1,507,437 1,573,405 1,516,712
Unearned compensation ..................................... (14,134) (17,145) (14,646)
Accumulated other comprehensive income--unrealized gain on
available for sale securities, net ...................... 47,463 36,571 57,245
------------ ------------ ------------
TOTAL SHAREHOLDERS' EQUITY .......................... 3,043,909 2,920,163 2,984,078
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......... $ 33,669,182 $ 30,422,171 $ 31,691,953
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1999 1998
------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans................................ $ 417,771 $ 463,444
Interest on investment securities
Taxable................................................. 106,580 84,178
Tax-exempt.............................................. 17,460 13,935
Interest on deposits at financial institutions............ 987 508
Interest on federal funds sold and securities purchased
under agreements to resell.............................. 869 6,834
Interest on trading account assets........................ 3,595 3,020
Interest on loans held for resale......................... 7,323 2,331
------------- -------------
Total interest income............................. 554,585 574,250
------------- -------------
INTEREST EXPENSE
Interest on deposits...................................... 213,004 220,251
Interest on short-term borrowings......................... 19,254 17,710
Interest on long-term debt................................ 26,630 32,539
------------- -------------
Total interest expense............................ 258,888 270,500
------------- -------------
NET INTEREST INCOME............................... 295,697 303,750
PROVISION FOR LOSSES ON LOANS............................... 16,279 33,212
------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON
LOANS........................................... 279,418 270,538
------------- -------------
NONINTEREST INCOME
Service charges on deposit accounts....................... 38,867 36,872
Mortgage banking revenue.................................. 27,487 21,645
Bank card income.......................................... 2,960 9,885
Factoring commissions..................................... 7,028 7,304
Trust service income...................................... 6,710 6,281
Profits and commissions from trading activities........... 345 1,848
Investment securities gains............................... 11 5,854
Other income.............................................. 42,846 37,070
------------- -------------
Total noninterest income.......................... 126,254 126,759
------------- -------------
NONINTEREST EXPENSE
Salaries and employee benefits............................ 123,230 113,722
Net occupancy expense..................................... 20,235 18,236
Equipment expense......................................... 19,020 17,040
Goodwill and other intangible amortization................ 12,863 5,853
Other expense............................................. 82,891 82,151
------------- -------------
Total noninterest expense......................... 258,239 237,002
------------- -------------
EARNINGS BEFORE INCOME TAXES...................... 147,433 160,295
Applicable income taxes..................................... 50,083 55,834
------------- -------------
NET EARNINGS...................................... $ 97,350 $ 104,461
============= =============
NET EARNINGS APPLICABLE TO COMMON SHARES.......... $ 96,892 $ 103,828
============= =============
EARNINGS PER COMMON SHARE (NOTE 11)
Basic............................................. $ .68 $ .76
Diluted........................................... .67 .74
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Basic............................................. 142,259 135,932
Diluted........................................... 144,675 141,414
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
CONVERTIBLE 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, 1999... $ 23,353 $ 709,625 $ 691,789 $ 1,516,712 $ (14,646) $ 57,245 $ 2,984,078
Comprehensive income
Net earnings............. -- -- -- 97,350 -- -- 97,350
Other comprehensive
income, net of taxes:
Net change in the
unrealized gain
on available for
sale securities.... -- -- -- -- -- (9,782) (9,782)
------------
Total comprehensive
income -- -- -- -- 87,568
Cash dividends
Common stock, $.50 per
share.................... -- -- -- (71,767) -- -- (71,767)
Preferred stock, $.50 per
share.................... -- -- -- (458) -- -- (458)
Common stock issued under
employee benefit plans,
net of stock exchanged... -- 1,335 8,619 -- 512 -- 10,466
Issuance of common stock
for acquisitions......... -- 7,024 71,340 4,119 -- -- 82,483
Conversion of preferred stock (456) 114 342 -- -- -- --
Conversion of debt of an
acquired entity -- 263 685 -- -- -- 948
Common stock repurchased for
use in business combinations. -- (5,511) (5,379) (38,519) -- -- (49,409)
------------ ------------ ------------ ------------ ------------ ------------ ------------
BALANCE, MARCH 31, 1999.... $ 22,897 $ 712,850 $ 767,396 $ 1,507,437 $ (14,134) $ 47,463 $ 3,043,909
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
TAX
BEFORE-TAX (EXPENSE) NET OF TAX
AMOUNT BENEFIT AMOUNT
------------ ------------ ------------
<S> <C> <C> <C>
DISCLOSURE OF
RECLASSIFICATION AMOUNT:
Net change in the unrealized gains
on available for sale securities
arising during the period............... $ (15,822) $ 6,047 $ (9,775)
Less: reclassification for gains
included in net income.................. 11 (4) 7
------------ ------------ ------------
Net change in the unrealized gain
on available for sale securities......... $ (15,833) $ 6,051 $ (9,782)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings..................................................... $ 97,350 $ 104,461
Reconciliation of net earnings to net cash provided (used) by
operating activities:
Provision for losses on loans, other real estate, and FHA/VA
foreclosure claims........................................... 16,580 34,457
Depreciation and amortization of premises and equipment........ 15,313 13,775
Amortization of goodwill, mortgage servicing rights, and other
intangibles.................................................. 18,721 11,054
Provisions for merger-related expenses......................... -- 110
Net accretion of investment securities......................... 5,456 2,045
Net realized gains on sales of investment securities........... (11) (5,854)
Deferred income tax benefit.................................... (13,353) (5,490)
(Increase) decrease in assets
Trading account assets and loans held for resale........... 61,731 (60,721)
Other assets............................................... (296,967) (53,127)
Increase (decrease) in accrued interest, expenses, taxes, and
other liabilities.............................................. (38,929) 43,012
Other, net..................................................... 4,674 1,645
------------ ------------
Net cash provided (used) by operating activities......... (129,435) 85,367
------------- ------------
INVESTING ACTIVITIES
Net decrease in short-term investments........................... 762,330 4,065
Proceeds from sales of available for sale securities............. 153,330 536,080
Proceeds from maturities, calls, and prepayments of available for
sale securities................................................ 2,091,936 771,883
Purchases of available for sale securities....................... (2,625,936) (1,556,329)
Net decrease in loans............................................ 375,637 306,213
Net cash received from acquisitions of financial institutions.... 21,117 2,591
Purchases of premises and equipment, net......................... (16,706) (16,601)
Other, net....................................................... -- 2,180
------------ ------------
Net cash provided by investing activities................ 761,708 50,082
------------ ------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.............................. (765,592) 58,988
Net increase (decrease) in short-term borrowings................. 314,605 (380,950)
Proceeds from long-term debt, net................................ -- 495,651
Repayment of long-term debt...................................... (155,299) (117,933)
Proceeds from issuance of common stock........................... 9,954 15,597
Purchase and retirement of common stock.......................... (49,409) (38,981)
Cash dividends paid.............................................. (72,231) (57,962)
Other, net....................................................... 29 (27,494)
------------ ------------
Net cash used by financing activities.................... (717,943) (53,084)
------------- ------------
Net increase (decrease) in cash and cash equivalents............. (85,670) 82,365
Cash and cash equivalents at the beginning of the period......... 1,366,182 1,523,039
------------ ------------
Cash and cash equivalents at the end of the period............... $ 1,280,512 $ 1,605,404
============ ============
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest....................................................... $ 265,786 $ 264,648
Income taxes................................................... 7,371 8,307
Unrealized gain on available for sale securities................. 77,311 57,809
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
UNION PLANTERS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. PRINCIPLES OF ACCOUNTING
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles. The foregoing financial
statements are unaudited; however, in the opinion of management, all
adjustments, including normal recurring adjustments, necessary for a fair
presentation of the consolidated financial statements have been included.
The accounting policies followed by Union Planters Corporation and its
subsidiaries (collectively, the Corporation) for interim financial reporting are
consistent with the accounting policies followed for annual financial reporting
except as noted below. The notes included herein should be read in conjunction
with the notes to the consolidated financial statements included in the
Corporation's 1998 Annual Report to Shareholders, (1998 Annual Report), a copy
of which is Exhibit 13 to the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1998 (1998 10-K). In 1999, the Corporation has changed
the presentation of mortgage servicing income and certain other mortgage banking
revenues. A new line, mortgage banking revenues, has been added to the statement
of earnings and includes mortgage servicing income, gain on sale of residential
mortgages, mortgage origination fees, sale of servicing, and other miscellaneous
fees of the mortgage banking operations. Prior year amounts for mortgage banking
revenues and certain other 1998 amounts have been reclassified to be consistent
with the 1999 financial reporting presentation.
NOTE 2. ACQUISITIONS
CONSUMMATED ACQUISITIONS
On January 31, 1999, the Corporation exchanged 1,404,816 shares of its
common stock for all of the outstanding shares of First Mutual Bancorp. (First
Mutual), the parent of First Mutual Bank, S.B., in Decatur, Illinois, in a
transaction accounted for as a purchase. The Corporation repurchased, in the
open market, a majority of the common stock issued to facilitate the purchase.
At the date of acquisition, First Mutual had total assets of approximately $403
million, total loans of $285 million, and total deposits of $315 million.
Goodwill and other intangibles resulting from the acquisition totaled $37
million.
On February 1, 1999, the Corporation consummated the acquisition of First
& Farmers Bancshares, Inc., in Somerset, Kentucky, the parent of First & Farmers
Bank of Somerset in Somerset, Kentucky, and Bank of Cumberland in Burkesville,
Kentucky. Cash in the amount of $76 million was paid for the acquisition which
was accounted for as a purchase. At the date of acquisition, First & Farmers
Bancshares, Inc. had total assets of $334 million, total loans of $185 million,
and total deposits of $318 million. Goodwill and other intangibles resulting
from the acquisition totaled $44 million.
On March 5, 1999, the Corporation purchased 56 branches of First Chicago
NBD Corporation in Indiana. In the transaction, the Corporation purchased $855
million of loans, acquired certain branch locations and equipment totaling $16
million, and assumed $1.7 billion of deposit liabilities. The premium paid
(goodwill and other intangibles) for the purchase was approximately $274
million.
Because the above purchase acquisitions, in the aggregate, are
insignificant to the consolidated results of the Corporation, pro forma
information has been omitted. Additionally, pro forma information for the branch
purchase is not available due to lack of information available for operation of
the branches on a historical basis. Reference is made to Note 2 of the
consolidated financial statements on pages 45 through 47 of the 1998 Annual
Report for information regarding acquisitions completed in 1998.
PENDING ACQUISITION
On February 22, 1999, the Corporation and Republic Banking Corp. of
Florida (Nasdaq:RBCF) (Republic), the parent company of Republic National Bank
of Miami, Miami, Florida, entered into an agreement to merge. Union Planters
Bank, National Association (the Bank or UPB) will acquire Republic National
Bank's 25 Miami-Dade and two Broward County banking centers and approximately
$1.6 billion in assets, $1.0 billion in loans, and $1.3 billion in total
deposits. The purchase price is approximately $412 million in cash and it is
expected the acquisition will close in mid-third quarter 1999. The transaction
is subject to regulatory approval and approval of Republic's shareholders.
7
<PAGE> 8
NOTE 3. LOANS
Loans are summarized by type as follows:
<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Commercial, financial, and agricultural.... $ 4,147,118 $ 3,361,118 $ 3,543,925
Foreign.................................... 183,318 180,804 197,120
Accounts receivable - factoring............ 620,472 572,585 615,952
Real estate - construction................. 1,258,440 1,126,347 1,195,779
Real estate - mortgage
Secured by 1-4 family residential........ 5,755,943 5,764,528 5,647,520
FHA/VA government-insured/guaranteed..... 617,854 1,228,769 759,911
Other mortgage........................... 4,590,580 4,339,724 4,386,182
Home equity................................ 528,915 460,657 482,665
Consumer
Credit cards and related plans........... 82,698 573,437 96,091
Other consumer........................... 2,692,095 2,622,388 2,622,402
Direct lease financing..................... 61,023 67,969 63,621
------------ ------------ ------------
TOTAL LOANS...................... $ 20,538,456 $ 20,298,326 $ 19,611,168
============ ============ ============
</TABLE>
Nonperforming loans are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------ ------------
1999 1998
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
NONACCRUAL LOANS
Domestic................................. $ 170,785 $ 150,378
Foreign.................................. -- --
RESTRUCTURED LOANS......................... 4,195 5,612
------------ ------------
TOTAL NONPERFORMING LOANS........ $ 174,980 $ 155,990
============ ============
FHA/VA GOVERNMENT-INSURED/GUARANTEED LOANS
ON NONACCRUAL STATUS..................... $ 8,369 $ 9,232
============ ============
</TABLE>
NOTE 4. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans for the three months
ended March 31, 1999 are summarized as follows (Dollars in thousands):
<TABLE>
<S> <C>
BALANCE, JANUARY 1, 1999................... $ 321,476
Provision for losses on loans.............. 16,279
Recoveries of loans previously charged off. 11,452
Loans charged off.......................... (25,656)
Increase due to acquisitions............... 21,460
------------
BALANCE, MARCH 31, 1999.................... $ 345,011
============
</TABLE>
As of March 31, 1999, the Corporation had an impaired loan totaling $11.9
million which had a valuation reserve recorded in the fourth quarter of 1998 of
$7 million.
8
<PAGE> 9
NOTE 5. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized
as follows:
<TABLE>
<CAPTION>
MARCH 31, 1999
------------------------------------------------------------
UNREALIZED
AMORTIZED ----------------------------
COST GAINS LOSSES FAIR VALUE
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE SECURITIES
U.S. Government obligations
U.S. Treasury.......................... $ 352,649 $ 3,360 $ 298 $ 355,711
U.S. Government agencies
Collateralized mortgage obligations.. 3,264,389 10,356 8,868 3,265,877
Mortgage-backed...................... 724,128 11,463 1,263 734,328
Other................................ 1,330,365 11,461 2,816 1,339,010
------------ ------------ ------------ ------------
Total U.S. Government
obligations 5,671,531 36,640 13,245 5,694,926
Obligations of states and political 1,352,957 48,647 2,404 1,399,200
subdivisions...........................
Other stocks and securities.............. 1,696,633 13,437 5,764 1,704,306
------------ ------------ ------------ ------------
TOTAL AVAILABLE FOR SALE
SECURITIES..................... $ 8,721,121 $ 98,724 $ 21,413 $ 8,798,432
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------------------------
UNREALIZED
AMORTIZED ----------------------------
COST GAINS LOSSES FAIR VALUE
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE SECURITIES
U.S. Government obligations
U.S. Treasury.......................... $ 390,538 $ 5,809 $ 60 $ 396,287
U.S. Government agencies
Collateralized mortgage obligations.. 2,581,446 12,908 6,051 2,588,303
Mortgage-backed...................... 733,224 13,970 819 746,375
Other................................ 1,491,394 17,695 975 1,508,114
------------ ------------ ------------ ------------
Total U.S. Government
obligations.................. 5,196,602 50,382 7,905 5,239,079
Obligations of states and political
subdivisions............................. 1,293,257 53,558 1,149 1,345,666
Other stocks and securities.............. 1,718,711 4,168 5,921 1,716,958
------------ ------------ ------------ ------------
TOTAL AVAILABLE FOR SALE
SECURITIES..................... $ 8,208,570 $ 108,108 $ 14,975 $ 8,301,703
============ ============ ============ ============
</TABLE>
Investment securities having a fair value of approximately $3.3 billion
and $3.1 billion at March 31, 1999 and December 31, 1998, respectively, were
pledged to secure public and trust funds on deposit, securities sold under
agreements to repurchase, and Federal Home Loan Bank advances.
The following table presents the gross realized gains and losses on
available for sale investment securities for the three months ended March 31,
1999 and 1998 (Dollars in thousands).
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Realized gains......... $ 67 $ 5,925
Realized losses........ 56 71
</TABLE>
9
<PAGE> 10
NOTE 6. OTHER NONINTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
1999 1998
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OTHER NONINTEREST INCOME
Gain on sale of FHA/VA loans....................... $ 5,317 $ --
Customer ATM usage fees............................ 5,192 4,169
Brokerage fee income............................... 4,728 4,237
Annuity sales income............................... 4,268 1,205
Insurance commissions.............................. 4,011 3,344
Gain on sale of credit card portfolio.............. 2,294 --
Gain on sales of branches/deposits and other
selected assets.................................. 1,531 1,026
Letters of credit fees............................. 1,358 1,337
Earnings (loss) of unconsolidated subsidiaries..... (1) 1,005
Other income....................................... 14,148 20,747
------------ ------------
TOTAL OTHER NONINTEREST INCOME............. $ 42,846 $ 37,070
============ ============
OTHER NONINTEREST EXPENSE
Communications..................................... $ 8,058 $ 6,008
Postage and carrier................................ 7,285 6,765
Other contracted services.......................... 7,116 6,108
Stationery and supplies............................ 6,833 7,107
Advertising and promotion.......................... 6,691 5,003
Amortization of mortgage servicing rights.......... 5,857 4,292
Other personnel services........................... 4,368 3,054
Legal fees......................................... 3,313 2,307
Merchant credit card charges....................... 3,150 2,725
Travel............................................. 2,657 2,115
Miscellaneous charge-offs.......................... 2,386 2,711
Consultant fees.................................... 2,034 1,686
Taxes other than income............................ 1,730 2,996
FDIC insurance..................................... 1,510 1,191
Other real estate expense.......................... 1,422 2,718
Accounting and audit fees.......................... 1,418 1,165
Federal Reserve fees............................... 1,320 964
Dues, subscriptions, and contributions............. 1,308 2,087
Brokerage and clearing fees on trading activities.. 1,076 1,491
Insurance.......................................... 536 1,027
Provision for losses on FHA/VA foreclosure claims.. 250 326
Merger-related expenses............................ -- 4,466
Other expense...................................... 12,573 13,839
------------ ------------
TOTAL OTHER NONINTEREST EXPENSE............ $ 82,891 $ 82,151
============ ============
</TABLE>
NOTE 7. INCOME TAXES
Applicable income taxes for the three months ended March 31, 1999, were
$50.1 million, resulting in an effective tax rate of 34.0%. Applicable income
taxes for the same period in 1998 were $55.8 million, resulting in an effective
tax rate of 34.8%. The variances from federal statutory rates (35% for both
years) are attributable to the level of tax-exempt income from investment
securities and loans and the effect of state income taxes. The tax expense
applicable to investment securities gains for the three months ended March 31,
1999 and 1998 were $4,000 and $2.3 million, respectively.
At March 31, 1999, the Corporation had a net deferred tax asset of $181.3
million compared to $160.6 million at December 31, 1998. The net deferred tax
asset includes a deferred liability related to the net unrealized gain on
available for sale securities of $29.8 million and $35.9 million at those dates,
respectively. Management continues to believe that, based upon historical
earnings, normal operations will continue to generate sufficient taxable income
to realize the portion of the deferred tax asset that is dependent upon the
generation of future taxable income.
10
<PAGE> 11
NOTE 8. BORROWINGS
SHORT-TERM BORROWINGS
Short-term borrowings include federal funds purchased and securities sold
under agreements to repurchase, Federal Home Loan Bank (FHLB) advances, and
other short-term borrowings. Federal funds purchased arise from the
Corporation's market activity with its correspondent banks and borrowing to meet
liquidity needs and generally mature in one business day. Securities sold under
agreements to repurchase are secured by U. S. Government and agency securities.
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balances at quarter end:
Federal funds purchased and securities sold under agreements to
repurchase....................................................... $ 2,168,092 $ 1,277,962 $ 1,647,249
FHLB advances...................................................... 2,000 45,077 --
Other short-term borrowings........................................ 2,406 23,925 790
------------ ------------ ------------
Total short-term borrowings.............................. $ 2,172,498 $ 1,346,964 $ 1,648,039
============ ============ ============
Federal funds purchased and securities sold under agreements to
repurchase Daily average balance................................. $ 1,754,258 $ 1,296,375 $ 1,454,025
Weighted average interest rate................................... 4.42% 5.12% 5.17%
</TABLE>
SHORT- AND MEDIUM-TERM SENIOR NOTES
The Corporation's principal subsidiary, UPB, has a $5 billion senior and
subordinated bank note program to supplement UPB's funding sources. Under the
program UPB may from time to time issue senior bank notes having maturities
ranging from 30 days to one year from their respective issue dates (Short-Term
Senior Notes), senior bank notes having maturities of more than one year to 30
years from their respective dates of issue (Medium-Term Senior Notes), and
subordinated bank notes with maturities from 5 years to 30 years from their
respective dates of issue (Subordinated Notes). At March 31, 1999 and December
31, 1998, UPB had no Short-Term Senior Notes or Subordinated Notes outstanding
under this program. A summary of the Medium-Term Senior Notes follows.
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
--------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balances at period end... $ 105,000 $ 105,000
Variable-rate notes...... -- --
Fixed-rate notes......... 105,000 105,000
Range of maturities...... 10/99 - 10/01 10/99 - 10/01
</TABLE>
FEDERAL HOME LOAN BANK 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 March 31, 1999, the
Corporation had an adequate amount of mortgage-backed securities and loans to
satisfy the collateral requirements. A summary of the advances is as follows.
<TABLE>
<CAPTION>
MARCH 31,
-------------------------- DECEMBER 31,
1999 1998 1998
----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at period end.... $ 210,804 $ 1,133,191 $ 279,992
Range of interest rates.. 3.25 - 6.85% 3.25 - 8.95% 3.25% - 8.36%
Range of maturities...... 2000 - 2015 1998 - 2017 1999 - 2015
</TABLE>
11
<PAGE> 12
OTHER LONG-TERM DEBT
The Corporation's other long-term debt is summarized as follows. Reference
is made to Note 9 to the consolidated financial statements in the 1998 Annual
Report for additional information regarding these borrowings.
<TABLE>
<CAPTION>
MARCH 31,
--------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Corporation-Obligated Mandatorily Redeemable Capital
Pass-through Securities of Subsidiary Trust holding
solely a Corporation-Guaranteed Related Subordinated
Note (Trust Preferred Securities)........................... $ 199,018 $ 198,982 $ 199,009
Variable-rate asset-based certificates...................... 275,000 275,000 275,000
6 3/4% Subordinated Notes due 2005.......................... 99,610 99,551 99,595
6.25% Subordinated Notes due 2003........................... 74,761 74,709 74,748
6.5% Putable/Callable Subordinated Notes due 2018........... 301,670 301,856 301,716
Revolving loan.............................................. -- 55,300 74,500
Subordinated notes of acquired entities due 1998 and 1999... 3,947 21,701 4,896
Other long-term debt........................................ 15,404 13,116 24,276
------------ ------------ ------------
TOTAL OTHER LONG-TERM DEBT........................ $ 969,410 $ 1,040,215 $ 1,053,740
============ ============ ============
</TABLE>
NOTE 9. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Corporation's outstanding preferred stock, all of which is convertible
into shares of the Corporation's common stock, is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Preferred stock, without par value, 10,000,000 shares authorized
Series F Preferred Stock
300,000 shares authorized, none issued (1)........................ $ -- $ N/A $ N/A
Series E, 8% Cumulative, Convertible,
Preferred Stock (stated at liquidation value of $25 per share),
915,866 shares issued and outstanding (1,478,888 at March 31,
1998 and 934,128 at December 31, 1998)........................... 22,897 36,972 23,353
------------ ------------ ------------
TOTAL PREFERRED STOCK....................................... $ 22,897 $ 36,972 $ 23,353
============ ============ ============
</TABLE>
- --------------------
(1) At March 31, 1998 and December 31, 1998, the Corporation had authorized
but unissued shares of Series A Preferred Stock related to a Shareholder
Rights Plan. That plan expired January 19, 1999 and was replaced by a new
Shareholder Rights Plan, which relates to a new Series F Preferred Stock.
See Note 10 to the consolidated financial statements in the 1998 Annual
Report.
12
<PAGE> 13
NOTE 10. EARNINGS PER SHARE
The calculation of net earnings per share is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
1999 1998
------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
BASIC
Net earnings............................. $ 97,350 $ 104,461
Less preferred dividends............... 458 633
------------- -------------
Net earnings applicable to common shares. $ 96,892 $ 103,828
============= =============
Average common shares outstanding........ 142,258,654 135,932,176
============= =============
Net earnings per common share-- basic.... $ .68 $ .76
============= =============
DILUTED
Net earnings............................. $ 97,350 $ 104,461
Elimination of interest on convertible 83 398
debt ------------- -------------
Net earnings applicable to common shares. $ 97,433 $ 104,859
============= =============
Average common shares outstanding........ 142,258,654 135,932,176
Stock option adjustment.................. 1,008,992 1,834,525
Preferred stock adjustment............... 1,159,488 2,337,596
Effect of other dilutive securities...... 247,731 1,309,831
------------- -------------
Average common shares outstanding........ 144,674,865 141,414,128
============= =============
Net earnings per common share -- diluted.. $ .67 $ .74
============= =============
</TABLE>
NOTE 11. LINES OF BUSINESS REPORTING
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------------
OTHER
OPERATING PARENT CONSOLIDATED
BANKING UNITS COMPANY TOTAL
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net interest income............. $ 278,477 $ 19,346 $ (2,126) $ 295,697
Provision for losses on loans... (14,999) (1,280) -- (16,279)
Noninterest income.............. 63,516 53,312 173 117,001
Noninterest expense............. (211,533) (43,941) (2,765) (258,239)
Other significant items, net.... 2,353 6,860 40 9,253
------------ ------------ ------------ ------------
Earnings before taxes........... $ 117,814 $ 34,297 $ (4,678) $ 147,433
============ ============ ============ ============
Average assets.................. $ 29,211,564 $ 2,894,861 $ 243,605 $ 32,350,030
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------------------------
OTHER
OPERATING PARENT CONSOLIDATED
BANKING UNITS COMPANY TOTAL
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net interest income............. $ 275,460 $ 27,530 $ 760 $ 303,750
Provision for losses on loans... (21,162) (12,050) -- (33,212)
Noninterest income.............. 72,671 40,426 1,382 114,479
Noninterest expense............. (197,608) (33,791) (1,265) (232,664)
Merger-related and other
significant items............. 8,358 -- (416) 7,942
------------ ------------ ------------ ------------
Earnings before taxes........... $ 137,719 $ 22,115 $ 461 $ 160,295
============ ============ ============ ============
Average assets.................. $ 26,456,964 $ 3,209,429 $ 274,072 $ 29,940,465
============ ============ ============ ============
</TABLE>
- --------------------
(1) Parent company noninterest income and earnings before taxes are net of the
intercompany dividend eliminations of $84.6 million and $41.7 million for
the three months ended March 31, 1999 and 1998, respectively.
13
<PAGE> 14
NOTE 12. CONTINGENT LIABILITIES
The Corporation and/or various subsidiaries are parties to certain pending
or threatened civil actions which are described in Item 3, Part I of the
Corporation's 1998 10-K and in Note 20 to the Corporation's consolidated
financial statements on page 67 of the 1998 Annual Report. Various other legal
proceedings pending against the Corporation and/or its subsidiaries have arisen
in the ordinary course of business.
Based upon present information, including evaluations of certain actions
by outside counsel, management believes that neither the Corporation's financial
position, results of operations, nor liquidity will be materially affected by
the ultimate resolution of pending or threatened legal proceedings. There were
no significant developments during the first quarter of 1999 in any of the
pending or threatened actions that affected such opinion.
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following provides a narrative discussion and analysis of significant
changes in the Corporation's results of operations and financial condition. This
discussion should be read in conjunction with the consolidated financial
statements and related financial analysis set forth in the Corporation's 1998
Annual Report, the interim unaudited consolidated financial statements and notes
for the three months ended March 31, 1999 included in Part I hereof, and the
supplemental financial data included in this discussion.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION
This discussion contains certain forward-looking statements (as defined in
the Private Securities Litigation Reform Act of 1995). Such statements are based
on management's expectations as well as certain assumptions made by, and
information available to, management. Specifically, this discussion contains
forward-looking statements with respect to the following items:
- effects of projected changes in interest rates
- effects of changes in general economic conditions
- the adequacy of the allowance for losses on loans
- the effect of legal proceedings on the Corporation's financial
condition, results of operations, and liquidity
- estimated charges related to pending acquisitions and estimated cost
savings related to the integration of completed acquisitions and the
consolidation of banking subsidiaries
- Year 2000 issues related to the Corporation and third parties
When used in this discussion, the words "anticipate," "project," "expect,"
"believe," "should" and similar expressions are intended to identify
forward-looking statements.
These forward-looking statements involve significant risks and
uncertainties including changes in general economic and financial market
conditions, changes in banking laws and regulations, the Corporation's ability
to execute its business plans, including its plan to address the Year 2000
issue, and the ability of third parties to address Year 2000 issues. Although
the Corporation believes that the expectations reflected in the forward-looking
statements are reasonable, actual results could differ materially.
14
<PAGE> 15
SELECTED FINANCIAL DATA
The following table presents selected financial highlights for the
three-month periods ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------- PERCENTAGE
1999 1998 CHANGE
------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Net earnings........................... $ 97,350 $ 104,461 (7)%
Per share
Basic.............................. .68 .76 (11)
Diluted............................ .67 .74 (9)
Return on average assets............. 1.22% 1.41%
Return on average common equity...... 13.39 14.87
Cash earnings.......................... $ 107,914 $ 110,003 (2)
Per share
Basic.............................. .76 .80 (5)
Diluted............................ .75 .78 (4)
Return on average tangible assets.... 1.37% 1.50%
Return on average tangible common equity 17.84 16.99
Dividends per common share............. $ .50 $ .50 --
Net interest margin (FTE).............. 4.22% 4.59%
Interest rate spread (FTE)............. 3.50 3.79
Expense ratio.......................... 1.61 1.54
Efficiency ratio....................... 58.13 53.52
Book value per common share............ $ 21.19 $ 21.12 --
Leverage ratio......................... 7.83% 9.71%
Common share prices
High closing price................... $ 48.75 $ 67.31
Low closing price.................... 43.00 58.38
Closing price at quarter end......... 43.94 62.19
</TABLE>
- --------------------
Cash earnings = Net earnings adjusted for the after-tax impact of goodwill and
other intangibles amortization.
Net interest margin = Net interest income (FTE) as a percentage of earning
assets
Interest rate spread = Difference in the FTE yield on average earning assets and
the rate on average interest-bearing liabilities
Expense ratio = Operating net noninterest expense [noninterest expense minus
noninterest income, excluding significant nonrecurring revenues/expenses,
investment securities gains (losses) and goodwill and other intangibles
amortization] divided by average assets
Efficiency ratio = Operating noninterest expense (excluding significant
nonrecurring expenses and goodwill and other intangibles amortization) divided
by net interest income (FTE) plus noninterest income, excluding significant
nonrecurring revenues and investment securities gains (losses)
FTE = Fully taxable-equivalent basis
15
<PAGE> 16
OPERATING RESULTS -- THREE MONTHS ENDED MARCH 31, 1999
The following table presents a summary of the Corporation's operating
results for the three months ended March 31, 1999 and 1998 identifying
significant items impacting the results for the periods shown.
UNION PLANTERS CORPORATION
SUMMARY OF CONSOLIDATED RESULTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Interest income........................................... $ 554,585 $ 574,250
Interest expense.......................................... (258,888) (270,500)
------------ ------------
NET INTEREST INCOME.................................. 295,697 303,750
PROVISION FOR LOSSES ON LOANS............................. (16,279) (33,212)
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS 279,418 270,538
NONINTEREST INCOME
Service charges on deposit accounts..................... 38,867 36,872
Mortgage banking revenues............................... 27,487 21,645
Bank card income........................................ 2,960 9,885
Factoring commissions................................... 7,028 7,304
Trust service income.................................... 6,710 6,281
Profits and commissions from trading activities......... 345 1,848
Other income............................................ 33,604 30,644
------------ ------------
Total noninterest income............................. 117,001 114,479
------------ ------------
NONINTEREST EXPENSE
Salaries and employee benefits.......................... 123,230 113,722
Net occupancy expense................................... 20,235 18,236
Equipment expense....................................... 19,020 17,040
Goodwill and other intangibles amortization............. 12,863 5,853
Other expense........................................... 82,891 77,813
------------ ------------
Total noninterest expense............................ 258,239 232,664
------------ ------------
EARNINGS BEFORE MERGER-RELATED CHARGES, OTHER SIGNIFICANT ITEMS,
AND INCOME TAXES 138,180 152,353
MERGER-RELATED CHARGES AND OTHER SIGNIFICANT ITEMS
Gain on sale of the credit card portfolio............... 2,394 --
Gain on securitization and sale of FHA/VA loans......... 5,317 --
Net gain on sales of branches and other selected assets. 1,531 6,426
Investment securities gains............................. 11 5,854
Merger-related expenses................................. -- (4,466)
Other, net.............................................. -- 128
------------ ------------
EARNINGS BEFORE INCOME TAXES......................... 147,433 160,295
Applicable income taxes................................... (50,083) (55,834)
------------ ------------
NET EARNINGS......................................... $ 97,350 $ 104,461
============ ============
NET EARNINGS.............................................. $ 97,350 $ 104,461
MERGER-RELATED CHARGES AND OTHER SIGNIFICANT ITEMS, NET OF TAXES (5,654) (3,131)
GOODWILL AND OTHER INTANGIBLES AMORTIZATION, NET OF TAXES. 10,564 5,542
------------ ------------
EARNINGS BEFORE MERGER-RELATED CHARGES, OTHER SIGNIFICANT ITEMS,
GOODWILL AND OTHER INTANGIBLES AMORTIZATION, NET OF TAXES $ 102,260 $ 106,872
============ ============
</TABLE>
16
<PAGE> 17
The table which follows presents the contributions to diluted earnings per
common share. A discussion of the operating results follows this table.
UNION PLANTERS CORPORATION
CONTRIBUTIONS TO DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, EPS
-------------------------- INCREASE
1999 1998 (DECREASE)
----------- ----------- -----------
<S> <C> <C> <C>
Net interest income-FTE $ 2.11 $ 2.21 $ (.10)
Provision for losses on loans........................ (.11) (.24) .13
----------- ----------- -----------
Net interest income after provision for losses on
loans-FTE............................................ 2.00 1.97 .03
----------- ----------- -----------
Noninterest income
Service charges on deposit accounts................ .27 .26 .01
Mortgage banking revenue........................... .19 .15 .04
Bank card income................................... .02 .07 (.05)
Factoring commissions.............................. .05 .05 --
Trust service income............................... .05 .05 --
Profits and commissions from trading activities.... -- .01 (.01)
Investment securities gains (losses)............... -- .04 (.04)
Other income....................................... .28 .27 .01
----------- ----------- -----------
TOTAL NONINTEREST INCOME................... .86 .90 (.04)
----------- ----------- -----------
Noninterest expense
Salaries and employee benefits..................... .85 .80 (.05)
Net occupancy expense.............................. .14 .13 (.01)
Equipment expense.................................. .13 .12 (.01)
Goodwill and other intangible amortization......... .09 .04 (.05)
Other expense...................................... .57 .59 .02
----------- ----------- -----------
TOTAL NONINTEREST EXPENSE.................. 1.78 1.68 (.10)
----------- ----------- -----------
Earnings before income taxes-FTE................... 1.08 1.19 (.11)
Applicable income taxes-FTE.......................... .41 .45 .04
----------- ----------- -----------
Net earnings....................................... .67 .74 (.07)
Less preferred stock dividends....................... -- -- --
----------- ----------- -----------
DILUTED EARNINGS PER COMMON SHARE.......... $ .67 $ .74 $ (.07)
=========== =========== ===========
Change in net earnings applicable to diluted earnings
per share using previous year average shares
outstanding........................................ $ (.05)
Change in average shares outstanding................. (.02)
------------
Change in net earnings............................... $ (.07)
============
Average diluted shares (in thousands) ............... 144,675 141,414
=========== ===========
</TABLE>
- --------------------
FTE = Fully taxable-equivalent basis
17
<PAGE> 18
ACQUISITIONS
The following tables present the estimated impact (as of March 31, 1999
and for the three months then ended compared to the same periods in 1998) on the
balance sheet and statement of earnings of acquisitions accounted for as
purchases, which were completed after March 31, 1998 and in the first quarter of
1999. The impact of certain acquisitions is estimated because the entities were
merged immediately into existing operations of the Corporation.
<TABLE>
<CAPTION>
BALANCE AT DATE OF ACQUISITION
------------------------------------------------------------
INDIANA FLORIDA
BRANCH BRANCH OTHER
PURCHASE PURCHASE ACQUISITIONS TOTAL
------------ ------------ ------------ -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Cash and due from banks...... $ 22 $ 1,272 $ 31 $ 1,325
Interest-bearing deposits at
financial institutions..... 745 -- 46 791
Available for sale securities -- -- 262 262
Loans........................ 855 2 1,022 1,879
Allowance for losses on loans (15) -- (18) (33)
Premises and equipment, net.. 16 5 19 40
Goodwill and other intangibles 274 110 128 512
Other assets................. 7 -- 28 35
------------ ------------ ------------ ------------
Total assets....... $ 1,904 $ 1,389 $ 1,518 $ 4,811
============ ============ ============ ============
Total deposits............... $ 1,698 $ 1,383 $ 1,259 $ 4,340
Short-term borrowings........ 198 -- 38 236
Long-term debt............... -- -- 20 20
Other liabilities............ 8 6 22 36
------------ ------------ ------------ ------------
Total liabilities.. $ 1,904 $ 1,389 $ 1,339 $ 4,632
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NET IMPACT OF ACQUISITIONS
THREE MONTHS ENDED
MARCH 31, 1999 VERSUS 1998
--------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Net interest income............. $ 15,935
Provision for losses on loans... (102)
Noninterest income.............. 2,825
Noninterest expense............. (19,068)
------------
Earnings before taxes........... $ (410)
============
</TABLE>
FIRST QUARTER EARNINGS OVERVIEW
For the first quarter of 1999, the Corporation reported earnings of $97.4
million, or $.67 per diluted common share. This compares to net earnings for the
same period in 1998 of $104.5 million, or $.74 per diluted common share. Cash
earnings for the first quarter of 1999 were $107.9 million, or $.75 per diluted
common share compared to $110.0, or $.78 per diluted common share for the same
period in 1998. The cash earnings resulted in an annualized return on average
tangible assets of 1.37% and an annualized return on average tangible common
equity of 17.84% for the first quarter of 1999 which compares to 1.50% and
16.99%, respectively, for the same period in 1998.
The decrease in net earnings in 1999 is attributable primarily to a
decline in net interest income and higher noninterest expenses, goodwill and
other intangibles amortization and noninterest expenses related to acquired
entities accounted for as purchase acquisitions. Offsetting these items was a
decrease in the provision for losses on loans. The following is a more complete
discussion and analysis of the first quarter of 1999 operating results compared
to the same period in 1998.
18
<PAGE> 19
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income (FTE) for the first quarter of 1999 was $305.1 million
which compares to $312.0 million for the first quarter of 1998 and $306.7
million for the fourth quarter of 1998. The 2% decline in net interest income
between the first quarter of 1999 and 1998 resulted primarily from a decrease in
yields on earning assets partially offset by a corresponding decrease in the
rates paid on interest-bearing liabilities. Reference is made to the
Corporation's average balance sheet and analysis of volume and rate changes
which follow this discussion for additional information regarding the changes in
net interest income.
The net interest margin for the first quarter of 1999 was 4.22% which
compares to 4.59% and 4.24%, respectively, for the first and fourth quarters of
1998. The interest-rate spread decreased to 3.50% for the first quarter of 1999
from 3.79% for the same period in 1998 and increased compared to 3.46% for the
fourth quarter of 1998.
Net interest income has declined over the last two years. The decline is
due to the following factors:
- Over this period lower mortgage rates have resulted in a high level
of refinancing activity by borrowers. This has resulted in
prepayments on mortgage-backed investments and single family
mortgage loans, approximately 39% of earning assets at March 31,
1999. The prepayments have forced the Corporation to reinvest the
funds at lower interest rates.
- The sale of the credit card portfolio (approximately $440 million of
loans in the fourth quarter of 1998 and approximately $20 million of
loans in the first quarter of 1999), a portfolio yielding
approximately 12%, lowered the overall yield on earnings assets.
- The securitization and sale of FHA/VA loans (approximately $132
million of loans with a weighted average yield of approximately 9.7%
in the first quarter of 1999 and approximately $381 million of loans
with a weighted average yield of approximately 9.9% in the second
quarter of 1998) has lowered the overall yield on earning assets.
- The investment of funds received in the Florida and Indiana branch
purchases has been invested primarily in investment securities, a
lower yielding investment alternative than loans.
- Net interest income was impacted by lower net interest margins
related to acquired banks.
Emphasis is being placed on reducing high cost borrowings of acquired
entities to improve their margins. Additionally, standard pricing of basic
transaction accounts and standard terms on other depository products currently
are being implemented which should produce improvements to the net interest
margin. Over the longer term, more guidance and day-to-day discipline in pricing
both assets and liabilities should also produce improvements in the margin.
Growth of loans is being emphasized and should produce improvements in the
margin since the growth would be funded by lower yielding investment securities.
The Corporation's current loan to deposit ratio at 77% provides capacity for
growth.
INTEREST INCOME
The following table presents a breakdown of average earning assets for the
first quarter of 1999 and the first and fourth quarters of 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------
MARCH 31,
---------------------- DECEMBER 31,
1999 1998 1998
--------- --------- ------------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C>
Average earning assets $ 29.3 $ 27.6 $ 28.7
Comprised of:
Loans......................................... 70% 75% 70%
Investment securities......................... 29 22 28
Other earning assets ......................... 1 3 2
- --------------------
Fully taxable-equivalent yield on average earning
assets............................................ 7.80% 8.56% 8.05%
</TABLE>
19
<PAGE> 20
Interest income (FTE) decreased $18.4 million for the first quarter of
1999 compared to the same period in 1998. The decrease is attributable primarily
to a decrease in the yield on average earning assets from 8.56% for the first
quarter of 1998 to 7.80% for the first quarter of 1999, which equated to a $46.0
million decrease in interest income. The lower yield is attributable to the
factors discussed above. This decrease was partially offset by an increase in
average earning assets, which increased interest income, approximately $27.6
million. Compared to the fourth quarter of 1998, interest income decreased
approximately $24.5 million due to a decline in the average yield on average
earning assets. This decrease was partially offset by a $6.0 million increase
due to growth of average earnings assets.
INTEREST EXPENSE
The following table presents a breakdown of average interest-bearing
liabilities for the first quarter of 1999 and the first and fourth quarters of
1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
--------------------------------------------
MARCH 31,
-------------------------- DECEMBER 31,
1999 1998 1998
---------- ---------- ------------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C>
Average interest-bearing liabilities $ 24.4 $ 23.0 $ 23.8
Comprised of:
Deposits...................................... 86% 85% 87%
Short-term borrowings......................... 7 6 6
FHLB advances and long-term debt.............. 7 9 7
- --------------------
Rate paid on average interest-bearing liabilities. 4.30% 4.77% 4.59%
</TABLE>
Interest expense decreased $11.6 million in the first quarter of 1999
compared to the same period in 1998. The decrease is due primarily to a decrease
in the rates paid on average interest-bearing liabilities which accounted for
approximately $22.8 million of the decrease. The average rate paid was 4.30% for
the first quarter of 1999 compared to 4.77% for the same period in 1998. This
decrease was partially offset by a $1.4 billion increase in average
interest-bearing liabilities, primarily due to the Florida Branch Purchase in
the third quarter of 1998, which increased interest expense approximately $11.2
million. The Indiana Branch Purchase completed on March 5, 1999 did not have as
significant an impact (average impact was approximately $418 million for the
quarter). Compared to the fourth quarter of 1998, interest expense decreased
$16.9 million. A decrease in the average rate paid on average interest-bearing
liabilities accounted for $19.9 million of the decrease in interest expense and
was partially offset by an approximate $3.0 million increase due to an increase
in average interest-bearing liabilities, primarily related to acquisitions.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans for the first quarter of 1999 was $16.3
million, or .33% of average loans on an annualized basis, compared to $33.2
million, or .70% of average loans, for the same period in 1998. The decrease in
the provision for losses on loans for the first quarter of 1999 was due
primarily to the sale of substantially all of the credit card portfolio, which
resulted in a decline in the provision of approximately $10.5 million. The
remaining decrease was primarily due to lower provisions for losses on loans
related to entities acquired in 1998. Reference is made to the "Allowance for
Losses on Loans" discussion for additional information regarding loan
charge-offs and other items impacting the provision for losses on loans.
NONINTEREST INCOME
Noninterest income for the first quarter of 1999 was $126.3 million,
almost level with the first quarter of 1998 and a decrease of $71.5 million from
the fourth quarter of 1998. The major components of noninterest income are
presented on the consolidated statement of earnings and in Note 6 to the
unaudited interim consolidated financial statements included in Item 1, Part I
of this report.
The increase in noninterest income for the first quarter of 1999 compared
to the same period in 1998 is attributable primarily to the following items:
- $5.8 million increase in mortgage banking revenues
- $5.3 million increase related to the securitization and sale of
FHA/VA loans
20
<PAGE> 21
- $3.1 million increase in annuity sales income
- $3.0 million increase in service charges on deposit accounts and
transaction related fees
- $2.2 million gain related to the sale of the remaining portion of
the credit card portfolio
These increases in noninterest income were offset by the following items:
- $6.9 million decrease in bank card income due to the sale of the
credit card portfolio
- $5.8 million decrease in investment securities gains
- $5.4 million decrease due to a gain on the sale of an investment in
the first quarter of 1998 by an acquired entity
- $1.5 million decline in trading profits and commission
The increase in mortgage banking revenues is attributable to higher volume
levels resulting from the high level of refinancing activity in the current low
interest rate environment. The increase resulting from the securitization and
sale of FHA/VA loans related to the sale of approximately $132 million of FHA/VA
loans with a weighted-average interest rate of 9.67% during the first quarter of
1999. The growth of annuity sales income is the result of greater efforts on
increasing this fee income source. Growth of service charges on deposits and
other transaction related fees is attributable to acquired entities and
increased levels of activity. The decrease in profits and commissions from
trading activities, primarily SBA loans, was due to trading losses taken during
the quarter. Volume levels remained strong during the quarter and profits and
commission are expected to improve in the second quarter of 1999.
The decrease in noninterest income from the fourth quarter of 1998 related
primarily to the sale of the credit card portfolio in the fourth quarter of
1998, which resulted in a gain of approximately $72.7 million and investment
securities gains of $6.0 million.
NONINTEREST EXPENSE
Noninterest expense for the first quarter of 1999 increased $21.2 million
to $258.2 million which compares to $237.0 million for the first quarter of 1999
and $264.6 million (before merger-related and other significant charges of $97.5
million) for the fourth quarter of 1998. The major components of noninterest
expense are detailed on the consolidated statement of earnings and in Note 6 to
the unaudited interim consolidated financial statements included in Item 1, Part
I of this report.
The increase in noninterest expense for the first quarter of 1999 compared
to the same period in 1998 relates primarily to the following items:
- $9.5 million increase in salaries and employee benefits
(approximately $7.0 million related to acquisitions)
- $4.0 million increase in occupancy and equipment expense
(approximately $2.4 million related to acquisitions)
- $7.0 million increase in goodwill and other intangibles amortization
related to purchase acquisitions and branch purchases
- $2.1 million increase in communications expense
- $1.7 million increase in advertising expense, related primarily to
acquisitions
- $1.6 million increase in amortization of mortgage servicing rights
- $4.5 million decrease in merger-related expenses
The largest component of noninterest expense, salaries and employee
benefits, was $123.2 million for the first quarter of 1999 compared to $113.7
million for the same quarter last year and compared to $131.9 million for the
fourth quarter of 1998. Full-time-equivalent employees at March 31, 1999 were
13,160 compared to 12,332 at March 31, 1998 and 12,330 at December 31, 1998.
Acquisitions completed in the first quarter of 1999 added approximately 879
full-time equivalent employees (primarily the Indiana Branch Purchase which
added approximately 625 full-time equivalent employees).
Management continues to anticipate cost savings related to integration of
acquired entities and consolidation of existing operations. Some savings are
expected each quarter of 1999 but the total savings are not expected to be fully
implemented until the fourth quarter of 1999 or early in 2000. Reference is made
to the discussion under the heading "Acquisitions - Operating Philosophy" on
pages 12 and 13 of the 1998 Annual Report.
21
<PAGE> 22
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------------------------------------------------
1999 1998
--------------------------------------- --------------------------------------
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.................... $ 120,476 $ 987 3.32% $ 36,013 $ 508 5.72%
Federal funds sold and securities
purchased under agreements to resell...... 75,954 869 4.64 502,534 6,834 5.52
Trading account assets...................... 238,811 3,595 6.11 183,193 3,020 6.69
Investment securities (1) (2)
Taxable................................... 7,127,846 106,580 6.06 5,252,084 84,178 6.50
Tax-exempt................................ 1,319,689 25,746 7.91 955,557 19,178 8.14
------------ ------------ ------------ ------------
Total investment securities......... 8,447,535 132,326 6.35 6,207,641 103,356 6.75
Loans, net of unearned income (1) (3) (4)... 20,453,815 426,254 8.45 20,659,133 468,760 9.20
------------ ------------ ------------ ------------
TOTAL EARNING ASSETS (1) (2) (3) (4) 29,336,591 564,031 7.80 27,588,514 582,478 8.56
------------ ------------
Cash and due from banks..................... 1,008,050 940,503
Premises and equipment...................... 566,337 536,304
Allowance for losses on loans............... (342,679) (331,462)
Goodwill and other intangibles.............. 491,474 221,256
Other assets................................ 1,290,257 985,350
------------ ------------
TOTAL ASSETS........................ $ 32,350,030 $ 29,940,465
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts....................... $ 3,564,252 $ 33,428 3.80% $ 3,150,242 $ 29,801 3.84%
Savings deposits............................ 5,047,427 20,622 1.66 4,252,844 23,863 2.28
Certificates of deposit of
$100,000 and over......................... 2,492,888 33,480 5.45 2,817,107 40,855 5.88
Other time deposits......................... 9,879,643 125,474 5.15 9,355,026 125,732 5.45
Short-term borrowings....................... 1,756,829 19,254 4.44 1,387,180 17,710 5.18
Long-term debt
Federal Home Loan Bank advances........... 595,347 7,350 5.01 1,139,616 14,180 5.05
Subordinated capital notes................ 480,702 7,849 6.62 230,686 4,297 7.55
Medium-term bank notes.................... 105,000 1,761 6.80 135,000 2,236 6.72
Trust Preferred Securities................ 199,013 4,128 8.41 198,978 4,128 8.41
Other..................................... 306,745 5,542 7.33 331,974 7,698 9.40
------------ ------------ ------------ ------------
TOTAL INTEREST-BEARING LIABILITIES.. 24,427,846 258,888 4.30 22,998,653 270,500 4.77
Noninterest-bearing demand deposits......... 4,303,509 -- 3,393,327 --
------------ ------------ ------------ ------------
TOTAL SOURCES OF FUNDS.............. 28,731,355 258,888 26,391,980 270,500
Other liabilities........................... 661,842 669,102
Shareholders' equity........................
Preferred stock.......................... 23,190 46,752
Common equity............................ 2,933,643 2,832,631
------------ ------------
Total shareholders' equity.......... 2,956,833 2,879,383
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' $ 32,350,030 $ 29,940,465
============ ============
EQUITY........................................
NET INTEREST INCOME (1)....................... $ 305,143 $ 311,978
============ ============
INTEREST-RATE SPREAD (1)...................... 3.50% 3.79%
==== ====
NET INTEREST MARGIN (1)....................... 4.22% 4.59%
==== ====
TAXABLE-EQUIVALENT ADJUSTMENTS:
Loans..................................... $ 1,160 $ 2,985
Investment securities..................... 8,286 5,243
------------ ------------
TOTAL............................... $ 9,446 $ 8,228
============ ============
</TABLE>
- ----------------------
(1) 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 in both interest income and the calculation of the
yield on income.
(4) Includes loans on nonaccrual status.
22
<PAGE> 23
UNION PLANTERS CORPORATION AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 VERSUS 1998
-------------------------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
---------------------------- TOTAL
AVERAGE AVERAGE INCREASE
VOLUME RATE (DECREASE)
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits at financial institutions........... $ 776 $ (297) $ 479
Federal funds sold and securities purchased under agreements
to resell..................................................... (5,026) (939) (5,965)
Trading account assets........................................ 864 (289) 575
Investment securities (FTE)................................... 35,631 (6,661) 28,970
Loans, net of unearned income (FTE)........................... (4,617) (37,889) (42,506)
------------ ------------ -----------
TOTAL INTEREST INCOME................................. 27,628 (46,075) (18,447)
============ ============ ===========
INTEREST EXPENSE
Money market accounts......................................... 3,896 (269) 3,627
Savings deposits.............................................. 4,082 (7,323) (3,241)
Certificates of deposit of $100,000 and over.................. (4,490) (2,885) (7,375)
Other time deposits........................................... 7,010 (7,268) (258)
Short-term borrowings......................................... 4,356 (2,812) 1,544
Long-term debt................................................ (3,667) (2,242) (5,909)
------------ ------------ -----------
TOTAL INTEREST EXPENSE................................ 11,187 (22,799) (11,612)
------------ ------------ -----------
CHANGE IN NET INTEREST INCOME (FTE)............................. $ 16,441 $ (23,276) $ (6,835)
============ ============ ===========
PERCENTAGE DECREASE IN NET INTEREST INCOME (FTE) FROM PRIOR PERIOD (2.19)%
</TABLE>
- --------------------
FTE = Fully taxable-equivalent basis
(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.
FINANCIAL CONDITION
The Corporation's total assets were $33.7 billion at March 31, 1999
compared to $30.4 billion at March 31, 1998 and $31.7 billion at December 31,
1998. Average assets were $32.4 billion for the first quarter of 1999 compared
to $29.9 billion for the first quarter of 1998. Banks acquired and the Indiana
and Florida Branch Purchases were the primary reasons for the growth of total
assets both at period end and on average. See the "Acquisitions" section of this
discussion and Note 2 to the unaudited interim consolidated financial statements
for additional information regarding the impact of acquisitions.
INVESTMENT SECURITIES
The Corporation's investment securities portfolio of $8.8 billion at March
31, 1999 consisted entirely of available for sale securities which are carried
on the balance sheet at fair value. This compares to investment securities of
$6.7 billion and $8.3 billion at March 31, 1998 and December 31, 1998,
respectively. At March 31, 1999, March 31, 1998, and December 31, 1998, these
securities had net unrealized gains of $77.3 million, $57.8 million, and $93.1
million, respectively. Reference is made to Note 5 to the unaudited interim
consolidated financial statements which provides the composition of the
investment portfolio at March 31, 1999 and December 31, 1998.
The increase in the investment securities resulted from the investment of
funds received in exchange for assuming deposit liabilities in the Indiana and
Florida Branch Purchases. Reference is made to the "Acquisitions" section of
this discussion for the estimated impact of these transactions.
U.S. Treasury and U.S. Government agency obligations represented
approximately 64.7% of the investment securities portfolio at March 31, 1999,
70.2% of which were Collateralized Mortgage Obligations (CMOs) and
mortgage-backed securities issues. The
23
<PAGE> 24
Corporation has some credit risk in the investment portfolio; however,
management does not consider that risk to be significant and does not believe
that cash flows will be significantly impacted. Reference is made to the "Net
Interest Income" and Market Risk and Asset/Liability Management" discussions for
information regarding the market-risk in the investment securities portfolio.
The limited credit risk in the investment securities portfolio at March
31, 1999 consisted of 16.3% of investment grade CMOs, 15.9% of municipal
obligations, and 3.1% of other stocks and securities (primarily equity
securities and Federal Reserve Bank and Federal Home Loan Bank Stock).
At March 31, 1999, the Corporation had approximately $40.7 million of
structured notes, which constituted approximately .5% 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 Bank
and Federal National Mortgage Association). The structured notes vary in type
but primarily include step-up bonds and index-amortizing notes.
LOANS
Loans, net of unearned income, at March 31, 1999 were $20.5 billion
compared to $20.3 billion and $19.6 billion at March 31, 1998 and December 31,
1998, respectively. Average loans for the first quarter of 1999 were $20.5
billion compared to $20.7 billion for the first quarter of 1998 and $20.2
billion for the fourth quarter of 1998. Note 3 to the unaudited interim
consolidated financial statements included in Part I. Item 1 of this report
presents the composition of the loan portfolio.
Excluding the FHA/VA government-insured/guaranteed loans, loans were $19.9
billion at March 31, 1999, an increase of approximately $900 million from March
31, 1998 and an increase of $1.1 billion from December 31, 1998. The increase
relates primarily to acquisitions which increased loans approximately $1.9
billion and $1.4 billion, respectively, compared to March 31, 1998 and December
31, 1998. On average, acquisitions increased loans approximately $1.1 billion
for the first quarter of 1999 compared to the same period in 1998 and increased
loans approximately $637 million compared to the fourth quarter of 1998. Also
impacting loan volumes was the sale of the credit card portfolio in the fourth
quarter of 1998, which reduced loans approximately $440 million. During the
first quarter of 1999 an additional $20 million of the sale settled. Loan
volumes have also been impacted by the high level of refinancing activity
related to residential mortgage loans which has reduced this category of loans.
ALLOWANCE FOR LOSSES ON LOANS
The Corporation maintains the allowance for losses on loans at a level
which is believed adequate to absorb losses inherent in the loan portfolio. A
formal review is prepared quarterly to assess the risk in the portfolio and to
determine the adequacy of the allowance for losses on loans. The review includes
analyses of certain problem loans, historical loan loss experience, the level of
classified and nonperforming loans, reviews and evaluations of specific loans,
changes in the nature and volume of loans, the results of regulatory
examinations, and current economic conditions and the related impact on specific
borrowers and industry groups. The review is presented to, and approved by,
senior management and a committee of the Board of Directors.
24
<PAGE> 25
The following table provides a reconciliation of the allowance for losses
on loans (the allowance) at the dates indicated and certain key ratios for the
three-month periods ended March 31, 1999 and 1998 and for the year ended
December 31, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------------- ------------
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE AT THE BEGINNING OF PERIOD.......................... $ 321,476 $ 324,474 $ 324,474
LOANS CHARGED OFF
Commercial, financial, and agricultural................... 8,164 4,985 65,815
Foreign................................................... -- -- 1,831
Real estate - construction................................ 424 1,448 3,714
Real estate - mortgage.................................... 7,626 2,079 28,654
Credit cards and related plans............................ 1,193 17,276 50,723
Consumer.................................................. 7,958 8,096 64,435
Direct lease financing.................................... 291 4 125
------------ ------------ ------------
Total charge-offs................................. 25,656 33,888 215,297
------------ ------------ ------------
RECOVERIES ON LOANS PREVIOUSLY CHARGED OFF
Commercial, financial, and agricultural................... 3,864 2,241 8,931
Foreign................................................... 96 -- 20
Real estate - construction................................ 539 83 310
Real estate - mortgage.................................... 1,139 1,104 5,825
Credit cards and related plans............................ 378 1,119 4,113
Consumer.................................................. 5,435 2,468 9,812
Direct lease financing.................................... 1 -- 5
------------ ------------ ------------
Total recoveries.................................. 11,452 7,015 29,016
------------ ------------ ------------
Net charge-offs............................................. (14,204) (26,873) (186,281)
Provision charged to expense................................ 16,279 33,212 204,056
Allowance related to the sale of certain loans.............. -- -- (36,693)
Increase due to acquisitions................................ 21,460 3,330 15,920
------------ ------------ ------------
BALANCE AT END OF PERIOD.......................... $ 345,011 $ 334,143 $ 321,476
============ ============ ============
Total loans, net of unearned income, at end of period....... $ 20,504,943 $ 20,261,612 $ 19,576,826
Less: FHA/VA government insured/guaranteed loans............ 617,854 1,228,769 759,911
------------ ------------ ------------
LOANS USED TO CALCULATE RATIOS.................... $ 19,887,089 $ 19,032,843 $ 18,816,915
============ ============ ============
Average total loans, net of unearned income, during period.. $ 20,453,815 $ 20,659,133 $ 20,498,773
Less: Average FHA/VA government-insured/guaranteed loans.... 688,883 1,280,381 958,921
------------ ------------ ------------
AVERAGE LOANS USED TO CALCULATE RATIOS............ $ 19,764,932 $ 19,378,752 $ 19,539,852
============ ============ ============
RATIOS (1):
Allowance at end of period to loans, net of unearned income 1.73% 1.76% 1.71%
Charge-offs to average loans, net of unearned income (2).. .53 .71 1.10
Recoveries to average loans, net of unearned income (2)... .24 .15 .15
Net charge-offs to average loans, net of unearned income (2) .29 .56 .95
Provision to average loans, net of unearned income (2).... .33 .70 1.04
</TABLE>
- --------------------
(1) Ratio calculations exclude FHA/VA government-insured/guaranteed loans,
since they represent minimal credit risk.
(2) Amounts annualized for March 31, 1999 and 1998.
The allowance at March 31, 1999, was $345.0 million, an increase of $23.5
million from December 31, 1998, and compared to $334.1 million at March 31,
1998. The increase from December 31, 1998 relates primarily to first quarter
1999 purchase acquisitions which increased the allowance $21.5 million. Net
charge-offs for the first quarter of 1999 were $14.2 million compared to $26.9
million and $80.6 million for the first and fourth quarters of 1998,
respectively. The sale of the Corporation's credit card portfolio reduced net
charge-offs approximately $15 million between the first quarters of 1999 and
1998. Net charge-offs for the fourth quarter of 1998 were abnormally high due to
the Corporation dealing aggressively with certain problem credits related to
acquired entities.
25
<PAGE> 26
NONPERFORMING ASSETS
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NONACCRUAL LOANS
Domestic............................................................. $ 170,785 $ 141,917 $ 150,378
Foreign.............................................................. -- 51 --
RESTRUCTURED LOANS..................................................... 4,195 6,928 5,612
------------ ------------ ------------
TOTAL NONPERFORMING LOANS.................................... 174,980 148,896 155,990
------------ ------------ ------------
FORECLOSED PROPERTY
Other real estate owned, net......................................... 26,052 34,049 23,937
Other foreclosed property............................................ 2,908 5,049 2,670
------------ ------------ ------------
TOTAL FORECLOSED PROPERTIES.................................. 28,960 39,098 26,607
------------ ------------ ------------
TOTAL NONPERFORMING ASSETS................................... $ 203,940 $ 187,994 $ 182,597
============ ============ ============
LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
Domestic............................................................. $ 50,906 $ 51,561 $ 48,626
Foreign.............................................................. -- -- --
------------ ------------ ------------
TOTAL LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST $ 50,906 $ 51,561 $ 48,626
============ ============ ============
FHA/VA GOVERNMENT-INSURED/GUARANTEED LOANS
Loans past due 90 days or more and still accruing interest........... $ 329,742 $ 438,038 $ 355,124
Nonaccrual........................................................... 8,369 13,606 9,232
RATIOS (1):
Nonperforming loans as a percentage of loans......................... .88% .78% .83%
Nonperforming assets as a percentage of loans plus foreclosed properties 1.02 .99 .97
Allowance for losses on loans as a percentage of nonperforming loans. 197 224 206
Loans past due 90 days or more and still accruing interest as a
percentage of loans.................................................... .26 .27 .26
</TABLE>
- --------------------
(1) FHA/VA government-insured/guaranteed loans are excluded from loans in the
ratio calculations.
The breakdown of nonaccrual loans and loans past due 90 days or more and
still accruing interest, both excluding FHA/VA loans, is as follows:
<TABLE>
<CAPTION>
LOANS PAST DUE 90 DAYS
NONACCRUAL LOANS (1) OR MORE (1)
----------------------------- -------------------------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
LOAN TYPE
Secured by single family residential..... $ 71,297 $ 73,433 $ 11,990 $ 12,991
Secured by nonfarm nonresidential........ 33,209 25,242 7,279 8,193
Other secured real estate................ 13,421 17,616 6,592 5,387
Commercial, financial, and agricultural,
including foreign loans and direct lease
financing.............................. 45,028 26,831 20,591 15,041
Credit cards and related plans........... 28 58 132 2,044
Other consumer........................... 7,802 7,198 4,322 4,970
------------ ------------ ------------ ------------
TOTAL............................ $ 170,785 $ 150,378 $ 50,906 $ 48,626
============ ============ ============ ============
</TABLE>
- --------------------
(1) See the preceding table for the amount of FHA/VA government-insured
guaranteed/loans on nonaccrual and past due 90 days or more and still
accruing interest.
26
<PAGE> 27
LOANS OTHER THAN FHA/VA LOANS. As a percentage of loans and foreclosed
properties, nonperforming assets were 1.02% at March 31, 1999 compared to .99%
at March 31, 1998 and .97% at December 31, 1998. The coverage of nonperforming
loans (allowance for losses on loans as a percentage of nonperforming loans) was
197% at March 31, 1999, which compares to 224% at March 31, 1998 and 206% at
year end 1998.
The majority of the increase in nonaccrual loans related primarily to two
loans, a healthcare related factoring loan totaling $7.8 million and a
commercial real estate development loan totaling $4.8 million (an additional
$4.8 million was charged-off during the first quarter). The healthcare lending
group (portfolio of approximately $40 million) has been experiencing problems
and the Corporation is taking steps to reduce its exposure to this type of
lending.
Loans past due 90 days or more and still accruing interest totaled $50.9
million, or .26% of loans, at March 31, 1999 compared to $51.6 million, or .27%,
and $48.6 million, or .26% of loans, at March 31, 1998 and December 31, 1998,
respectively. The preceding table details the composition of these loans.
FHA/VA LOANS. FHA/VA government-insured/guaranteed loans (FHA/VA loans) do
not, in management's opinion, have traditional credit risk inherent in the
balance of the loan portfolio and risk of principal loss is considered minimal.
FHA/VA loans past due 90 days or more and still accruing interest totaled $329.7
million at March 31, 1999 which compared to $438.0 million and $355.1 million at
March 31, 1998 and December 31, 1998, respectively. The decrease in past due
loans relates to a decline in the overall volume of these loans. At March 31,
1999, March 31, 1998, and December 31, 1998, $8.4 million, $13.6 million and
$9.2 million, respectively, of these loans were placed on nonaccrual status by
management because the contractual payment of interest by FHA/VA had stopped due
to missed filing dates. No loss of principal is expected from these loans.
POTENTIAL PROBLEM ASSETS
Potential problem assets are assets which are generally secured and not
currently considered nonperforming, but where information about possible credit
problems has caused management to have serious doubts as to the ability of the
borrowers to comply in the future with present repayment terms. Historically,
these assets were loans which became nonperforming. At March 31, 1999, the
Corporation had potential problem assets of $68.9 million, composed of 28 loans.
DEPOSITS
The Corporation's core deposit base is its most important and stable
funding source and consists of deposits from the communities served by the
Corporation.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS
---------------------------------------------------
THREE MONTHS ENDED
MARCH 31, THREE MONTHS ENDED
---------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Demand deposits............................ $ 4,303,509 $ 3,393,327 $ 3,854,463
Money market accounts (1).................. 3,564,252 3,150,242 3,093,909
Savings deposits (2)....................... 5,047,427 4,252,844 4,962,920
Other time deposits (3).................... 9,879,643 9,355,026 9,904,602
------------ ------------ -------------
Total core deposits.............. 22,794,831 20,151,439 21,815,894
Certificates of deposit of $100,000 and over 2,492,888 2,817,107 2,714,815
------------ ------------ -------------
Total average deposits .......... $ 25,287,719 $ 22,968,546 $ 24,530,709
============ ============ =============
</TABLE>
- --------------------
(1) Includes money market savings accounts, High Yield accounts, and super NOW
accounts.
(2) Includes regular and premium savings accounts and NOW accounts.
(3) Includes certificates of deposit under $100,000, investment savings
accounts, and other time deposits.
Average deposits for the first quarter of 1999 were $25.3 billion, which
represents increases of $2.3 billion and $757 million, respectively, from the
average deposits for the first quarter of 1998 and the fourth quarter of 1998.
The majority of the increase relates to banks acquired and to the branch
purchases in Indiana and Florida.
27
<PAGE> 28
LIQUIDITY
The Corporation requires liquidity sufficient 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 at
maturity. Deposits, available for sale securities, and money market investments
are the Corporation's primary sources of liquidity. Liquidity is also achieved
through short-term borrowings, borrowings under available lines of credit, and
issuance of securities and debt instruments in the financial markets. The
Corporation has adequate liquidity to meet its operating requirements.
Parent company liquidity is achieved and maintained by dividends received
from subsidiaries, interest on advances to subsidiaries, and interest on its
available for sale investment securities portfolio. At March 31, 1999, the
parent company had cash and cash equivalents totaling $164.9 million and net
working capital of $260.9 million. At April 1, 1999, the Corporation's banking
subsidiaries could have paid dividends totaling $296 million without prior
regulatory approval. The actual amount of dividends that will be paid in the
second quarter of 1999 will be limited by management to approximately $71
million due to capital and liquidity requirements of individual financial
institutions. The payment of additional dividends by the Corporation's
subsidiaries will be dependent on the future earnings and growth 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.
SHAREHOLDERS' EQUITY
The Corporation's total shareholders' equity increased by $60 million from
December 31, 1998 to $3.0 billion at March 31, 1999. The increase was due to the
following:
- - $25.1 million increase due to net retained earnings (net earnings less
dividends)
- - $33.1 million increase due to stock issued for acquisitions, net of shares
repurchased
- - $11.4 million increase due to stock issued under employee benefit plans
and conversion of debt of an acquired entity
- - $ 9.8 million decrease due to the net change in the unrealized gain on
available for sale investment securities
CAPITAL ADEQUACY
The following table presents capital adequacy information for the Corporation:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------- DECEMBER 31,
1999 1998 1998
----------- ----------- ------------
<S> <C> <C> <C>
CAPITAL ADEQUACY DATA
Total shareholders' equity/total assets (at period
end)............................................ 9.04% 9.60% 9.42%
Average shareholders' equity/average total assets 9.14 9.62 9.54
Tier 1 capital/unweighted average assets (leverage
ratio) (1)........................................ 7.83 9.71 8.86
</TABLE>
- --------------------
(1) Based on period-end capital and quarterly adjusted average assets.
28
<PAGE> 29
The following table presents the Corporation's risk-based capital and
capital adequacy ratios. The Corporation's regulatory capital ratios qualify the
Corporation for the "well-capitalized" regulatory classification.
RISK-BASED CAPITAL
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
TIER 1 CAPITAL
Shareholders' equity............................................. $ 3,043,909 $ 2,920,163 $ 2,984,078
Trust Preferred Securities and minority interest in consolidated 202,206 216,433 202,197
subsidiaries.....................................................
Less: Goodwill and other intangibles............................ (720,871) (213,406) (381,601)
Disallowed deferred tax asset............................. (1,139) (1,578) (1,144)
Unrealized gain on available for sale securities.......... (47,463) (36,571) (57,245)
------------ ------------ ------------
TOTAL TIER 1 CAPITAL 2,476,642 2,885,041 2,746,285
TIER 2 CAPITAL
Allowance for losses on loans ................................... 272,214 250,090 258,173
Qualifying long-term debt........................................ 461,089 476,116 461,110
Other adjustments................................................ 241 -- 218
------------ ------------ ------------
TOTAL CAPITAL BEFORE DEDUCTIONS.......................... 3,210,186 3,611,247 3,465,786
Less investment in unconsolidated subsidiaries................... (12,195) (10,752) (10,736)
------------ ------------ ------------
TOTAL CAPITAL............................................ $ 3,197,991 $ 3,600,495 $ 3,455,050
============ ============ ============
RISK-WEIGHTED ASSETS............................................... $ 21,704,317 $ 20,132,684 $ 20,590,574
============ ============ ============
RATIOS AS A PERCENT OF END OF PERIOD RISK-WEIGHTED ASSETS
Tier 1 capital................................................... 11.41% 14.33% 13.34%
Total capital.................................................... 14.73 17.88 16.78
</TABLE>
The Corporation's shareholders' equity to total assets ratio decreased at
March 31, 1999 compared to prior periods due to the first quarter acquisitions
which utilized some of the Corporation's excess capital capacity. Regulatory
capital ratios were further impacted by goodwill and other intangibles resulting
from these acquisitions which are deducted from capital in calculating
regulatory capital. The Corporation's capital ratios still fall within the
"well-capitalized" regulatory capital category.
YEAR 2000 RISK FACTORS
The 1998 Annual Report contains a discussion of the potential problems
that may occur related to the Year 2000, the Corporation's plans to address Year
2000 problems, and the estimated costs for the Corporation to become Year 2000
compliant. On March 26, 1999, the Corporation announced that Year 2000 testing
and certification had been successfully completed on all its "mission critical"
systems. The core processing system for Union Planters Bank (UPB), which drives
main bank functions such as customer account information and loans, was
certified by the Information Technology Association of America and tested Year
2000 compliant. In addition, the variety of software used to support other
critical functions, including wire transfer, cash management, the ATM system,
direct deposit, and others, have been successfully tested.
The following provides an update, as of April 26, 1999, to the
Corporation's disclosures in the 1998 Annual Report related to certain critical
dates:
- - By December 31, 1998, in-house code enhancements and revisions, hardware
upgrades, and other associated changes are substantially complete. For
mission critical applications, programming changes should be largely
complete and testing well underway - complete
- - Third-party vendor testing of mission critical systems should be
substantially complete by March 31, 1999 - 98% complete
- - Testing of mission critical systems should be completed and implementation
should be substantially complete by June 30, 1999 - 98% complete (UPB
complete)
- - Year 2000 Business Resumption Plan should be complete by June 30, 1999 -
90% complete
- - The Corporation's planned conversion schedule to convert acquired entities
from their systems to the Corporation's systems is on schedule
29
<PAGE> 30
- - The Corporation's evaluation of the Year 2000 preparedness of major loan
customers is continuing and the additional evaluation of 10% of the
portfolio discussed in the 1998 Annual Report is substantially complete
- - Integration testing of the communication links that permit systems to
interface - complete
- - Costs of approximately $400,000 have been incurred in 1999 related to Year
2000 and an additional $150,000 is expected over the remainder of 1999.
The total estimated costs related to the Year 2000 project are projected
to be less than $1 million.
The Corporation is continuing to test various aspects of its operating
systems to attempt to prevent any problems related to the Year 2000. These
efforts will continue throughout the rest of 1999. While management believes it
will be Year 2000 compliant, there are substantial risks associated with the
Year 2000, many of which are outside the Corporation's control. If major loan
customers are not prepared for the Year 2000 or if external parties have major
failures related to the Year 2000 (e.g. shutdown of communications systems,
disruption of electrical services, government services not operating properly,
etc.), any resulting problems could create situations that might have a material
adverse affect on the Corporation's financial condition, liquidity, or operating
results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ASSET LIABILITY AND MARKET RISK 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 is
devoted to managing interest-rate risk. Currently, the Corporation does not have
any significant risks related to foreign exchange, commodities or equity risk
exposure.
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.
Reference is made to the "Investment Securities," and "Loans" discussions for
additional information regarding risks related to these items.
The Corporation's Funds Management Committee oversees the conduct of
global asset/liability management. The Committee reviews the asset/liability
structure and interest-rate risk monthly for the lead bank and quarterly for the
Corporation's other subsidiaries.
The Corporation uses interest-rate sensitivity analysis (GAP analysis) to
monitor the amounts and timing of balances exposed to changes in interest rates,
as shown in the following table. The analysis presented has been made at a point
in time and could change significantly on a daily basis.
In addition to GAP analysis, the Corporation uses other methods such as
simulation analysis in evaluating interest-rate risk. The key assumptions used
in simulation analysis include the following
- - Prepayment speeds on mortgage-related assets
- - Cash flows and maturities of financial instruments held for purposes other
than trading
- - Changes in volumes and pricing
- - Deposit sensitivity
- - Management's financial capital plan
These assumptions are inherently uncertain and, as a result, the
simulation cannot precisely estimate net interest income or precisely predict
the impact of higher or lower interest rates on net interest income. Actual
results will differ from simulated results due to timing, magnitude, and
frequency of interest rate changes and changes in market conditions and
management strategies.
At March 31, 1999, the GAP analysis indicated that the Corporation was
liability sensitive with $503 million more liabilities than assets repricing
within one year. At 1% of total assets, this position was within management's
policy limit of 10% of total assets.
30
<PAGE> 31
Balance sheet simulation analysis has been conducted at March 31, 1999 to
determine the impact on net interest income for the coming twelve months under
several interest-rate scenarios. One such scenario uses rates at March 31, 1999,
and holds the rates and volumes constant for simulation. When this position is
subjected to immediate and parallel shifts in interest rates ("rate shocks") of
200 basis points rising and 200 basis points falling, the annual impact on the
Corporation's net interest income is a negative $19 million and a negative $8
million pretax, respectively. Another simulation uses management's conclusions
as to a "most likely" scenario of interest rates rising 25 basis points over the
next twelve months resulting in a $17 million pretax increase in net interest
income from the constant rate/volume projection. These scenarios are well within
the Corporation's policy of limiting the projected impact on net interest income
from changes in interest rates to less than 5% of shareholders' equity.
31
<PAGE> 32
UNION PLANTERS CORPORATION AND SUBSIDIARIES
RATE SENSITIVITY ANALYSIS AT MARCH 31, 1999
<TABLE>
<CAPTION>
INTEREST-SENSITIVE WITHIN (1) (7)
------------------------------------------------------------------------------------------------
NON-
0-90 91-180 181-365 1-3 3-5 5-15 OVER 15 INTEREST-
DAYS DAYS DAYS YEARS YEARS YEARS YEARS BEARING TOTAL
-------- -------- -------- -------- -------- -------- ------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans and leases(2)(3)(4) $ 7,317 $ 2,108 $ 3,412 $ 4,633 $ 1,991 $ 539 $ 13 $ 525 $ 20,538
Investment securities(5)(6) 1,500 495 914 3,228 1,365 947 349 -- 8,798
Other earning assets....... 770 41 16 1 -- -- -- -- 828
Other assets............... -- -- -- -- -- -- -- 3,505 3,505
-------- -------- -------- -------- -------- -------- ------- -------- ---------
Total Assets....... $ 9,587 $ 2,644 $ 4,342 $ 7,862 $ 3,356 $ 1,486 $ 362 $ 4,030 $ 33,669
======== ======== ======== ======== ======== ======== ======= ======== =========
SOURCES OF FUNDS
Money market deposits(7)(8) $ 1,471 $ -- $ 1,471 $ 1,736 $ -- $ -- $ -- $ -- $ 4,678
Other savings and
time deposits........... 4,090 2,491 2,806 3,398 298 1,603 3 -- 14,689
Certificates of deposit of
$100,000 and over........ 905 547 594 338 43 3 -- -- 2,430
Short-term borrowings...... 2,160 3 8 1 -- -- -- -- 2,172
Short- and medium-term
bank notes.............. -- 30 15 60 -- -- -- -- 105
Federal Home Loan Bank
advances................ 203 2 2 2 1 1 -- -- 211
Other long-term debt....... 276 1 1 13 79 100 500 -- 970
Noninterest-bearing
deposits................ -- -- -- -- -- -- -- 4,664 4,664
Other liabilities.......... -- -- -- -- -- -- -- 706 706
Shareholders' equity....... -- -- -- -- -- -- -- 3,044 3,044
-------- -------- -------- -------- -------- -------- ------- -------- ---------
Total sources of funds $ 9,105 $ 3,074 $ 4,897 $ 5,548 $ 421 $ 1,707 $ 503 $ 8,414 $ 33,669
======== ======== ======== ======== ======== ======== ======= ======== =========
Interest-rate sensitivity gap $ 482 $ (430) $ (555) $ 2,314 $ 2,935 $ (221) $ (141) $ (4,384) --
Cumulative interest-rate
Sensitivity gap(8)......... 482 52 (503) 1,811 4,746 4,525 4,384 -- --
Cumulative gap as a
percentage of total
assets(8).................. 1% --% (1)% 5% 14% 13% 13% --%
</TABLE>
- --------------------
Management has made the following assumptions in presenting the above analysis:
(1) Assets and liabilities are generally scheduled according to their earliest
repricing dates regardless of their contractual maturities.
(2) Nonaccrual loans and accounts receivable-factoring 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 generally 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 be expected to vary by product type and market.
(8) If all money market, NOW, and savings deposits had been included in the
0-90 Days category above, the cumulative gap as a percentage of total
assets would have been negative (17%), (19%) and (16%) for the 0-90 Days,
91-180 Days and 181-365 Days categories and positive 1%, 9%, 13%, and 13%,
respectively, for the 1-3 Years, 3-5 Years, 5-15 Years, and over 15 Years
categories at March 31, 1999.
32
<PAGE> 33
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
During the period covered by this report, there have been no new material
legal proceedings or material developments in pending material litigation to
which the Corporation or any of its subsidiaries is a party or of which any of
their property is subject, other than ordinary routine litigation incidental to
their business. Information concerning legal proceedings is contained in Item 3,
Part I of the Corporation's 1998 Form 10-K , Note 19 to the Corporation's
consolidated financial statements on pages 66 and 67 of the 1998 Annual Report,
and Note 10 to the Corporation's unaudited interim consolidated financial
statements included herein under Item 1 of Part I.
ITEM 2 -- CHANGES IN SECURITIES
SERIES F PREFERRED STOCK. The Board has adopted a new Shareholder Rights Plan,
which became effective upon the expiration of the former Shareholder Rights Plan
on January 19, 1999. Under the new Shareholder Rights Plan, each share of common
stock received a tax-free dividend of one Right. The Rights are not exercisable
unless a third party acquires 15% of the common stock, or an offer is commenced
for 15% or more of the common stock. At that time, subject to Board action, the
Rights can be exercised to purchase Units of the Corporation's Series F
Preferred Stock. Each Unit has the same voting and dividend rights as one share
of the common stock, and each Right entitles the holder to purchase one Unit at
a 50% discount from the then market value of one share of the common stock. If a
third party merges with or otherwise acquires the Corporation, each Right can be
exercised to purchase one share of common stock of the acquiring company at a
50% discount from the then market value of that stock. Rights held by the
potential acquiring company cannot be exercised. The Board may extend the time
period before the Rights become exercisable or redeem the Rights at $.01 per
Right. These provisions give the Board the flexibility to negotiate a
transaction with a potential acquiror in the best interests of the shareholders.
The new Shareholder Rights Plan will expire on January 19, 2009. The Corporation
authorized 300,000 shares of Series F Preferred Stock for issuance under the
Shareholder Rights Plan, none of which has been issued.
COMMON STOCK. During the first quarter of 1999, the Company issued 955 shares of
common stock to two officers upon the exercise of stock options, which had been
granted to them under a compensatory stock incentive plan. The aggregate
exercise price paid for the shares was $24,206. In addition, the Company placed
41,026 common stock units, with a value of $1,864,362, into the Company's Stock
Option Deferral Plan for eight officers upon the exercise of stock options under
such Plan. The exemption from registration relied on by the Registrant was
Section 4(2) of the Securities Act of 1933. The officers were senior officers of
the Company and its subsidiaries who had access to material information
concerning the Company and, under the terms of their options, they generally are
required to hold the shares acquired by them upon exercise of the options for a
period of three years or until the previously elected distribution date from the
Deferral Plan, whichever period is longer.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
10(n) Union Planters Corporation 1992 Stock Incentive Plan as Amended
October 17, 1996 and February 18, 1999
11 Computation of Per Share Earnings (incorporated by reference to Note
10 to the Corporation's unaudited interim consolidated financial
statements included herein)
27 Financial Data Schedule (for SEC use only)
33
<PAGE> 34
b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Date of Current Report Subject
---------------------- -------------------------------------------
<S> <C>
1. January 21, 1999 Press release announcing year ended
December 31, 1998 net earnings, reported
under Item 5
2. April 15, 1999 Press release announcing first quarter 1999
net earnings, reported under Item 5
</TABLE>
34
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION PLANTERS CORPORATION
-------------------------------
(Registrant)
Date: May 10, 1999
-------------------
By: /s/ Benjamin W. Rawlins, Jr.
--------------------------------------------
Benjamin W. Rawlins, Jr.
Chairman and Chief Executive Officer
By: /s/ John W. Parker
-------------------------------------------
John W. Parker
Executive Vice President and
Chief Financial Officer
By: /s/ M. Kirk Walters
--------------------------------------------
M. Kirk Walters
Senior Vice President, Treasurer,
and Chief Accounting Officer
35
<PAGE> 36
UNION PLANTERS CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------------- ------------------------------------------------------------------------------------
<S> <C>
10(n) Union Planters Corporation 1992 Stock Incentive Plan as Amended October 17,
1996 and February 18, 1999
11 Computation of Per Share Earnings (incorporated by reference to Note 11 to
the Corporation's unaudited interim consolidated financial statements
included herein)
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
EXHIBIT 10(N)
UNION PLANTERS CORPORATION
1992 STOCK INCENTIVE PLAN
AS AMENDED OCTOBER 17, 1996 AND
FEBRUARY 18, 1999
1. Definitions. In this Plan, except where the context otherwise
indicates, the following definitions apply:
a) "Agreement" means the written agreement implementing a grant
of an Option or an Award of Restricted Stock under the Plan.
b) "Board" means the Board of Directors of the Company.
c) "Code" means the Internal Revenue Code of 1986, as amended.
d) "Committee" means the committee referred to in Section 3.
Unless otherwise determined by the Board, the Stock Option
Committee of the Board shall be the Committee.
e) "Common Stock" means the authorized but unissued common
stock, par value $5, of the Company.
f) "Company" means Union Planters Corporation.
g) "Date of Exercise" means the date on which the Company
receives notice pursuant to Section 7 of the exercise of an
Option.
h) "Date of Grant" means the date on which an Option or
Restricted Stock is granted or awarded by the action of the
Committee.
i) "Director" means any person who is a director of the Company
or any Subsidiary.
j) "Director-Employee" means an Employee who is also a Director.
k) "Employee" means any person determined by the Committee to be
an employee of the Company or any Subsidiary, including
officers, Directors, and Director-Employees.
l) "Fair Market Value" of a share of Common Stock means the
amount equal to the closing price for a share of Common Stock
on the New York Stock Exchange as reported in The Wall Street
Journal or, if the Common Stock is not traded on the New York
Stock Exchange, then the Fair Market Value of such Common
Stock as determined by the Committee pursuant to a reasonable
method adopted in good faith for such purpose.
m) "Incentive Stock Option" means an Option that qualifies as an
Incentive Stock Option under Section 422 of the Code.
n) "Nonstatutory Stock Option" means an Option which is not an
Incentive Stock Option.
o) "Officer" means any person who is an officer of the Company
or any Subsidiary.
p) "Option" means the right to purchase from the Company a
specified number of shares of Common Stock, which right shall
be designated as either an Incentive Stock Option or a
Nonstatutory Stock Option.
q) "Optionee" means an Employee to whom an Option or Restricted
Stock has been granted or awarded.
r) "Option Period" means the period during which an Option may
be exercised.
<PAGE> 2
s) "Option Price" means the price per share at which an Option
may be exercised.
t) "Plan" means the Union Planters Corporation 1992 Stock
Incentive Plan as amended October 17, 1996 and February 18,
1999.
u) "Reload Option" means an Option granted to an Optionee upon
the surrender of shares of Common Stock in payment of an
Option Price upon the exercise of an Option. The Option Price
for any Reload Option shall be the Fair Market Value at the
date the Common Stock is surrendered as payment pursuant to
Section 3(d) (iv). Other terms of the Reload Option shall be
the same as contained in the Option Agreement relating to the
Option exercised.
v) "Restricted Stock" means shares of Common Stock awarded
pursuant to the provisions of Section 11.
w) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
x) "Subsidiary" means a corporation of which at least 50 percent
of the total combined voting power of all classes of stock is
held by the Company, either directly or through one or more
other Subsidiaries.
2. PURPOSE. The purposes of the Plan are: (1) to encourage stock
ownership by management and other key Employees in order to closely
associate their interests with the Company's shareholders by
reinforcing the relationship between Plan participants' rewards and
shareholder gains; (2) to maintain competitive compensation levels in
order to continue to attract highly talented persons; and (3) to
provide an incentive to management and other key Employees for
continuous employment with the Company or its Subsidiaries.
3. ADMINISTRATION. The Plan shall be administered by the Committee, which
shall be appointed by the Board and consist of no fewer than three
disinterested members of the Board who (i) for at least one year prior
to serving on the Committee have not received, and who shall not
during their tenure on the Committee receive, any grant of stock
options or rights pursuant to the Plan or any other plan of the
Company, except as may be permitted for disinterested administrator
status under Exchange Act Rule 16b-3, and (ii) is not a current
employee of the Company, is not a former employee who receives
compensation for prior services (other than under a tax-qualified
retirement plan), has not been an officer of the Company, and does not
receive remuneration from the Company in any capacity other than as a
director in accordance with the requirements of Section 162(m) of the
Code. The Board shall have the power to fill vacancies on the
Committee or to replace members of the Committee with other members of
the Board at any time. In addition to any other powers granted to the
Committee, it shall have the following powers subject to the express
provisions of the Plan:
a) subject to the provisions of Sections 4, 6, and 11, to
determine in its sole discretion the Employees to whom
Options or Restricted Stock shall be granted or awarded under
the Plan, the number of shares which shall be subject to each
Option or Restricted Stock grant, the terms upon which, the
times at which, and the periods within which such Options may
be acquired and exercised, and the terms and conditions of
Restricted Stock awards;
b) to grant Options to, and to award Restricted Stock to,
Employees selected by the Committee in its sole discretion;
c) to determine all other terms and provisions of each
Agreement, which need not be identical;
d) without limiting the foregoing, to provide in its sole
discretion in an Agreement:
i) for an agreement by the Optionee to render services
to the Company or a Subsidiary upon such terms and
conditions as are specified in the Agreement,
provided that the Committee shall not have the power
to commit the Company or any Subsidiary to employ or
otherwise retain any Optionee;
2
<PAGE> 3
ii) for restrictions on the transfer, sale, or other
disposition of Common Stock issued to the Optionee
upon the exercise of an Option or for other
restrictions permitted by Section 11 with respect to
Restricted Stock;
iii) for an agreement by the Optionee to resell to the
Company, under specified conditions, Common Stock
issued upon the exercise of his Option or awarded as
Restricted Stock; and
iv) for the payment of the Option Price upon the
exercise of an Option otherwise than in cash,
including without limitation by delivery (including
constructive delivery) of shares of Common Stock
(other than Restricted Stock) valued at Fair Market
Value on the Date of Exercise of the Option, or by a
combination of cash and shares of Common Stock;
v) for the automatic issuance of a Reload Option for
the same number of shares delivered as payment (or
partial payment) of the Option Price as provided in
Section 3(d)(iv) above and, to the extent authorized
by the Committee, for the number of shares used to
satisfy any tax withholding requirement incident to
the exercise of an Option as provided for in Section
12. The number of shares covered by a Reload Option
shall not exceed (1) the number of shares, if any,
surrendered as payment or (2) the number of shares
remaining available for granting under the Plan,
whichever shall be less. No Reload Options shall
issue to an Optionee who exercises any Option
pursuant to the terms of this Plan following
termination of his employment.
e) to construe and interpret the Agreements and the Plan;
f) to require, whether or not provided for in the pertinent
Agreement, of any person acquiring or exercising an Option or
acquiring Restricted Stock, at the time of such exercise or
acquisition, the making of any representations or agreements
which the Committee may deem necessary or advisable in order
to comply with the securities and tax laws of the United
States or of any state; and
g) to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.
Any determinations or actions made or taken by the Committee
pursuant to this Section shall be binding and final.
4. ELIGIBILITY. Participants in the Plan shall be selected by the
Committee from key Employees occupying responsible managerial or
professional positions and who have the ability to make a substantial
contribution to the success of the Company. In making this selection
and in determining the form and amount of grants and awards, the
Committee shall consider any factors deemed relevant, including the
individual's functions, responsibilities, value of services to the
Company or to its Subsidiaries, and past and potential contributions
to the Company's profitability and sound growth. Members of the
Committee shall not be eligible to receive awards or grants under the
Plan during their tenure on the Committee.
Options and Restricted Stock may be granted only to
Employees; provided, however, that Directors who are not also
full-time employees shall not be eligible to receive Incentive Stock
Options. An Employee who has been granted an Option or Restricted
Stock may be granted additional Options and Restricted Stock.
5. STOCK SUBJECT TO THE PLAN. There is hereby reserved for issuance upon
the exercise of Options granted under the Plan or the award of
Restricted Stock under the Plan an aggregate of 13,000,000 shares of
Common Stock. If an Option granted under the Plan expires or
terminates for any reason without having been fully exercised or if
shares of Restricted Stock granted under the Plan are forfeited, the
unpurchased shares of Common Stock which had been subject to such
Option at the time of its expiration or termination or the forfeited
shares of Restricted Stock, as the case may be, shall become available
for awards by the Committee of other Options or Restricted Stock under
the Plan. The total number of shares of Common Stock available to
grant to any one Optionee will not exceed 20% of the total shares
subject to grant.
3
<PAGE> 4
6. OPTIONS.
a) Each Option grant shall be evidenced by an Agreement, which
shall indicate whether the Option is intended to be a
Nonstatutory Stock Option or an Incentive Stock Option.
b) The Option Price shall be determined by the Committee, but in
no event shall the Option Price be less than the greater of
the Fair Market Value of the Common Stock determined as of
the Date of Grant or the par value of the Common Stock.
c) The Option Period shall be determined by the Committee and
specifically set forth in the Agreement; provided, however,
than an Option shall not be exercisable after ten years from
the Date of Grant.
d) To the extent that the aggregate fair market value
(determined on the date the Option is granted) of Common
Stock with respect to which an Incentive Stock Option is
exercisable for the first time by any Optionee during any
calendar year exceeds $100,000, such Option shall be treated
as a Nonstatutory Stock Option.
e) All Incentive Stock Options granted under the Plan shall
comply with the provisions of the Code governing incentive
stock options, and with all other applicable rules and
regulations.
f) The Committee may permit the Optionee to defer the issue or
transfer of Common Stock which would otherwise be issued or
transferred to such Optionee upon exercise of the Option.
Such deferral shall be at a time, in an amount, and in a
manner that is in accordance with the terms and conditions
established by the Committee.
7. EXERCISE OF OPTIONS. An Option shall, subject to the provisions of the
Agreement under which it was granted, be exercised in whole or in part
by the delivery to the Company of written notice of the exercise, in
such form as the Committee may prescribe, accompanied by full payment
for the Common Stock with respect to which the Option is exercised.
8. NONTRANSFERABILITY. Incentive Stock Options granted under the Plan
shall not be transferable otherwise than by will or the laws of
descent and distribution. Nonstatutory Stock Options granted under the
Plan shall not be transferable otherwise than by will or the laws of
descent and distribution, except as provided by the Committee and
specified in the Agreement.
9. DEATH OF OPTIONEE. Upon the death of an Optionee, any Option
exercisable on the date of death may be exercised by the Optionee's
estate or by a person who acquires the legal right to exercise such
Option by bequest or inheritance or otherwise, provided that such
exercise occurs within one year following date of death and within the
remaining Option Period. The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may have
terminated prior to death, but only to the extent of any Options
exercisable on the date of death.
10. RETIREMENT, DISABILITY, AND OTHER TERMINATION. Notwithstanding the
designation of an Option in an Agreement as an Incentive Stock Option,
the tax treatment available pursuant to Section 422 of the Code upon
the exercise of an Incentive Stock Option is not available to an
Optionee who exercises any Incentive Option more than (i) 12 months
after the date of termination of employment due to permanent
disability or (ii) three months after the date of termination of
employment due to retirement or for other reasons.
11. RESTRICTED STOCK AWARDS. Restricted Stock awards under the Plan shall
consist of shares of Common Stock granted to an Employee that are
restricted against transfer, subject to forfeiture, and subject to
other terms and conditions intended to further the purpose of the Plan
as determined by the Committee. Restricted Stock awards shall be
evidenced by Agreements containing provisions setting forth the terms
and conditions governing such awards. Each such Agreement must contain
the following:
4
<PAGE> 5
a) prohibitions against the sale, assignment, transfer,
exchange, pledge, hypothecation, or other encumbrance of (i)
the shares awarded as Restricted Stock, (ii) the right to
vote such shares, and (iii) the right to receive dividends
thereon during the restriction period applicable to such
shares; provided, however, that the Optionee shall have all
the other rights of a stockholder including, but not limited
to, the right to receive dividends and the right to vote such
shares;
b) at least one term, condition, or restriction constituting a
"substantial risk of forfeitures" as defined in Section 83(c)
of the Code;
c) such other terms, conditions, and restrictions as the
Committee in its discretion chooses to apply to the stock
(including, without limitation) provisions creating
additional substantial risks of forfeiture);
d) a requirement that each certificate representing shares of
Restricted Stock shall be deposited with the Company, or its
designee, and shall bear the following legend:
This certificate and shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture and restrictions against
transfer) contained in the Union Planters Corporation
1992 Stock Incentive Plan and an Agreement entered
into between the registered owner and Union Planters
Corporation. Release from such terms and conditions
shall be made only in accordance with the provisions
of the Plan and the Agreement, a copy of each of
which is on file in the office of the Treasurer of
Union Planters Corporation.
e) the applicable period or periods of any terms, conditions, or
restrictions applicable to the Restricted Stock; provided,
however, that the Committee in its discretion may accelerate
the expiration of the applicable restriction period with
respect to any part or all of the shares awarded to an
Optionee; and
f) the terms and conditions upon which any restrictions upon
shares of Restricted Stock awarded shall lapse and new
certificates free of the foregoing legend shall be issued to
the Optionee or his legal representative.
The Committee may include in an Agreement that in the event
of an Optionee's termination of employment for any reason prior to the
lapse of restrictions, all shares of Restricted Stock shall be
forfeited by such Optionee to the Company without payment of any
consideration by the Company, and neither the Optionee nor any
successors, heirs, assigns, or personal representatives of such
Optionee shall thereafter have any further rights or interest in such
shares or certificates.
12. WITHHOLDING TAXES. Whenever the Company proposes or is required to
issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the Optionee to remit to the Company
cash or Common Stock in an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares. Alternatively, the
Company may issue or transfer such shares of Common Stock net of the
number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock
shall be valued on the date the withholding obligation is incurred.
All Optionees shall have the right under the Plan to elect to pay
withholding taxes in cash, to have shares of Common Stock withheld, or
to deliver previously owned shares to satisfy withholding tax
requirements upon the exercise of an Option granted under the Plan or
upon the acquisition of Restricted Stock free of prior restrictions.
13. CAPITAL ADJUSTMENTS. The number and class of shares subject to each
outstanding Option or Restricted Stock grant, the Option Price, and
the aggregate number and class of shares for which awards thereafter
may be made shall be subject to such adjustment, if any, as the
Committee in its discretion deems appropriate to reflect such events
as stock dividends, stock splits, recapitalizations, mergers,
consolidations, or reorganizations of or by the Company; provided,
however, that any such adjustment shall not materially increase the
benefits accruing to Plan participants.
5
<PAGE> 6
14. TERMINATION OR AMENDMENT. The Board shall have the power to terminate
the Plan and to amend it in any respect, provided, however, that after
the Plan has been approved by the stockholders of the Company, no
amendment of the Plan shall be made by the Board without approval of
the Company's stockholders to the extent stockholder approval of such
amendment is required by applicable law or regulation or the
requirements of the principal exchange or interdealer quotation system
on which the Common Stock is then listed or quoted. Unless required by
applicable law or governmental regulations, no termination or
amendment of the Plan shall adversely affect the rights or obligations
of the holder of any Option or Restricted Stock granted under the Plan
without his consent.
15. MODIFICATION, EXTENSION, RENEWAL AND SUBSTITUTION OF OPTIONS. Subject
to the terms and conditions and within the limitations of the Plan,
the Committee may modify, extend, or renew outstanding Options granted
under the Plan. Notwithstanding the foregoing, however, no
modification of an Option under the Plan shall, without the consent of
the Optionee, alter or impair any of such Optionee's rights or
obligations, unless required by applicable law or governmental
regulations. Anything contained herein to the contrary
notwithstanding, Options may, at the discretion of the Committee, be
granted under this Plan in substitution for options to purchase shares
of capital stock of another corporation which is merged into,
consolidated with, or all or a substantial portion of the property or
stock of which is acquired by, the Company or a Subsidiary. The terms
and conditions of the substitute options so granted may vary from the
terms and conditions set forth in this Plan to such extent as the
Committee may deem appropriate in order to conform, in whole or in
part, to the provisions of the options in substitution for which such
Options are granted. Such Options shall not be counted toward the
(20%) share limit set forth in the last sentence in Section 5, except
to the extent it is determined by the Committee that counting such
Options is required in order for the grants of such Options hereunder
to be eligible to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Code and the rules and
regulations thereunder.
16. EFFECTIVENESS OF THE PLAN. Following adoption by the Board, the Plan
shall take effect on the date approved by the stockholders of the
Company. Notwithstanding any provision to the contrary, all Options
and Restricted Stock shall be without force or effect unless the Plan
shall have been approved by the stockholders of the Company. Any Plan
amendments which require stockholder approval pursuant to Section 14
are subject to approval by vote of the stockholders of the Company
within 12 months after their adoption by the Board. Subject to such
approval, any such amendments shall be effective on the date on which
they are adopted by the Board. Options and Restricted Stock which are
dependent upon stockholder approval of a Plan amendment may be granted
prior to such approval, but shall be subject to such approval. The
date on which any Option or Restricted Stock grant dependent upon
stockholder approval of a Plan amendment is effective shall be the
Date of Grant for all purposes as if the Option or Restricted Stock
grant had not been subject to such approval; however, no Option or
Restricted Stock granted may be exercised prior to such stockholder
approval.
17. TERM OF THE PLAN. Unless sooner terminated by the Board pursuant to
Section 14, the Plan shall terminate on the date ten years after its
adoption by the Board, and no Options or Restricted Stock may be
granted after termination. The termination shall not affect the
validity of any Option or Restricted Stock outstanding on the date of
termination.
18. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as Directors or as members of the
Committee, the members of the Committee shall be indemnified by the
Company against the reasonable expenses, including attorneys' fees,
actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein,
to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any
Option or Restricted Stock granted or awarded hereunder, and against
all amounts reasonably paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, if such members acted in good faith and in a manner which
they believed to be in, and not opposed to, the best interests of the
Company.
19. GENERAL PROVISIONS.
a) The establishment of the Plan shall not confer upon any
Employee any legal or equitable right against the Company or
the Committee except as expressly provided in the Plan.
6
<PAGE> 7
b) The Plan does not constitute inducement or consideration for
the employment of any Employee, nor is it a contract between
the Company and any Employee. Participation in the Plan shall
not give any Employee any right to be retained in the employ
of the Company. The Company retains the right to hire and
discharge any Employee at any time, with or without cause, as
if the Plan had never been adopted.
c) The interests of any Employee under the Plan are not subject
to the claims of creditors and may not in any way be
assigned, alienated, or encumbered.
d) The Plan shall be governed, construed, and administered in
accordance with the laws of the state of Tennessee and in
accordance with the intention of the Company that Incentive
Stock Options granted under the Plan qualify as such under
Section 422 of the Code, and that Options granted under the
Plan to Officers and Directors who are subject to Section 16
of the Exchange Act qualify as exempt transactions under
Exchange Act Rule 16b-3.
e) Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i)
the listing, registration or qualification of the shares of
Common Stock subject or related thereto upon any securities
exchange or under any state or federal law, or (ii) the
consent or approval of any government regulatory body, or
(iii) an agreement by the Optionee with respect to the
disposition of shares of Common Stock is necessary or
desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of
Common Stock thereunder, such award may not be consummated in
whole or in part unless such listing, registration,
qualification, consent, approval, or agreement shall have
been effected or obtained free of any conditions not
acceptable to the Committee.
<TABLE>
<S> <C>
ORIGINAL PLAN APPROVAL: AMENDMENT NO. 1 APPROVAL:
Board of Directors -- February 20, 1992 Board of Directors -- October 17, 1996
Shareholders -- April 23, 1992 Shareholders -- April 17, 1997
AMENDMENT NO. 2 APPROVAL:
Board of Directors -- February 18, 1999
Shareholders -- April 15, 1999
</TABLE>
7
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE UNION PLANTERS CORPORATION FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,168,722
<INT-BEARING-DEPOSITS> 51,652
<FED-FUNDS-SOLD> 114,790
<TRADING-ASSETS> 280,689
<INVESTMENTS-HELD-FOR-SALE> 8,798,432
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 20,885,356
<ALLOWANCE> 345,011
<TOTAL-ASSETS> 33,669,182
<DEPOSITS> 26,461,681
<SHORT-TERM> 2,172,498
<LIABILITIES-OTHER> 705,880
<LONG-TERM> 1,285,214
0
22,897
<COMMON> 712,850
<OTHER-SE> 2,308,162
<TOTAL-LIABILITIES-AND-EQUITY> 33,669,182
<INTEREST-LOAN> 425,094
<INTEREST-INVEST> 124,040
<INTEREST-OTHER> 5,451
<INTEREST-TOTAL> 554,585
<INTEREST-DEPOSIT> 213,004
<INTEREST-EXPENSE> 258,888
<INTEREST-INCOME-NET> 295,697
<LOAN-LOSSES> 16,279
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 258,239
<INCOME-PRETAX> 147,433
<INCOME-PRE-EXTRAORDINARY> 97,350
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,350
<EPS-PRIMARY> .68
<EPS-DILUTED> .67
<YIELD-ACTUAL> 7.80
<LOANS-NON> 179,154
<LOANS-PAST> 380,648
<LOANS-TROUBLED> 4,195
<LOANS-PROBLEM> 68,780
<ALLOWANCE-OPEN> 321,476
<CHARGE-OFFS> 25,656
<RECOVERIES> 11,452
<ALLOWANCE-CLOSE> 345,011
<ALLOWANCE-DOMESTIC> 345,011
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
