<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, 2000
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.
Class Outstanding at April 30, 2000
- ------------------------- -----------------------------
Common stock $5 par value 135,313,869
<PAGE> 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheet - March 31, 2000,
March 31, 1999, and December 31, 1999................................... 3
b) Consolidated Statement of Earnings -
Three Months Ended March 31, 2000 and 1999.............................. 4
c) Consolidated Statement of Changes in Shareholders' Equity -
Three Months Ended March 31, 2000 ...................................... 5
d) Consolidated Statement of Cash Flows -
Three Months Ended March 31, 2000 and 1999.............................. 6
e) Notes to Unaudited Consolidated Financial Statements.................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................... 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk.............. 29
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................... 32
Item 2. Changes in Securities................................................... 32
Item 3. Defaults Upon Senior Securities......................................... 32
Item 4. Submission of Matters to a Vote of Security Holders..................... 32
Item 5. Other Information....................................................... 32
Item 6. Exhibits and Reports on Form 8-K........................................ 32
Signatures........................................................................ 33
</TABLE>
2
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------------ ------------
2000 1999 1999
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash and due from banks .................................................. $ 963,297 $ 1,168,722 $ 1,127,902
Interest-bearing deposits at financial institutions ...................... 17,429 51,652 73,062
Federal funds sold and securities purchased under agreements to resell ... 40,023 114,790 51,117
Trading account assets ................................................... 207,996 280,689 315,734
Loans held for resale .................................................... 338,694 380,413 430,690
Available for sale securities (Amortized cost: $7,572,300,
$8,721,121, and $7,685,096, respectively) .............................. 7,341,647 8,798,432 7,472,455
Loans .................................................................... 22,230,099 20,538,456 21,474,498
Less: Unearned income .................................................. (20,365) (33,513) (28,098)
Allowance for losses on loans ................................ (345,821) (345,011) (342,300)
------------ ------------ ------------
Net loans ........................................................... 21,863,913 20,159,932 21,104,100
Premises and equipment, net .............................................. 628,370 582,973 637,628
Accrued interest receivable .............................................. 283,115 290,226 287,231
FHA/VA claims receivable ................................................. 104,052 139,411 108,618
Mortgage servicing rights, net ........................................... 126,905 107,639 122,110
Goodwill and other intangibles, net ...................................... 955,199 725,746 975,432
Other assets ............................................................. 479,870 868,557 574,274
------------ ------------ ------------
TOTAL ASSETS ..................................................... $ 33,350,510 $ 33,669,182 $ 33,280,353
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing ................................................... $ 4,185,808 $ 4,664,334 $ 4,035,189
Certificates of deposit of $100,000 and over .......................... 2,044,939 2,429,551 1,963,347
Other interest-bearing ................................................ 17,139,323 19,367,796 17,373,580
------------ ------------ ------------
Total deposits ................................................... 23,370,070 26,461,681 23,372,116
Short-term borrowings .................................................... 5,384,459 2,172,498 5,422,504
Short- and medium-term senior notes ...................................... 260,000 105,000 60,000
Federal Home Loan Bank advances .......................................... 201,720 210,804 203,032
Other long-term debt ..................................................... 829,342 969,410 854,738
Accrued interest, expenses, and taxes .................................... 259,274 292,126 202,303
Other liabilities ........................................................ 347,065 413,754 389,551
------------ ------------ ------------
TOTAL LIABILITIES ................................................ 30,651,930 30,625,273 30,504,244
------------ ------------ ------------
Commitments and contingent liabilities ................................... -- -- --
Shareholders' equity
Convertible preferred stock ............................................ 20,542 22,897 20,875
Common stock, $5 par value; 300,000,000 shares authorized;
135,486,993 issued and outstanding (142,570,077 at March 31,1999
and 138,487,381 at December 31, 1999) ................................ 677,435 712,850 692,437
Additional paid-in capital ............................................. 741,908 767,396 755,306
Retained earnings ...................................................... 1,416,477 1,507,437 1,453,468
Unearned compensation .................................................. (11,945) (14,134) (11,760)
Accumulated other comprehensive income--unrealized gain (loss)on
available for sale securities, net of income taxes ................... (145,837) 47,463 (134,217)
------------ ------------ ------------
TOTAL SHAREHOLDERS' EQUITY ....................................... 2,698,580 3,043,909 2,776,109
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...................... $ 33,350,510 $ 33,669,182 $ 33,280,353
============ ============ ============
</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,
------------------------------
2000 1999
---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................... $ 469,763 $ 417,771
Interest on investment securities
Taxable..................................................... 101,691 106,580
Tax-exempt.................................................. 16,813 17,460
Interest on deposits at financial institutions................ 320 987
Interest on federal funds sold and securities purchased under
agreements to resell........................................ 1,029 869
Interest on trading account assets............................ 5,054 3,595
Interest on loans held for resale............................. 6,318 7,323
---------- ----------
Total interest income................................. 600,988 554,585
---------- ----------
INTEREST EXPENSE
Interest on deposits.......................................... 189,968 213,004
Interest on short-term borrowings............................. 76,696 19,254
Interest on long-term debt.................................... 19,574 26,630
---------- ----------
Total interest expense................................ 286,238 258,888
---------- ----------
NET INTEREST INCOME................................... 314,750 295,697
PROVISION FOR LOSSES ON LOANS................................... 17,303 16,279
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS 297,447 279,418
---------- ----------
NONINTEREST INCOME
Service charges on deposit accounts........................... 42,031 38,867
Mortgage banking revenue...................................... 22,872 27,487
Bank card income.............................................. 8,422 2,960
Factoring commissions......................................... 7,144 7,028
Trust service income.......................................... 6,665 6,710
Profits and commissions from trading activities............... 1,463 345
Investment securities gains................................... -- 11
Other income.................................................. 38,972 42,846
---------- ----------
Total noninterest income.............................. 127,569 126,254
---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits................................ 128,731 123,230
Net occupancy expense......................................... 23,399 20,235
Equipment expense............................................. 21,075 19,020
Goodwill and other intangibles amortization................... 15,847 12,863
Other expense................................................. 82,653 82,891
---------- ----------
Total noninterest expense............................. 271,705 258,239
---------- ----------
EARNINGS BEFORE INCOME TAXES.......................... 153,311 147,433
Income taxes.................................................... 51,974 50,083
---------- ----------
NET EARNINGS.......................................... $ 101,337 $ 97,350
========== ==========
NET EARNINGS APPLICABLE TO COMMON SHARES.............. $ 100,925 $ 96,892
========== ==========
EARNINGS PER COMMON SHARE
Basic................................................. $ .74 $ .68
Diluted............................................... .73 .67
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Basic............................................. 136,546 142,259
Diluted........................................... 138,073 144,675
</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
LOSS 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, 2000 .............. $ 20,875 $ 692,437 $ 755,306 $ 1,453,468 $(11,760) $(134,217) $2,776,109
Comprehensive income
Net earnings ......................... -- -- -- 101,337 -- -- 101,337
Other comprehensive income,
net of taxes:
Net change in the unrealized losses
on available for sale securities ... -- -- -- -- -- (11,620) (11,620)
Total comprehensive income ........ 89,717
Cash dividends
Common stock, $.50 per share ......... -- -- -- (68,682) -- -- (68,682)
Preferred stock, $.50 per share ...... -- -- -- (412) -- -- (412)
Common stock issued under
employee benefit plans,
net of stock exchanged ............... -- 523 3,396 (34) (185) -- 3,700
Conversion of preferred stock ......... (333) 83 250 -- -- -- --
Common stock purchased
and retired .......................... -- (15,608) (17,044) (69,200) -- -- (101,852)
-------- --------- --------- ----------- -------- --------- ----------
BALANCE, MARCH 31, 2000 ............... $ 20,542 $ 677,435 $ 741,908 $ 1,416,477 $(11,945) $(145,837) $2,698,580
======== ========= ========= =========== ======== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
BEFORE-TAX TAX NET OF TAX
AMOUNT BENEFIT AMOUNT
---------- ------- ----------
<S> <C> <C> <C>
DISCLOSURE OF RECLASSIFICATION AMOUNT:
Change in the unrealized losses
on available for sale securities
arising during the period .............. $(18,012) $6,392 $(11,620)
Less: reclassification for losses
included in net income ............ -- -- --
-------- ------ --------
Net change in the unrealized losses
on available for sale securities ....... $(18,012) $6,392 $(11,620)
======== ====== ========
</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,
-------------------------------
2000 1999
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings .......................................................................... $ 101,337 $ 97,350
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 ..... 17,450 16,580
Depreciation and amortization of premises and equipment ............................. 19,679 15,313
Amortization of goodwill and other intangibles ...................................... 15,847 12,863
Amortization of mortgage servicing rights ........................................... 4,588 5,857
Net amortization (accretion) of investment securities ............................... (86) 5,456
Net realized gains on sales of investment securities ................................ -- (11)
Deferred income tax expense (benefit) ............................................... 5,346 (13,353)
(Increase) decrease in assets
Trading account assets and loans held for resale ................................ 199,734 61,731
Other assets .................................................................... 105,925 (296,967)
Increase (decrease) in accrued interest, expenses, taxes, and other liabilities ..... 14,390 (38,929)
Other, net .......................................................................... 535 4,675
----------- -----------
Net cash provided (used) by operating activities .............................. 484,745 (129,435)
----------- -----------
INVESTING ACTIVITIES
Net decrease in short-term investments ................................................ 55,633 762,330
Proceeds from sales of available for sale securities .................................. 25,022 153,330
Proceeds from maturities, calls, and prepayments of available for sale securities ..... 390,047 2,091,936
Purchases of available for sale securities ............................................ (303,259) (2,625,936)
Net (increase) decrease in loans ...................................................... (784,081) 375,637
Net cash received from acquisitions of financial institutions ......................... -- 21,117
Purchases of premises and equipment, net .............................................. (10,416) (16,706)
----------- -----------
Net cash provided (used) by investing activities .............................. (627,054) 761,708
----------- -----------
FINANCING ACTIVITIES
Net decrease in deposits .............................................................. (973) (765,592)
Net increase in short-term borrowings ................................................. 161,955 314,605
Proceeds from long-term debt .......................................................... 100,000 --
Repayment of long-term debt ........................................................... (126,699) (155,299)
Proceeds from issuance of common stock ................................................ 3,277 9,954
Purchase and retirement of common stock ............................................... (101,852) (49,409)
Cash dividends paid ................................................................... (69,098) (72,231)
Other, net ............................................................................ -- 29
----------- -----------
Net cash used by financing activities ......................................... (33,390) (717,943)
----------- -----------
Net decrease in cash and cash equivalents ............................................. (175,699) (85,670)
Cash and cash equivalents at the beginning of the period .............................. 1,179,019 1,366,182
----------- -----------
Cash and cash equivalents at the end of the period .................................... $ 1,003,320 $ 1,280,512
=========== ===========
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest ............................................................................ $ 274,842 $ 265,786
Income taxes paid (refunded), net ................................................... (17,492) 7,371
Unrealized gain (loss) on available for sale securities ............................... (230,653) 77,311
</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 accounting principles generally accepted in the United States. 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, Union Planters or the Company) 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 Union Planters Corporation's 1999 Annual Report to Shareholders
(1999 Annual Report), a copy of which is Exhibit 13 to Union Planters
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999
(1999 10-K). Certain prior year amounts have been reclassified to be consistent
with the 2000 financial reporting presentation.
NOTE 2. ACQUISITIONS
SUBSEQUENT EVENT
On April 26, 2000, Union Planters Bank, National Association (UPB), the
Company's principal subsidiary, completed the acquisition of Strategic
Outsourcing, Inc. (SOI) which is headquartered in Charlotte, North Carolina. SOI
is one of the largest providers of professional employment organization services
(e.g. workers' compensation management, employee benefits management, payroll
administration, safety and risk management, human resources administration, and
compliance administration) in the United States. Clients, which are small and
mid-sized businesses, are provided integrated and cost-effective approaches to
the management of critical human resources responsibilities and employer risks.
The cash purchase price for this acquisition is approximately $45 million
(excluding up to $10 million of future contingent consideration) and goodwill
and other intangibles resulting from the acquisition are preliminarily estimated
to be approximately $40 million.
NOTE 3. LOANS
Loans are summarized by type as follows:
<TABLE>
<CAPTION>
MARCH 31,
--------------------------- DECEMBER 31,
2000 1999 1999
----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Commercial, financial, and agricultural.... $4,957,019 $4,147,118 $4,799,840
Foreign.................................... 443,512 183,318 374,814
Accounts receivable - factoring............ 643,465 620,472 555,128
Real estate - construction................. 1,719,468 1,258,440 1,581,164
Real estate - mortgage
Secured by 1-4 family residential........ 5,911,360 5,755,943 5,554,943
FHA/VA government-insured/guaranteed..... 479,255 617,854 519,213
Other mortgage........................... 4,558,281 4,590,580 4,591,110
Home equity................................ 596,984 528,915 584,546
Consumer
Credit cards and related plans........... 80,921 82,698 82,998
Other consumer........................... 2,754,356 2,692,095 2,752,016
Direct lease financing..................... 85,478 61,023 78,726
----------- ----------- -----------
TOTAL LOANS...................... $22,230,099 $20,538,456 $21,474,498
=========== =========== ===========
</TABLE>
7
<PAGE> 8
Nonperforming loans are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans........................... $ 130,483 $ 127,766
Restructured loans......................... 1,811 1,878
---------- ----------
TOTAL NONPERFORMING LOANS........ $ 132,294 $ 129,644
========== ==========
FHA/VA GOVERNMENT-INSURED/GUARANTEED
LOANS ON NONACCRUAL STATUS............ $ 5,767 $ 6,613
========== ==========
</TABLE>
NOTE 4. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans for the three months
ended March 31, 2000 are summarized as follows (Dollars in thousands):
<TABLE>
<S> <C>
BALANCE, JANUARY 1, 2000 ....................... $ 342,300
Provision for losses on loans .................. 17,303
Recoveries of loans previously charged off ..... 15,175
Loans charged off .............................. (28,957)
----------
BALANCE, MARCH 31, 2000 ........................ $ 345,821
==========
</TABLE>
NOTE 5. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized
as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000
--------------------------------------------------------------
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 ..................................... $ 165,361 $ 143 $ 1,253 $ 164,251
U.S. Government agencies
Collateralized mortgage obligations ............. 2,483,693 1,197 94,384 2,390,506
Mortgage-backed ................................. 644,512 3,520 17,570 630,462
Other ........................................... 1,007,532 1,827 26,596 982,763
----------- ----------- ----------- -----------
Total U.S. Government obligations ......... 4,301,098 6,687 139,803 4,167,982
Obligations of states and political subdivisions .... 1,274,859 13,221 36,824 1,251,256
Other stocks and securities ......................... 1,996,343 2,743 76,677 1,922,409
----------- ----------- ----------- -----------
TOTAL AVAILABLE FOR SALE SECURITIES ....... $ 7,572,300 $ 22,651 $ 253,304 $ 7,341,647
=========== =========== =========== ===========
<CAPTION>
DECEMBER 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 ..................................... $ 165,335 $ 398 $ 1,190 $ 164,543
U.S. Government agencies
Collateralized mortgage obligations ............. 2,440,301 498 85,350 2,355,449
Mortgage-backed ................................. 650,125 3,507 16,870 636,762
Other ........................................... 1,048,180 1,879 26,232 1,023,827
----------- ----------- ----------- -----------
Total U.S. Government obligations ......... 4,303,941 6,282 129,642 4,180,581
Obligations of states and political subdivisions .... 1,303,088 13,902 43,845 1,273,145
Other stocks and securities ......................... 2,078,067 3,510 62,848 2,018,729
----------- ----------- ----------- -----------
TOTAL AVAILABLE FOR SALE SECURITIES ....... $ 7,685,096 $ 23,694 $ 236,335 $ 7,472,455
=========== =========== =========== ===========
</TABLE>
Investment securities having a fair value of approximately $4.4 billion
and $2.8 billion at March 31, 2000 and December 31, 1999, respectively, were
pledged to secure public and trust funds on deposit, securities sold under
agreements to repurchase, and Federal Home Loan Bank (FHLB) advances.
8
<PAGE> 9
The following table presents the gross realized gains and losses on
available for sale investment securities for the three months ended March 31,
2000 and 1999 (Dollars in thousands).
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Realized gains........... $ -- $ 67
Realized losses.......... $ -- $ 56
</TABLE>
NOTE 6. OTHER NONINTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OTHER NONINTEREST INCOME
ATM transaction fees................................... $ 7,404 $ 5,192
Brokerage fee income................................... 4,988 4,728
Annuity sales income................................... 4,626 4,268
Insurance commissions.................................. 3,850 4,011
Letters of credit fees................................. 1,614 1,358
Gain on sales of branches/deposits and other assets.... 504 1,531
Gain on sale of FHA/VA loans........................... -- 5,317
Gain on sale of credit card portfolio.................. -- 2,294
Losses of equity method investments.................... (557) (1)
Other income........................................... 16,543 14,148
---------- ----------
TOTAL OTHER NONINTEREST INCOME................. $ 38,972 $ 42,846
========== ==========
OTHER NONINTEREST EXPENSE
Communications......................................... $ 10,170 $ 8,058
Other contracted services.............................. 7,956 7,116
Postage and carrier.................................... 7,301 7,285
Stationery and supplies................................ 6,438 6,833
Merchant interchange fees.............................. 5,755 3,150
Advertising and promotion.............................. 5,404 6,691
Amortization of mortgage servicing rights.............. 4,588 5,857
Other personnel services............................... 3,547 4,368
Legal fees............................................. 2,617 3,313
Travel................................................. 2,402 2,657
Consultant fees........................................ 2,106 2,034
Federal Reserve fees................................... 1,659 1,320
Accounting and audit fees.............................. 1,614 1,418
Other real estate expense.............................. 1,467 1,422
Brokerage and clearing fees on trading activities...... 1,444 1,076
Taxes other than income................................ 1,329 1,730
FDIC insurance......................................... 1,200 1,510
Dues, subscriptions, and contributions................. 933 1,308
Insurance.............................................. 817 536
Provision for losses on FHA/VA foreclosure claims...... 100 250
Miscellaneous charge-offs.............................. 75 2,386
Other expense.......................................... 13,731 12,573
---------- ----------
TOTAL OTHER NONINTEREST EXPENSE................ $ 82,653 $ 82,891
========== ==========
</TABLE>
NOTE 7. INCOME TAXES
Income taxes for the three months ended March 31, 2000, were $52.0
million, resulting in an effective tax rate of 33.90%. Income taxes for the same
period in 1999 were $50.1 million, resulting in an effective tax rate of 33.97%.
The decrease in the effective rate in 2000, as compared to 1999, is due
primarily to the change in the mix of taxable and nontaxable revenues.
At March 31, 2000, Union Planters had a net deferred tax asset of $255.8
million compared to $254.7 million at December 31, 1999. The net deferred tax
asset includes a deferred tax asset related to the net unrealized loss on
available for sale securities of $84.8 million and $78.4 million at those dates,
respectively. Based upon historical earnings and anticipated future earnings,
management believes that normal operations will generate sufficient taxable
income to realize in full these deferred tax benefits. Therefore, no
extraordinary strategies are deemed necessary by management to generate
sufficient taxable income for purposes of realizing the net deferred tax asset.
9
<PAGE> 10
NOTE 8. BORROWINGS
SHORT-TERM BORROWINGS
Short-term borrowings include short-term FHLB advances, federal funds
purchased, securities sold under agreements to repurchase, and other short-term
borrowings. Short-term FHLB advances are borrowings from the FHLB, which are
secured by mortgage-backed securities and mortgage loans. Federal funds
purchased arise from Union Planters' market activity with its correspondent
banks and generally mature in one business day. Securities sold under agreements
to repurchase are secured by U.S. Government and agency securities.
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------- ------------
2000 1999 1999
---------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balances at period end:
Short-term FHLB advances .................................................... $3,000,000 $ 2,000 $3,000,000
Federal funds purchased ..................................................... 853,775 752,753 945,869
Securities sold under agreements to repurchase .............................. 1,530,241 1,415,339 1,476,142
Other short-term borrowings ................................................. 443 2,406 493
---------- ---------- ----------
Total short-term borrowings ....................................... $5,384,459 $2,172,498 $5,422,504
========== ========== ==========
Federal funds purchased and securities sold under agreements to repurchase
Daily average balance ..................................................... $2,343,982 $1,754,258 $1,980,674
Weighted average interest rate ............................................ 5.28% 4.42% 4.62%
Short-term FHLB advances
Daily average balance ..................................................... 3,005,768 -- 928,493
Weighted average interest rate ............................................ 6.00% --% 5.42%
</TABLE>
SHORT- AND MEDIUM-TERM SENIOR NOTES
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, 2000, March 31, 1999, and December 31, 1999, UPB had no
Subordinated Notes outstanding under this program. At March 31, 1999 and
December 31, 1999, UPB had no Short-Term Senior Notes outstanding. A summary of
the Short-Term and Medium-Term Senior Notes outstanding follows.
<TABLE>
<CAPTION>
SHORT-TERM
SENIOR NOTES MEDIUM-TERM SENIOR NOTES
-------------- ----------------------------------------------------
MARCH 31, 2000 MARCH 31, 2000 MARCH 31, 1999 DECEMBER 31, 1999
-------------- -------------- -------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balances at period end... $ 200,000 $ 60,000 $ 105,000 $ 60,000
Variable-rate notes...... -- -- -- --
Fixed-rate notes......... 200,000 60,000 105,000 60,000
Range of maturities...... 5/00 8/01 - 10/01 10/99 - 10/01 8/01 - 10/01
</TABLE>
10
<PAGE> 11
FEDERAL HOME LOAN BANK ADVANCES
Certain of Union Planters' banking and thrift subsidiaries had outstanding
advances, with original maturity dates of greater than one year, 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, 2000, Union Planters 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,
2000 1999 1999
-------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at period end........ $ 201,720 $ 210,804 $ 203,032
Range of interest rates...... 3.25 - 5.985% 3.25 - 6.85% 1.75 - 6.85%
Range of maturities.......... 2000 - 2015 2000 - 2015 2000 - 2015
</TABLE>
OTHER LONG-TERM DEBT
Union Planters' other long-term debt is summarized as follows. Reference
is made to Note 9 to the consolidated financial statements in the 1999 Annual
Report for additional information regarding these borrowings.
<TABLE>
<CAPTION>
MARCH 31,
------------------------ DECEMBER 31,
2000 1999 1999
---------- ---------- ------------
(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) .................... $ 199,053 $ 199,018 $ 199,044
Variable-rate asset-based certificates ...................................... 150,000 275,000 175,000
6 3/4% Subordinated Notes due 2005 .......................................... 99,669 99,610 99,655
6.25% Subordinated Notes due 2003 ........................................... 74,813 74,761 74,800
6.5% Putable/Callable Subordinated Notes due 2018 ........................... 301,008 301,670 301,055
Other long-term debt ........................................................ 4,799 19,351 5,184
---------- ---------- ----------
TOTAL OTHER LONG-TERM DEBT ........................................ $ 829,342 $ 969,410 $ 854,738
========== ========== ==========
</TABLE>
NOTE 9. SHAREHOLDERS' EQUITY
PREFERRED STOCK
Union Planters' outstanding preferred stock, all of which is convertible
into shares of Union Planters' common stock, is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31,
------------------------ DECEMBER 31,
2000 1999 1999
---------- ---------- ------------
(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 .................................. $ -- $ -- $ --
Series E, 8% Cumulative, Convertible,
Preferred Stock (stated at liquidation value of $25 per share),
821,671 shares issued and outstanding (1,478,888 at March 31, 1999
and 835,006 at December 31, 1999) ...................................... 20,542 22,897 20,875
---------- ---------- ----------
TOTAL PREFERRED STOCK ............................................. $ 20,542 $ 22,897 $ 20,875
========== ========== ==========
</TABLE>
11
<PAGE> 12
NOTE 10. EARNINGS PER SHARE
The calculation of net earnings per share is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
2000 1999
------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
BASIC
Net earnings ........................................ $ 101,337 $ 97,350
Less preferred dividends .......................... 412 458
------------ ------------
Net earnings applicable to common shares ............ $ 100,925 $ 96,892
============ ============
Average common shares outstanding ................... 136,546,372 142,258,654
============ ============
Net earnings per common share-- basic ............... $ .74 $ .68
============ ============
DILUTED
Net earnings ........................................ $ 101,337 $ 97,350
Elimination of interest on convertible debt ......... -- 83
------------ ------------
Net earnings applicable to common shares ............ $ 101,337 $ 97,433
============ ============
Average common shares outstanding ................... 136,546,372 142,258,654
Stock option adjustment ............................. 487,952 1,008,992
Preferred stock adjustment .......................... 1,038,281 1,159,488
Effect of other dilutive securities ................. -- 247,731
------------ ------------
Average common shares outstanding ................... 138,072,605 144,674,865
============ ============
Net earnings per common share-- diluted ............. $ .73 $ .67
============ ============
</TABLE>
NOTE 11. LINES OF BUSINESS REPORTING
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
------------------------------------------------------------
OTHER
OPERATING PARENT CONSOLIDATED
BANKING UNITS COMPANY TOTAL
---------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net interest income................. $ 304,090 $ 13,205 $ (2,545) $ 314,750
Provision for losses on loans....... (14,448) (2,855) -- (17,303)
Noninterest income.................. 77,902 49,493 (330) 127,065
Noninterest expense................. (226,050) (43,544) (2,111) (271,705)
Other significant items, net........ 504 -- -- 504
----------- ---------- ---------- -----------
Earnings before income taxes........ $ 141,998 $ 16,299 $ (4,986) $ 153,311
=========== ========== ========== ===========
Average assets...................... $30,605,423 $2,495,441 $ 151,950 $33,252,814
=========== ========== ========== ===========
<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
----------- ---------- ---------- -----------
Earning before income taxes......... $ 117,814 $ 34,297 $ (4,678) $ 147,433
=========== ========== ========== ===========
Average assets...................... $29,211,564 $2,894,861 $ 243,605 $32,350,030
=========== ========== ========== ===========
</TABLE>
- --------------------
(1) Parent company noninterest income and earnings before income taxes are net
of the intercompany dividend eliminations of $70.7 million and $84.6
million for the three months ended March 31, 2000 and 1999, respectively.
12
<PAGE> 13
NOTE 12. CONTINGENT LIABILITIES
Union Planters and/or various subsidiaries are parties to certain pending
or threatened civil actions which are described in Item 3, Part I of Union
Planters' 1999 10-K and in Note 20 to Union Planters' consolidated financial
statements on page 70 of the 1999 Annual Report. Various other legal proceedings
pending against Union Planters 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 Union Planters' 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 2000 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 Union Planters' 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 Union Planters' 1999
Annual Report, the interim unaudited consolidated financial statements and notes
for the three months ended March 31, 2000 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 and the
level of future provisions for losses on loans
- the effect of legal proceedings on Union Planters' financial
condition, results of operations, and liquidity
- the effect of Internal Revenue Service examinations on Union
Planters' financial condition, results of operations, and
liquidity
- business plans for the year 2000 and beyond
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, and Union Planters' ability
to execute its business plans. Although Union Planters believes that the
expectations reflected in the forward-looking statements are reasonable, actual
results could differ materially.
13
<PAGE> 14
SELECTED FINANCIAL DATA
The following table presents selected financial highlights for the
three-month periods ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------- PERCENTAGE
2000 1999 CHANGE
----------- ------------ ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net earnings ..................................... $ 101,337 $ 97,350 4%
Per share
Basic ........................................ .74 .68 9
Diluted ...................................... .73 .67 9
Return on average assets ....................... 1.23% 1.22%
Return on average common equity ................ 14.39 13.39
Cash operating earnings .......................... $ 114,351 $ 102,260 12
Per share
Basic ........................................ .83 .72 15
Diluted ...................................... .83 .71 17
Return on average assets ....................... 1.38% 1.28%
Return on average common equity ................ 16.24 14.07
Return on average tangible assets .............. 1.42 1.30
Return on average tangible common equity ....... 24.71 16.91
Dividends per common share ....................... $ .50 $ .50 --
Net interest margin (FTE) ........................ 4.34% 4.22%
Net interest spread (FTE) ........................ 3.70 3.50
Expense ratio .................................... 1.56 1.61
Efficiency ratio ................................. 56.74 58.13
Book value per common share ...................... $ 19.77 $ 21.19 (7)
Leverage ratio ................................... 6.48% 7.83%
Common share prices
High closing price ............................. $ 37.25 $ 48.75
Low closing price .............................. 25.63 43.00
Closing price at quarter end ................... 30.81 43.94
</TABLE>
- ----------
Cash operating earnings = Net earnings adjusted for the after-tax impact of
goodwill and other intangibles amortization and other significant items.
Net interest margin = Net interest income (FTE) as a percentage of average
earning assets
Net interest 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
14
<PAGE> 15
OPERATING RESULTS -- THREE MONTHS ENDED MARCH 31, 2000
The following table presents a summary of Union Planters' operating
results for the three months ended March 31, 2000 and 1999 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,
------------------------------
2000 1999
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Interest income................................................. $ 600,988 $ 554,585
Interest expense................................................ (286,238) (258,888)
---------- ----------
NET INTEREST INCOME........................................ 314,750 295,697
PROVISION FOR LOSSES ON LOANS................................... (17,303) (16,279)
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS.... 297,447 279,418
NONINTEREST INCOME
Service charges on deposit accounts........................... 42,031 38,867
Mortgage banking revenues..................................... 22,872 27,487
Bank card income.............................................. 8,422 2,960
Factoring commissions......................................... 7,144 7,028
Trust service income.......................................... 6,665 6,710
Profits and commissions from trading activities............... 1,463 345
Other income.................................................. 38,468 33,604
---------- ----------
Total noninterest income................................... 127,065 117,001
---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits................................ 128,731 123,230
Net occupancy expense......................................... 23,399 20,235
Equipment expense............................................. 21,075 19,020
Goodwill and other intangibles amortization................... 15,847 12,863
Other expense................................................. 82,653 82,891
---------- ----------
Total noninterest expense.................................. 271,705 258,239
---------- ----------
EARNINGS BEFORE OTHER SIGNIFICANT ITEMS AND INCOME TAXES........ 152,807 138,180
OTHER SIGNIFICANT ITEMS
Net gain on sales of branches and other assets................ 504 1,531
Investment securities gains................................... -- 11
Gain on sale of the credit card portfolio..................... -- 2,394
Gain on securitization and sale of FHA/VA loans............... -- 5,317
---------- ----------
EARNINGS BEFORE INCOME TAXES............................... 153,311 147,433
Income taxes.................................................... (51,974) (50,083)
---------- ----------
NET EARNINGS............................................... $ 101,337 $ 97,350
========== ==========
NET EARNINGS.................................................... $ 101,337 $ 97,350
Other significant items, net of taxes........................... (308) (5,654)
---------- ----------
NET OPERATING EARNINGS.......................................... 101,029 91,696
Goodwill and other intangibles amortization, net of taxes....... 13,322 10,564
---------- ----------
CASH OPERATING EARNINGS......................................... $ 114,351 $ 102,260
========== ==========
</TABLE>
15
<PAGE> 16
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
2000 1999 (DECREASE)
------ ------ ----------
<S> <C> <C> <C>
Net interest income-FTE ......................................... $ 2.35 $ 2.11 $ .24
Provision for losses on loans ................................... (.13) (.11) (.02)
------ ------ ------
Net interest income after provision for losses on loans-FTE...... 2.22 2.00 .22
------ ------ ------
Noninterest income
Service charges on deposit accounts ........................... .30 .27 .03
Mortgage banking revenue ...................................... .17 .19 (.02)
Bank card income .............................................. .06 .02 .04
Factoring commissions ......................................... .05 .05 --
Trust service income .......................................... .05 .05 --
Profits and commissions from trading activities ............... .01 -- .01
Investment securities gains ................................... -- -- --
Other income .................................................. .28 .28 --
------ ------ ------
TOTAL NONINTEREST INCOME .............................. .92 .86 .06
------ ------ ------
Noninterest expense
Salaries and employee benefits ................................ .93 .85 (.08)
Net occupancy expense ......................................... .17 .14 (.03)
Equipment expense ............................................. .15 .13 (.02)
Goodwill and other intangible amortization .................... .11 .09 (.02)
Other expense ................................................. .61 .57 (.04)
------ ------ ------
TOTAL NONINTEREST EXPENSE ............................. 1.97 1.78 (.19)
------ ------ ------
EARNINGS BEFORE INCOME TAXES-FTE ................................ 1.17 1.08 .09
Income taxes-FTE ................................................ .44 .41 (.03)
------ ------ ------
NET EARNINGS .................................................... .73 .67 .06
Less preferred stock dividends .................................. -- -- --
------ ------ ------
DILUTED EARNINGS PER COMMON SHARE ..................... $ .73 $ .67 $ .06
====== ====== ======
Change in net earnings applicable to diluted earnings
per share using previous year average shares outstanding ...... $ .03
Change in average shares outstanding ............................ .03
------
CHANGE IN NET EARNINGS ................................ $ .06
======
AVERAGE DILUTED SHARES (IN THOUSANDS) ........................... 138,073 144,675
======= =======
</TABLE>
- ---------------
FTE = Fully taxable-equivalent basis
FIRST QUARTER EARNINGS OVERVIEW
For the first quarter of 2000, Union Planters reported net earnings of
$101.3 million, or $.73 per diluted common share. This compares to net earnings
for the same period in 1999 of $97.4 million, or $.67 per diluted common share.
Net earnings for the quarter resulted in annualized returns on average assets
and average common equity of 1.23% and 14.39%, respectively, which compares to
1.22% and 13.39%, respectively, for the first quarter of 1999.
Cash operating earnings for the first quarter of 2000 were $114.4
million, or $.83 per diluted common share compared to $102.3 million, or $.71
per diluted common share for the same period in 1999. The cash operating
earnings resulted in an annualized return on average assets of 1.38% and an
annualized return on average tangible common equity of 16.24% for the first
quarter of 2000 which compares to 1.28% and 14.07%, respectively, for the same
period in 1999.
16
<PAGE> 17
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income (FTE) for the first quarter of 2000 was $323.9
million which compares to $305.1 million for the first quarter of 1999 and
$330.3 million for the fourth quarter of 1999. The 6% improvement in net
interest income between the first quarters of 2000 and 1999 resulted primarily
from the growth of earning assets (primarily 8% growth in loans) partially
offset by higher funding costs. The 2% decrease from the fourth quarter of 1999
resulted from the rising interest-rate environment which put downward pressure
on net interest income due to funding cost increases. Reference is made to
Union Planters' 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 2000 was 4.34% which
compares to 4.22% and 4.39%, respectively, for the first and fourth quarters of
1999. The interest-rate spread increased to 3.70% for the first quarter of 2000
from 3.50% for the same period in 1999 and decreased compared to 3.75% for the
fourth quarter of 1999.
INTEREST INCOME
The following table presents a breakdown of average earning assets for
the first quarter of 2000 and the first and fourth quarters of 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------
MARCH 31,
------------------------ DECEMBER 31,
2000 1999 1999
-------- -------- ------------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C>
Average earning assets .......................................... $ 30.0 $ 29.3 $ 29.9
Comprised of:
Loans ....................................................... 73% 70% 73%
Investment securities ....................................... 25 29 26
Other earning assets ........................................ 2 1 1
- ---------------
Fully taxable-equivalent yield on average earning assets ........ 8.17% 7.80% 7.96%
</TABLE>
Interest income (FTE) increased $46.1 million for the first quarter of
2000 compared to the same period in 1999. The increase is attributable
primarily to the growth of average earning assets and to an increase in the
yield on average earning assets.
Average earning assets increased $712 million, which accounted for $23.7
million of the increase in interest income. Average loans grew 8% as compared
to the first quarter of 1999, due primarily to acquisitions. Average investment
securities decreased $802 million as maturities of investment securities were
used to fund the loan growth.
The average yield on earning assets increased from 7.80% for the first
quarter of 1999 to 8.17% for the first quarter of 2000, which accounted for
$22.4 million of the increase in interest income. The higher yield is
attributable primarily to the rising interest-rate environment over this
period.
Interest income increased $10.9 million compared to the fourth quarter of
1999. The increase was attributable to an increase in the average yield on
earning assets from 7.96% to 8.17%, which accounted for $9.3 million of the
increase. An increase in average earning assets of $192 million (primarily the
growth of loans) accounted for the remaining $1.6 million of the increase.
17
<PAGE> 18
INTEREST EXPENSE
The following table presents a breakdown of average interest-bearing
liabilities for the first quarter of 2000 and the first and fourth quarters of
1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
----------------------------------------------
MARCH 31, DECEMBER 31,
----------------------------
2000 1999 1999
------------ ------------ ------------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C>
Average interest-bearing liabilities $ 25.8 $ 24.4 $ 25.3
Comprised of:
Deposits........................................ 75% 86% 78%
Short-term borrowings........................... 21 7 17
FHLB advances and long-term debt................ 4 7 5
- --------------------
Rate paid on average interest-bearing liabilities... 4.47% 4.30% 4.21%
</TABLE>
Interest expense increased $27.4 million in the first quarter of 2000
compared to the same period in 1999. An increase in average interest-bearing
liabilities of $1.4 billion accounted for $14.2 million of the increase. This
growth was attributable to an increase in short-term borrowings (primarily
short-term FHLB advances), which was partially offset by a decline in average
interest-bearing deposits of $1.7 billion and a decrease in long-term debt of
$586 million. Also contributing to the increase was an increase in the average
rate paid for interest-bearing liabilities from 4.30% for the first quarter of
1999 to 4.47% for the same period in 2000. This increase in rate accounted for
$13.1 million of the increase in interest expense.
Compared to the fourth quarter of 1999, interest expense increased $17.4
million. This increase was attributable primarily to an increase in
interest-bearing liabilities (primarily short-term FHLB advances) which
increased interest expense $12.2 million. Also contributing to the increase was
a 26 basis point increase in the average rate paid on interest-bearing
liabilities to 4.47% for the first quarter of 2000. This rate increase caused
interest expense to increase $5.2 million.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans for the first quarter of 2000 was $17.3
million, or .32% of average loans on an annualized basis. This compares to
$16.3 million, or .33% of average loans, for the same period in 1999 and $19.7
million, or .37% of average loans, for the fourth quarter of 1999. The lower
provision for losses on loans in the first quarter of 2000 is attributable to a
higher level of loan recoveries. The increase in recoveries partially offset
the need for additional provision due to the loan growth in the first quarter.
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 2000 was $127.6 million, an
increase of $1.3 million from $126.3 million in the same period last year and
an increase of $4.9 million from the fourth quarter of 1999. Noninterest income
for the first quarter of 1999 included net gains aggregating $9.2 million from
the securitization and sale of FHA/VA loans, the sale of the remaining portion
of the credit card portfolio, and branch and other asset sales. Excluding these
significant items, noninterest income for the first quarter of 2000 increased
$10.1 million compared to the same period in 1999. Reference is made to the
"Summary of Consolidated Results" on page 15 for a detail of these gains. 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 2000 compared
to the same period in 1999 is attributable primarily to the following items:
- $5.5 million increase in bank card income (merchant processing) - The
growth relates primarily to the acquisition of Republic Bank in July
1999 which had a large merchant processing operation.
18
<PAGE> 19
- $3.2 million increase in service charges on deposit accounts - The
increase is attributable to the increase in deposits resulting from the
1999 acquisitions and branch purchase.
- $2.2 million increase in ATM transaction fees - These fees relate to
the volume of noncustomer usage of Union Planters' 1,049 ATMs.
- $4.6 million decrease in mortgage banking revenues - During the first
quarter of 1999, the low interest rates created an environment for a
high level of refinancing activity which increased mortgage banking
revenues. As interest rates increased beginning in the last half of
1999, the level of activity and revenues decreased.
- $3.8 million increase in all other noninterest income.
The increase in noninterest income from the fourth quarter of 1999 is
attributable to the following:
- $1.5 million decrease in losses from investments using the equity
method of accounting. In the first quarter of 2000, the Company
switched to the cost method for an investment, previously accounted for
under the equity method, due to a decrease in ownership and a
significant decrease in the Company's ability to exercise influence
over the investee's operations.
- $1.3 million increase in mortgage banking revenues resulting primarily
from the expansion of the wholesale mortgage production operations.
- $1.2 million increase in brokerage fee income.
- $ .7 million increase in trust service income.
- $2.4 million decrease in service charges on deposit accounts due to the
decline in deposits.
- $2.3 million net increase in all other noninterest income.
NONINTEREST EXPENSE
Noninterest expense for the first quarter of 2000 increased $13.5 million
to $271.7 million, which compares to $258.2 million for the first quarter of
1999 and $277.1 million for the fourth quarter of 1999. Noninterest expense for
the fourth quarter of 1999 included a $7.2 million credit to expense related to
the reversal of severance reserves established in prior periods. 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 2000
compared to the same period in 1999 relates primarily to the following items:
- $5.5 million increase in salaries and employee benefits (approximately
$7.6 million related to purchase acquisitions in 1999).
- $5.2 million increase in occupancy and equipment expense (approximately
$4.5 million related to purchase acquisitions in 1999).
- $3.0 million increase in goodwill and other intangibles amortization
related to purchase acquisitions in 1999.
- $2.6 million increase in merchant interchange fees which is directly
related to the increase in bank card income (merchant processing).
- $2.1 million increase in communications.
- $2.3 million decrease in miscellaneous charge-offs due to recoveries of
previously charged-off amounts in the first quarter of 2000.
- $2.6 million net decrease in all other noninterest expenses.
The decrease in noninterest expense compared to the fourth quarter of
1999 relates primarily to the following items.
- $7.0 million decrease in miscellaneous charge-offs. Miscellaneous
charge-offs were high in the fourth quarter of 1999 while the first
quarter of 2000 included greater than normal recoveries of previously
charged-off amounts.
- $2.3 million decrease in other personnel expenses.
- $1.3 million decrease in stationery and supplies expense.
- $1.2 million decrease in postage and other courier expense.
- $7.2 million increase due to the reversal of merger-related severance
reserves in the fourth quarter of 1999 that was not repeated in the
first quarter of 2000.
19
<PAGE> 20
- $2.9 million increase in salaries and employee benefits expense. The
increase relates primarily to incentive pay and commissions for
volume-related activities.
- $3.7 million net decrease in all other noninterest expenses.
The largest component of noninterest expense, salaries and employee
benefits, was $128.7 million for the first quarter of 2000 compared to $123.2
million for the same quarter last year and compared to $125.8 million for the
fourth quarter of 1999. Full-time-equivalent employees at March 31, 2000 were
12,711 compared to 13,160 at March 31, 1999 and 13,156 at December 31, 1999.
Excluding the impact of acquisitions, salaries and employee benefits expense
decreased approximately $2.1 million compared to the first quarter of 1999.
20
<PAGE> 21
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
MARCH 31,
-----------------------------------------------------------------------------
2000 1999
------------------------------------- -------------------------------------
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................................... $ 35,491 $ 320 3.63% $ 120,476 $ 987 3.32%
Federal funds sold and securities purchased
under agreements to resell ................... 71,232 1,029 5.81 75,954 869 4.64
Trading account assets ......................... 265,569 5,054 7.65 238,811 3,595 6.11
Investment securities(1)(2)
Taxable ...................................... 6,369,279 101,691 6.42 7,127,846 106,580 6.06
Tax-exempt ................................... 1,275,936 24,692 7.78 1,319,689 25,746 7.91
------------ ---------- ----------- ---------
Total investment securities ............ 7,645,215 126,383 6.65 8,447,535 132,326 6.35
Loans, net of unearned income(1)(3)(4) ......... 22,030,701 477,323 8.71 20,453,815 426,254 8.45
------------ ---------- ----------- ---------
TOTAL EARNING ASSETS(1)(2)(3)(4) ....... 30,048,208 610,109 8.17 29,336,591 564,031 7.80
---------- ---------
Cash and due from banks .......................... 976,291 1,008,050
Premises and equipment ........................... 632,962 566,337
Allowance for losses on loans .................... (346,177) (342,679)
Goodwill and other intangibles ................... 966,281 491,474
Other assets ..................................... 975,249 1,290,257
------------ -----------
TOTAL ASSETS ............................. $ 33,252,814 $32,350,030
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts .......................... $ 3,915,206 $ 40,080 4.12% $ 2,839,706 $ 30,258 4.32%
Interest-bearing checking ...................... 3,403,196 11,641 1.38 2,105,949 8,400 1.62
Savings deposits ............................... 1,558,341 5,629 1.45 3,666,023 15,392 1.70
Certificates of deposit of $100,000 and over ... 1,978,169 26,088 5.30 2,492,888 33,480 5.45
Other time deposits ............................ 8,403,967 106,530 5.10 9,879,644 125,474 5.15
Short-term borrowings
Federal funds purchased and securities sold
under agreements to repurchase ............. 2,343,982 30,752 5.28 1,754,258 19,137 4.42
Short-term FHLB advances ..................... 3,005,768 44,832 6.00 -- -- --
Other ........................................ 72,730 1,112 6.15 2,571 117 18.46
Long-term debt
Federal Home Loan Bank advances .............. 202,083 3,012 5.99 595,347 7,350 5.01
Subordinated capital notes ................... 475,499 7,759 6.56 480,702 7,849 6.62
Medium-term senior notes ..................... 60,000 1,025 6.87 105,000 1,761 6.80
Trust Preferred Securities ................... 199,049 4,128 8.34 199,013 4,128 8.41
Other ........................................ 163,255 3,650 8.99 306,745 5,542 7.33
------------ ---------- ----------- ---------
TOTAL INTEREST-BEARING LIABILITIES ........... 25,781,245 286,238 4.47 24,427,846 258,888 4.30
Noninterest-bearing demand deposits ............ 4,027,414 -- 4,303,509 --
------------ ---------- ----------- ---------
TOTAL SOURCES OF FUNDS ....................... 29,808,659 286,238 28,731,355 258,888
---------- ---------
Other liabilities .............................. 602,280 661,842
Shareholders' equity
Preferred stock ............................ 20,766 23,190
Common equity .............................. 2,821,109 2,933,643
------------ -----------
Total shareholders' equity ............... 2,841,875 2,956,833
------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY .. $ 33,252,814 $32,350,030
============ ===========
NET INTEREST INCOME(1) ........................... $ 323,871 $ 305,143
========== =========
INTEREST-RATE SPREAD(1) .......................... 3.70% 3.50%
====== ======
NET INTEREST MARGIN(1) ........................... 4.34% 4.22%
====== ======
TAXABLE-EQUIVALENT ADJUSTMENTS:
Loans ........................................ $ 1,242 $ 1,160
Securities ................................... 7,879 8,286
---------- ---------
TOTAL .................................. $ 9,121 $ 9,446
========== =========
</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.
21
<PAGE> 22
UNION PLANTERS CORPORATION AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 VERSUS 1999
-----------------------------------------
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 .............. $ (751) $ 84 $ (667)
Federal funds sold and securities purchased under agreements to (56) 216 160
resell..........................................................
Trading account assets ........................................... 447 1,012 1,459
Investment securities (FTE) ...................................... (12,328) 6,385 (5,943)
Loans, net of unearned income (FTE) .............................. 36,407 14,662 51,069
---------- ---------- ----------
TOTAL INTEREST INCOME .................................... 23,719 22,359 46,078
---------- ---------- ----------
INTEREST EXPENSE
Money market accounts ............................................ 5,345 4,477 9,822
Interest-bearing checking ........................................ 215 3,026 3,241
Savings deposits ................................................. (8,286) (1,477) (9,763)
Certificates of deposit of $100,000 and over ..................... (6,561) (831) (7,392)
Other time deposits .............................................. (17,737) (1,207) (18,944)
Short-term borrowings ............................................ 50,648 6,794 57,442
Long-term debt ................................................... (9,405) 2,349 (7,056)
---------- ---------- ----------
TOTAL INTEREST EXPENSE ................................... 14,219 13,131 27,350
---------- ---------- ----------
CHANGE IN NET INTEREST INCOME (FTE) ................................ $ 9,500 $ 9,228 $ 18,728
========== ========== ==========
PERCENTAGE INCREASE IN NET INTEREST INCOME (FTE) FROM PRIOR PERIOD.. 6.14%
==========
</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
Union Planters' total assets were $33.4 billion at March 31, 2000
compared to $33.7 billion at March 31, 1999 and $33.3 billion at December 31,
1999. Average assets were $33.3 billion for the first quarter of 2000 compared
to $32.4 billion for the first quarter of 1999. Earning assets at March 31,
2000 were $30.2 billion, an increase of $366 million from year end. Average
earning assets were $30.0 billion for the first quarter of 2000 which compares
to $29.3 billion for the same period last year and compared to $29.9 billion
for the fourth quarter of 1999.
INVESTMENT SECURITIES
Union Planters' investment securities portfolio of $7.3 billion at March
31, 2000 consisted entirely of available for sale securities, which are carried
on the balance sheet at fair value. This compares to investment securities of
$8.8 billion and $7.5 billion at March 31, 1999 and December 31, 1999,
respectively.
At March 31, 2000 and December 31, 1999, these securities had net
unrealized losses of $230.7 million and $212.6 million, respectively. The
investment portfolio had an unrealized gain of $77.3 million at March 31, 1999.
The unrealized loss in the investment portfolio resulted from the increasing
interest-rate environment during the latter part of 1999 and first quarter of
2000. Management does not expect any losses to result from the decline in value
of the investment portfolio because maturities of securities and other funding
sources should meet Union Planters' liquidity needs. Any losses taken will
result from strategic or discretionary decisions to adjust the portfolio. The
investment portfolio has decreased as funds received from the maturities of
securities were used to meet other funding needs. Reference is made to Note 5
to the unaudited interim consolidated financial statements which provides the
composition of the investment portfolio at March 31, 2000 and December 31,
1999.
22
<PAGE> 23
U.S. Treasury and U.S. Government agency obligations represented
approximately 57% of the investment securities portfolio at March 31, 2000, 72%
of which were Collateralized Mortgage Obligations (CMOs) and mortgage-backed
securities issues. Union Planters 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, 2000 consisted of 23% investment grade CMOs, 17% municipal obligations, and
3% other stocks and securities (primarily Federal Reserve Bank and FHLB Stock).
LOANS
Loans, net of unearned income, at March 31, 2000 were $22.2 billion
compared to $20.5 billion and $21.4 billion at March 31, 1999 and December 31,
1999, respectively. Average loans for the first quarter of 2000 were $22.0
billion compared to $20.5 billion for the first quarter of 1999 and $21.7
billion for the fourth quarter of 1999. Excluding the FHA/VA
government-insured/guaranteed loans, average loans were $21.5 billion at March
31, 2000, an increase of 9% from the first quarter of 1999 and an increase of
2% from the fourth quarter of 1999. The growth over the first quarter of 1999
relates primarily to loans acquired with the 1999 acquisitions and branch
purchases. The growth over the fourth quarter of 1999 resulted from general
loan growth in a number of the markets served by Union Planters. 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.
ALLOWANCE FOR LOSSES ON LOANS
Union Planters maintains the allowance for losses on loans (the
allowance) at a level deemed adequate to absorb estimated losses in the loan
portfolio. The allowance is reviewed quarterly to assess the risk in the
portfolio. This methodology includes assigning loss factors, based on
historical experience as adjusted for current business and economic conditions,
to loans with similar characteristics for which estimates of inherent probable
loss can be assessed. The loss factors are applied to the respective portfolios
to assist in the determination of the overall adequacy of the allowance.
A periodic review of selected credits (based on loan size) is conducted
to identify loans with heightened risk or inherent losses. The primary
responsibility for this review rests with management assigned accountability
for the credit relationship. This review is supplemented with periodic reviews
by Union Planters' credit review function, regulatory agencies, and the
Company's independent accountants. These reviews provide information which
assists in the timely identification of problems or potential problems and in
deciding whether the credit represents a probable loss or risk which should be
recognized.
23
<PAGE> 24
The following table provides a reconciliation of the allowance at the
dates indicated and certain key ratios for the three-month periods ended March
31, 2000 and 1999 and for the year ended December 31, 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------------------ --------------
2000 1999 1999
-------------- --------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE AT THE BEGINNING OF PERIOD.......................... $ 342,300 $ 321,476 $ 321,476
LOANS CHARGED OFF
Commercial, financial, and agricultural................... 11,331 8,164 67,649
Foreign................................................... 79 -- 459
Real estate - construction................................ 442 424 3,330
Real estate - mortgage.................................... 3,911 7,626 28,076
Credit cards and related plans............................ 1,193 1,193 45,089
Consumer.................................................. 12,001 7,958 4,158
Direct lease financing.................................... -- 291 396
----------- ----------- -----------
Total charge-offs................................. 28,957 25,656 149,157
----------- ----------- -----------
RECOVERIES ON LOANS PREVIOUSLY CHARGED OFF
Commercial, financial, and agricultural................... 5,395 3,864 23,266
Foreign................................................... 79 96 77
Real estate - construction................................ 378 539 670
Real estate - mortgage.................................... 2,444 1,139 7,639
Credit cards and related plans............................ 405 378 18,805
Consumer.................................................. 6,474 5,435 2,278
Direct lease financing.................................... -- 1 126
----------- ----------- -----------
Total recoveries.................................. 15,175 11,452 52,861
----------- ----------- -----------
Net charge-offs............................................. (13,782) (14,204) (96,296)
Provision charged to expense................................ 17,303 16,279 74,045
Increase due to acquisitions................................ -- 21,460 43,075
----------- ----------- -----------
BALANCE AT END OF PERIOD.......................... $ 345,821 $ 345,011 $ 342,300
=========== =========== ===========
Total loans, net of unearned income, at end of period....... $22,209,734 $20,504,943 $21,446,400
Less: FHA/VA government insured/guaranteed loans............ 479,255 617,854 519,213
----------- ----------- -----------
LOANS USED TO CALCULATE RATIOS.................... $21,730,479 $19,887,089 $20,927,187
=========== =========== ===========
Average total loans, net of unearned income, during period.. $22,030,701 $20,453,815 $21,141,576
Less: Average FHA/VA government-insured/guaranteed loans.... 499,234 688,883 597,944
----------- ----------- ----------
AVERAGE LOANS USED TO CALCULATE RATIOS............ $21,531,467 $19,764,932 $20,543,632
=========== =========== ===========
RATIOS (1):
Allowance at end of period/loans, net of unearned income.. 1.59% 1.73% 1.64%
Charge-offs/average loans, net of unearned income (2)..... .54 .53 .73
Recoveries/average loans, net of unearned income (2)...... .28 .24 .26
Net charge-offs/average loans, net of unearned income (2). .26 .29 .47
Provision/average loans, net of unearned income (2)....... .32 .33 .36
</TABLE>
- --------------------
(1) Ratio calculations exclude FHA/VA government-insured/guaranteed loans,
since they represent minimal credit risk.
(2) Amounts annualized for March 31, 2000 and 1999.
The allowance at March 31, 2000, was $345.8 million, an increase of $3.5
million from December 31, 1999, and compared to $345.0 million at March 31,
1999. The increase from December 31, 1999 relates primarily to the provision for
losses on loans exceeding net charge-offs. Net charge-offs for the first quarter
of 2000 were .26% of average loans and compared to .29% and .68%, respectively,
for the first and fourth quarters of 1999. In the first quarter of 2000 there
was a higher level of recoveries of loans previously charged-off than in prior
periods.
24
<PAGE> 25
NONPERFORMING ASSETS
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
MARCH 31,
-------------------- DECEMBER 31,
2000 1999 1999
-------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NONACCRUAL LOANS ............................................................................. $130,483 $170,785 $127,766
RESTRUCTURED LOANS ........................................................................... 1,811 4,195 1,878
-------- -------- --------
TOTAL NONPERFORMING LOANS .................................................................. 132,294 174,980 129,644
-------- -------- --------
FORECLOSED PROPERTY
Other real estate owned, net ................................................................ 38,798 26,052 35,943
Other foreclosed property ................................................................... 1,300 2,908 1,921
-------- -------- --------
TOTAL FORECLOSED PROPERTIES ................................................................ 40,098 28,960 37,864
-------- -------- --------
TOTAL NONPERFORMING ASSETS ................................................................. $172,392 $203,940 $167,508
======== ======== ========
LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST ................................... $ 81,738 $ 50,906 $ 92,834
======== ======== ========
FHA/VA GOVERNMENT-INSURED/GUARANTEED LOANS
Loans past due 90 days or more and still accruing interest ................................. $216,185 $329,742 $240,799
Nonaccrual loans ........................................................................... 5,767 8,369 6,613
RATIOS (1):
Nonperforming loans/loans, net of unearned income .......................................... .61% .88% .62%
Nonperforming assets/loans, net of unearned income plus foreclosed properties .............. .79 1.02 .80
Allowance for losses on loans/nonperforming loans .......................................... 261 197 264
Loans past due 90 days or more and still accruing interest/loans, net of unearned income ... .38 .26 .44
</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, MARCH 31,
-------------------- DECEMBER 31, ------------------ DECEMBER 31,
2000 1999 1999 2000 1999 1999
-------- -------- ------------ ------- ------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
LOAN TYPE
Secured by single family residential ................... $ 20,972 $ 71,297 $ 20,031 $60,523 $11,990 $64,515
Secured by nonfarm nonresidential ...................... 34,899 33,209 33,818 3,190 7,279 3,975
Other secured real estate .............................. 25,635 13,421 23,453 4,654 6,592 3,480
Commercial, financial, and agricultural,
including foreign loans and direct lease financing ... 46,156 45,028 47,551 9,041 20,591 15,130
Credit cards and related plans ......................... 2 28 3 115 132 67
Other consumer ......................................... 2,819 7,802 2,910 4,215 4,322 5,667
-------- -------- -------- ------- ------- -------
TOTAL .......................................... $130,483 $170,785 $127,766 $81,738 $50,906 $92,834
======== ======== ======== ======= ======= =======
</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.
LOANS OTHER THAN FHA/VA LOANS. As a percentage of loans and foreclosed
properties, nonperforming assets were .79% at March 31, 2000 compared to 1.02%
at March 31, 1999 and .80% at December 31, 1999. The coverage of nonperforming
loans (allowance for losses on loans as a percentage of nonperforming loans) was
261% at March 31, 2000, which compares to 197% at March 31, 1999 and 264% at
year-end 1999.
25
<PAGE> 26
The higher percentage of nonperforming assets at March 31, 1999 and the
lower level of loans past due 90 days or more and still accruing interest
relates to a change made in the third quarter of 1999 to Union Planters' policy
for placing single family residential mortgages on nonaccrual status (see Note 5
on page 52 of the 1999 Annual Report). The impact of this change in policy was
to reduce nonaccrual loans approximately $50 million with loans past due 90 days
or more and still accruing interest increasing by a corresponding amount. The
change was made prospectively and prior period amounts were not restated.
Loans past due 90 days or more and still accruing interest totaled $81.7
million, or .38% of loans, at March 31, 2000 compared to $50.9 million, or .26%,
and $92.8 million, or .44% of loans, at March 31, 1999 and December 31, 1999,
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 $216.2
million at March 31, 2000 which compares to $329.7 million and $240.8 million at
March 31, 1999 and December 31, 1999, respectively. The decrease in past due
loans relates to a decline in the overall volume of these loans. At March 31,
2000, March 31, 1999, and December 31, 1999, $5.8 million, $8.4 million and $6.6
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.
FHA/VA FORECLOSURE CLAIMS
Provisions for losses related to FHA/VA claims are provided through
noninterest expense as provisions for losses on FHA/VA foreclosure claims and
the corresponding liability is carried in other liabilities. Provisions for
losses on FHA/VA foreclosure claims totaled $100,000 and $250,000 for the first
quarter of 2000 and 1999, respectively. At March 31, 2000, the Company had a
reserve for FHA/VA claims losses of $18.4 million compared to $28.0 million at
December 31, 1999.
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, 2000, Union
Planters had potential problem assets of $52.2 million, composed of 14 loans.
This compares to $48.1 million, or 12 loans, at December 31, 1999 and $68.9
million, or 28 loans, at March 31, 1999.
DEPOSITS
Union Planters' core deposit base is its most important and stable funding
source and consists of deposits from the communities served by Union Planters.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS
------------------------------------------
THREE MONTHS ENDED
------------------------------------------
MARCH 31,
------------------------- DECEMBER 31,
2000 1999 1999
----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Demand deposits............................... $ 4,027,414 $ 4,303,509 $ 4,222,365
Money market accounts......................... 3,915,206 2,839,706 3,846,661
Interest-bearing checking..................... 3,403,196 2,105,949 2,535,898
Savings deposits.............................. 1,558,341 3,666,023 2,586,067
Other time deposits........................... 8,403,967 9,879,644 8,795,691
----------- ----------- -----------
Total core deposits................. 21,308,124 22,794,831 21,986,682
Certificates of deposit of $100,000 and over.. 1,978,169 2,492,888 2,070,880
----------- ----------- -----------
Total average deposits ............. $23,286,293 $25,287,719 $24,057,562
=========== =========== ===========
</TABLE>
Average deposits for the first quarter of 2000 were $23.3 billion, which
represents decreases of $2.0 billion and $771 million, respectively, from the
average deposits for the first quarter of 1999 and the fourth quarter of 1999.
Adjusting for the deposits acquired in the 1999 acquisitions and the branch
purchase, both actual and average total deposits have decreased approximately $4
billion from the first quarter of 1999. The decrease is attributable to several
factors, including time deposits that matured and were not renewed (including
26
<PAGE> 27
higher priced deposits of acquired entities), not competing as aggressively for
public fund deposits (which require pledging of investment securities), the
competitive market in general, and increased competition from other investment
sources (annuities, mutual funds, broker money market accounts, etc.), including
Union Planters' sale of nontraditional deposit products.
SHAREHOLDERS' EQUITY
Union Planters' total shareholders' equity decreased by $77.5 million from
December 31, 1999 to $2.7 billion at March 31, 2000. The major items affecting
shareholders' equity are as follows:
- $101.9 million decrease due to shares purchased (3.1 million shares)
- $ 11.6 million decrease due to the net change in the unrealized loss on
available for sale investment securities
- $ 32.2 million increase due to retained net earnings (net earnings less
dividends paid)
- $ 3.8 million increase due to common stock issued for employee benefit
plans
In August 1999, the Company's Board of Directors authorized the purchase
of up to 5% of Union Planters' common stock or approximately 7.1 million shares.
In February 2000, the Company completed the purchase of the 7.1 million shares
under this plan. On February 17, 2000, the Board of Directors authorized the
purchase from time to time of up to an additional 7.1 million shares. The
purchases are expected to take place over 18 to 24 months either in the open
market or privately negotiated transactions. As of April 30, 2000, 665,000
shares had been purchased under this second plan.
CAPITAL ADEQUACY
The following table presents capital adequacy information for Union Planters:
<TABLE>
<CAPTION>
MARCH 31,
--------------------- DECEMBER 31,
2000 1999 1999
---------- ---------- ------------
<S> <C> <C> <C>
CAPITAL ADEQUACY DATA
Total shareholders' equity/total assets (at period end) .......... 8.09% 9.04% 8.34%
Average shareholders' equity/average total assets ................ 8.55 9.14 9.06
Tier 1 capital/unweighted average assets (leverage ratio)(1) ..... 6.48 7.83 6.65
</TABLE>
- --------------------
(1) Based on period-end capital and quarterly adjusted average assets.
27
<PAGE> 28
The following table presents Union Planters' risk-based capital and
capital adequacy ratios. Union Planters' regulatory capital ratios qualify Union
Planters for the "well-capitalized" regulatory classification.
RISK-BASED CAPITAL
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------ DECEMBER 31,
2000 1999 1999
-------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
TIER 1 CAPITAL
Shareholders' equity ............................................. $ 2,698,580 $ 3,043,909 $ 2,776,109
Trust Preferred Securities and minority interest in consolidated
subsidiaries ..................................................... 202,241 202,206 202,232
Less: Goodwill and other intangibles ............................ (951,863) (720,871) (971,770)
Disallowed deferred tax asset ............................. (1,661) (1,139) (1,053)
Unrealized loss (gain) on available for sale securities 145,837 (47,463) 134,217
------------ ------------ ------------
TOTAL TIER 1 CAPITAL ..................................... 2,093,134 2,476,642 2,139,735
TIER 2 CAPITAL
Allowance for losses on loans .................................... 292,860 272,214 282,149
Qualifying long-term debt ........................................ 445,566 461,089 445,590
Other adjustments ................................................ -- 241 --
------------ ------------ ------------
TOTAL CAPITAL BEFORE DEDUCTIONS .......................... 2,831,560 3,210,186 2,867,474
Less investment in unconsolidated subsidiaries ................... (10,253) (12,195) (10,289)
------------ ------------ ------------
TOTAL CAPITAL ............................................ $ 2,821,307 $ 3,197,991 $ 2,857,185
============ ============ ============
RISK-WEIGHTED ASSETS ............................................... $ 23,375,855 $ 21,704,317 $ 22,511,772
============ ============ ============
RATIOS AS A PERCENT OF END OF PERIOD RISK-WEIGHTED ASSETS
Tier 1 capital ................................................... 8.95% 11.41% 9.50%
Total capital .................................................... 12.07 14.73 12.69
</TABLE>
Union Planters' shareholders' equity to total assets ratio decreased at
March 31, 2000 compared to prior periods due to the Company's share purchase
plans and 1999 purchase acquisitions. Regulatory capital ratios were further
impacted by goodwill and other intangibles resulting from the 1999 purchase
acquisitions which are deducted from capital in calculating regulatory capital.
Union Planters' capital ratios still fall within the "well-capitalized"
regulatory capital category.
LIQUIDITY
Union Planters 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 Union Planters' 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. Union
Planters 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, 2000, the
parent company had cash and cash equivalents totaling $170.2 million, which
compares to 264.3 million at December 31, 1999. Net working capital (total
assets maturing within one year less similar liabilities) was $195.1 million,
which compares to $296.5 million at December 31, 1999. The decrease in parent
company liquidity relates primarily to the Company's share purchase plan.
At April 1, 2000, the parent company could have received dividends from
subsidiaries of $139.3 million without prior regulatory approval. The payment of
dividends by Union Planters' subsidiaries in the second quarter of 2000 will be
limited by management due to capital and liquidity requirements of individual
financial institutions. The payment of additional dividends by Union Planters'
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 and
servicing of its debt.
28
<PAGE> 29
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ASSET LIABILITY AND MARKET RISK MANAGEMENT
Union Planters' assets and liabilities are principally financial in nature
and the resulting earnings, primarily net interest income, are subject to
changes as a result of fluctuations in market interest rates and the mix of the
various assets and liabilities. Interest rates in the financial markets affect
decisions on pricing its assets and liabilities, which impacts net interest
income, which is approximately 71% of Union Planters' operating revenues. As a
result, a substantial part of Union Planters' risk management activities are
devoted to managing interest-rate risk. Currently, Union Planters 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 Union Planters 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.
Union Planters' Funds Management Committee (the Committee) oversees the
conduct of asset/liability and interest-rate management. The Committee meets
monthly and reviews the outlook for the economy and interest rates, Union
Planters' balance sheet structure, and yields on earning assets and rates on
interest-bearing liabilities. Union Planters uses two methods, interest-rate
sensitivity analysis and simulation analysis, to measure interest-rate risk.
Interest-rate sensitivity analysis (GAP analysis) is used to monitor the
amounts and timing of balances exposed to changes in interest rates, as shown in
the following table. The analysis has been made at a point in time and could
change significantly on a daily basis.
As a general policy guideline, management expects the GAP position at one
year not to exceed 10% of Union Planters' assets. At March 31, 2000, this
position was 14% of Union Planters' total assets with $4.8 billion more
liabilities repricing than assets. This position compares to December 31, 1999
which was 15% of total assets with $4.9 billion more liabilities repricing than
assets.
Even though the GAP position exceeds the policy at one year, $4.2 billion
of the liabilities affecting the one year GAP are scheduled money market and
savings deposits whose rates are administered by management. Total money market
and savings deposits of $8.9 billion that have no contractual maturity are
scheduled according to management's best estimate of their repricing in response
to changes in interest rates. Even with conservative estimates of their rate
sensitivity, the resulting impact on earnings at risk in simulation analysis
produces results which bring interest-rate risk into an acceptable range and one
not implied by GAP analysis alone. Still, management is evaluating strategies to
reduce the liability sensitive position at one year.
Interest-rate risk is evaluated by conducting balance sheet simulation
analysis to project net interest income for twelve months forward under
different interest rate scenarios. Each of these scenarios is compared with a
base case scenario wherein current market rates and current period balances are
held constant for the simulation period.
The scenarios include immediate "shocks" to current rates of 200 basis
points up and down and a "most likely" scenario in which current rates are moved
according to economic forecasts and management's expectations of changes in
administered rates.
The results of these simulations are compared to policy guidelines
approved by the Funds Management Committee of Union Planters. The policy limits
the changes of net interest income to 20% of net operating earnings (net
earnings before other significant items, net of taxes, annualized - see the
"Summary of Consolidated Results" on page 15) when compared with the base case
(flat) scenario. The simulations have consistently fallen within the policy
guidelines.
At March 31, 2000, the 200 basis point immediate rise in interest rates
produced a 16.4% ($66 million after-tax) decrease in net operating earnings,
which compares to a 16.5% ($65 million after-tax ) decrease at December 31,
1999. The 200 basis point immediate fall in interest rates produced a 12.9% ($52
million after-tax) increase in net operating earnings versus a 12.5% ($49
million after-tax) increase at December 31, 1999. The "most likely" scenario at
March 31, 2000 produced a .6% ($2 million after-tax) decrease in net operating
earnings compared to a 4.9% ($19 million after-tax) decrease in net operating
earnings at December 31, 1999. The "most likely" scenario at March 31, 2000
assumed the Federal Funds rate increasing from 6.00% to 6.50% over the first
three months of the
29
<PAGE> 30
twelve month simulation period. At December 31, 1999, the "most likely" scenario
assumed the Federal Funds rate increasing from 5.50% to 6.00% over the first six
months of the twelve month simulation period.
The key assumptions used in simulation analysis include the following
- prepayment rates on mortgage-related assets
- cash flows and maturities of all financial instruments
- changes in volumes and pricing
- future shapes of the yield curve
- money market spreads
- credit spreads
- 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, the difference between actual experience and
the characteristics assumed, and changes in market conditions and management
strategies.
30
<PAGE> 31
UNION PLANTERS CORPORATION AND SUBSIDIARIES
RATE SENSITIVITY ANALYSIS AT MARCH 31, 2000
<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) ...... $ 7,562 $ 1,632 $ 2,595 $ 6,230 $2,846 $ 835 $ 47 $ 483 $22,230
Investment securities (5)(6) .... 478 190 530 1,442 2,515 2,125 293 (231) 7,342
Other earning assets ............ 543 42 16 3 -- -- -- -- 604
Other assets .................... -- -- -- -- -- -- -- 3,175 3,175
-------- ------- ------- ------- ------ ------ ------ ------- -------
TOTAL ASSETS ............ $ 8,583 $ 1,864 $ 3,141 $ 7,675 $5,361 $2,960 $ 340 $ 3,427 $33,351
======== ======= ======= ======= ====== ====== ====== ======= =======
SOURCES OF FUNDS
Money market deposits (7)(8) .... $ 1,296 $ -- $ 1,296 $ 1,335 $ -- $ -- $ -- $ -- $ 3,927
Savings and interest-bearing
checking deposits (7)(8) ...... 1,625 -- -- 1,625 -- 1,674 -- 4,924
Other time deposits ............. 2,281 2,122 2,231 1,510 247 39 3 -- 8,433
Certificates of deposit of
$100,000 and over ............. 652 473 500 243 30 3 -- -- 1,901
Short-term borrowings ........... 5,082 500 2 -- -- -- -- -- 5,584
Short- and medium-term
senior notes ................ -- -- -- 60 -- -- -- -- 60
Federal Home Loan Bank
advances ..................... 200 -- 1 1 -- -- -- -- 202
Other long-term debt ............ 150 1 2 1 75 401 199 -- 829
Noninterest-bearing deposits .... -- -- -- -- -- -- -- 4,186 4,186
Other liabilities ............... -- -- -- -- -- -- -- 606 606
Shareholders' equity ............ -- -- -- -- -- -- -- 2,699 2,699
-------- ------- ------- ------- ------ ------ ------ ------- -------
TOTAL SOURCES OF FUNDS .. $ 11,286 $ 3,096 $ 4,032 $ 4,775 $ 352 $2,117 $ 202 $ 7,491 $33,351
======== ======= ======= ======= ====== ====== ====== ======= =======
INTEREST-RATE SENSITIVITY GAP ..... $ (2,703) $(1,232) $ (891) $ 2,900 $5,009 $ 843 $ 138 $(4,064) --
CUMULATIVE INTEREST-RATE
SENSITIVITY GAP(8) .............. (2,703) (3,935) (4,826) (1,926) 3,083 3,926 4,064 --
CUMULATIVE GAP AS A
PERCENTAGE OF TOTAL ASSETS(8) ... (8)% (12)% (14)% (6)% 9% 12% 12% --%
POLICY ........................... none 15% 10% 5% >0% >0% >0%
</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, interest-bearing checking, 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, interest-bearing checking, 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 (26%), (30%),
(28%), and (11%) for the 0-90 Days, 91-180 Days 181-365 Days and 1-3
Years categories and positive 4%, 12%, and 12%, respectively, for the
3-5 Years, 5-15 Years, and over 15 Years categories at March 31, 2000.
31
<PAGE> 32
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 Union Planters 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 Union Planters' 1999 Form 10-K , Note 20 to Union Planters'
consolidated financial statements on page 70 of the 1999 Annual Report, and Note
12 to Union Planters' unaudited interim consolidated financial statements
included herein under Item 1 of Part I.
ITEM 2 -- CHANGES IN SECURITIES
None
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:
11 Computation of Per Share Earnings (incorporated by
reference to Note 10 to Union Planters' unaudited
interim consolidated financial statements included
herein)
27 Financial Data Schedule (for SEC use only)
b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Date of Current Report Subject
- -------------------------------- -------------------------------------
<S> <C>
1. January 20, 2000 Press release announcing year ended
December 31, 1999 net earnings, reported under
Item 5
2. April 20, 2000 Press release announcing first quarter 2000
net earnings, reported under Item 5
</TABLE>
32
<PAGE> 33
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.
<TABLE>
<S> <C>
UNION PLANTERS CORPORATION
---------------------------------------------
(Registrant)
Date: May 8, 2000
---------------------------
By: /s/ Benjamin W. Rawlins, Jr.
--------------------------------------------
Benjamin W. Rawlins, Jr.
Chairman and Chief Executive Officer
By: /s/ Bobby L. Doxey
-------------------------------------------
Bobby L. Doxey
Senior Executive Vice President and
Chief Financial Officer
By: /s/ M. Kirk Walters
--------------------------------------------
M. Kirk Walters
Executive Vice President and
Chief Accounting Officer
</TABLE>
33
<PAGE> 34
UNION PLANTERS CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------------- ------------------------------------------------------------------------------------
<S> <C>
11 Computation of Per Share Earnings (incorporated by reference to Note 10 to Union
Planters' unaudited interim consolidated financial statements included herein)
27 Financial Data Schedule (for SEC use only)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UNION PLANTERS CORPORATION FOR THE THREE MONTHS ENDED
MARCH 31, 2000 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-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 963,297
<INT-BEARING-DEPOSITS> 17,429
<FED-FUNDS-SOLD> 40,023
<TRADING-ASSETS> 207,996
<INVESTMENTS-HELD-FOR-SALE> 7,341,647
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 22,548,428
<ALLOWANCE> 345,821
<TOTAL-ASSETS> 33,350,510
<DEPOSITS> 23,370,070
<SHORT-TERM> 5,584,459
<LIABILITIES-OTHER> 606,339
<LONG-TERM> 1,091,062
0
20,542
<COMMON> 677,435
<OTHER-SE> 2,000,603
<TOTAL-LIABILITIES-AND-EQUITY> 33,350,510
<INTEREST-LOAN> 476,081
<INTEREST-INVEST> 118,504
<INTEREST-OTHER> 6,403
<INTEREST-TOTAL> 600,988
<INTEREST-DEPOSIT> 189,968
<INTEREST-EXPENSE> 286,238
<INTEREST-INCOME-NET> 314,750
<LOAN-LOSSES> 17,303
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 271,705
<INCOME-PRETAX> 153,311
<INCOME-PRE-EXTRAORDINARY> 101,337
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,337
<EPS-BASIC> .74
<EPS-DILUTED> .73
<YIELD-ACTUAL> 8.17
<LOANS-NON> 136,250
<LOANS-PAST> 297,923
<LOANS-TROUBLED> 1,811
<LOANS-PROBLEM> 52,194
<ALLOWANCE-OPEN> 342,300
<CHARGE-OFFS> 28,957
<RECOVERIES> 15,175
<ALLOWANCE-CLOSE> 345,821
<ALLOWANCE-DOMESTIC> 345,821
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
