<PAGE> 1
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period from ........................ to ........................
Commission file number 1-7067
UNITED COMPANIES FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 71-0430414
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4041 Essen Lane 70809
Baton Rouge, Louisiana (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including
area code (504) 924-6007
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares of $2.00 par value common stock issued and
outstanding as of May 10, 1995 was 13,908,931, excluding 579,841 treasury
shares.
================================================================================
<PAGE> 2
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Financial Statements:
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 . . . . . . . . . . . . . . . 2
Consolidated Statements of Income
Three months ended March 31, 1995 and 1994 . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows
Three months ended March 31, 1995 and 1994 . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 5-9
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . 10-23
Review by Independent Accountants . . . . . . . . . . . . . . . . . . 24
Independent Accountants' Report . . . . . . . . . . . . . . . . . . . 25
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . 26
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
<PAGE> 3
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Assets
- ------
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $ 11,591 $ 56,359
Temporary investments - reserve accounts . . . . . . . . . . . 97,821 81,980
Investment securities
Trading . . . . . . . . . . . . . . . . . . . . . . . . . 764 679
Available-for-sale . . . . . . . . . . . . . . . . . . . . 1,058,343 960,100
Held-to-maturity . . . . . . . . . . . . . . . . . . . . . 57,091 57,391
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,756 26,672
Loans - net . . . . . . . . . . . . . . . . . . . . . . . . . . 394,362 369,382
Capitalized excess servicing income . . . . . . . . . . . . . . 195,609 179,065
Deferred policy acquisition costs . . . . . . . . . . . . . . . 92,802 91,915
Accrued interest receivable . . . . . . . . . . . . . . . . . . 40,101 37,200
Property - net . . . . . . . . . . . . . . . . . . . . . . . . 31,747 30,565
Deferred income tax benefit . . . . . . . . . . . . . . . . . . - 7,420
Net assets of discontinued operations . . . . . . . . . . . . . 8,563 9,736
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 72,256 69,791
------------- ------------
Total assets . . . . . . . . . . . . . . . . . . $ 2,087,806 $ 1,978,255
============= ============
Liabilities and Stockholders' Equity
- ------------------------------------
Annuity reserves . . . . . . . . . . . . . . . . . . . . . . . $ 1,440,233 $ 1,425,973
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . 240,342 213,668
Insurance reserves . . . . . . . . . . . . . . . . . . . . . . 117,950 120,992
Allowance for loss on loans serviced . . . . . . . . . . . . . 29,580 26,822
Deferred income taxes payable . . . . . . . . . . . . . . . . . 12,301 -
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 53,508 35,550
------------- ------------
Total liabilities . . . . . . . . . . . . . . . . . . 1,893,914 1,823,005
------------- ------------
Stockholders' equity:
Common stock, $2 par value;
Authorized - 100,000,000 shares;
Issued - 14,464,790 and 14,270,577 shares . . . . . . 28,930 28,541
Additional paid-in capital . . . . . . . . . . . . . . . . 126,085 122,670
Net unrealized loss on securities . . . . . . . . . . . . . (21,132) (46,858)
Retained earnings . . . . . . . . . . . . . . . . . . . . . 73,314 62,025
Treasury stock and ESOP debt . . . . . . . . . . . . . . . (13,305) (11,128)
------------- ------------
Total stockholders' equity . . . . . . . . . . . . . . 193,892 155,250
------------- ------------
Total liabilities and stockholders' equity . . . $ 2,087,806 $ 1,978,255
============= ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
1995 1994
---------- ----------
<S> <C> <C>
Revenues:
Interest, charges and fees on loans . . . . . . . . . . . . . . . . . . $ 30,788 $ 27,285
Loan sale gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,734 22,554
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,011 18,221
Loan servicing income . . . . . . . . . . . . . . . . . . . . . . . . . 3,484 3,689
Net insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . 2,102 3,068
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,119 74,817
---------- ----------
Expenses:
Interest on annuity policies . . . . . . . . . . . . . . . . . . . . . 19,526 17,793
Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,071 13,507
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,894 2,425
Loan loss provision . . . . . . . . . . . . . . . . . . . . . . . . . . 4,064 3,996
Insurance commissions . . . . . . . . . . . . . . . . . . . . . . . . . 3,548 3,423
Insurance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 2,429 3,008
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,038 9,833
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,570 53,985
---------- ----------
Income from continuing operations before income taxes . . . . . . . . . . 19,549 20,832
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . 6,725 7,355
---------- ---------
Income from continuing operations . . . . . . . . . . . . . . . . . . . . 12,824 13,477
Income (loss) from discontinued operations:
Income (loss) from discontinued operations net of income taxes (benefit) of
$(201) and $127, respectively . . . . . . . . . . . . . . . . . . . . (373) 233
Gain on disposal, including estimated operating losses during
phaseout (including income tax benefit of $1,045) . . . . . . . . . . 245 -
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (128) 233
---------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,696 $ 13,710
========== ==========
Per share data:
Income from continuing operations . . . . . . . . . . . . . . . . . . . $ .91 $ .93
Income (loss) from discontinued operations . . . . . . . . . . . . . . (.01) .02
---------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .90 $ .95
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from continuing operating activities:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . $ 12,824 $ 13,477
Adjustments to reconcile income from continuing operations
to net cash provided (used) by continuing operating activities:
Increase in deferred policy acquisition costs . . . . . . . . . . . . (887) (89)
Decrease (increase) in accrued interest receivable . . . . . . . . . . . (2,901) 753
Decrease (increase) in other assets . . . . . . . . . . . . . . . . . . . 7,189 (155)
Decrease in insurance reserves . . . . . . . . . . . . . . . . . . . . . (3,042) (3,935)
Increase in other liabilities . . . . . . . . . . . . . . . . . . . . . . 1,386 6,267
Loan sale gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,734) (22,554)
Amortization of capitalized excess servicing income . . . . . . . . . . . 13,467 8,181
Investment (gains) losses . . . . . . . . . . . . . . . . . . . . . . . . (85) 60
Interest on annuity policies . . . . . . . . . . . . . . . . . . . . . . 19,526 17,793
Loan loss provision . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,064 3,996
Amortization and depreciation . . . . . . . . . . . . . . . . . . . . . . 945 703
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 5,868 (1,170)
Proceeds from sales and principal collections of loans
held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,655 201,822
Originations and purchases of loans held for sale . . . . . . . . . . . . (321,427) (202,041)
Net cash flows from trading investment securities . . . . . . . . . . (84) -
----------- -----------
Net cash provided (used) by continuing operating activities . . . (8,236) 23,108
----------- -----------
Cash flows from investing activities:
Principal collected on loans held for investment . . . . . . . . . . . 15,047 18,521
Originations and acquisition of loans held for investment . . . . . . . (4,839) -
Increase in reserve accounts . . . . . . . . . . . . . . . . . . . . . (15,841) (7,869)
Proceeds from sales of available-for-sale securities . . . . . . . . 17,606 -
Proceeds from maturities or calls of investment securities . . . . . . 5,584 33,449
Purchases of available-for-sale securities . . . . . . . . . . . . . . (81,553) (106,525)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (1,853) (863)
----------- -----------
Net cash used by investing activities . . . . . . . . . . . . . . (65,849) (63,287)
----------- -----------
Cash flows from financing activities:
Proceeds from mortgage loan . . . . . . . . . . . . . . . . . . . . . 1,194 -
Increase in revolving credit debt . . . . . . . . . . . . . . . . . . 35,000 20,000
Decrease in repurchase agreement . . . . . . . . . . . . . . . . . . . - (24,968)
Increase (decrease) in debt with maturities of three months or less . (11,150) 5,450
Deposits received from annuities . . . . . . . . . . . . . . . . . . . 48,563 45,029
Payments on annuities . . . . . . . . . . . . . . . . . . . . . . . . (53,829) (39,927)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . (1,407) (1,234)
Increase in managed cash overdraft . . . . . . . . . . . . . . . . . . 10,092 14,789
Proceeds from issuance of stock . . . . . . . . . . . . . . . . . . . - 4,545
Loan made to ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . (682) -
Proceeds from exercise of stock options and warrants . . . . . . . . . 1,536 206
----------- -----------
Net cash provided by financing activities . . . . . . . . . . . . 29,317 23,890
----------- -----------
Decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . (44,768) (16,289)
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . . 56,359 39,942
----------- -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 11,591 $ 23,653
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION.
In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting of
only normal accruals, except for discontinued operations, necessary to
present fairly the financial position, the results of operations and the
cash flows for the interim periods presented.
These notes reflect only the major changes from those disclosures contained
in the Company's Annual Report on Form 10-K for the year ended December
31, 1994 filed with the United States Securities and Exchange Commission.
The consolidated results of operations for the three months ended March 31,
1995 and 1994 are not necessarily indicative of the results to be expected
for the full year. Certain 1994 amounts have been reclassified to conform
with the current year presentations. Such reclassifications had no effect
on net income.
2. DISCONTINUED OPERATIONS.
On April 10, 1995, the Company made a decision to dispose of its investment
in United General Title Insurance Company ("UG Title"), a wholly owned
subsidiary of the Company, and, on May 1, 1995, approved a formal plan of
disposal. As a result, the operations of UG Title have been classified as
discontinued operations, and, accordingly, the consolidated financial
statements and the related notes of the Company segregate continuing and
discontinued operations. It is anticipated that the disposal will be
completed during 1995.
In connection with the decision to dispose of UG Title, the Company
recorded a $128,000 after tax loss in its financial statements as of and
for the quarter ended March 31, 1995. Total revenues of UG Title for the
three months ended March 31, 1995 and 1994 were $9.0 million and $9.1
million, respectively, and net income (loss) was $(373,000) and $233,000,
respectively. Total assets of UG Title at March 31, 1995 and December 31,
1994 were $16.0 million and $18.0 million, respectively.
3. CASH PAID FOR INTEREST AND INCOME TAXES.
During the three months ended March 31, 1995 and 1994, the Company paid
interest on notes payable in the amount of $2.6 million and $2.5 million,
respectively. There were no payments made for income taxes during the
three months ended March 31, 1995. During the three months ended March 31,
1994 the Company paid income taxes in the amount of $7.7 million.
5
<PAGE> 7
4. INVESTMENT SECURITIES.
At March 31, 1995, the Company's investment securities consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trading
Common stock $ 676 $ 109 $ 21 $ 764
=========== =========== =========== ===========
Available-for-sale
Debt securities
Corporate . . . . . . . . . . . . . . . $ 318,804 $ 3,165 $ 5,945 $ 316,024
U.S. Treasury . . . . . . . . . . . . . 10,720 39 97 10,662
Mortgage-backed . . . . . . . . . . . . 742,730 997 30,430 713,297
Foreign governments . . . . . . . . . . 17,471 487 283 17,675
Other . . . . . . . . . . . . . . . . . 425 20 - 445
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . 1,090,150 4,708 36,755 1,058,103
----------- ----------- ----------- -----------
Equity securities . . . . . . . . . . . . . 704 35 499 240
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . $ 1,090,854 $ 4,743 $ 37,254 $ 1,058,343
=========== =========== =========== ===========
Held-to-maturity
Debt securities
Corporate . . . . . . . . . . . . . . . $ 10,488 $ 354 $ 200 $ 10,642
Mortgage-backed . . . . . . . . . . . . 46,603 709 1,565 45,747
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . $ 57,091 $ 1,063 $ 1,765 $ 56,389
=========== =========== =========== ===========
Other
Investment in limited
partnership . . . . . . . . . . . . . . . . $ 26,756 $ 26,756
=========== ===========
</TABLE>
Net unrealized losses on available-for-sale securities in stockholders'
equity at March 31, 1995 are presented net of deferred income taxes of
$11.4 million. Realized investment gains (losses) for the three months
ended March 31, 1995 and 1994 were $85,000 and $(60,000), respectively, and
are included in investment income.
6
<PAGE> 8
5. LOANS - NET
The following schedule sets forth the components of Loans owned by the
Company at March 31, 1995 and December 31, 1994.
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(in thousands)
<S> <C> <C>
Home equity . . . . . . . . . $ 228,175 $ 202,551
Commercial . . . . . . . . . . 157,110 155,271
Conventional . . . . . . . . . 1,089 1,106
Foreclosed properties . . . . 29,321 31,073
Nonrefundable loan fees . . . (4,850) (4,538)
Consumer and other . . . . . . 1,313 1,536
------------ -----------
Total . . . . . $ 412,158 $ 386,999
============ ===========
</TABLE>
Included in owned loans at March 31, 1995 and December 31, 1994 were
nonaccrual loans totaling $20.7 million and $21.7 million, respectively.
The following schedule summarizes the composition of Loans - net at
March 31, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(in thousands)
<S> <C> <C>
Loans . . . . . . . . . . . . $ 412,158 $ 386,999
Allowance for loan losses . . (16,842) (16,508)
Unearned discount . . . . . . (954) (1,109)
------------ -----------
Loans - net . . . . . . . $ 394,362 $ 369,382
============ ===========
</TABLE>
6. OTHER ASSETS AND OTHER LIABILITIES.
At March 31, 1995, other assets included amounts due from reinsurers of
$34.5 million and policy loans of $19.8 million compared to $35.0 million
and $20.2 million, respectively, at December 31, 1994. In addition,
included in other assets at March 31, 1995 and December 31, 1994 was a
federal income tax receivable of $9.7 million and $6.2 million,
respectively.
Other liabilities included a $22.9 million and $12.8 million managed cash
overdraft at March 31, 1995 and December 31, 1994, respectively.
7
<PAGE> 9
7. EMPLOYEE BENEFITS.
The Company sponsors a leveraged employee stock ownership plan (ESOP) that
covers all employees who meet minimum age and service requirements. The
Company makes annual contributions to the ESOP in amounts as determined by
the Board of Directors. These contributions are used to purchase
additional shares and to pay debt service on shares acquired with the
proceeds of loans ("leveraged shares"). The ESOP's leveraged shares are
initially pledged as collateral for the debt incurred in connection with
the acquisition of such shares. As the debt is repaid, shares are released
from collateral and allocated to plan participants, based on the proportion
of debt service paid in the year. During the first quarter of 1995, the
ESOP was granted a $10 million line of credit from a financial institution.
At March 31, 1995 the ESOP had notes payable with a balance of $1.6 million
under this line of credit. Because the source of the loan payments is
primarily contributions received by the ESOP from the Company, such debt is
included in the Company's notes payable, with a corresponding reduction of
stockholders' equity. In addition, the ESOP has notes payable to the
Company with a balance of $5.0 million at March 31, 1995, including loans
with a principal balance of $1.9 million made prior to December 31, 1992.
The balance of the loans to the Company are also reflected as a reduction
of stockholders' equity. In accordance with Statement of Position 93-6
("SOP 93-6"), leveraged shares purchased subsequent to December 31, 1992
are upon release reflected as compensation expense based on the then
current market price of the shares. Shares which have not been committed
to be released are not considered outstanding for purposes of the
computation of earnings per share. During the three months ended March 31,
1995, 82,500 shares of the Company's common stock which were considered
outstanding for earnings per share purposes in prior periods were not
considered outstanding. During the first quarter of 1995, approximately
2,700 shares of common stock were committed to be released and as a result
the Company recorded compensation expense of approximately $94,000. The
Company has elected not to apply the provisions of SOP 93-6 to shares
purchased on or before December 31, 1992.
8. COMMITMENTS AND CONTINGENCIES.
On March 21, 1994, the United States Court of Appeals for the Eleventh
Circuit held, in part, that a lender improperly disclosed the collection of
the Florida state intangible tax from the borrower, thereby subjecting the
loan to rescission under the Federal Truth-in-Lending Act (the "TILA") by
the borrower for three years after it was made. Subsequent to the court's
initial decision and prior to its refusal to reconsider its decision, the
Florida Legislature amended the language of the intangible tax to clarify
the Legislature's previous intention that the intangible tax be disclosed
for purposes of the TILA in the manner that had been followed by most
lenders in Florida, including the Company. Although the Florida
Legislature intended this legislation to apply retroactively, no final
court decision has been rendered as to the effect of this legislation on
loans originated prior to its effective date. This court decision may also
apply to a similar intangible tax imposed by other states. To its
knowledge, as of May 12, 1995 no claims have been filed against the Company
under this court decision (other than as a defense in foreclosure
proceedings) and no notice of a breach of a representation has been
received under the Company's loan sale agreements requesting it to
repurchase, cure or substitute other loans for the loans sold. If the
intent of the Florida Legislature is not upheld and if a substantial number
of claims are filed by borrowers against the Company resulting in
rescission or repurchase, the Company's financial statements and operations
will be materially adversely affected. As the financial impact, if any, of
this contingency cannot presently be reasonably estimated, the Company has
made no accrual therefor.
Amendments to the TILA which may become effective on October 1, 1995,
impose additional disclosure requirements and prohibit certain prepayment
penalty charges, among other requirements, on loans with a specified level
of origination fees or a specified interest rate level. A significant
percentage of the Company's loans originated after the effective date could
be subject to the requirements of this legislation. The Company is
currently reviewing this legislation in its final form to determine the
impact of its provisions on the Company's business or results of
operations.
8
<PAGE> 10
As discussed in Note 2 above, the Company has formalized a plan of
disposition of its investment in UG Title. In connection therewith, a
letter of intent to sell UG Title has been signed which provides a
reduction of the sale price for certain claims relating to transactions
occurring prior to the date of sale and discovered within twelve months
thereafter. The Company has estimated the risk of loss related to such
potential claims and recorded a provision for such loss in connection with
the disposition. Should such claims materially exceed the Company's
estimates for such losses, such consequence will have an adverse impact on
the Company's operations by reducing the proceeds to be received from the
sale.
The Company used a prefunding feature in connection with its loan
securitization transaction during the first quarter of 1995. At March 31,
1995, approximately $79 million was held in a prefunding account for the
purchase of the Company's home equity loans during the second quarter of
1995. Pursuant to this commitment, home equity loans with a remaining
principal balance of approximately $79 million will be delivered prior to
June 12, 1995.
9. ACCOUNTING STANDARDS.
In May, 1993 and in October, 1994 the FASB issued Statements of Financial
Accounting Standards Nos. 114 and 118 ("SFAS 114" and "SFAS 118") which
address the accounting by creditors for impairment of loans and specify how
allowances for credit losses related to certain loans should be determined.
The statements also address the accounting by creditors for all loans that
are restructured in a troubled debt restructuring involving modification of
the terms of a receivable. The implementation of the provisions of SFAS
114 and SFAS 118 in the first quarter of 1995 did not have a material
effect on the financial statements of the Company.
9
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following analysis should be read in conjunction with the Company's
consolidated financial statements and accompanying notes presented elsewhere
herein.
RESULTS OF OPERATIONS
The Company's financial statements present United General Title Insurance
Company ("UG Title") as discontinued operations (see Note 2 to consolidated
financial statements). Discussed below are results of continuing operations
for the periods presented and certain financial data by business segment for
such periods.
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Income from continuing operations for the first quarter of 1995 was $12.8
million ($.91 per share based on 14.1 million weighted average shares
outstanding) compared to net income of $13.5 million ($.93 per share based on
14.4 million shares outstanding) for the same period of 1994. In comparison to
the 1994 period, the decline in income in 1995 was primarily the result of
costs of expanding the Company's mortgage operations. Personnel costs in the
Company's mortgage division increased approximately $3.9 million as the average
number of employees in the unit increased by approximately 300 from the first
quarter of 1994 to the same period of 1995. In addition, advertising expenses
increased approximately $2.0 million and occupancy costs of the mortgage
operations increased approximately $.6 million as the result of an increase in
the number of retail branches from 125 at March 31, 1994 to 143 at March 31,
1995. The negative effect on income of these increased expense items was
offset to some extent by a $76 million increase in the amount of loans sold,
which resulted in an increase in loan sale gains from $22.6 million for the
first quarter of 1994 to $26.7 million for the same period in 1995.
The table below sets forth income from continuing operations before income
taxes for each of the Company's business segments and certain home equity loan
data for the indicated periods:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
-------- --------
(dollars in thousands)
<S> <C> <C>
Mortgage . . . . . . . . . . . . . . . . . . . . . . . $ 17,903 $ 20,350
Life insurance . . . . . . . . . . . . . . . . . . . . 3,169 1,579
Corporate, other operations and eliminations . . . . . (1,523) (1,097)
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . $ 19,549 $ 20,832
=========== ===========
Home equity loan originations . . . . . . . . . . . . . $ 309,290 $ 197,357
Home equity loans sold . . . . . . . . . . . . . . . . 274,653 198,332
Interest spread retained on home equity
loans sold . . . . . . . . . . . . . . . . . . . . . 4.42% 5.61%
</TABLE>
10
<PAGE> 12
The following table sets forth certain financial data for the periods
indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
------ ------
(dollars in thousands)
<S> <C> <C>
Total revenues . . . . . . . . . . . . . . . . . . . $ 88,119 $ 74,817
Total expenses . . . . . . . . . . . . . . . . . . . 68,570 53,985
Income from continuing operations
before income taxes . . . . . . . . . . . . . . . 19,549 20,832
Income from continuing operations . . . . . . . . . . 12,824 13,477
</TABLE>
Revenues. The following table sets forth information regarding the
components of the Company's revenues for the three months ended March 31, 1995
and 1994.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
1995 1994
---------- ----------
(in thousands)
<S> <C> <C>
Interest, charges and fees on loans . . . . . . $ 30,788 $ 27,285
Loan sale gains . . . . . . . . . . . . . . . . 26,734 22,554
Investment income . . . . . . . . . . . . . . . 25,011 18,221
Loan servicing income . . . . . . . . . . . . . 3,484 3,689
Net insurance premiums . . . . . . . . . . . . . 2,102 3,068
---------- ----------
Total . . . . . . . . . . . . . . . . . . . $ 88,119 $ 74,817
========== ==========
</TABLE>
Interest, charges and fees on loans increased $3.5 million for the
first three months of 1995 compared to the same period of 1994. This line item
includes interest on mortgage loans owned by the mortgage and life insurance
divisions and loan origination fees earned by the mortgage division. Loan
origination fees in excess of direct origination costs on loans held by the
Company are recognized over the life of the loan and are recognized at the time
of sale on loans sold to third parties. During the three months ended March
31, 1995 and 1994, the Company sold approximately $275 million and $198
million, respectively, in home equity loans and recognized approximately $8.2
million and $7.0 million, respectively, in net loan origination fees in
connection with these sales. Other loan income includes primarily prepayment
fees, late charges, and insurance commissions.
The following table presents the composition of interest, charges and
fees on loans for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
1995 1994
----------- ----------
(in thousands)
<S> <C> <C>
Loan origination fees . . . . . . . . . . . . . $ 15,502 $ 12,465
Mortgage loan interest . . . . . . . . . . . . . 10,650 11,258
Other loan income . . . . . . . . . . . . . . . 4,636 3,562
----------- ---------
Total . . . . . . . . . . . . . . . . . . . $ 30,788 $ 27,285
=========== =========
</TABLE>
11
<PAGE> 13
The Company estimates that non-accrual loans reduced mortgage loan
interest for the first three months of 1995 and 1994 by approximately $2.9
million and $2.5 million, respectively. During the three months ended March
31, 1995 the average amount of non-accrual loans owned by the Company was $21.5
million compared to approximately $28.7 million during the same period of 1994.
In addition, the average balance of loans serviced for third parties which were
on a non-accrual basis or in foreclosure was $69.3 million and $50.8 million
during the first three months of 1995 and 1994, respectively, representing 3.9%
and 4.5%, respectively, of the average amount of loans serviced for third
parties. The Company is generally obligated to advance interest on delinquent
loans which have been sold until satisfaction of the note, liquidation of the
collateral or charge off of the delinquent loan. At March 31, 1995, the
Company owned approximately $10.5 million of commercial loans which were on an
accrual status, but which the Company considers as potential problem loans,
compared to $8.2 million at March 31, 1994. The Company evaluates each of
these commercial loans to estimate its risk of loss in the investment and
provides for such loss through a charge to earnings.
Loan sale gains increased $4.2 million during the first three months
of 1995 over the same period in 1994. Loan sale gains approximate the present
value over the estimated lives of the loans of the excess of the contractual
rates on the loans sold, over the sum of the pass through rate paid to the
buyer, a normal servicing fee, a trustee fee, a surety bond fee, if any, in
mortgage-backed securitization transactions, and an estimate of future credit
losses. The increase in the amount of loan sale gains was due primarily to a
$76 million increase in the amount of loans sold which offset a decline in
excess servicing income retained by the Company (i.e., the stated interest rate
on the loan less the pass through rate and the normal servicing fee and other
applicable recurring fees). Interest spread retained by the Company on loans
sold includes the normal servicing fee. During 1994, guidelines were published
by Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., defining a
normal servicing fee as 50 basis points for servicing "B" and "C" quality home
equity loans, such as those originated by the Company. As the result of this
industry data, the servicing fee rate used by the Company in its securitization
transactions subsequent to July 1, 1994 has been 50 basis points compared to
previous securitizations which include a servicing fee rate of 75 basis points.
The following table presents information regarding home equity loan
sale transactions for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------
1995 1994
----------- -----------
(dollars in thousands)
<S> <C> <C>
Home equity loans sold . . . . . . . . . . . . . $ 274,653 $ 198,332
Average coupon on home equity loans sold . . . . 12.65% 11.67%
Interest spread retained on home equity loans sold 4.42% 5.61%
Home equity loan sale gains . . . . . . . . . . $ 26,734 $ 22,554
</TABLE>
In comparison to the first quarter of 1994, market interest rates were
higher in the first quarter of 1995, and, as a result, the Company experienced
a decrease in the weighted average interest spread retained on home equity
loans sold from 5.61% in 1994 to 4.42% in 1995. Fluctuations in and the level
of market interest rates will impact the interest spread retained by the
Company on loans sold, and, potentially, the amount of its loan sale gains. An
increase in the level of market interest rates will generally adversely affect
the interest spread on loans sold, whereas such interest spread generally
widens during a declining interest rate environment. Although actions have
been taken by the Company during a rising interest rate environment to mitigate
the impact on earnings of fluctuations in market rates, such as increasing the
coupon rate charged on its loan products, the effect of such
12
<PAGE> 14
actions will generally lag the impact of market rate fluctuations. The
weighted average interest spread retained by the Company on loan sales during
the first quarter of 1995 increased to 4.42% from 4.10% retained on loan sales
during the fourth quarter of 1994. This increase is primarily attributable to
an increase in the weighted average coupon on loans sold which offset an
increase in the pass-through rates attributable to such loans.
Historically, the Company has not entered into commercial interest rate
hedge transactions in connection with future loan securitizations; however,
during the first quarter of 1995 the Company entered into a hedge with respect
to a portion of the home equity mortgage loan securitization transaction to
close during the quarter. In addition, the Company has used a prefunding
feature in connection with recent loan securitization transactions. The
prefunding feature "locks in" the pass-through rate that the Company will pay
to the investors on a prefunded amount which will be used to acquire loans at a
future date. The Company is obligated for the difference between the earnings
on such prefunded amount and the pass-through interest paid to the investors
during the period from the date of the closing of the securitization
transaction until the date of delivery of the loans. In connection with the
home equity loan securitization transaction which closed in the first quarter
of 1995, approximately $79 million was held in a prefunding account for
purchase of the Company's home equity loans during the second quarter of 1995.
Pursuant thereto, home equity loans with a remaining principal balance of
approximately $79 million will be delivered prior to June, 1995.
Investment income totaled $25.0 million on average investments of
approximately $1.2 billion for the first three months of 1995 compared to
investment income of $18.2 million on average investments of approximately $977
million during the same period of 1994. At March 31, 1995 the amortized cost
of the fixed income portfolio totaled $1.1 billion and was comprised
principally of $789 million in investment grade mortgage-backed securities and
$336 million in investment grade bonds. At March 31, 1995, the weighted
average rating of the publicly traded bond portfolio according to nationally
recognized rating agencies was "AA". During 1994, the Company established a
trading account for a portion of its investment portfolio invested in common
stocks. At March 31, 1995, the carrying value of investments in the Company's
trading account was $.8 million reflecting an $88,000 net unrealized gain
which is included in investment income for the first quarter of 1995.
Loan servicing income declined $.2 million for the three months ending
March 31, 1995 compared to the same period of 1994. Loan servicing income was
negatively affected by a $1 million increase in the amortization of prior loan
sale gains as the result of an adjustment in the estimated prepayment
assumptions of certain mortgage loans serviced by the Company, primarily
adjustable rate mortgage loans. This adjustment was made in connection with
the Company's evaluation of capitalized excess servicing income which is
performed as of each balance sheet date. This evaluation includes an analysis
of the prepayment assumptions used in calculating loan sale gains in relation
to the current rate of prepayment, and if necessary, revising the estimate
using the original discount rate. Any losses arising from adverse prepayment
experience are recognized immediately while favorable experience is recognized
prospectively. This adjustment offset the impact of a $700 million increase in
the average amount of home equity loans serviced by the Company for third
parties during the first quarter of 1995 compared to the same period of 1994.
In addition, the reduction in the normal servicing fee from 75 to 50 basis
points as discussed above has the impact of increasing current revenues (loan
sale gains) while reducing future revenues (loan servicing income). The
following table reflects the components of loan servicing income for the
periods indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1995 1994
------------ ---------
(in thousands)
<S> <C> <C>
Servicing fees earned . . . . . . . . . . . . . $ 16,951 $ 11,870
Amortization of capitalized excess
servicing income . . . . . . . . . . . . . . . (13,467) (8,181)
----------- ---------
Total . . . . . . . . . . . . . . . . . . . . $ 3,484 $ 3,689
=========== =========
</TABLE>
13
<PAGE> 15
Net insurance premiums declined $1.0 million for the first three months
of 1995 compared with the same period of 1994. Net insurance premiums reflect
the recognition of credit life premiums on policies sold in prior years. The
decrease in premium income is primarily the result of UC Life's decision in
1993 to discontinue sales of credit insurance products.
Expenses. The following table presents the components of the Company's
expenses for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1995 1994
----------- ----------
(dollars in thousands)
<S> <C> <C>
Interest on annuity policies . . . . . . . . . . . $ 19,526 $ 17,793
Personnel . . . . . . . . . . . . . . . . . . . . 17,071 13,507
Interest . . . . . . . . . . . . . . . . . . . . . 5,894 2,425
Loan loss provision . . . . . . . . . . . . . . . 4,064 3,996
Insurance commissions . . . . . . . . . . . . . . 3,548 3,423
Insurance benefits . . . . . . . . . . . . . . . . 2,429 3,008
Other operating . . . . . . . . . . . . . . . . . 16,038 9,833
---------- ---------
Total . . . . . . . . . . . . . . . . . . . . $ 68,570 $ 53,985
========== =========
</TABLE>
Interest on annuity policies increased $1.7 million for the first three
months of 1995 when compared to the same period of 1994 primarily as the result
of an increase in annuity reserves. Average annuity reserves were $1.4 billion
during the first quarter of 1995, an increase of approximately $127 million
from the same period of 1994.
Personnel expenses increased approximately $3.6 million primarily
because of costs associated with the expansion of the Company's mortgage
operations and an increase in incentive bonuses based on loan production.
Interest expense for the first three months of 1995 increased $3.5
million from the same period of 1994 primarily as the result of an increase in
the weighted average interest rate on debt outstanding.
The provision for estimated losses on the commercial mortgage portfolio
during the first quarter of 1995 declined approximately $.8 million when
compared to the same period of 1994 due to a reduction in the amount of loans
serviced and an improved commercial real estate environment. The positive
effect of this reduction on net income was offset by an increase in the
provision for estimated losses on home-equity loans when compared to the first
quarter of 1994.
Insurance commissions for the first three months of 1995 was $3.5
million compared to $3.4 million for the same period of 1994. Commissions paid
on issuance of the Company's single premium deferred annuity products are
generally capitalized as deferred policy acquisition costs ("DPAC") and
amortized over the estimated life of the policy. During the three months ended
March 31, 1995, the Company capitalized approximately $3.9 million in
commissions paid on sales of annuities compared to $3.5 million during the same
period of 1994. Amortization of commission expense on annuities capitalized in
prior periods was $2.6 million during the three months ended March 31, 1995,
compared to $2.2 million during the same period of 1994.
Other operating expenses for the three months ended March 31, 1995
increased approximately $6.2 million when compared to the same period of 1994
primarily as the result of expansion of the Company's mortgage operations,
including a $2.0 million increase in advertising expenses, a $.8 million
increase in loan purchase premiums and a $.6 million increase in occupancy
expenses.
14
<PAGE> 16
FINANCIAL INFORMATION ON BUSINESS SEGMENTS
The following tables reflect income from continuing operations before
income taxes for each of the Company's business segments for the three months
ended March 31, 1995 and 1994, respectively.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1995
------------------------------------------------------
Corporate,
Life Other Operations,
Mortgage Insurance & Eliminations Total
-------- --------- -------------- -----
(in thousands)
<S> <C> <C> <C> <C>
Revenues:
Interest, charges and fees on loans $ 20,140 $ 9,267 $ 1,381 $ 30,788
Loan sale gains . . . . . . . . . . 26,734 26,734
Investment income . . . . . . . . . 1,465 24,145 (599) 25,011
Loan servicing income . . . . . . . 4,734 (427) (823) 3,484
Net insurance premiums . . . . . . 2,102 2,102
---------- --------- --------- ---------
Total . . . . . . . . . . . . . 53,073 35,087 (41) 88,119
---------- --------- --------- ---------
Expenses:
Interest on annuity policies . . . 19,526 19,526
Personnel . . . . . . . . . . . . . 14,530 1,406 1,135 17,071
Interest . . . . . . . . . . . . . 3,643 396 1,855 5,894
Loan loss provision . . . . . . . . 3,498 566 4,064
Insurance commissions . . . . . . . 3,444 104 3,548
Insurance benefits . . . . . . . . 2,429 2,429
Other operating . . . . . . . . . . 13,499 4,151 (1,612) 16,038
---------- --------- --------- ---------
Total . . . . . . . . . . . . . 35,170 31,918 1,482 68,570
---------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes . . . . . . . $ 17,903 $ 3,169 $ (1,523) $ 19,549
========== ========= ========= =========
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
Three Months Ended March 31, 1994
-------------------------------------------------------
Corporate,
Life Other Operations,
Mortgage Insurance & Eliminations Total
-------- --------- -------------- -----
(in thousands)
<S> <C> <C> <C> <C>
Revenues:
Interest, charges and fees on loans . $ 14,798 $ 11,577 $ 910 $ 27,285
Loan sale gains . . . . . . . . . . . 22,554 22,554
Investment income . . . . . . . . . . 266 18,313 (358) 18,221
Loan servicing income . . . . . . . . 4,977 (44) (1,244) 3,689
Net insurance premiums . . . . . . . 3,068 3,068
-------- -------- -------- ---------
Total . . . . . . . . . . . . . . 42,595 32,914 (692) 74,817
-------- -------- -------- ---------
Expenses:
Interest on annuity policies . . . . 17,793 17,793
Personnel . . . . . . . . . . . . . . 10,612 1,340 1,555 13,507
Interest . . . . . . . . . . . . . . 1,216 248 961 2,425
Loan loss provision . . . . . . . . . 2,664 1,332 3,996
Insurance commissions . . . . . . . . 3,360 63 3,423
Insurance benefits . . . . . . . . . 3,008 3,008
Other operating . . . . . . . . . . . 7,752 4,254 (2,173) 9,833
-------- ------- -------- ---------
Total . . . . . . . . . . . . . . 22,244 31,335 406 53,985
-------- ------- -------- ---------
Income (loss) from continuing operations
before income taxes . . . . . . . . $ 20,351 $ 1,579 $(1,098) $ 20,832
======== ======== ======== =========
</TABLE>
16
<PAGE> 18
ASSET QUALITY AND RESERVES
The quality of the Company's loan and bond portfolios and of the loan
portfolio serviced for third parties significantly affects the profitability of
the Company. The values of and markets for these assets are dependent on a
number of factors, including general economic conditions, interest rates and
governmental regulations. Adverse changes in such factors, which become more
pronounced in periods of economic decline, may affect the quality of these
assets and the Company's resulting ability to sell these assets for acceptable
prices. General economic deterioration can result in increased delinquencies
on existing loans, reductions in collateral values and declines in the value of
investments resulting from a reduced capacity of issuers to repay the bonds.
Loans. Substantially all of the loans owned by the Company were
originated through the Company's branch (i.e., retail) network or wholesale
loan programs. In connection with its origination of home equity loans, the
Company relies on thorough underwriting and credit review procedures, a
mortgage on the borrower's residence and, in some cases, other security, and,
in its retail origination program, contact with borrowers through its branch
office system to manage credit risk on its loans. In addition to servicing the
loans owned by the Company, the mortgage division serviced approximately $1.9
billion in loans for third parties at March 31, 1995, $1.7 billion of which are
home equity loans. Substantially all of the home equity loans serviced for
third parties were publicly sold as mortgage backed securities ("pass-through
certificates"). The purchasers of the pass-through certificates receive a
credit enhanced security which is generally achieved in part by subordinating
the excess interest spread retained by the Company to the payment of scheduled
principal and interest on the certificates. Such subordination relates to
credit losses which may occur after the sale of the loans and continues until
the earlier of the payment in full of the loans or termination of the agreement
pursuant to which the loans were sold. If cumulative payment defaults exceed
the amount subordinated, a third party insurer is obligated to pay any further
losses experienced by the owners of the pass-through certificates.
The Company is also obligated to cure, repurchase or replace loans
which may be determined after the sale to violate representations and
warranties relating to them and which are made by the Company at the time of
the sale. The Company regularly evaluates the quality of the loan portfolio
and estimates its risk of loss based upon historical loss experience,
prevailing economic conditions, estimated collateral value and such other
factors which, in management's judgment, are relevant in estimating the credit
risk in owned and/or serviced loans. Estimated losses on the owned portfolio
are provided for by an increase in the allowance for loan losses through a
charge to current operating income. At March 31, 1995, the Company's allowance
for loan losses was $16.8 million. For loans sold, the Company reduces the
amount of gain recognized on the sale by the estimated amount of credit losses,
and records such amount on its balance sheet in the allowance for loss on loans
serviced. At March 31, 1995, the allowance for loss on loans serviced was
$29.6 million. The maximum recourse associated with sales of home equity loans
according to terms of the loan sale agreements totaled approximately $323
million, of which amount approximately $312 million relates to the subordinated
cash and excess interest spread. Should credit losses on loans sold
materially exceed the Company's estimates for such losses, such consequence
will have a material adverse impact on the Company's operations.
At March 31, 1995, the contractual balance of loans serviced was
approximately $2.2 billion comprised of approximately $387 million serviced for
the Company and approximately $1.9 billion serviced for investors. The
portfolio is geographically diversified. Although the Company services loans
in 46 states, at March 31, 1995 a substantial portion of the loans serviced
were originated in Florida (13.4%), Ohio (11.5%) and Louisiana (10.1%),
respectively, and no other state accounted for more than 8.0% of the serviced
portfolio. Included in the serviced portfolio are commercial loans originated
by the Company, a substantial portion of which were originated in Florida
(27.4%) and Georgia (16.8%) and no other state accounted for more than 8.5% of
the commercial loans serviced. The risk inherent in such concentrations is
dependent not only upon regional and general economic stability which affects
property values, but also the financial well-being and creditworthiness of the
borrower.
17
<PAGE> 19
The following table provides a summary of loans owned and/or serviced
which are past due 30 days or more, foreclosed properties and loans charged off
as of the dates indicated.
<TABLE>
<CAPTION>
Foreclosed Properties
-----------------------
Contractual Delinquencies % of Owned Serviced for % of
Balance Contractual Contractual by the Third Party Net Loans Average
Period Ended of Loans Balance Balance Company Investors Charged Off Loans*
- ------------ ------------- ------------- ----------- -------- ------------ ----------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
March 31, 1995
- --------------
Home equity . . . $ 1,895,955 $ 134,514 7.09% $ 7,527 $ 13,187 $ 3,470 .76%
Commercial . . . 267,291 5,208 1.95% 21,509 10,738 210 .32%
Conventional . . 70,986 2,634 3.71% 285 - 36 .20%
----------- ---------- --------- --------- ---------
Total . . . $ 2,234,232 $ 142,356 6.37% $ 29,321 $ 23,925 $ 3,716
=========== ========== ========= ========= =========
December 31, 1994
- -----------------
Home equity . . . $ 1,683,698 $ 129,203 7.67% $ 8,791 $ 11,837 $ 11,694 0.84%
Commercial . . . 274,413 5,377 1.96% 22,131 8,784 5,658 1.83%
Conventional . . 74,294 2,672 3.60% 35 - 100 0.16%
------------ ---------- --------- --------- ---------
Total . . . $ 2,032,405 $ 137,252 6.75% $ 30,957 $ 20,621 $ 17,452
------------ ========== ========= ========= =========
December 31, 1993
- -----------------
Home equity . . . $ 1,125,139 $ 92,974 8.26% $ 17,014 $ 8,355 $ 8,548 0.88%
Commercial . . . 345,365 19,292 5.59% 20,871 9,275 3,579 0.95%
Conventional . . 98,277 3,747 3.81% 148 - 77 0.09%
------------ ---------- ---------- --------- ---------
Total . . . $ 1,568,781 $ 116,013 7.40% $ 38,033 $ 17,630 $ 12,204
============ ========== ========== ========= =========
</TABLE>
*Annualized for the three months ended March 31, 1995.
Management continues to focus on reducing the level of non-earning
assets owned and/or serviced by expediting the foreclosure process. The
balance of foreclosed home equity loans owned and/or serviced totaled $20.7
million at March 31, 1995 compared to $22.0 million at March 31, 1994.
The above delinquency and loan loss experience represents the
Company's recent experience. However, the delinquency, foreclosure and net
loss percentages may be affected by the increase in the size and relative lack
of seasoning of the portfolio. In addition, the Company can neither quantify
the impact of property value declines, if any, on the home equity loans nor
predict whether or to what extent or how long such declines may exist. In a
period of such declines, the rates of delinquencies, foreclosures and losses on
the home equity loans could be higher than those theretofore experienced in the
mortgage lending industry in general. Adverse economic conditions (which may
or may not affect real property values) may affect the timely payment by
borrowers of scheduled payments of principal and interest on the home equity
loans and, accordingly, the actual rates of delinquencies, foreclosures and
losses. As a result, the information in the above tables should not be
considered as the only basis for assessing the likelihood, amount or severity
of delinquencies or losses in the future on home equity loans and no assurance
can be given that the delinquency and loss experience presented in the tables
will be indicative of such experience on home equity loans.
18
<PAGE> 20
A summary analysis of the changes in the Company's allowance for loan
losses for the indicated periods is as follows.
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------
1995 1994
---------- ---------
(in thousands)
<S> <C> <C>
Balance at beginning of period . . . . . . . . . . . $ 16,508 $ 21,017
Loans charged to allowance
Home equity . . . . . . . . . . . . . . . . . . . (3,827) (4,029)
Commercial . . . . . . . . . . . . . . . . . . . . (210) -
Conventional . . . . . . . . . . . . . . . . . . . (36) (15)
---------- ----------
(4,073) (4,044)
Recoveries on loans previously
charged to allowance . . . . . . . . . . . . . . . . 357 276
---------- ----------
Net loans charged off . . . . . . . . . . . . . . . . (3,716) (3,768)
Loan loss provision . . . . . . . . . . . . . . . . . 4,064 3,996
Reserve reclassification . . . . . . . . . . . . . . . (14) (61)
---------- ----------
Balance at end of period . . . . . . . . . . . . . . . $ 16,842 $ 21,184
========== ==========
Specific reserves . . . . . . . . . . . . . . . . . . $ 6,353 $ 8,429
Unallocated reserves . . . . . . . . . . . . . . . . . 10,489 12,755
---------- ----------
Total reserves . . . . . . . . . . . . . . . . . . . . $ 16,842 $ 21,184
========== ==========
</TABLE>
Specific reserves are provided for foreclosures in which the carrying
value of the loan exceeds the market value of the collateral. Unallocated
reserves are provided for loans not in foreclosure and are calculated primarily
using objective measurement techniques. Unallocated reserves also include
reserves for active loans which have been modified or indicate potential
problems as well as reserves for a $32.5 million subordinated position the
Company acquired in connection with the securitization and sale of
approximately $230 million in commercial real estate mortgage loans in 1990.
At March 31, 1995, the Company owned $29.3 million of property acquired in
settlement of loans, excluding the specific reserves attributed to these
properties. These balances are included in the loans owned by the Company.
The specific reserve in the table above is provided to reduce the carrying
value of these properties to their market value.
A summary of the amounts provided by the Company for future credit
losses on loans and foreclosed properties owned by the Company and loans sold
with recourse (including for purposes hereof loans sold with
19
<PAGE> 21
limited guarantees and subordination of cash and excess interest spread owned
by the Company) as of the dates indicated is as follows:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1995 1994 1994
------------ ------------ -----------
(in thousands)
<S> <C> <C> <C>
Allowance for loan losses
(Applicable to loans and foreclosed properties
owned by the Company) . . . . . . . . . . $ 16,842 $ 16,508 $ 21,184
Allowance for loss on loans serviced
(Applicable to loans
sold with recourse) . . . . . . . . . . . 29,580 26,822 16,393
--------- ---------- ----------
Total . . . . . . . . . . . . . . . $ 46,422 $ 43,330 $ 37,577
========= ========== ==========
</TABLE>
As of March 31, 1995, approximately $1.7 billion of home equity loans sold
were serviced by UC Lending under agreements substantially all of which provide
for the subordination of cash and excess interest spread owned by the Company
for credit losses ("loans sold with recourse"). The maximum recourse
associated with sales of home equity loans according to terms of the loan sales
agreements was approximately $323 million at March 31, 1995, of which $312
million relates to the subordinated cash and excess interest spread. The
Company's estimate of its losses, based on historical loan loss experience, was
approximately $29.6 million at March 31, 1995 and is recorded in the Company's
allowance for loss on loans serviced. Should credit losses on loans sold with
limited recourse, or subordination of cash and excess interest spread owned by
the Company, materially exceed the Company's estimate for such losses, such
consequence will have a material adverse impact on the Company's operations.
Recent legal developments related to mortgage loans. On March 21, 1994,
the United States Court of Appeals for the Eleventh Circuit held, in part, that
a lender improperly disclosed the collection of the Florida state intangible
tax from the borrower, thereby subjecting the loan to rescission under the
Federal Truth-in-Lending Act (the "TILA") by the borrower for three years after
it was made. Subsequent to the court's initial decision and prior to its
refusal to reconsider its decision, the Florida Legislature amended the
language of the intangible tax to clarify the Legislature's previous intention
that the intangible tax be disclosed for purposes of the TILA in the manner
that had been followed by most lenders in Florida, including the Company.
Although the Florida Legislature intended this legislation to apply
retroactively, no final court decision has been rendered as to the effect of
this legislation on loans originated prior to its effective date. This court
decision may also apply to a similar intangible tax imposed by other states.
To its knowledge, as of May 12, 1995, no claims have been filed against the
Company under this court decision (other than as a defense in foreclosure
proceedings) and no notice of a breach of a representation has been received
under the Company's loan sale agreements requesting it to repurchase, cure or
substitute other loans for the loans sold. If the intent of the Florida
Legislature is not upheld and if a substantial number of claims are filed by
borrowers against the Company resulting in rescission or repurchase, the
Company's financial statements and operations will be materially adversely
affected. As the financial impact, if any, of this contingency cannot
presently be reasonably estimated, the Company has made no accrual therefor.
Amendments to the TILA which may become effective on October 1, 1995,
impose additional disclosure requirements and prohibit certain prepayment
penalty charges, among other requirements, on loans with a specified level of
origination fees or a specified interest rate level. A significant percentage
of the Company's loans originated after the effective date could be subject to
the requirements of this legislation. The Company is currently reviewing this
legislation in its final form to determine the impact of its provisions on
the Company's business or results of operations.
Investment securities. The Company's investment portfolio consists
primarily of mortgage backed securities and corporate bonds, comprising 66%
and 29% of the portfolio at March 31, 1995, respectively. At March 31,
20
<PAGE> 22
1995, approximately 93% of the Company's portfolio of investment securities
were classified in an available-for-sale category and the carrying value
adjusted to fair value by means of an adjustment to stockholders' equity. The
remainder of the portfolio consists primarily of private placements made either
directly or through an investment partnership and are classified as
held-to-maturity and valued at cost. At March 31, 1995, the Company owned $.8
million in equity securities classified as trading securities. The net
unrealized loss in the debt securities portfolio (amortized cost over fair
value) at March 31, 1995 was $32.7 million compared to an unrealized loss of
$73.9 million at December 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal cash requirements consist of funding loan
originations in its mortgage operations and the payment of policyholder claims
and surrenders incurred in its life insurance operations. The Company's
mortgage operations require continued access to short and long-term sources of
debt financing, the sale of loans to United Companies Life Insurance Company
("UC Life") and the sale of loans and asset-backed securities in the secondary
market; whereas liquidity requirements for the Company's insurance operations
are generally met by funds provided from the sale of annuities and cash flow
from its investments in fixed income securities and mortgage loans.
The following discussion reflects the primary sources of liquidity and
capital for each of the Company's primary operating divisions.
Mortgage. The principal cash requirements of the Company's mortgage
operations arise from loan originations, deposits to reserve accounts,
repayments of inter-company debt borrowed under the Company's revolving credit
facility (the "Bank Facility") and the senior notes due November 1, 1999,
payments of operating and interest expenses, and income taxes related to loan
sale transactions. Loan originations are funded principally through the Bank
Facility and short-term bank facilities pending loan sales to UC Life and in
the secondary market. In addition, at March 31, 1995, UC Lending had available
a secured warehouse facility provided by the investment bank that acted as sole
underwriter of the Company's first quarter public loan securitization
transaction. The warehouse facility was directly related to this
securitization transaction and initially provided funding for up to $200
million of eligible home equity loans for such securitization and will mature
with the closing of the last delivery of loans under the prefunding account
relative to this securitization.
Substantially all of the loans originated or acquired by UC Lending
are sold. Net cash from operating activities of the Company in the first
quarter of 1995 and 1994 reflects approximately $321 million and $202 million,
respectively, in cash used for loan originations and acquisitions. The primary
source of funding for loan originations is derived from the reinvestment of
proceeds from the ultimate sale of loans in the secondary market which totaled
approximately $275 million and $198 million in the three months ended March 31,
1995 and 1994. In connection with the loan sale transactions in the secondary
market, third-party surety bonds and cash deposits by the Company as credit
enhancements were provided. The loan sale transactions required the
subordination of certain cash flows payable to UC Lending and its subsidiaries
to the payment of principal and interest due to certificate holders. In
connection with these transactions, UC Lending was required, in some instances,
to fund an initial deposit, and thereafter, in each transaction, a portion of
the amounts receivable by UC Lending and its subsidiaries from the excess
interest spread is required to be placed and maintained in a reserve account to
the extent of the subordination requirements. The subordination requirements
generally provide that the excess interest spread is payable to a reserve
account until a specified level of cash, which is less than the maximum
subordination amount, is accumulated therein. The capitalized excess servicing
income of the Company is subject to being utilized first to replenish cash paid
from the reserve account to fund shortfalls in collections from borrowers who
default on the payment of principal or interest on the loans underlying the
pass-through certificates issued until the total of the Company's deposits into
the reserve account equal the maximum subordination amount. In connection with
the issuance and sale of approximately $1.8 billion of pass-through
certificates through March 31, 1995 under the Company sponsored
shelf-registration statement, the subordination amounts aggregate
approximately $273 million. After the Company's
21
<PAGE> 23
deposits into the reserve account equal the maximum subordination amount for a
transaction, the subordination of the related excess interest spread (including
the guarantee fee payable therefrom) for these purposes is terminated. The
excess interest spread required to be deposited and maintained in the
respective reserve accounts will not be available to support the cash flow
requirements of the Company until such amount exceeds the maximum subordinated
amount (other than amounts, if any, in excess of the specified levels required
to be maintained in the reserve accounts, which may be distributed periodically
to the Company). At March 31, 1995, the amounts on deposit in such reserve
accounts totaled $97.8 million.
The expansion of the Company's mortgage division and the increase in
the amount of loans originated are capital intensive operations; therefore,
adequate credit facilities and other sources of funding, including the ability
of the Company to sell loans in the secondary market and to UC Life, are
essential for the continuation of and the growth in the Company's loan
operations. At March 31, 1995, the Company's debt facilities available to fund
general operating needs totaled $276 million, of which $236 million was
outstanding, resulting in available, but unfunded debt capacity for general
operating needs of $40 million. During the first quarter of 1995, peak
borrowings under such credit facilities reached $262 million and rose to $273
million subsequent to quarter end. At December 31, 1994, the Company had $266
million in such debt facilities available with $212 million outstanding,
resulting in $54 million in available, but unfunded debt capacity. The Company
continues to evaluate its current resources and to explore the feasibility of
additional capital market transactions.
Life insurance. The principal cash requirement of UC Life consists of
contractual obligations to policyholders, principally through policy claims and
surrenders. The primary sources of funding these obligations, in addition to
cash flow from investments, are the sale of annuities. Net cash flow from
annuity operations is used to build an investment portfolio, which in turn
produces future cash flows from investment income and provides a secondary
source of liquidity for this division. Net cash provided by operating
activities of the insurance division in the first quarter of 1995 and 1994 was
approximately $24.2 million and $19.5 million, respectively, resulting
primarily from cash earnings on investments. The Company monitors available
cash and cash equivalents to maintain adequate balances for current payments
while maximizing cash available for longer term investment activities. The
Company's financing activities during the first quarter of 1995 and 1994
reflect approximately $48.6 million and $45.0 million, respectively, in cash
received primarily from sales by UC Life of its annuity products. As reflected
in the net cash used by investing activities during the same periods,
investment purchases were approximately $81.6 million and $106.5 million,
respectively, reflecting the investment of these funds and the reinvestment of
proceeds from maturities of investments. Cash used by financing activities
during these three month periods also reflects payments of $53.8 million and
$39.9 million primarily on annuity products resulting from policyholder
surrenders and claims. The increase in annuity surrenders during the first
quarter of 1995 was expected, due in part to an increase in the amount of
annuity policies which were beyond the surrender penalty period. The interest
margin on the Company's annuity liabilities during the first quarter of 1995
was 2.38% compared to 2.61% during the same period of 1994. UC Life's
investments at March 31, 1995 included approximately $337 million in
residential and commercial mortgage loans, and the amortized cost of its bond
portfolio included $358 million in corporate and government bonds and private
debt placements and $789 million in mortgage-backed securities.
The investment portfolio is also managed to provide a secondary source
of liquidity as investments can be sold, if necessary, to fund abnormal levels
of policy surrenders, claims and expenses. An unanticipated increase in
surrenders would impact the Company's liquidity, potentially requiring the sale
of certain assets, such as bonds and loans prior to their maturities, which may
be at a loss.
As a Louisiana domiciled insurance company, UC Life is subject to
certain regulatory restrictions on the payment of dividends. UC Life had the
capacity at March 31, 1995 to pay dividends of $8.2 million. UC Life did not
pay any dividends to the Company during 1992, 1993 or 1994 in order to retain
capital in UC Life.
22
<PAGE> 24
ACCOUNTING STANDARDS
In May 1993 and in October 1994, the FASB issued Statements of
Financial Accounting Standards Nos. 114 and 118 ("SFAS 114" and "SFAS 118")
which address the accounting by creditors for impairment of loans and specify
how allowances for credit losses related to certain loans should be determined.
The statements also address the accounting by creditors for all loans that are
restructured in a troubled debt restructuring involving modification of terms
of a receivable. The implementation of the provisions of SFAS 114 and SFAS 118
in the first quarter of 1995 did not have a material effect on the financial
statements of the Company.
23
<PAGE> 25
REVIEW BY INDEPENDENT ACCOUNTANTS
The Company's independent accountants, Deloitte & Touche LLP, have performed a
review of the accompanying unaudited consolidated balance sheet as of March 31,
1995 and the related consolidated statements of income and cash flows for the
three months ended March 31, 1995 and 1994 and previously audited and expressed
an unqualified opinion dated February 28, 1995 on the consolidated financial
statements of the Company and its subsidiaries as of December 31, 1994, from
which the consolidated balance sheet as of this date is derived.
24
<PAGE> 26
INDEPENDENT ACCOUNTANTS' REPORT
United Companies Financial Corporation:
We have reviewed the accompanying consolidated balance sheet of United
Companies Financial Corporation and subsidiaries as of March 31, 1995, and the
related consolidated statements of income and cash flows for the three-month
periods ended March 31, 1995 and 1994. These financial statements are the
responsibility of the Corporation's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of United Companies Financial
Corporation and subsidiaries as of December 31, 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated February 28,
1995, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1994 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ DELOITTE & TOUCHE LLP
Baton Rouge, Louisiana
May 12, 1995
25
<PAGE> 27
PART II
OTHER INFORMATION
Items 1 through 5 - Inapplicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - (3) Amended and restated by-laws
(10) Indemnification Agreements
(11) Statement re computation of earnings per share
(15) Consent of Deloitte & Touche LLP
(27) Financial Data Schedule
(b) Reports of Form 8-K - None
26
<PAGE> 28
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.
UNITED COMPANIES FINANCIAL CORPORATION
Date: 5/12/95 By: /s/ J. Terrell Brown
---------------- ----------------------------------------
J. Terrell Brown
President and Chief Executive Officer
Date: 5/12/95 By: /s/ Dale E. Redman
---------------- ----------------------------------------
Dale E. Redman
Executive Vice President and Chief
Financial Officer
27
<PAGE> 29
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Page No.
- ----------- --------
<S> <C> <C>
3 Amended and restated by-laws 29 - 40
10 Indemnification Agreements 41 - 48
11 Statement re computation of 49
earnings per share
15 Consent of Deloitte & Touche LLP 50
27 Financial Data Schedule 51
</TABLE>
28
<PAGE> 1
EXHIBIT 3
AMENDED AND RESTATED BY-LAWS
OF
UNITED COMPANIES FINANCIAL CORPORATION
AS OF AUGUST 20, 1985, AS AMENDED ON MARCH 11, 1988,
MAY 31, 1988, MARCH 14, 1989, AUGUST 26, 1992, AND JANUARY 31, 1995
ARTICLE I
NAME AND LOCATION
The name of this corporation is UNITED COMPANIES FINANCIAL
CORPORATION (the "Corporation") and its principal place of business is 4041
Essen Lane, Baton Rouge, Louisiana. Other offices for the transaction of
business shall be located at such places as the Board of Directors may from
time to time determine.
ARTICLE II
SHAREHOLDERS
2.1 REGULAR ANNUAL MEETING OF SHAREHOLDERS. The regular annual
meeting of the shareholders of the Corporation for the election of directors,
and the transaction of other business, shall be held once each year at such
time and place as the board of directors shall determine, whether in or outside
of the State of Louisiana.
2.2 SPECIAL MEETING OF SHAREHOLDERS. Except as provided in the
Articles, a special meeting of the shareholders may be called for any purpose
or purposes at any time by the chairman of the board or the chief executive
officer of the Corporation, or by resolution of the board of directors duly
adopted by a vote of no less than sixty-six and two-thirds percent (66-2/3%) of
the entire board of directors. (As amended January 31, 1995, to be effective
as of January 31, 1995)
2.3 PRESIDING OFFICER. The chairman of the board or in his absence
one of the vice-chairmen, and in their absence the chief executive officer of
the Corporation shall preside at all meetings of the shareholders.
Notwithstanding anything in these by-laws to the contrary, no business shall be
conducted at any meeting of the shareholders except in accordance with the
procedures set forth in these by-laws, including but not limited to the
procedures for the submission of shareholder proposals and shareholder
nominations of directors pursuant to Section 2.8 and Subsection 4.9.2,
respectively. The presiding officer of any meeting of the shareholders shall,
if the facts warrant, determine and declare to the meeting that business or
nominations were not properly brought before the meeting in accordance with
these by-laws, including but not limited to Section 2.8 and Subsection 4.9.2,
respectively, and if he should so determine, he shall so declare to the meeting
and any such business or nominations not properly brought before the meeting
shall not be transacted and shall not be submitted for consideration at the
meeting. (As amended January 31, 1995, to be effective as of January 31, 1995)
<PAGE> 2
2.4 NOTICE OF SHAREHOLDERS MEETING. Written or printed notice
stating the place, day and hour of the shareholders meeting, and, in the case
of a special shareholders meeting, the purpose or purposes for which the
shareholders meeting is called, shall be delivered by or at the direction of
the chief executive officer or Secretary to each shareholder of record entitled
to notice of such shareholders meeting, not less than ten (10) nor more than
sixty (60) days before the date of either an annual or special shareholders
meeting. The notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his last known address as
it appears on the records of the Corporation, with postage prepaid. (As
amended August 26, 1992, to be effective as of August 26, 1992).
2.5 QUORUM. Except as provided in the next section hereof, any
number of shareholders, together holding at least a majority of the outstanding
shares entitled to vote at any shareholders meeting, who are present in person
or represented by proxy at such shareholders meeting, shall constitute a quorum
for the transaction of business despite the subsequent withdrawal or refusal to
vote of any shareholder.
2.6 ADJOURNMENT OF SHAREHOLDERS MEETING. If less than a quorum is
in attendance at any time for which a shareholders meeting is called, the
meeting may, after the lapse of at least half an hour, be adjourned by a
majority in interest of the shareholders present or represented and entitled to
vote thereat. If notice of such adjourned shareholders meeting is sent to the
shareholders entitled to vote at the meeting, stating the purpose or purposes
of the shareholders meeting and that the previous shareholders meeting failed
for lack of a quorum, then any number of shareholders, present in person or
represented by proxy, and together holding at least one-fourth of the
outstanding shares entitled to vote thereat, shall constitute a quorum at the
second of such adjourned meetings.
2.7 VOTING.
2.7.1 Proxy. A shareholder shall have the right to cast
his vote either in person or by proxy duly authorized in writing, signed by the
shareholder and filed with the Secretary prior to or at the commencement of the
shareholders meeting.
2.7.2 Ballot; One Vote. On demand of any shareholder, the
vote for directors or on any question before a shareholders meeting shall be by
ballot. All elections for directors shall be had by plurality, and all
questions decided by majority, of the votes cast, except as otherwise provided
by the Articles or these by-laws. Except as otherwise provided in the
Articles, each shareholder of record shall have the right, at every
shareholders meeting, to one vote upon each matter submitted for a vote, for
each share standing in his name on the books of the Corporation.
2.7.3 List of Shareholders. At each meeting of
shareholders, a list of the shareholders entitled to vote, arranged
alphabetically and certified by the secretary, showing the number and class of
shares held by each such shareholder on the record date for the meeting, shall
be produced on the request of any shareholder.
- 2 -
<PAGE> 3
2.8 SHAREHOLDER PROPOSALS. Any proposal by a shareholder submitted
for consideration at any annual or special meeting of the shareholders of the
Corporation must be timely delivered in the proper written form to the
secretary of the Corporation. To be timely, a shareholder's proposal shall be
delivered to or mailed and received at the Corporation's principal offices at
least sixty (60) days prior to the annual or special meeting at which the
proposal is to be considered (or, if fewer than seventy (70) days' notice or
prior public disclosure of the meeting date is given or made to the
shareholders, not later than the tenth day following the day on which the
notice of the date of the meeting was mailed or such public disclosure was
made). To be in proper written form, such shareholder proposal shall set forth
in writing (i) the name and address, as they appear on the Corporation's books,
of the shareholder submitting the proposal, (ii) the number of shares
beneficially owned by the shareholder, (iii) a brief description of the
proposal, (iv) the reason(s) for submitting the proposal, (v) any material
interest of the shareholder in the proposal, (vi) a representation by the
shareholder that the shareholder will attend the meeting to move consideration
of the proposal, and (vii) a representation by the shareholder that the
shareholder will remain a shareholder of record through the record date of the
meeting. (As amended January 31, 1995, to be effective as of January 31, 1995)
ARTICLE III
CAPITAL STOCK
3.1 CERTIFICATES. Certificates of stock, numbered and with the
seal of the Corporation affixed, signed by the chairman of the board or one of
the vice-chairmen of the board or the chief executive officer or the president
or a vice-president and by the secretary, or by an assistant secretary, shall
be issued to each shareholder, certifying the number of shares owned by him in
the Corporation. If the stock certificates are countersigned by a transfer
agent and a registrar, the signatures of the corporate officials may be
facsimile.
3.2 TRANSFER OF SHARES. Shares of stock of the Corporation are
transferable only on its books, by the holders thereof in person or by their
duly authorized attorneys or legal representative, and only after proof of
compliance with any restrictions upon their transfer set forth in the Articles
or in these by-laws. Upon such transfer, the old certificates shall be
surrendered to the person in charge of the stock transfer records, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer, and whenever a transfer is made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer. The board of directors may make regulations concerning the transfer
of shares, and may in their discretion authorize the transfer of shares from
the names of deceased persons whose estates are not administered, upon receipt
of such indemnity as they may require.
- 3 -
<PAGE> 4
3.3 RECORD DATE.
3.3.1 In order to make a determination of the shareholders
of record for any purpose, the board of directors may fix in advance a record
date for determination of shareholders for such purpose, such date to be not
more than sixty days and, if fixed for the purpose of determining shareholders
entitled to notice of and to vote at a shareholders meeting or to receive
payment of dividends, not less than ten days, prior to the date on which the
action requiring the determination of shareholders is to be taken.
3.3.2 If no record date is fixed, the record date shall be
determined as follows: (i) for the purpose of determining shareholders
entitled to notice of and to vote at a shareholders meeting, the close of
business on the day before the notice of the shareholders meeting is mailed, or
if notice is waived, the close of business on the day before the shareholders
meeting, shall be the record date; (ii) for the purpose of determining
shareholders entitled to a dividend, the close of business on the tenth day
after the date of the board of directors meeting at which the dividend is
declared shall be the record date; or (iii) for any other purpose, the close of
business on the day on which the board of directors adopts the resolution
relating thereto shall be the record date.
3.3.3 A determination of shareholders entitled to notice of
and to vote at a shareholders meeting, shall apply to any adjournment thereof
unless otherwise provided by the board of directors.
3.4 TRANSFER AGENTS, REGISTRARS. The board of directors may
appoint and remove one or more transfer agents and registrars for any class of
stock. If such appointments are made, the transfer agents shall effect
original issuances of stock certificates and transfer of shares, record and
advise the Corporation and one another of such issuances and transfers,
countersign and deliver stock certificates, and keep the stock, transfer and
other pertinent records; and the registrars shall prevent over-issues by
registering and countersigning all stock certificates issued. A transfer agent
and registrar may be identical. The transfer agents and registrars, when
covered with the Corporation as obligees by an indemnity bond substantially in
a form, and issued by a surety company, approved by the Corporation's secretary
and providing indemnity unlimited in stated amount, or in form and amount and
signed by a surety approved by the board of directors, and upon receipt of an
appropriate affidavit and indemnity agreement, may (a) countersign, register
and deliver, in place of any stock certificate alleged to have been lost,
stolen, destroyed or mutilated, or to have been mailed or not received, a
replacement certificate for the same number of shares, and make any payment,
credit, transfer, issuance, conversion or exchange to which the holder may be
entitled in respect of such replaced certificate, without surrender thereof for
cancellation, and (b) effect transfers of shares from the names of deceased
persons whose estates are not administered. (As amended August 26, 1992, to be
effective as of August 26, 1992.)
3.5 LOST CERTIFICATE. A new certificate of stock may be issued in
place of any certificate theretofore issued by the Corporation, alleged to have
been lost, stolen, mutilated or
- 4 -
<PAGE> 5
destroyed, or mailed and not received, and the board of directors may in its
discretion require the owner of the replaced certificate to give the
Corporation a bond, unlimited as to stated amount, to indemnify the Corporation
and its transfer agents and registrars against any claim which may be made
against it on account of the replacement of the certificate or any payment made
or other action taken in respect thereof. New certificates shall bear the
designation "duplicate" plainly marked on the face of the new certificate.
ARTICLE IV
DIRECTORS
4.1 NUMBER OF DIRECTORS, ELECTION AND TERM. Except as otherwise
provided pursuant to the provisions of Article III of the Articles relating to
the rights of the holders of any class or series of stock having a preference
over the common stock as to dividends or upon liquidation to elect additional
directors under specified circumstances, the number of directors shall be fixed
exclusively from time to time by resolution duly adopted by a vote of no less
than sixty-six and two-thirds percent (66-2/3%) of the entire board of
directors. At the 1995 Annual Meeting of Shareholders, the directors shall be
divided into three (3) classes, as nearly equal in number as possible, as
determined by the board of directors, with the term of office of the first
class to expire at the 1996 Annual Meeting of Shareholders, the term of office
of the second class to expire at the 1997 Annual Meeting of Shareholders, and
the term of office of the third class to expire at the 1998 Annual Meeting of
Shareholders, with the members of each class to hold office until their
successors are elected and qualified. At each annual meeting of the
shareholders following the 1995 Annual Meeting of Shareholders, the successors
of the class of directors whose term expires at such annual meeting of the
shareholders shall be elected to hold office for a term expiring at the annual
meeting of the shareholders held in the third year following the year of their
election, with each director in each such class to hold office until his or her
successor is elected and qualified. (As amended January 31, 1995, to be
effective as of January 31, 1995)
4.2 PLACE OF HOLDING BOARD OF DIRECTORS MEETINGS. Meetings of the
board of directors, regular or special, may be held at any place, within or
outside Louisiana, as the board of directors may determine. In addition,
meetings of the board of directors, and any committee thereof, may be held by
means of conference telephone, or similar communications equipment that allows
all persons participating in such meetings to hear and communicate with each
other.
4.3 WRITTEN CONSENTS. Any action which may be taken at a meeting
of the board of directors or any committee thereof, may be taken by a consent
in writing signed by all of the directors or by all members of the committee,
as the case may be, and filed with the records of proceedings of the board of
directors or committee.
4.4 FIRST MEETING. The first meeting of each newly elected board
of directors shall be held immediately following the annual meeting of the
shareholders, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the
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meeting, provided a quorum is present; or they may meet at such time and place
as fixed by the consent in writing of all of the directors or by notice given
by the majority to the remaining directors. At the first meeting, or any
subsequent meeting called for the purpose, the directors shall elect the
officers of the Corporation.
4.5 REGULAR BOARD OF DIRECTORS MEETINGS. Regular meetings of the
board of directors may be held without notice, at such time and place as may be
designated by the directors.
4.6 SPECIAL BOARD OF DIRECTORS MEETINGS. Special meetings of the
board of directors may be called at any time (i) by the board of directors or
by the executive committee by vote at a meeting, or (ii) by the chairman of the
board, one of the vice-chairmen of the board, or the chief executive officer,
or (iii) in writing, with or without a meeting, by a majority of the directors
or of the members of the executive committee. Special meetings may be held at
such place or places within or outside Louisiana as may be designated by the
board of directors. In the absence of such designation, any such meeting shall
be held at such place as may be designated in the notice thereof.
4.7 NOTICE OF SPECIAL BOARD OF DIRECTORS MEETINGS. Notice of the
place and time of every special meeting of the board of directors (and of the
first meeting of the newly-elected Board, if held on notice) shall be delivered
to each director, or communicated by telephone, or sent to him by telegraph,
telecopy or by mail, or by leaving the same at his residence or usual place of
business.
4.8 QUORUM. At all meetings of the board of directors, a majority
of the directors in office and qualified to act, shall constitute a quorum for
the transaction of business, and the action of a majority of the directors
present at any meeting at which a quorum is present is the action of the board
of directors, unless the concurrence of a greater proportion is required for
such action by law, the Articles or these by-laws. If a quorum is not present
at any meeting of the board of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum is present. If a quorum be present, the
directors present may continue to act by vote of a majority of the quorum until
adjournment, notwithstanding the subsequent withdrawal of enough directors to
leave less than a quorum or the refusal of any directors present to vote.
4.9 NOMINATING PROCEDURE.
4.9.1 By management. One or more of the shareholders who
are members of the board of directors of the Corporation may make nominations
for election to the board of directors at any annual meeting of the
shareholders of the Corporation. Such nominations, if made by a majority of
the members of the board who are shareholders, shall be considered as
nominations made by or on behalf of the then existing management of the
Corporation. Such nominations shall be made in writing and shall be delivered
to the secretary of the Corporation not less than sixty (60) days prior to the
annual meeting of the shareholders (or, if fewer than
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seventy (70) days' notice or prior public disclosure of the meeting date is
given or made to the shareholders, not later than the tenth day following the
day on which the notice of the date of the meeting was mailed or such public
disclosure was made). (As amended August 26, 1992, to be effective as of
August 26, 1992, and as further amended January 31, 1995, to be effective as of
January 31, 1995.)
4.9.2 By shareholders. Any nomination by a shareholder for
election to the board of directors at any annual meeting of the shareholders of
the Corporation must be timely delivered in the proper written form to the
secretary of the Corporation. To be timely, a shareholder's nomination shall
be delivered to or mailed and received at the Corporation's principal offices
at least sixty (60) days prior to the annual meeting at which the nomination is
to be considered (or, if fewer than seventy (70) days' notice or prior public
disclosure of the meeting date is given or made to the shareholders, not later
than the tenth day following the day on which the notice of the date of the
meeting was mailed or such public disclosure was made). To be in proper
written form, the shareholder's nomination(s) shall set forth in writing (a) as
to each person whom the shareholder proposes to nominate for election or
reelection as a director, all information relating to such person that is
required to be disclosed in solicitation of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including but not limited to such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director, if elected; and (b) as to the shareholder proposing
the nomination(s), (i) the name and address, as they appear on the
Corporation's books, of the shareholder, (ii) the number of shares beneficially
owned by the shareholder, (iii) a description of all arrangements or
understandings between the shareholder and each person whom the shareholder
proposes to nominate and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the
shareholder, (iv) a representation by the shareholder that the shareholder will
attend the meeting to move consideration of the nomination(s), and (v) a
representation by the shareholder that the shareholder will remain a
shareholder of record through the record date of the meeting. (As amended
January 31, 1995, to be effective as of January 31, 1995)
4.10 REMUNERATION TO DIRECTORS. Directors, as such, shall receive
such compensation for their services, payable in such amounts, in such manner
and at such times as may be fixed from time to time by resolution of the board
of directors. Directors shall also be entitled to receive such rights or
options to purchase the capital stock of the Corporation pursuant to any plan
or agreement which may be approved by a majority of the shareholders of the
Corporation present or represented at any shareholders meeting at which such
plan or agreement is considered. In addition, the board of directors may allow
expenses of attendance to directors for attendance at such meetings. This
Section does not preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. (As amended March 11,
1988, such amendment to be effective January 1, 1988, and as further amended on
March 14, 1989, to be effective as of March 14, 1989.)
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<PAGE> 8
4.11 POWERS OF BOARD OF DIRECTORS. The business and affairs of the
Corporation shall be managed by and, subject to any restrictions imposed by
law, the Articles or these by-laws, all the powers of the Corporation shall be
vested in the board of directors. Without prejudice to such general powers,
the board of directors has the following specific powers:
(a) To appoint managing officers of the Corporation and to
terminate their appointment and remove them from office.
(b) From time to time, to devolve the powers and duties of any
officer upon any other person for the time being.
(c) To confer upon any officer the power to appoint, remove and
suspend, and fix and change the compensation of, subordinate
officers, agents and factors.
(d) To determine who shall be entitled to vote, or to assign and
transfer any shares of stock, bonds, debentures or other
securities of other corporations held by this Corporation.
(e) To delegate any of the powers of the board of directors to any
standing or special committee or to any officer or agent (with
power to sub-delegate) upon such terms as they may deem fit.
4.12 RESIGNATIONS. The resignation of a director shall take effect
on receipt of notice thereof by the chairman of the board of directors or the
secretary, or on any later date specified in such notice, but not more than
thirty days after receipt of such notice.
4.13 VACANCIES. Newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the board of
directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled exclusively by a vote of no
less than sixty-six and two-thirds percent (66-2/3%) of the remaining
directors, even though the remaining directors may not constitute a quorum, at
any regular or special board of directors meeting. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created and the vacancy occurred and until such director's successor is elected
and qualified. (As amended January 31, 1995, to be effective as of January 31,
1995)
4.14 ELIGIBILITY. No person shall be eligible for nomination or
election as a director of this Corporation after reaching the age of
seventy-five (75) years, but he shall be eligible to serve as an emeritus
director. (As amended March 14, 1989, to be effective as of March 14, 1989,
and August 26, 1992, to be effective as of August 26, 1992.)
4.15 EMERITUS DIRECTORS. Emeritus directors may be elected from
time to time by the board of directors in such numbers as the board of
directors may determine. Emeritus directors
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may not serve on any committee created by the board of directors, but may
attend and observe such meetings of the board of directors to which they may be
invited by the board of directors. They shall be entitled to receive such
remuneration as the board of directors may determine from time to time but are
not empowered to vote on any actions taken by the board of directors nor are
they responsible for any such actions. (As amended on March 14, 1989, to be
effective as of March 14, 1989.)
4.16 REMOVAL. Except as otherwise provided pursuant to the
provisions of Article III of the Articles relating to the rights of the holders
of any class or series of stock having a preference over the common stock as to
dividends or upon liquidation to elect additional directors under specified
circumstances, any director may be removed from office at any time, with or
without cause, only by the affirmative vote of the holders of no less than
eighty percent (80%) of the total voting power of all shares of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class. (As amended January 31, 1995, to be effective as of January 31,
1995)
ARTICLE V
EXECUTIVE COMMITTEE
5.1 MEMBERSHIP. The board of directors shall appoint an executive
committee composed of up to nine members from among the members of the board of
directors together with such advisory members of the executive committee as may
be appointed by the board of directors. Advisory members may be appointed to
the executive committee by the board of directors in such numbers as the board
of directors may determine. An advisory member of the executive committee need
not be a director. Advisory members may attend all meetings of the executive
committee and express their opinions in its deliberations. Advisory members
shall perform such duties as shall be assigned by the executive committee but
are not required nor empowered to vote on any actions taken by the executive
committee, nor shall the attendance of the advisory member be counted in
determination of the quorum for any meeting of the executive committee.
5.2 POWERS AND DUTIES. The executive committee shall advise the
officers of the Corporation on all matters concerning its interests and
management of its business, and, when the board of directors is not in session,
the executive committee shall have and may exercise all the powers of the board
of directors, except the power to declare dividends, issue stock, make or alter
by-laws, fill vacancies on the board of directors or on the executive
committee, or change the membership of the executive committee.
5.3 MEETINGS. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may
from time to time fix. Other meetings of the executive committee may be called
by any member.
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<PAGE> 10
5.4 QUORUM; VOTING. At any meeting of the executive committee a
majority of the members then comprising the committee, but not including any
advisory members, shall constitute a quorum. To be effective any action of the
executive committee must be authorized by the affirmative vote of a majority of
the members present and entitled to vote. Only members of the executive
committee who are also members of the board of directors shall be entitled to
vote on matters brought before the executive committee.
5.5 MINUTES OF MEETINGS. The secretary of the executive committee
shall keep minutes of the meetings of the executive committee and cause them to
be recorded in a book kept at his office for that purpose. The minutes shall
be available for inspection by the board of directors for their information,
but no approval of any action taken by it shall be required.
ARTICLE VI
SPECIAL OR STANDING COMMITTEES OF THE BOARD OF DIRECTORS
6.1 The board of directors may designate and appoint from its
number such special or standing committees as may be necessary. Such
committee(s) shall have and may exercise such powers as may be provided by
resolution of the board of directors or in the Articles or these by-laws. Each
committee so appointed shall adopt its own rules of procedure and shall meet as
provided by such rules.
ARTICLE VII
OFFICERS
7.1 TITLES. The officers of the Corporation shall be a chairman of
the board of directors, one or more vice-chairmen of the board of directors, a
chief executive officer, a president, one or more vice-presidents, a chief
financial officer, a secretary and such other officers as may, from time to
time, be elected or appointed by the board of directors. Any two officers,
except that of president and vice-president, may be combined in the same
person, and none need be a director. (As amended on May 31, 1988.)
7.2 CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the board
of directors shall, when present, preside at all meetings of the directors and
the shareholders and shall perform such other duties as shall be assigned to
him by the board of directors.
7.3 VICE-CHAIRMEN OF THE BOARD OF DIRECTORS. A vice-chairman of
the board of directors shall preside, in the absence of the chairman of the
board of directors, at all meetings of the directors and the shareholders and
each shall perform such other duties as shall be assigned to him by the board
of directors.
7.4 CHIEF EXECUTIVE OFFICER. The chief executive officer shall
have supervisory powers over the management, operations, business, and affairs
of the Corporation. He shall
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<PAGE> 11
perform such duties as shall be assigned to him by the board of directors and
shall be primarily responsible for effectuating the orders and resolutions of
the board of directors. In the absence of the chairman and vice-chairmen of
the board of directors, he shall preside over the meetings of the board of
directors and the shareholders.
7.5 PRESIDENT. The president shall have such powers, and shall
perform such duties, as shall be assigned to him by the board of directors. In
the absence of the chairman and vice-chairmen of the board of directors and
the chief executive officer, he shall preside over the meetings of the board of
directors and the shareholders.
7.6 VICE-PRESIDENTS. Each vice-president shall have such powers,
and shall perform such duties as shall be assigned to him by the directors, the
chairman or the vice-chairman of the board of directors, the chief executive
officer, or by the president, and, in the order determined by the board, shall,
in the absence or disability of the president, perform the duties and exercise
the powers of the president.
7.7 CHIEF FINANCIAL OFFICER. The chief financial officer has
custody of all funds, securities, evidences of indebtedness and other valuable
documents of the Corporation. He shall receive and give, or cause it be given,
receipts and acquittances for moneys paid in on account of the Corporation, and
shall pay out of the funds on hand all just debts of the Corporation of
whatever nature, when due. He shall enter, or cause to be entered in books of
the Corporation to be kept for that purpose, full and accurate accounts of all
moneys received and paid out on account of the Corporation, and whenever
required by the chairman of the board of directors or the chief executive
officer, he shall render a statement of his accounts. He shall keep or cause
to be kept such books as will show a true record of the expenses, gains,
losses, assets and liabilities of the Corporation; and he shall perform all of
the other duties incident to the office of chief financial officer. If
required by the board of directors, he shall give the Corporation a bond for
the faithful discharge of his duties and for restoration to the Corporation,
upon termination of his tenure, of all property of the Corporation under his
control. (As amended on May 31, 1988.)
7.8 SECRETARY. The secretary shall give, or cause to be given,
notice of all meetings of shareholders, directors and committees, and all other
notices required by law, or by these by-laws, and in case of his absence or
refusal or neglect so to do, such notice may be given by the shareholders or
the directors upon whose request the meeting is called as provided in these
by-laws. He shall record all the proceedings of the meetings of the
shareholders, of the directors, and of committees in one or more books to be
kept for that purpose. Except as otherwise determined by the directors, he has
charge of the original stock ledgers, and shall act as transfer agent in
respect of the stock and other securities issued by the Corporation unless and
until the board of directors shall appoint a corporate transfer agent or agents
who shall have such responsibility. He has custody of the seal of the
Corporation, and shall affix it to all instruments requiring it; and he shall
perform such other duties as may be assigned to him by the directors, the
chairman or a vice-chairman of the board, the chief executive officer or the
president.
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<PAGE> 12
7.9 ASSISTANTS. Assistant secretaries may be appointed by the
board of directors, the chairmen or the chief executive officer and shall have
such powers and duties of the Secretary as may be delegated to one or more of
them by the secretary. (As amended August 26, 1992, to be effective as of
August 26, 1992.)
ARTICLE VIII
AMENDMENTS; ETC.
8.1 These by-laws may be altered, amended, changed, waived or
repealed, and new by-laws may be adopted as provided in the Articles; provided,
however, notwithstanding the foregoing, Sections 2.2, 2.3, 2.8, 4.1, 4.13 and
4.16, this Section 8.1 and Subsection 4.9.2 of these by-laws, as amended on and
effective as of January 31, 1995, may not be altered, amended, changed, waived
or repealed, directly or indirectly, nor may any provision inconsistent with
such Sections be adopted, by the board of directors. (As amended January 31,
1995, to be effective as of January 31, 1995.)
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1. CORPORATE SEAL. The corporate seal is circular in form, and
contains the name of the Corporation and the words "SEAL LOUISIANA". The seal
may be used by causing it, or a facsimile thereof, to be impressed or affixed
or otherwise reproduced.
9.2 CHECKS, DRAFTS, NOTES. All checks, drafts, other orders for
the payment of money, and notes or other evidences of indebtedness, issued in
the name of the Corporation, shall be signed by such officer or officers, agent
or agents of the Corporation and in such manner as shall, from time to time, be
determined by the board of directors.
9.3 NOTICE. Whenever any notice is required by these by-laws to be
given, personal notice is not meant unless expressly so stated; except as
otherwise provided in these by-laws, any notice is sufficient if given by
depositing the same in a United States mail receptacle in a sealed postage-paid
envelope addressed to the person entitled thereto at his last known address as
it appears on the records of the Corporation; and such notice is deemed to have
been given on the day of such mailing.
9.4 WAIVER OF NOTICE. Whenever any notice of the time, place or
purpose of any meeting of the shareholders, the directors or a committee is
required by law, the Articles or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice and filed with the
records of the meeting before or after the holding thereof, or actual
attendance at the meeting of the shareholders in person or by proxy, or at the
meeting of the directors or committee in person, as the case may be, is
equivalent to the giving of such notice except as otherwise provided by law.
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<PAGE> 1
EXHIBIT 10
United Companies Financial Corporation
March 31, 1995
The Company entered into Indemnification Agreements in the form attached
hereto, each dated as of March 31, 1995, with the following directors and/or
officers:
James J. Bailey, III
General Robert H. Barrow
J. Terrell Brown
Richard A. Campbell
Harris J. Chustz
O. Miles Pollard, Jr.
Charles Prosser, M.D.
Robert D. Kilpatrick
Dale E. Redman
William H. Wright, Jr.
W. Roger Clark
John D. Dienes
Robert B. Thomas, Jr.
Sherry E. Anderson
F. Wayne Bono
Jo Anna Cotaya
Greg Fontenot
Frank W. Foote
Jesse O. Griffin
Kitty S. Kennedy
Paul E. Kirk
Laura T. Martin
H. C. McCall, III
Kathleen M. Merkel
B. Dale Quick
Louis J. Resweber
William S. Spann, Jr.
Gary L. Warrington
<PAGE> 2
EXHIBIT 10
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of
the ____ day of March, 1995, by and between United Companies Financial
Corporation, a Louisiana corporation (the "Company"), and ____________________
(the "Indemnitee").
RECITALS
The Indemnitee is presently serving as a [director][officer] of
the Company and the Company desires the Indemnitee to continue in such
capacity. The Indemnitee is willing, subject to certain conditions including
without limitation the execution and performance of this Agreement by the
Company, to continue in that capacity. Accordingly, and in order to induce the
Indemnitee to continue to serve in his present capacity, the Company and the
Indemnitee agree as follows:
1. Continued Service. [The Indemnitee will continue to serve as
a director of the Company so long as he is duly elected and qualified in
accordance with the By-laws until he resigns in writing or is removed in
accordance with applicable law. [The Indemnitee will continue to serve as an
officer of the Company (and/or one or more subsidiaries of the Company) subject
to the right of the Company (and/or one or more such subsidiaries) and the
Indemnitee, as the case may be, to terminate his employment (as provided in his
employment agreement dated ______________ ______, 19____, between the
Indemnitee and (the Company or name subsidiaries)) (at will without cause or
prior notice).]
2. Initial Indemnity. (a) The Company shall indemnify the
Indemnitee when he was, is or becomes a party or witness or other participant
in, or was or is threatened to be made a party to or witness or other
participant in, any pending, threatened or completed action, suit or
proceeding, whether civil, administrative, investigative or criminal (other
than an action by or in the name or right of the Company), by reason of the
fact that he is or was or had agreed to become a director or officer of the
Company, or is or was serving or had agreed to serve at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against any and
all costs, charges and expenses, including without limitation attorneys' and
others' fees and expenses, judgments, fines and amounts paid in settlement
(including without limitation all interest, assessments and other charges paid
or payable in connection with or in respect of such costs, charges, expenses,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Indemnitee in connection therewith and any appeal therefrom and
any federal, state, local or foreign taxes imposed on the Indemnitee as a
result of the actual or deemed receipt of any payments under this Agreement, if
the Indemnitee acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the Indemnitee
did not satisfy the foregoing standard of conduct to the extent applicable
thereto.
(b) The Company shall indemnify the Indemnitee when he was, is
or becomes a party or witness or other participant in, or was or is threatened
to be made a party to or witness or other participant in, any pending,
threatened or completed action, suit or proceeding by or in the name or right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was or had agreed to become a director or officer of the Company, or is
or was serving or had agreed to serve at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, against any and all costs, charges and
expenses (including without limitation attorneys' and others' fees and
expenses) actually and reasonably incurred by him in connection with the
defense or settlement thereof (including without limitation all interest,
assessments and other charges paid or payable in connection with or in respect
of such costs,
<PAGE> 3
charges, expenses and amounts paid in settlement) or any appeal therefrom and
any federal, state, local or foreign taxes imposed on the Indemnitee as a
result of the actual or deemed receipt of any payments under this Agreement,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which the Indemnitee shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
Company unless and only to the extent that the court in which such action, suit
or proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, the
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
that such court shall deem proper.
(c) To the extent that the Indemnitee has been successful on the
merits or otherwise, including without limitation the dismissal of an action
without prejudice, in defense of any action, suit or proceeding referred to in
Sections 2(a) or 2(b) hereof or in defense of any claim, issue or matter
therein, he shall be indemnified against costs, charges and expenses (including
without limitation attorneys' and others' fees and expenses) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under Sections 2(a) or 2(b) hereof
(unless ordered by a court) shall be made by the Company only as authorized in
the specific case upon a determination, in compliance with the provisions of
Section 4 hereof or, to the extent more favorable to the Indemnitee, any
applicable provision of the Articles of Incorporation of the Company (the
"Articles"), the By-laws of the Company (the "By-laws"), other agreements,
resolutions or otherwise, that the applicable standard of conduct has been met.
Such determination shall be made as follows: (i) by the Board of Directors of
the Company (the "Board"), by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum of disinterested directors is not available or so directs, by
independent legal counsel (designated in the manner provided below in this
subsection (d)) in a written opinion, or (iii) by the shareholders of the
Company (the "Shareholders"). Independent legal counsel shall be designated by
vote of a majority of the disinterested directors; provided, however, that if
the Board is unable or fails to so designate, such designation shall be made by
the Indemnitee subject to the approval of the Company (which approval shall not
be unreasonably withheld). Independent legal counsel shall not be any person
or firm who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the
Company or the Indemnitee in an action to determine the Indemnitee's rights
under this Agreement. The Company agrees to pay the reasonable fees and
expenses of such independent legal counsel and to indemnify fully such counsel
against costs, charges and expenses (including without limitation attorneys'
and others' fees and expenses) actually and reasonably incurred by such counsel
in connection with this Agreement or the opinion of such counsel pursuant
hereto.
(e) All expenses (including without limitation attorneys' and
others' fees and expenses) incurred by the Indemnitee in defending a civil or
criminal action, suit or proceeding for which indemnification is provided under
this Agreement shall be paid by the Company in advance of the final disposition
of such action, suit or proceeding subject to and in the manner prescribed by
Section 4(b) hereof.
(f) The Company shall not adopt any amendment to the Articles or
the By-laws, the effect of which would be to deny, diminish or encumber the
Indemnitee's rights to indemnity pursuant to the Articles, the By-laws, the
Business Corporation Law of the State of Louisiana (the "LBCL") or any other
applicable law as applied to any act or failure to act occurring in whole or in
part prior to the date (the "Effective Date") upon which the amendment was
approved by the Board or the Shareholders, as the case may be. In the event
that the Company shall adopt any amendment to the Articles or the By-laws, the
effect of which is to so deny, diminish or encumber the Indemnitee's rights to
indemnity, such amendment shall apply only to acts or failures to act occurring
entirely after the Effective Date thereof unless the Indemnitee shall have
voted in favor of such adoption as a director or holder of record of the
Company's voting stock, as the case may be.
3. Additional Indemnification. (a) Pursuant to Section 83 of
the LBCL, without limiting any right which the Indemnitee may have pursuant to
Section 2 hereof, the Articles, the By-laws, the LBCL, any policy of insurance
or otherwise, but subject to the limitations on the maximum permissible
indemnity that may exist under applicable law at the time of any request for
indemnity hereunder determined as contemplated by this Section 3(a), the
Company shall indemnify the Indemnitee to the fullest extent permitted by law
against any
<PAGE> 4
amount that he is or becomes legally obligated to pay relating to or arising
out of any claim made against him because of any act, failure to act or neglect
or breach of duty, including without limitation any actual or alleged error,
misstatement or misleading statement, that he commits, suffers, permits or
acquiesces in while acting in his capacity as a director or officer of the
Company, or, at the request of the Company, as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. The payments that the Company is obligated to make pursuant to
this Section 3 shall include without limitation damages, judgments, settlements
and charges, costs, expenses, expenses of investigation and expenses of defense
of legal actions, suits, proceedings or claims and appeals therefrom (including
without limitation all interest, assessments and other charges paid or payable
in connection with or in respect of such damages, judgments, settlements,
charges, costs and expenses), and expenses of appeal, attachment or similar
bonds and any federal, state, local or foreign taxes imposed on the Indemnitee
as a result of the actual or deemed receipt of any payments under this
Agreement; provided, however, that the Company shall not be obligated under
this Section 3(a) to make any payment in connection with any claim against the
Indemnitee:
(i) to the extent of any fine or similar governmental
imposition that the Company is prohibited by applicable law from
paying that results in a final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee gaining in fact a personal profit to which he was not
legally entitled, including without limitation profits made from
the purchase and sale by the Indemnitee of equity securities of
the Company that are recoverable by the Company pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended,
and profits arising from transactions in publicly traded
securities of the Company that were effected by the Indemnitee in
violation of Section 10(b) of the Securities Exchange Act of
1934, as amended, including without limitation Rule 10b-5
promulgated thereunder.
The determination of whether the Indemnitee shall be entitled to
indemnification under this Section 3(a) may be, but shall not be required to
be, made in accordance with Section 4(a) hereof. If that determination is so
made, it shall be binding upon the Company and the Indemnitee for all purposes.
(b) All expenses (including without limitation attorneys' and
others' fees and expenses) incurred by the Indemnitee in defending any civil or
criminal action, suit or proceeding for which indemnification is provided under
this Agreement shall be paid by the Company in advance of the final disposition
of such action, suit or proceeding subject to and in the manner prescribed by
Section 4(b) hereof.
4. Certain Procedures Relating to Indemnification and
Advancement of Expenses. (a) Except as otherwise permitted or required by the
LBCL, for purposes of pursuing his rights to indemnification under Sections
2(a), 2(b) or 3(a) hereof, as the case may be, the Indemnitee may, but shall
not be required to, (i) submit to the Board a sworn statement of request for
indemnification substantially in the form of Exhibit A hereto and made a part
hereof (the "Indemnification Statement") averring that he is entitled to
indemnification hereunder; and (ii) present to the Company reasonable evidence
of all expenses for which payment is requested. Submission of an
Indemnification Statement and such evidence of expenses to the Board shall
create a presumption that the Indemnitee is entitled to indemnification under
Sections 2(a), 2(b) or 3(a) hereof, as the case may be, and the Board shall be
deemed to have determined that the Indemnitee is entitled to such
indemnification unless within 30 calendar days after submission of the
Indemnification Statement the Board shall determine by vote of two-thirds of
its directors based on clear and convincing evidence (sufficient to rebut the
foregoing presumption) that the Indemnitee is not so entitled to
indemnification and the Indemnitee shall have received notice within such
period in writing of such determination, which notice shall disclose with
particularity the evidence in support of the Board's determination. The
foregoing notice shall be sworn to by all persons who participated in the
determination and voted to deny indemnification. The provisions of this
Section 4(a) are intended to be procedural only and shall not affect the right
of the Indemnitee to indemnification under this Agreement and any determination
by the Board that the Indemnitee is not entitled to indemnification and any
failure to make the payments requested in the Indemnification Statement shall
be subject to judicial review as provided in Section 7 hereof.
(b) For purposes of determining whether to authorize advancement
of expenses pursuant to Section 2(e) or 3(b) hereof, the Indemnitee shall
submit to the Board a sworn statement of request for
<PAGE> 5
advancement of expenses substantially in the form of Exhibit B hereto and made
a part hereof (the "Undertaking"), averring that (i) he has reasonably incurred
or will reasonably incur actual expenses in defending an actual civil or
criminal action, suit, proceeding or claim, and (ii) he undertakes to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Company under this Agreement or otherwise. Subject to the
last sentence of this Section 4(b), upon receipt of an Undertaking, the Board
shall, within 10 calendar days after receipt of the Indemnification Statement,
authorize immediate payment of the expenses stated in the Undertaking,
whereupon such payments shall immediately be made by the Company. No security
shall be required in connection with any Undertaking and any Undertaking shall
be accepted without reference to the Indemnitee's ability to make repayment.
5. Subrogation; Duplication of Payments. (a) In the event of
any payment by the Company to or on behalf of the Indemnitee under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including without limitation the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make
any payment in connection with any claim made against the Indemnitee to the
extent the Indemnitee has actually received payment (under any insurance
policy, the Articles, the By-laws or otherwise) of the amounts otherwise
payable hereunder.
6. Shareholder Ratification. The Company may, at its option,
propose at any future meeting of the Shareholders that this Agreement be
ratified by the Shareholders; provided, however, that the Indemnitee's rights
hereunder shall be fully enforceable in accordance with the terms hereof
whether or not such ratification is sought or obtained; and provided further,
however, that if such ratification is sought and not obtained, the Company, in
the discretion of and upon action by the Board, may rescind this Agreement
effective as of the date of such Board action.
7. Enforcement. (a) If a claim for indemnification made to the
Company pursuant to Section 4 hereof is not paid in full by the Company within
30 calendar days after a written claim has been received by the Company, the
Indemnitee may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim.
(b) In any action brought under Section 7(a) hereof, it shall be
a defense to a claim for indemnification pursuant to Sections 2(a) or 2(b)
hereof that the Indemnitee has not met the standards of conduct that make it
permissible under the LBCL for the Company to indemnify the Indemnitee for the
amount claimed, but the burden of proving such defense shall be on the Company.
Neither the failure of the Company (including without limitation the Board,
independent legal counsel or the Shareholders) to have made a determination
prior to commencement of such action that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the LBCL, nor an actual determination by the Company
(including without limitation the Board, independent legal counsel or the
Shareholders) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
(c) It is the intent of the Company that the Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under the Agreement or in the event that the Company or any other person takes
any action to declare the Agreement void or unenforceable, or institutes any
action, suit or proceeding designed (or having the effect of being designed) to
deny, or to recover from, the Indemnitee the benefits intended to be provided
to the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee
from time to time to retain counsel of his choice, at the expense of the
Company as hereafter provided, to represent the Indemnitee in connection with
the initiation or defense of any litigation or other legal action, whether by
or against the Company or any director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely
<PAGE> 6
responsible for any and all costs, charges and expenses, including without
limitation attorneys' and others' fees and expenses, reasonably incurred by the
Indemnitee (i) as a result of such action, suit or proceeding or litigation or
other legal action, and the Company's failure to perform this Agreement or any
provision thereof, or (ii) as a result of the Company or any person contesting
the validity or enforceability of this Agreement or any provision thereof as
aforesaid.
8. Merger or Consolidation. In the event that the Company shall
be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
acquiring corporation therein, shall require as a condition thereto the
surviving, resulting or acquiring corporation to agree to indemnify the
Indemnitee to the full extent provided in this Agreement. Whether or not the
Company is the surviving, resulting or acquiring corporation in any such
transaction, the Indemnitee shall also stand in the same position under this
Agreement with respect to the resulting, surviving or acquiring corporation as
he would have with respect to the Company if its separate existence had
continued.
9. Nonexclusivity and Severability. (a) The right to
indemnification provided by this Agreement shall not be exclusive of any other
rights to which the Indemnitee may be entitled under the Articles, the By-laws,
the LBCL, any other statute, insurance policy, agreement, vote of Shareholders
or the Board or otherwise, both as to actions in his official capacity and as
to actions in another capacity while holding such office, and shall continue
after the Indemnitee has ceased to be a director, officer, employee or agent
and shall inure to the benefit of his heirs, executors, administrators,
legatees and successors.
(b) If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Louisiana, without giving
effect to the principles of conflict of laws thereof.
11. Modification; Survival. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and, subject to
the provisions of Section 9 hereof, supersedes any prior agreement between the
Indemnitee and the Company relating to the subject matter hereof. This
Agreement may be modified only by an instrument in writing signed by both
parties hereto. The provisions of this Agreement shall survive the death,
disability, or incapacity of the Indemnitee or the termination of the
Indemnitee's service as a director or officer of the Company, or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise for which he served at the request of the Company,
and shall inure to the benefit of the Indemnitee's heirs, executors,
administrators, legatees and successors.
12. Certain Terms. For purposes of this Agreement, references
to "other enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on Indemnitee with respect to
any employee benefit plan; and references to "serving at the request of the
Company" shall include any service as a director, officer, employee or agent of
the Company that imposes duties on, or involves services by, the Indemnitee
with respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; and if the Indemnitee acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan he shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
UNITED COMPANIES FINANCIAL
CORPORATION
<PAGE> 7
By: ___________________________________
Name: ____________________________
Title: ____________________________
INDEMNITEE
____________________________________________
Name: _____________________________________
<PAGE> 8
EXHIBIT A
INDEMNIFICATION STATEMENT
STATE OF _____________________________________ )
) SS
(PARISH) (COUNTY) OF _________________________ )
I, ___________________________________________________, being
first duly sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to
the Indemnification Agreement, dated as of February __, 1995 (the
"Indemnification Agreement), between United Companies Financial Corporation, a
Louisiana corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, charges,
expenses (including without limitation attorneys' and others' fees and
expenses), judgments, fines and amounts paid in settlement, and any federal,
state, local or foreign taxes imposed on me as a result of the actual or deemed
receipt of any payments under the Indemnification Agreement, all of which
(collectively, "Liabilities") have been or will be incurred by me in connection
with an actual or threatened action, suit, proceeding or claim to which I am a
party or witness or other participant or am threatened to be made a party or
witness or other participant.
3. With respect to all matters related to any such action,
suit, proceeding or claim, I am entitled to be indemnified as herein
contemplated pursuant to the Indemnification Agreement.
4. Without limiting any other rights which I have or may
have, I am requesting indemnification against Liabilities which have or may
arise out of ___________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
Subscribed and sworn to before me, a Notary Public in and for
said (Parish) (County) and State, this _______ day of _______________, 19____.
__________________________________________
[Seal]
My commission expires the ________ day of ______________________, 19____.
<PAGE> 9
EXHIBIT B
UNDERTAKING
STATE OF _____________________________________ )
) SS
(PARISH) (COUNTY) OF _________________________ )
I, _______________________________________, being first duly
sworn do depose and say as follows:
1. This Undertaking is submitted pursuant to the
Indemnification Agreement, dated as of February __, 1995, between United
Companies Financial Corporation, a Louisiana corporation (the "Company"), and
the undersigned.
2. I am requesting advancement of certain costs, charges and
expenses which I have incurred or will reasonably incur in defending an actual
or pending civil or criminal action, suit, proceeding or claim.
3. I hereby undertake to repay this advancement of expenses
if it shall ultimately be determined that I am not entitled to be indemnified
by the Company under the aforesaid Indemnification Agreement or otherwise.
4. The costs, charges and expenses and other amounts for
which advancement is requested are, in general, all expenses related to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________________
Subscribed and sworn to before me, a Notary Public in and for
said (Parish) (County) and State, this ______ day of _________________, 19____.
__________________________________________
[Seal]
My commission expires the _______ day of ______________________________, 19___.
<PAGE> 1
EXHIBIT 11
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
----------- ------------
(in thousands, except per share amounts)
<S> <C> <C>
Primary Earnings Per Share
- --------------------------
Income available to common shareholders:
----------------------------------------
Income from continuing operations . . . . . . . . $ 12,824 $ 13,477
Less: Income (loss) from discontinued operations . (128) 233
----------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . $ 12,696 $ 13,710
=========== ============
Weighted average number of common and
common equivalent shares:
--------------------------------------------
Average common shares outstanding . . . . . . . . 13,629 13,552
Add: Dilutive effect of stock options after
application of treasury stock method . . . 452 850
----------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . 14,081 14,402
=========== ============
Earnings (loss) per share:
--------------------------
Income from continuing operations . . . . . . . . $ .91 $ .93
Income (loss) from discontinued operations . . . . (.01) .02
----------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . $ .90 $ .95
=========== ============
Fully Diluted Earnings Per Share
- --------------------------------
Income available to common shareholders:
----------------------------------------
Income from continuing operations . . . . . . . . $ 12,824 $ 13,477
Less: Income (loss) from discontinued operations . (128) 233
----------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . $ 12,696 $ 13,710
=========== ============
Weighted average number of common and
all dilutive contingent shares:
-----------------------------------------------
Average common shares outstanding . . . . . . . . 13,629 13,552
Add: Dilutive effect of stock options after
application of treasury stock method . . . 494 850
----------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . 14,123 14,402
=========== ============
Earnings (loss) per share:
--------------------------
Income from continuing operations . . . . . . . . $ .91 $ .93
Income (loss) from discontinued operations . . . . (.01) .02
----------- ------------
Total . . . . . . . . . . . . . . . . . . . . . . $ .90 $ .95
=========== ============
</TABLE>
49
<PAGE> 1
EXHIBIT 15
United Companies Financial Corporation:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim
consolidated financial information of United Companies Financial Corporation
and subsidiaries for the periods ended March 31, 1995 and 1994, as indicated in
our report dated May 12, 1995; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, is being
incorporated by reference in the following: Registration Statement No.
33-15326 on Form S-8 pertaining to the United Companies Financial Corporation
1986 Employee Incentive Stock Option Plan, Registration Statement No. 33-17366
on Form S-8 pertaining to the United Companies Financial Corporation Employees'
Savings Plan and Trust, Registration Statement No. 33-29994 on Form S-8
pertaining to the 1989 Stock Incentive Plan and the 1989 Non-Employee Director
Stock Option Plan, Registration Statement No. 33-54955 on Form S-8 pertaining
to the 1993 Stock Incentive Plan and the 1993 Non-Employee Director Stock
Option Plan, Registration Statement No. 33-68626 on Form S-3 pertaining to the
registration of 1,951,204 shares of United Companies Financial Corporation
Common Stock, Registration Statement No. 33-55227 on Form S-3 pertaining to the
registration of $200 million of United Companies Financial Corporation Debt
Securities and Preferred Stock, and Registration Statement No. 33-52739 on Form
S-3 pertaining to the registration of 200,000 shares of United Companies
Financial Corporation Common Stock.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
/s/ DELOITTE & TOUCHE LLP
Baton Rouge, Louisiana
May 12, 1995
50
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000217416
<NAME> UNITED COMPANIES FINANCIAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 11,591
<SECURITIES> 1,142,954
<RECEIVABLES> 412,158
<ALLOWANCES> 16,842
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 31,747
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,087,806
<CURRENT-LIABILITIES> 0
<BONDS> 240,342
<COMMON> 28,930
0
0
<OTHER-SE> 164,962
<TOTAL-LIABILITY-AND-EQUITY> 2,087,806
<SALES> 0
<TOTAL-REVENUES> 88,119
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 58,612
<LOSS-PROVISION> 4,064
<INTEREST-EXPENSE> 5,894
<INCOME-PRETAX> 19,549
<INCOME-TAX> 6,725
<INCOME-CONTINUING> 12,824
<DISCONTINUED> (128)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,696
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
