<PAGE> 1
ORIGINAL
UNITED STATES
-------------
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM 10-K
---------
(Mark One)
X Annual Report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934.
(Fee Required)
For the fiscal year ended December 31, 1995.
or
--- Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
(No Fee Required)
For the transition period from ______ to ______.
Commission file number 2-94209
FIRST EVERGREEN CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2952700
-------- ----------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
3101 W. 95th Street, Evergreen Park, Illinois 60805
- --------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 422-6700
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicated by check mark whether the registrant (1) has filed all reports 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 for the
past 90 days.
Yes X No
--- ---
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of common stock outstanding held by nonaffiliates of
the registrant as of March 15, 1996, (based upon the closing price as of such
date) was approximately $113,086,000. Shares of common stock held by Directors
and executive officers of the registrant and by each person who owns 5% or more
of the outstanding common stock have been excluded.
The number of shares outstanding of the registrant's common stock, $25.00 par
value, as of March 15, 1996, was 402,685.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to stockholders for the year ended December 31,
1995 are incorporated by reference into Part I and Part II.
Portions of the proxy statement for the annual stockholders meeting to be held
April 25, 1996, are incorporated by reference into Part III.
<PAGE> 2
PART I
ITEM 1 - BUSINESS
FIRST EVERGREEN CORPORATION
First Evergreen Corporation ("First Evergreen") is a bank holding company
organized in 1977 under the laws of the State of Delaware. First Evergreen
owns all the outstanding common stock of First National Bank of Evergreen Park
("Evergreen Bank"), a national banking association organized in 1948 under the
laws of the United States. First Evergreen does not engage in any activities
other than providing administrative services for and acting as a holding
company for its subsidiary bank.
SUBSIDIARY BANK
Evergreen Bank provides a complete range of retail banking services to
individuals and small and medium-size businesses at each of its five banking
locations--Evergreen Park (main office), Evergreen Bank-Oak Lawn Office,
Evergreen Bank-Clearing Office, Evergreen Bank-Orland Park Office and Evergreen
Bank-Physician's Pavilion. These services include checking, savings, NOW and
Money Market deposit accounts, business loans, personal loans, residential
mortgage loans, home improvement loans, loans for education, other consumer
oriented financial services including IRA and Keogh accounts, and safe deposit
and night depository facilities. Additionally, Evergreen Bank provides 24-hour
banking services to its customers.
Evergreen Bank's Trust Department offers fiduciary, investment management
and advisory services to individuals and small corporations. It also
administers (as trustee and in other fiduciary and representative capacities)
pension, profit-sharing and other employee benefit plans and personal trusts
and estates.
Evergreen Bank employs 565 people on a full time equivalent basis and
provides a variety of employment benefits. Management believes that
relationships with employees are good.
SUPERVISION AND REGULATION
FIRST EVERGREEN
First Evergreen is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "Act"), and is registered as such
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). The Act requires every bank holding company to obtain prior
approval of the Federal Reserve before merging with or consolidating into
another bank holding company, acquiring substantially all the assets of any
bank or acquiring direct or indirect ownership or control of more than 5% of
the voting shares of any bank. However, the Federal Reserve may not approve
any acquisition if it is prohibited by State law.
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The Illinois Bank Holding Company Act of 1957, as amended, permits bank
holding companies located in states other than Illinois to acquire banks and
bank holding companies in Illinois, if such other states have passed
legislation granting similar privileges to Illinois banks and bank holding
companies. On the federal level, in September 1994 Congress passed the
Interstate Banking and Branching Efficiency Act, which authorizes after
September 29, 1995, a bank holding company to acquire a bank located outside of
its home state so long as certain criteria are satisfied. After June 1, 1997,
this enactment authorizes the merger of banks located in different states so
long as certain criteria are satisfied. States are currently evaluating the
ramifications and issues which arise from the enactment of this law. Moderate
activity by out-of-state entities has occurred in First Evergreen's market
area.
The Act also prohibits a bank holding company, with certain exceptions,
from acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company which is not a bank and from engaging in any
business other than that of banking, managing and controlling banks or
furnishing services to banks and their subsidiaries. Bank holding companies,
however, may engage in, and may own shares of companies engaged in certain
businesses determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be properly incident thereto.
The Act does not place territorial restrictions on the activities of bank
holding companies or their non-bank subsidiaries.
Under the Act, First Evergreen is required to file annual reports of its
operations and such additional information as the Federal Reserve may require
and is subject, along with its subsidiary, to examination by the Federal
Reserve. The Federal Reserve has jurisdiction to regulate the terms of certain
debt issues of bank holding companies, including the authority to impose
reserve requirements.
SUBSIDIARY BANK
Evergreen Bank is a national bank and is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, is subject to the provisions of
the Federal Deposit Insurance Act. All national banks are members of the
Federal Reserve System and are subject to applicable provisions of the Federal
Reserve Act. Evergreen Bank is subject to regulation and regular examination
by the Comptroller of the Currency.
The federal and state laws and regulations generally applicable to banks
regulate, among other things, the scope of their business, their investments,
their reserves against deposits, the nature and amount of collateral for loans,
and include restrictions on the number of banking offices and activities which
may be performed at such offices.
Subsidiary banks of bank holding companies are subject to certain
restrictions under the Federal Reserve Act and the Federal Deposit Insurance
Act on loans and extensions of credit to the bank holding company or to its
other subsidiaries, investments in the stock or other securities of the bank
holding company or its other subsidiaries, or advances to any borrower
collateralized by such stock or other securities.
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GOVERNMENTAL MONETARY POLICIES
Revenue of Evergreen Bank, and therefore a majority of First Evergreen's
revenue, is affected by general economic conditions and also by the fiscal and
monetary policies of the Federal Government and its agencies, particularly the
Federal Reserve. The Federal Reserve regulates the reserve requirements of
member and non-member banks and the discount rate on bank borrowings. Its
policies have a direct effect on the amount of bank loans and deposits and
interest rates charged and paid thereon. Consequently, federal regulations
have a significant impact on banking revenue.
First Evergreen cannot fully predict the nature or the extent of any
effect which such fiscal and monetary policies may have on its business and
earnings.
COMPETITION
Evergreen Bank encounters intense competition in all aspects of its
business. Evergreen Bank competes vigorously with other financial institutions
in its local communities, and banks in downtown Chicago. The historical
restrictions in Illinois applicable to the ability of an Illinois located bank
to establish bank offices have been virtually eliminated. Accordingly, any
bank capable of doing business in Illinois has the legal right to establish an
office in Evergreen Bank's market area. Thus, banking competition has
increased, and will continue to increase, with First Evergreen's market.
DIVIDENDS
First Evergreen uses funds derived primarily from payment of dividends by
Evergreen Bank for, among other things, the cost of operations and payment of
dividends to its stockholders. Various contractual and statutory limitations
exist with respect to the ability of Evergreen Bank to pay dividends to First
Evergreen. Under certain circumstances, Evergreen Bank would need the approval
of the Comptroller of the Currency to pay dividends. All dividends are
restricted by capital adequacy requirements imposed by federal regulations.
FINANCIAL INFORMATION
Disclosure of financial information, including assets, revenue and operating
gain or loss, on pages 7 and 8 of the annual report to stockholders for the
year ended December 31, 1995, is incorporated herein by reference.
4
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ITEM 2 - PROPERTIES
First Evergreen owns no properties and requires minimal office space in
one of the facilities of Evergreen Bank. All but one of the facilities of
Evergreen Bank are owned. Evergreen Bank's sole leased facility, which
accounts for less than 2% of total deposits, is leased through May, 2001. Each
facility is sufficient to meet its operations and is periodically remodeled to
meet and exceed customer service demands.
OFFICE LOCATION OWNERSHIP SQUARE FOOTAGE
- ------ -------- --------- --------------
Main Office 3101 W. 95th Street Owned 64,000
Evergreen Park, Illinois
Oak Lawn 9400 S. Cicero Avenue Owned 85,000
Oak Lawn, Illinois
4900 W. 95th Street Owned 24,000
Oak Lawn, Illinois
9430 S. Cicero Avenue Owned 8,500
Oak Lawn, Illinois
Clearing 5235 W. 63rd Street Owned 23,000
Chicago, Illinois
Orland Park 15330 S. Harlem Ave. Owned 15,000
Orland Park, Illinois
Physician's 4400 W. 95th Street Leased 1,700
Pavilion Oak Lawn, Illinois
ITEM 3 - LEGAL PROCEEDINGS
There are no material legal proceedings pending against First Evergreen.
However, as Evergreen Bank acts as a depository of funds, it is named as a
defendant in numerous lawsuits (such as garnishment proceedings) involving
claims to the ownership of funds in particular accounts. Evergreen Bank is
also involved in litigation brought by it to collect delinquent loans and
enforce collateral provisions of security documents. All such litigation is in
the ordinary course of business. Management of the bank believes that no
litigation is threatened which will materially affect the bank's financial
position as presented herein.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(DURING THE FOURTH QUARTER OF 1995)
None
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Common Stock Information and Dividends on page 23 of the annual report to
stockholders for the year ended December 31, 1995 is incorporated herein by
reference.
ITEM 6 - SELECTED FINANCIAL DATA
Financial Review and Selected Financial Data on page 24 of the annual
report to stockholders for the year ended December 31, 1995, are incorporated
herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 25 through 32 of the annual report to stockholders for the
year ended December 31, 1995, are incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements and Notes thereto on pages 7 through 22,
and Independent Public Accountants Report on page 23 of the annual report to
stockholders for the year ended December 31, 1995, are incorporated herein by
reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
6
<PAGE> 7
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Directors of the Registrant on page 2 of the proxy
statement for the annual stockholders' meeting to be held on April 25, 1996 is
incorporated herein by reference.
EXECUTIVE OFFICERS
KENNETH J. OZINGA
Mr. Ozinga has been President and a Director of First Evergreen since 1986
and President of First National Bank of Evergreen Park since 1985.
Additionally, Mr. Ozinga has served as a Director of First National Bank of
Evergreen Park or a subsidiary bank since 1982. Mr. Ozinga is 44 years old.
STEPHEN M. HALLENBECK
Mr. Hallenbeck is Secretary/Treasurer and Chief Financial Officer of First
Evergreen. Additionally, he is an Executive Vice President of First National
Bank of Evergreen Park since 1985, and Secretary/Director of First National
Bank of Evergreen Park. Mr. Hallenbeck joined First Evergreen as a Director of
a subsidiary bank in 1979. Mr. Hallenbeck is 54 years old.
ROBERT C. WALL
Mr. Wall is Vice President of First Evergreen. Additionally, he is an
Executive Vice President of First National Bank of Evergreen Park and a
Director of First National Bank of Evergreen Park since 1975. Mr. Wall joined
First National Bank of Evergreen Park in 1977. Mr. Wall is 60 years old.
RICHARD H. BROWN
Mr. Brown is Executive Vice President of First National Bank of Evergreen
Park. Mr. Brown joined First National Bank of Evergreen Park in 1986. Mr.
Brown is 41 years old.
ITEM 11 - EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
A director who is an employee of Evergreen Bank is not compensated for
service as a member of First Evergreen's Board of Directors or any committee of
the Board. During 1995, the two outside directors received retainers totaling
$17,400.
The following "Summary of Compensation Table" provides shareholders a
concise, comprehensive overview of compensation awarded, earned and paid in the
reporting period.
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<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Position Year Salary All Other Compensation *
- --------------------------- ---- ------ ------------------------
<S> <C> <C> <C>
Kenneth J. Ozinga 1995 $552,500 $21,931
Chief Executive Officer 1994 $502,900 $21,477
1993 $340,000 $28,989
Stephen M. Hallenbeck 1995 $334,750 $21,931
Secretary/Treasurer 1994 $265,600 $21,477
1993 $225,000 $28,989
Robert C. Wall 1995 $309,750 $21,931
Vice President 1994 $265,600 $21,477
1993 $225,000 $28,989
Richard H. Brown 1995 $133,000 $19,950
Executive Vice President 1994 $107,000 $16,050
(subsidiary) 1993 $ 95,000 $14,250
</TABLE>
* Other annual compensation received by Messrs. Ozinga, Hallenbeck, Wall and
Brown represent company contributions to a defined contribution plan.
Messrs. Ozinga, Hallenbeck, Wall and Brown are compensated by Evergreen
Bank and not First Evergreen. Compensation considerations include, but are not
limited to, industry standards and practices as well as practical issues such
as affordability and financial impact. Compensation of the Chief Executive
Officer also follows industry standards and practices and is not directly
correlated with First Evergreen's or Evergreen Bank's financial performance.
Neither First Evergreen nor Evergreen Bank provides an equity incentive
program.
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION
First Evergreen has no compensation committee or committees performing the
functions of such. The entire Board of Directors of First Evergreen engages in
the process and is responsible for setting compensation of First Evergreen's
Chief Executive Officer. The directors of First Evergreen during 1995 were
Alfred E. Bleeker, Jerome J. Cismoski, Stephen M. Hallenbeck, Kenneth J. Ozinga
and Martin F. Ozinga. Kenneth J. Ozinga was, during 1995, the President, Chief
Executive Officer and Chairman of the Board of Directors of First Evergreen.
Stephen M. Hallenbeck was, during 1995, the Secretary and Treasurer of First
Evergreen. The entire Board of Directors of Evergreen Bank engages in the
process of, and is responsible for, setting the compensation of Messrs.
Hallenbeck, Wall and Brown. The directors of Evergreen Bank, during 1995, were
Davis Boyd, Daniel Butler, Jr., James R. Cismoski, Jerome J. Cismoski, Stephen
M. Hallenbeck, Kenneth J. Ozinga, Martin F. Ozinga, Ronald W. Ozinga, Thomas
Palmisano and Robert C. Wall. Kenneth J. Ozinga was, during 1995, the
President and Chairman of the Board of Evergreen Bank. Stephen M. Hallenbeck,
during 1995, was the Secretary and Executive Vice President of Evergreen Bank.
Robert C. Wall, during 1995, was a Vice President of First Evergreen and an
Executive Vice President of Evergreen Bank. Martin F. Ozinga, during 1995, was
a Sr. Vice President of Evergreen Park.
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<PAGE> 9
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Information concerning Security Ownership of Certain Beneficial Owners and
Management of the Registrant on page 3 of the proxy statement for the annual
stockholders' meeting to be held on April 25, 1996 is incorporated herein by
reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and officers of First Evergreen and their associates were
customers of and had transactions with First Evergreen and Evergreen Bank in
the ordinary course of business during 1995. It is anticipated that similar
transactions may occur in the future. Such transactions in 1995 included
payments by First Evergreen and Evergreen Bank for services furnished and were
not material relative to the gross revenues of either First Evergreen or the
directors' companies. In management's opinion, all loans and commitments
included in such transactions were made at substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present any unfavorable features.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements and reports of
independent public accountants of First Evergreen and subsidiary, included in
the annual report of the Registrant to its stockholders for the year ended
December 31, 1995, are incorporated by reference in Item 8:
Report of independent public accountants
Consolidated statements of condition - December 31, 1995 and 1994
Consolidated statements of income - Years ended December 31, 1995,
1994 and 1993
Consolidated statements of changes in stockholders' equity - Years
ended December 31, 1993, 1994 and 1995
Consolidated statements of cash flows - Years ended December 31, 1995,
1994 and 1993
Notes to consolidated financial statements - December 31, 1995, 1994
and 1993
(2) Schedules to the consolidated financial statements required by Article
9 of Regulation S-X are omitted since they are either not applicable or the
required information is shown in the financial statements or notes thereto.
(3) Exhibits
Exhibit 13 - Annual report to stockholders for the year ended
December 31, 1995
Exhibit 16 - Letter regarding change in certifying accountant
Exhibit 27 - Financial Data Schedule
Exhibit 99 - Notice of Annual Meeting and Proxy Statement
(b) Report on Form 8-K under Section 13 or 15(d) of the Securities Exchange
Act of 1934 was filed on December 22, 1995.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Village of
Evergreen Park, State of Illinois, on March 19, 1996.
First Evergreen Corporation
(The Registrant)
/s/KENNETH J. OZINGA
__________________________ Chairman of the Board of Directors and President
Kenneth J. Ozinga (Principal Executive Officer)
/s/STEPHEN M. HALLENBECK
_________________________ Secretary/Treasurer
Stephen M. Hallenbeck (Principal Financial and Accounting Officer)
/s/ALFRED E. BLEEKER
__________________________ Director
Alfred E. Bleeker
/s/JEROME J. CISMOSKI
__________________________ Director
Jerome J. Cismoski
/s/MARTIN F. OZINGA
__________________________ Director
Martin F. Ozinga
Being a majority of the Registrant's Board of Directors
10
<PAGE> 1
EXHIBIT 13
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
Dollars in thousands except share data
<TABLE>
<CAPTION>
December 31
<S> <C> <C>
ASSETS 1995 1994
Cash and due from banks (Note B) $ 58,998 $ 68,712
Available for sale securities (Notes A and C) 142,269 128,582
Held to maturity securities (Notes A and C)
U.S. Treasury obligations 251,116 395,070
U.S. Government agencies 411,858 445,234
Obligations of states and political subdivisions 151,295 131,657
Mortgage-backed securities 50,807 35,443
Collateralized mortgage obligations 208,345 127,651
Other securities 1,385 1,385
---------- ---------
Total held to maturity securities 1,074,806 1,136,440
(Market value of $1,104,284 in 1995 and $1,117,807 in 1994)
Loans (Notes A and D) 530,499 478,764
Less allowance for loan losses (3,796) (3,852)
---------- ---------
Net loans 526,703 474,912
Bank premises and equipment (Notes A and E) 29,647 28,461
Accrued interest receivable 20,959 24,484
Goodwill and other intangibles -- net (Note A) 5,124 5,966
Other assets (Note A) 29,582 4,478
---------- ---------
Total assets $1,888,088 $1,872,035
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Demand deposits $ 169,748 $ 178,025
Savings deposits and NOW accounts 631,633 771,801
Money market accounts 97,174 101,016
Time deposits (Note F) 763,391 643,775
---------- ---------
Total deposits 1,661,946 1,694,617
Federal funds purchased and securities sold under
agreements to repurchase (Note G) 15,070 13,160
Accrued interest and other liabilities 37,254 6,794
---------- ---------
Total liabilities 1,714,270 1,714,571
--------- ---------
Stockholders' equity
Common stock -- authorized, 2,000,000 shares
of $25 par value; issued, 432,842 shares in 1995 and 1994 10,821 10,821
Surplus 4,815 4,815
Retained earnings (Note J) 165,629 150,659
Equity reserve--available for sale 196 (1,927)
---------- ---------
181,461 164,368
Less treasury stock -- at cost, 30,065 shares in 1995
and 28,258 shares in 1994 (7,643) (6,904)
---------- ---------
Total stockholders' equity 173,818 157,464
---------- ---------
Total liabilities and stockholders' equity $1,888,088 $1,872,035
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
7
<PAGE> 2
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Dollars in thousands except share data
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Interest income
Interest and fees on loans (Note A) $ 40,600 $ 36,540 $ 34,044
Interest and dividends on investment securities
Taxable securities 65,177 66,099 72,574
Securities exempt from federal taxes 8,958 7,853 8,175
Dividends 83 83 83
Interest on available for sale securities 7,188 5,959 4,733
Interest on federal funds sold 1,435 536 808
-------- -------- --------
Total interest income 123,441 117,070 120,417
-------- -------- --------
Interest expense
Interest on deposits (Note F) 63,224 54,075 59,829
Interest on federal funds purchased and securities
sold under agreements to repurchase (Note G) 520 118 0
Interest on note payable (Note G) 0 7 125
-------- -------- --------
Total interest expense 63,744 54,200 59,954
-------- -------- --------
Net interest income 59,697 62,870 60,463
Provision for loan losses (Note D) 0 0 0
-------- -------- --------
Net interest income after provision
for loan losses 59,697 62,870 60,463
-------- -------- --------
Other operating income
Service charges on deposit accounts 2,977 2,952 3,049
Trust department income (Note A) 1,726 1,651 1,539
Other income 1,329 1,239 1,443
Net security gains (losses) 1,968 (1,372) 257
-------- -------- --------
Total other operating income 8,000 4,470 6,288
-------- -------- --------
Other operating expenses
Salaries and employee benefits (Note I) 22,441 20,269 18,015
Net occupancy expense of bank premises 3,308 3,028 3,050
Equipment depreciation, rentals and maintenance (Note A) 2,548 2,221 1,892
Insurance 2,212 4,186 4,033
Outside fees and services 2,059 2,252 1,877
Data processing 2,070 1,932 1,873
Other expenses 6,256 5,603 5,887
-------- -------- --------
Total other operating expenses 40,894 39,491 36,627
-------- -------- --------
Income before income tax expense 26,803 27,849 30,124
Income tax expense (Notes A and H) 6,573 7,434 8,154
-------- -------- --------
Net income $ 20,230 $ 20,415 $ 21,970
======== ======== ========
Net income per share (Note A) $ 50.11 $ 50.29 $ 53.77
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements
8
<PAGE> 3
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
Dollars in thousands except share data
<TABLE>
<CAPTION>
Years Ended December 31, 1993, 1994 and 1995
Common Retained Equity Treasury
Stock Surplus Earnings Reserve Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $10,821 $4,815 $117,251 $ 0 $(4,974) $127,913
Net income 0 0 21,970 0 0 21,970
Cash dividends ($9 per share) 0 0 (3,691) 0 0 (3,691)
Acquisition of 3,472 shares
of treasury stock 0 0 0 0 (1,166) (1,166)
------- ------ -------- ------- ------- --------
Balance at December 31, 1993 10,821 4,815 135,530 0 (6,140) 145,026
Net income 0 0 20,415 0 0 20,415
Cash dividends ($13 per share) 0 0 (5,286) 0 0 (5,286)
Acquisition of 2,029 shares
of treasury stock 0 0 0 0 (764) (764)
Equity reserve -- available
for sale securities 0 0 0 (1,927) 0 (1,927)
------- ------ -------- ------- ------- --------
Balance at December 31, 1994 10,821 4,815 150,659 (1,927) (6,904) 157,464
Net income 0 0 20,230 0 0 20,230
Cash dividends ($13 per share) 0 0 (5,260) 0 0 (5,260)
Acquisition of 1,807 shares
of treasury stock 0 0 0 0 (739) (739)
Equity reserve -- available
for sale securities 0 0 0 2,123 0 2,123
------- ------ -------- ------- ------- --------
Balance at December 31, 1995 $10,821 $4,815 $165,629 $ 196 $(7,643) $173,818
======= ====== ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements
9
<PAGE> 4
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
Dollars in thousands
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 20,230 $ 20,415 $ 21,970
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for depreciation and amortization 3,369 3,114 2,671
Provision for loan losses 0 0 0
Amortization of investment security discounts/premiums 11,083 23,803 24,907
Net loss (gain) on investment securities (1,968) 1,373 (257)
Deferred income tax provision (benefit) 435 212 (543)
Decrease (increase) in accrued interest receivable 3,525 (497) (1,012)
Decrease (increase) in other assets (26,682) 1,360 10
Increase (decrease) in accrued interest and other
liabilities 30,460 1,133 (89)
----------- --------- ---------
Net cash provided by operating activities 40,452 50,913 47,657
Cash flows from investing activities:
Capital expenditures (3,712) (4,891) (6,414)
Proceeds from maturity of securities held to maturity 294,322 327,668 287,063
Purchases of securities held to maturity (242,992) (280,561) (355,023)
Proceeds from sales of securities available for sale 1,449,220 278,132 432,695
Purchases of securities available for sale (1,458,453) (286,897) (446,832)
Net increase in loans (51,791) (62,335) (28,427)
----------- --------- ---------
Net cash used for investing activities (13,406) (28,884) (116,938)
Cash flows from financing activities:
Net increase (decrease) in demand, money market,
savings and NOW accounts (152,287) (195,699) 69,052
Net increase (decrease) in time deposits 119,616 172,245 (4,352)
Net increase in federal funds purchased and
securities sold under agreements to repurchase 1,910 13,160 0
Cash dividends paid (5,260) (5,286) (3,691)
Principal payments on note payable 0 (2,000) (1,000)
Acquisition of treasury stock (739) (764) (1,166)
----------- --------- ---------
Net cash provided by (used for) financing activities (36,760) (18,344) 58,843
Increase (decrease) in cash and cash equivalents (9,714) 3,685 (10,438)
Cash and cash equivalents at beginning of year 68,712 $ 65,027 75,465
----------- --------- ---------
Cash and cash equivalents at end of period $ 58,998 $ 68,712 $ 65,027
=========== ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 61,943 $ 53,233 $ 60,784
Income taxes 6,160 7,625 8,025
</TABLE>
The accompanying notes are an integral part of these statements
10
<PAGE> 5
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands - December 31, 1995, 1994 and 1993
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of First Evergreen Corporation and
subsidiary conform to generally accepted accounting principles and to general
practice within the banking industry. Certain reclassifications have been made
to the 1994 financial statements to conform with the 1995 presentation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of First Evergreen
Corporation ("First Evergreen") and its wholly owned subsidiary, First National
Bank of Evergreen Park (the "Bank"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
NATURE OF OPERATIONS
First Evergreen is a bank holding company whose principle asset is its
investment in the Bank subsidiary. The Bank operates five facilities in
Evergreen Park, Oak Lawn, Orland Park and Chicago. An additional facility in
Chicago's Auburn-Highland area is planned to open in late 1996. First
Evergreen generates the majority of its revenues from interest earned on
investment securities and loans.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENT
The preparation of financial statements in conformance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT SECURITIES
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which First Evergreen adopted
effective January 1, 1994. SFAS No. 115 expands the use of fair value
accounting for certain investments, but retains the use of the amortized cost
method for investments the reporting enterprise intends and has the ability to
hold to maturity. Under SFAS No. 115, investment securities are classified as
held to maturity, available for sale or trading. The adoption did not have a
material effect on the consolidated financial statements.
First Evergreen maintains a held to maturity portfolio recorded at cost
adjusted for amortization of premium and accretion of discount in accordance
with management's positive intent and ability to hold these securities to final
maturity. Premium and discount on held to maturity securities are amortized
(deducted) and accreted (added), respectively, to interest income using the
level yield method over the period from acquisition to maturity, or earlier
call date, of the related securities. Realized gains and losses on held to
maturity securities are determined on a specific identification method.
Specific securities are designated as available for sale based upon
management's plan to use such securities for liquidity needs and asset
liability management. It is management's intent not to hold such securities as
long term investments. Such securities are reported at fair value with both
unrealized gains and losses credited or charged, net of tax effect, directly to
stockholders' equity.
LOANS
Loans are stated at the principal amount outstanding, net of unearned fees and
discounts, if any. Interest on commercial, real estate and installment loans
is accrued and credited to interest income based upon the principal amount
outstanding. Unearned income on discount loans is credited to interest income
over the term of the loan on the sum-of-the-months-digits method which does
not significantly differ from the effective interest method.
Loan origination fees and direct loan origination costs are deferred and
amortized into interest income over the life of the loan as an adjustment to
the yield using the effective interest method. Indirect loan origination costs
are expensed as incurred.
Accrual of interest is discontinued on loans past due ninety days or more when
management believes, after considering economic and business conditions and
collection efforts, the borrower's financial condition is such that collection
of interest is doubtful. Interest income from such loans is recognized on the
cash basis. Past due loans which are well secured and in the process of
collection are not placed in a nonaccrual status.
11
<PAGE> 6
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
ALLOWANCE FOR LOAN LOSSES
The allowance is based on estimates of an amount that management believes is
adequate to absorb losses on existing loans which may become uncollectible,
although ultimate losses may vary from the current estimates. These estimates
are reviewed quarterly and are based on evaluations of collectibility of loans
and prior loan loss experience. As adjustments become necessary, they are
reported in earnings in the periods in which they become known. Evaluations
take into consideration such factors as changes in the nature and volume of the
loan portfolio, overall portfolio quality, review of specific problem loans and
current economic conditions which may affect the borrower's ability to pay.
Loans are charged off when management determines there has been permanent
impairment of the related carrying values. Recoveries on loans previously
charged off are credited directly to the allowance for loan losses.
IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets That Are To Be Disposed Of. The
statement covers long-lived assets and certain identifiable intangibles and
requires a review for impairment whenever events or circumstances indicate that
the carrying value of the assets may not be recoverable. The statement is
effective for fiscal years beginning after December 15, 1995. First Evergreen
will adopt the standard for the fiscal year beginning January 1, 1996.
Management believes the adoption of this statement will not have a material
effect on the consolidated financial statements.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally on the straight-line method over the
estimated useful lives of the assets which range between five and fifty years.
Maintenance and repairs are charged to expense when incurred; improvements are
capitalized. Gains and losses on routine disposition, which are not
significant, are reflected in current operations.
OTHER REAL ESTATE OWNED
Other real estate owned consists of properties acquired in partial or total
satisfaction of loans and is stated at the lower of cost or fair value.
Losses arising at acquisition are charged against the allowance for loan
losses. Write-downs to reflect reductions in fair value subsequent to
acquisition are recorded in other expense in the consolidated statements of
income, while any gains realized upon the disposition of such properties are
included in other income. Other real estate owned included in other assets in
1995 and 1994 is approximately $224 and $1,256 respectively.
INTANGIBLE ASSETS
Goodwill, representing the investment in subsidiary in excess of the value of
net assets acquired, is amortized on a straight line basis over ten years.
First Evergreen recorded $8,400 in goodwill from the acquisition of Oak Lawn
Trust and Savings Bank on February 11, 1992. As of December 31, 1995,
accumulated amortization -- goodwill totalled $3,276. In management's opinion,
no events or circumstances have occurred which would warrant revision or place
doubt on the stated recoverability of the balance.
TRUST DEPARTMENT INCOME
Trust department income is recognized on the cash basis which is not
significantly different from amounts that would have been recognized on the
accrual basis.
INCOME TAXES
First Evergreen files a consolidated federal income tax return with its
subsidiary. The Bank pays to or receives from First Evergreen the amount of
federal income taxes it would have paid or received had the Bank filed a
separate federal income tax return.
NET INCOME PER SHARE
Net income per share is computed by dividing net income by the weighted average
number of shares outstanding during the year. The weighted average number of
shares outstanding for the years ended December 31, 1995, 1994 and 1993 was
403,727, 405,940 and 408,614 respectively.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks.
12
<PAGE> 7
NOTE B - CASH AND CASH EQUIVALENTS
The Federal Reserve requires the Bank to maintain certain average reserve
balances. These average reserves approximated $9,397 during 1995 and $13,063
in 1994.
NOTE C - INVESTMENT SECURITIES
The amortized cost and approximate market value of held to maturity securities
are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
Gross Gross Approximate Gross Gross Approximate
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations $ 251,116 $ 2,469 ($ 461) $ 253,124 $ 395,070 $ 427 ($11,444) $ 384,053
U.S. Government agencies 411,858 17,602 (164) 429,296 445,234 2,541 (6,187) 441,588
Obligations of states &
political subdivisions 151,295 8,677 (147) 159,825 131,657 3,365 (1,670) 133,352
Mortgage-backed securities 50,807 1,036 (658) 51,185 35,443 475 (794) 35,123
Collateralized mortgage
obligations 208,345 1,468 (344) 209,469 127,651 1 (5,346) 122,306
Other securities 1,385 0 0 1,385 1,385 0 0 1,385
---------- ------- ------ ---------- ---------- ------ ------- ----------
Total $1,074,806 $31,252 ($1,774) $1,104,284 $1,136,440 $6,809 ($25,441) $1,117,807
========== ======== ======== ========== ========== ====== ========= ==========
</TABLE>
The amortized cost and approximate market value of held to maturity securities
at December 31, 1995, by contractual maturity, are shown in the chart below.
<TABLE>
<CAPTION>
Approximate
Amortized Cost Market Value
<S> <C> <C>
Due in one year or less $ 258,612 $ 261,085
Due after one year through five years 683,732 704,802
Due after five years through ten years 81,800 85,898
Due after ten years 50,662 52,499
---------- ----------
Total maturities $1,074,806 $1,104,284
========== ==========
</TABLE>
The amortized cost and approximate market value of securities available for
sale are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
Gross Gross Approximate Gross Gross Approximate
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations $138,725 $186 ($23) $138,888 $131,545 $1 ($2,964) $128,582
Collateralized mortgage
obligations 3,244 137 0 3,381 0 0 0 0
-------- ---- -- -------- -------- -- ------ --------
Total $141,969 $323 ($23) $142,269 $131,545 $1 ($2,964) $128,582
======== ==== ===== ======== ======== == ======== ========
</TABLE>
13
<PAGE> 8
NOTE C - INVESTMENT SECURITIES - CONTINUED
The amortized cost and approximate market value of available for sale
securities at December 31, 1995, by contractual maturity, are shown in the
chart below.
<TABLE>
<CAPTION>
Approximate
Amortized Cost Market Value
<S> <C> <C>
Due after one year through five years $138,725 $138,888
Due after five years through ten years 3,244 3,381
-------- --------
$141,969 $142,269
======== ========
</TABLE>
Held to Maturity securities carried at approximately $85,391 and $75,317 at
December 31, 1995 and 1994, respectively, were pledged to secure public and
trust deposits and for other purposes as required or permitted by law. All
collateralized mortgage obligations held by First Evergreen are collateralized
by government agency securities and are thus rated AAA. Privately issued
obligations totalled $24,474 in 1995. Mortgage backed securities and
collateralized mortgage obligations held in the Bank's portfolio are secured by
U.S. Treasury or Agency securities. While credit risk is eliminated, there
remains the risk of faster repayment of principal. This interest rate risk is
a result of economic factors which may make it advantageous to the mortgagee to
refinance at lower interest cost. When issues are held that were purchased at a
premium, the Bank's yield is reduced if the issue prepays faster than the
assumptions held at the time of purchase.
In the fourth quarter of 1995, concurrent with the adoption of its
implementation guide on SFAS No. 115, the Financial Accounting Standards Board
allowed a one-time reassessment of the SFAS No. 115 classifications of all
securities currently held. Any reclassifications would be accounted for at fair
value in accordance with SFAS No. 115 and any reclassifications from the
held-to-maturity portfolio that resulted from this one-time reassessment would
not call into question the intent of the Corporation to hold other debt
securities to maturity in the future. First Evergreen used the opportunity
under this one-time reassessment to reclassify $4,400 U.S. Government Agency
securities and $3,500 collateralized mortgage obligations from held-to-maturity
to the available-for-sale portfolio. In connection with this reclassification,
gross unrealized gains of $88 were recorded in available-for-sale securities
and in stockholders' equity (on a net-of-tax basis).
Net realized security gains in 1995 totalled $1,968. Gross realized gains and
losses were $3,178 and ($1,210), respectively. Net unrealized available for
sale portfolio gains increased by $3,263 during the period and were recorded on
the balance sheet utilizing an asset valuation account and as a component of
stockholders' equity, net of tax. In 1994, net realized security losses
totalled ($1,373). Gross realized gains and losses were $172 and ($1,545)
respectively. Unrealized available for sale portfolio losses increased by
($2,808) during the period.
Market value of the held to maturity and available for sale portfolios is
determined by reference to quoted market prices, if available. If quoted
market prices are not available, market value is estimated using quoted market
prices for similar securities.
NOTE D - LOANS
Major classifications of loans are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Commercial and industrial $ 78,181 $ 73,051
Real estate - construction 4,290 714
Real estate - residential 332,293 301,296
Real estate - commercial 91,353 82,294
Installment 24,404 21,451
-------- --------
530,521 478,806
Less unearned discount (22) (42)
-------- --------
Total $530,499 $478,764
======== ========
</TABLE>
14
<PAGE> 9
NOTE D - LOANS - CONTINUED
Certain executive officers and directors of First Evergreen and its subsidiary
and their affiliates have borrowed money from the Bank in the ordinary course
of business and in management's opinion, on substantially the same terms as
other Bank customers. Loans to such related parties whose outstanding balance
exceeded $60 approximated $2,052 and $1,982 at December 31, 1995 and 1994
respectively. During 1995, the Bank granted new loans of $154 and received
repayments of $84. Transactions of certain executive officers and directors
reported herewithin do not require additional disclosure terms. None of these
loans were included in the reported amounts of past due, nonaccrual, or
restructured loans.
Loans in a nonaccrual status amounted to approximately $1,619, $414 and $1,316
at December 31, 1995, 1994 and 1993 respectively. If interest on nonaccrual
loans had been accrued, such additional income would have approximated $52, $21
and $40 in 1995, 1994 and 1993 respectively. The amount of interest income
recognized on these loans was $25 in 1995, $22 in 1994 and $91 in 1993.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year $3,852 $3,764 $3,906
Provision for loan losses 0 0 0
Recoveries on loans previously charged off 201 269 401
Loans charged off (257) (181) (543)
------ ------ ------
Balance at end of year $3,796 $3,852 $3,764
====== ====== ======
</TABLE>
First Evergreen adopted SFAS Nos. 114 and 118, Accounting By Creditors for
Impairment of a Loan, effective January 1, 1995. These statements provide
guidance as to when loans should be classified and reported as impaired and
addresses how the allowance for credit losses related to these loans should be
determined. Specifically, SFAS No. 114 requires that impaired loans be measured
based on the present value of expected future cash flows discounted at the
loan's original effective rate. As a practical expedient, impairment may be
measured at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. Commercial credits which are
covered by these statements are evaluated on an individual basis. Smaller
balance homogeneous loans such as residential real estate and consumer
installment which are not covered by the statements are aggregated for
evaluation. Nonaccrual loans covered by the statements are classified as
impaired but may not require a valuation allowance. Any shortfall in the
estimated value of an impaired loan compared with the recorded investment in
the loan is identified as a portion of the allowance for loan losses. Payments
on loans classified as impaired are recorded as reductions of principal.
Interest is recorded on the cash basis after all principal has been repaid. The
adoption of this statement did not have a material effect on the consolidated
statements and no additional allowance for loan losses was required as a result
of the adoption.
As of December 31, 1995, the bank's recorded investment in impaired loans and
the related valuation allowance are as follows:
<TABLE>
<CAPTION>
Recorded Valuation
Impaired loans Investment Allowance
<S> <C> <C>
Valuation allowance required $ 156 $100
No valuation allowance required 1,261 0
------ ----
Total impaired loans $1,417 $100
====== ====
</TABLE>
15
<PAGE> 10
NOTE E - BANK PREMISES AND EQUIPMENT
The following is a summary of bank premises and equipment at December 31:
<TABLE>
<CAPTION>
Accumulated Net Book
Cost Depreciation Value
<S> <C> <C> <C>
1995
Land $ 4,688 $ 0 $ 4,688
Bank premises 26,875 7,704 19,171
Furniture and equipment 10,646 4,858 5,788
------- ------- -------
Total $ 42,209 $12,562 $29,647
======= ======= =======
1994
Land $ 4,688 $ 0 $ 4,688
Bank premises 25,945 7,394 18,551
Furniture and equipment 10,417 5,195 5,222
------- ------- -------
Total $ 41,050 $12,589 $28,461
======= ======= =======
</TABLE>
Depreciation expense for the years ended December 31, 1995, 1994 and 1993
amounted to approximately $2,527, $2,272 and $1,817 respectively.
NOTE F - TIME DEPOSITS
Time certificates of deposit in denominations of $100 or more as of December
31, 1995 and 1994 totalled $138,626 and $117,900, respectively. Interest
expense on time certificates of $100 or more totalled $7,342, $3,651 and $2,003
in 1995, 1994 and 1993 respectively.
Maturities of time certificates of deposit of $100 or more are summarized as
follows at December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Three months or less $ 53,322 $ 54,570
Over three through six months 34,049 17,788
Over six through twelve months 25,308 19,615
Over twelve months 25,947 25,927
-------- --------
Total $138,626 $117,900
======== ========
</TABLE>
NOTE G - SHORT TERM BORROWINGS
Federal funds purchased and securities sold under agreement to repurchase
averaged $10,650, $2,950 and $615 during the years ending December 31, 1995,
1994 and 1993 respectively. The average interest rate was 4.88% in 1995, 4.00%
in 1994 and 3.22% in 1993.
First Evergreen's demand note payable was collateralized by substantially all
of the common stock of the Bank owned by First Evergreen and bore interest at
the lending bank's prime rate. On January 24, 1994, First Evergreen paid off
this commitment. The terms of the note did not require specific principal
amortization and allowed First Evergreen to repay the principal and accrued
interest without penalty. The prime rate of the lending bank at December 31,
1993, was 5.50%. The average interest rate in effect at December 31, 1993 was
5.86%.
16
<PAGE> 11
Note H - Income Taxes
The components of Federal income tax expense (benefit) for 1995, 1994 and 1993
are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Current $6,138 $7,178 $8,697
Deferred 435 256 (543)
------ ------ ------
Total $6,573 $7,434 $8,154
======= ======= ======
</TABLE>
First Evergreen and subsidiary had no state income tax expense in 1995, 1994 or
1993.
The table below reconciles First Evergreen's deferred tax assets and
liabilities under SFAS No. 109 on December 31:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
ASSETS
Deferred loan fees ($1,208) ($1,501) ($1,668)
Allowance for bad debt (1,328) (1,348) (1,317)
Unrecognized security losses 0 (1,037) 0
Other assets (220) (156) (160)
-------- -------- --------
Gross deferred tax assets (2,756) (4,042) (3,145)
----- ------ ------
LIABILITIES
Fair market value of assets acquired 760 786 873
Depreciation 783 659 556
Investment accretion 579 491 391
Unrecognized security gains 106 0 0
Gross deferred tax liabilities 2,228 1,936 1,820
----- ------ ------
Net deferred tax assets ($528) ($2,106) ($1,325)
====== ======== ========
</TABLE>
Management has determined that a valuation allowance is not required at
December 31, 1995, 1994 or 1993 due to estimated future income.
The table below reconciles the statutory Federal income tax rate with the
effective income tax as a percent of pretax income.
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Statutory income tax rate 35.0% 35.0% 35.0%
Change in taxes resulting from
Tax-exempt interest (11.8) (9.3) (8.9)
Other - net 1.3 1.0 1.0
---- ---- ----
Effective income tax rate 24.5% 26.7% 27.1%
===== ===== =====
</TABLE>
Accumulated net deferred income taxes included in other assets or accrued
interest and other liabilities in the accompanying consolidated statements of
condition and currently payable income taxes are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Current payable $206 $228
Deferred receivable, net (528) (2,106)
---- ------
Net receivable ($322) ($1,878)
====== ========
</TABLE>
17
<PAGE> 12
NOTE I - EMPLOYEE BENEFIT PLANS
First Evergreen has a contributory profit sharing plan for virtually all
employees. Employees begin vesting after two years of net credited service and
become fully vested after seven years of net credited service. Contributions
are voluntary and at the discretion of the Board of Directors. Annual
contributions cannot exceed 15% of participants' earnings. Contributions were
approximately $2,227, $1,980 and $1,824 for the years ended December 31, 1995,
1994 and 1993 respectively.
NOTE J - DIVIDEND RESTRICTIONS
Banking regulations limit the amount of dividends that may be paid to First
Evergreen by its bank subsidiary without prior approval of the Bank's
respective regulatory agencies. Based upon these limitations, the Bank could
have declared approximately $42,000 of dividends at December 31, 1995 without
prior approval. Additionally, the Federal Reserve Board limits the amount of
dividends which may be paid by First Evergreen to its stockholders under
capital adequacy guidelines.
NOTE K - CONTINGENCIES
There are legal proceedings pending against the Bank which arise in the
ordinary course of business. Based upon opinions of legal counsel, management
believes that liabilities arising from these proceedings, if any, would not
have a material adverse effect on the consolidated financial position or
results of operations of First Evergreen Corporation and subsidiary.
NOTE L - CONSOLIDATED SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The unaudited quarterly results of operations for the years ended December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
December 31 September 30 June 30 March 31
<S> <C> <C> <C> <C>
1995
Interest income $31,228 $31,030 $30,833 $30,350
Net interest income 14,649 14,570 14,873 15,605
Net security gains 704 161 1,089 14
Other non-interest income 1,381 1,476 1,665 1,510
Non interest expense 10,122 9,401 10,521 10,850
Income tax expense 1,636 1,672 1,774 1,491
Net income 4,976 5,134 5,332 4,788
Income per share $12.44 $12.73 $13.20 $11.74
1994
Interest income $30,266 $29,802 $29,134 $27,868
Net interest income 15,983 16,039 15,872 14,976
Net security losses (42) (19) (300) (1,011)
Other non-interest income 1,345 1,556 1,486 1,455
Non interest expense 10,428 9,796 9,721 9,546
Income tax expense 1,804 2,156 2,077 1,397
Net income 5,054 5,624 5,260 4,477
Income per share $12.47 $13.86 $12.95 $11.01
</TABLE>
18
<PAGE> 13
NOTE M - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
First Evergreen has, through its subsidiary bank, financial instruments with
off-balance-sheet risk made in the normal course of business to meet the
financing needs of its customers. These financial instruments include
commitments to extend credit, letters of credit and financial guarantees.
These instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the consolidated statements of
condition.
Exposure to credit loss in the event of nonperformance by the other party to
the financial instrument for commitments to extend credit, letters of credit
and financial guarantees is represented by the contractual amount of those
instruments. The same credit policies are used in making commitments as those
used for on-balance-sheet instruments. Collateral or other security is
generally required to support financial instruments with off-balance-sheet
credit risk, however, credit risk is controlled through credit approvals,
limits and monitoring procedures.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since a portion of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. Each customer's credit
worthiness is evaluated on a case-by-case basis. The amount of collateral
obtained, if deemed necessary, upon extension of credit is based on
management's credit evaluation of the counterparty. Collateral held varies,
but may include accounts receivable, inventory, property, plant and equipment,
or real estate. Commitments to extend credit at December 31, 1995 and 1994
are approximately $78,345 and $64,457 respectively. Rates on these
commitments ranged from 6.375% to 15% in 1995 and 6% to 15% in 1994.
Standby letters of credit and financial guarantees are issued to guarantee the
performance of a customer to a third party. The credit risk involved in
issuing letters of credit is essentially the same as that involved in extending
other credits to customers. Collateral is held to support these commitments
as deemed necessary. At December 31, 1995 and 1994, outstanding letters of
credit totalled approximately $7,623 and $5,332 respectively.
NOTE N - CONCENTRATIONS OF CREDIT RISK
According to SFAS No. 105 - Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk, group concentrations of credit risk exist if a
number of borrowers or other counterparties are engaged in similar activities
and have similar economic characteristics that would cause their ability to
meet contractual obligations to be similarly affected by economic or other
conditions. Management is of the opinion that both its investment and loan
portfolios are well diversified. However, as substantially all loans
originated and approximately 69% of all obligations of state and political
subdivisions held at December 31, 1995, are located in Cook County and the
surrounding area, some geographic concentration risk exists. At December 31,
1994, investment commitments in the Cook County and the surrounding area was
approximately 70%.
At December 31, 1995, no securities of any one issuer (exclusive of U.S.
Treasury and U.S. Government agencies) exceeded ten percent of stockholders'
equity. At December 31, 1994, concentration in securities of a single issuer
consisted of investments in bonds issued by Cook County School District No.
135, with book value and associated market value of $15,955 and $16,820
respectively.
Concentrations of loans and off-balance-sheet commitments exist within the loan
portfolio. Commitments totaling $75,769 or 12.29% of total outstanding loans
have been issued to the construction industry. These commitments include
financing to construction suppliers, contractors and developers. Management
monitors these concentrations on a regular basis and is of the opinion that the
concentrations are not significant.
19
<PAGE> 14
Note O - First Evergreen Corporation (Parent Company)
The Parent Company's condensed financial information, which follows, conforms
with the accounting policies described in the preceding notes.
Condensed Statements of Condition
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994
<S> <C> <C>
Assets
Cash at subsidiary bank $ 499 $ 801
Investment in banking subsidiary 173,229 156,605
Other assets 90 58
-------- --------
Total assets $173,818 $157,464
======== ========
Liabilities and stockholders equity
Liabilities $ 0 $ 0
Stockholders equity 173,818 157,464
-------- -------
Total liabilities and stockholders equity $173,818 $157,464
======== ========
Condensed Statements of Income Years Ended December 31
1995 1994 1993
Operating income
Dividends from the Bank (Note A) $ 5,907 $ 8,592 $ 6,086
Operating expenses
Interest expense 0 7 125
Other expenses 268 139 158
-------- ------- -------
Total operating expenses 268 146 283
-------- ------- -------
Income before federal income tax benefit and equity
in undistributed income of subsidiary bank 5,639 8,446 5,803
Federal income tax benefit 90 48 97
-------- ------- -------
Income before equity in undistributed
income of subsidiary bank 5,729 8,494 5,900
Equity in undistributed income of subsidiary bank 14,501 11,921 16,070
-------- ------- -------
Net income $ 20,230 $20,415 $21,970
======== ======= =======
</TABLE>
20
<PAGE> 15
NOTE O - FIRST EVERGREEN CORPORATION (PARENT COMPANY) -- CONTINUED
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $20,230 $20,415 $21,970
Adjustments to reconcile net income to net cash
provided by operating activities:
Undistributed income of subsidiary bank (14,501) (11,921) (16,070)
Decrease (increase) in other assets (32) 104 49
Increase in other liabilities 0 (47) (47)
------- ------- -------
Net cash provided by operating activities 5,697 8,551 5,902
------- ------- -------
Cash flows from financing activities:
Principal payment on note payable 0 (2,000) (1,000)
Acquisitions of treasury stock (739) (764) (1,166)
Dividends paid (5,260) (5,286) (3,691)
------- ------- -------
Net cash used for financing activities (5,999) (8,050) (5,857)
------- ------- -------
Increase (decrease) in cash (302) 501 45
Cash at beginning of year 801 300 255
------- ------- -------
Cash at end of year $ 499 $ 801 $ 300
======= ======= =======
Supplemental disclosures of cash flow information
Cash paid (received) during the year for:
Interest $ 0 $ 55 $ 170
Income taxes (net of reimbursements
from subsidiary bank) $ (90) $ (159) $ (97)
</TABLE>
NOTE P-FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summarizes the carrying value and estimated fair value
of financial instruments as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
Financial Assets
Cash and cash equivalents $ 58,998 $ 58,998 $ 68,712 $ 68,712
Securities held to maturity 1,074,806 1,104,284 1,136,440 1,117,807
Securities available for sale 142,269 142,269 128,582 128,582
Net loans 526,703 544,702 474,912 457,039
Interest receivable 20,959 20,959 24,484 24,484
Financial Liabilities
Deposits 1,661,946 1,668,008 1,694,617 1,688,160
Federal funds purchased and securities
sold under agreements to repurchase 15,070 15,070 13,160 13,160
Interest payable 5,894 5,894 4,094 4,094
Off-Balance-Sheet Financial Instruments
Commitments to extend credit and
standby letters of credit n/a 502 n/a 418
</TABLE>
21
<PAGE> 16
Note P - Fair Value of Financial Instruments -- continued
Where readily available, quoted market prices were utilized. If quoted market
prices were not available, fair values were based on estimates using present
value calculations. As this method is significantly affected by assumptions
used, such as the discount rate and estimates of future cash flows, the
estimates cannot be substantiated by comparison to independent markets, and, in
many cases, could not be realized upon immediate settlement of the instruments.
Certain financial instruments and all nonfinancial assets and liabilities have
been omitted. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of First Evergreen. The following methods and
assumptions were used in estimating the fair value for financial instruments.
CASH AND CASH EQUIVALENTS
The fair values reported for cash and cash equivalents were estimated
to be their carrying value as they are highly liquid and short term in nature.
SECURITIES HELD TO MATURITY AND SECURITIES AVAILABLE FOR SALE
Fair values of securities held to maturity and available for sale are
determined by reference to quoted market prices, if available. If quoted
market prices are not available, fair value is estimated using quoted prices
for similar securities.
LOANS
Fair value of the loan portfolio was estimated by discounting anticipated
future cash flows using current rates at which similar loans would be made with
the same remaining maturity. Credit risk was incorporated in the anticipated
cash flows by considering the historical loss experience for each major
category of loans. The cash flows of non-performing loans are reduced based
upon estimates of loan management.
ACCRUED INTEREST RECEIVABLE
Due to its short term nature, the fair value of accrued interest receivable was
estimated at carrying value.
DEPOSITS
The fair value of deposits with no stated maturities is estimated to be the
carrying value. Fair value of fixed maturity certificates is estimated by
discounting future cash flows using rates currently offered for deposits of
similar remaining maturities.
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
As these instruments are short term in nature, their fair value is
estimated to be their carrying value.
INTEREST PAYABLE
Due to its short term nature, the fair value of accrued interest payable was
estimated at carrying value.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
The fair value of instruments with off-balance-sheet risk is determined
by estimating the amount First Evergreen would have to pay a third party to
assume these instruments.
22
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
First Evergreen Coporporation:
We have audited the accompanying consolidated statements of condition of First
Evergreen Corporation [a Delaware Corporation] and subsidiary as of December
31, 1995 and 1994, and the related consolidated statements of income, changes
in stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Evergreen
Corporation and subsidiary as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
Chicago, Illinois,
January 24, 1996 /s/ Arthur Andersen LLP
COMMON STOCK INFORMATION AND DIVIDENDS
The common stock of First Evergreen, held by 494 stockholders of record on
December 31, 1995, is not traded on any national or regional exchange or in the
over-the-counter market. First Evergreen, due to the absence of a readily
accessible market, with certain limitations, offers to purchase shares that a
stockholder cannot otherwise sell. Such transactions are subject to a stated
policy which defines the price per share as equal to the "book value" as last
established by the Board of Directors [rounded up or down to the nearest
twenty-five cents] and further defines "book value" as an amount equal to the
amount of stockholders' equity divided by the number of outstanding shares and
adjusted by adding to it the amount per outstanding share of the allowance for
loan losses of the Evergreen Bank [net of the statutory Federal tax rate of
35%]. Individual purchases by First Evergreen in excess of 500 shares in a
twelve-month period are made at a declining percentage of "book value" and any
shares purchased by First Evergreen are subject to a one year holding period by
the stockholder. Federal Reserve regulations place limitations on a bank
holding company's purchase and redemption of its own stock without prior notice
to the Federal Reserve and its approval thereof. The following table sets forth
the high and low price by quarter for trades known to First Evergreen.
<TABLE>
<CAPTION>
1995 Fourth Third Second First
<S> <C> <C> <C> <C> <C>
High $433.25 $418.75 $408.00 $387.75
Low $433.25 $408.00 $397.00 $382.50
1994 Fourth Third Second First
High $391.50 $380.75 $366.25 $357.75
Low $384.75 $366.25 $356.75 $344.75
</TABLE>
For the year ended December 31, 1995, there were, to the knowledge of
First Evergreen, 27 trades involving 1,807 shares. For the year ended December
31, 1994, there were 32 trades involving 2,029 shares. See Selected Financial
Data for information relating to dividend payments. In January 1996, a $15 per
share cash dividend was declared to stockholders of record on January 3, 1996.
Future dividend payments on common stock will depend upon such factors as cash
position, earnings and capital requirements.
23
<PAGE> 18
FINANCIAL REVIEW
The following Selected Financial Data are not covered by the report of
independent public accountants and should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which follows, and the financial statements and notes of First
Evergreen appearing elsewhere in this report. As average daily balances for all
reported figures were not available, monthly average balances were used in
preparation of some average consolidated amounts presented. In the opinion of
First Evergreen's management, the use of monthly averages is not substantially
different from the use of daily averages.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total interest income $ 123,441 $ 117,070 $ 120,417 $ 120,392 $ 108,775
Total interest expense 63,744 54,200 59,954 68,187 65,088
---------- ---------- ---------- ---------- ----------
Net interest income 59,697 62,870 60,463 52,205 43,687
Provision for loan losses 0 0 0 231 540
---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 59,697 62,870 60,463 51,974 43,147
Other income 8,000 4,470 6,288 6,092 6,724
Other expenses 40,894 39,491 36,627 32,923 28,302
---------- ---------- ---------- ---------- ----------
Income before income tax expense 26,803 27,849 30,124 25,143 21,569
Applicable income taxes 6,573 7,434 8,154 6,184 4,755
---------- ---------- ---------- ---------- ----------
Net income $ 20,230 $ 20,415 $ 21,970 $ 18,959 $ 16,814
========== ========== ========== ========== ==========
DIVIDENDS
Cash dividends declared $ 5,260 $ 5,286 $ 3,691 $ 3,320 $ 2,921
Stock dividends declared 0 0 0 0 0
PER SHARE DATA
Net income $ 50.11 $ 50.29 $ 53.77 $ 45.95 $ 40.39
Cash dividends declared 13.00 13.00 9.00 8.00 7.00
SELECTED BALANCES - END OF YEAR
Total assets $1,888,088 $1,872,035 $1,870,758 $1,790,033 $1,354,318
Total investments 1,217,075 1,265,022 1,331,347 1,273,899 912,074
Total loans 530,499 478,764 416,341 388,056 374,930
Total deposits 1,661,946 1,694,617 1,718,071 1,653,371 1,213,259
Stockholders' equity 173,818 157,464 145,026 127,912 113,702
RATIOS
Net income to:
Average total deposits 1.22% 1.20% 1.30% 1.27% 1.46%
Average total assets 1.10 1.10 1.19 1.17 1.33
Average stockholders' equity 12.29 13.68 16.17 15.83 15.82
Cash dividends to net income 26.00 25.89 16.80 17.51 17.37
Average loans to average deposits 30.06 26.54 22.71 26.62 31.82
Average equity to average assets 8.91 8.00 7.39 7.39 8.38
</TABLE>
24
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION & RESULTS OF OPERATIONS
LIQUIDITY
Liquidity is the ability to meet deposit withdrawals, provide for customers'
credit needs, acquire and develop technologies to deliver customer services and
service First Evergreen's financial obligations when due. Principal sources of
liquidity are cash and assets that can be readily converted to cash. Such
assets include interest bearing deposits in banks, federal funds sold,
securities available for sale and the maturity of loans and securities held to
maturity. Historically, First Evergreen's strong earnings flow has provided a
solid source of liquidity as well. An additional source of liquidity used by
First Evergreen is the purchase of federal funds. The need for liquidity has
become more important in the banking industry in recent years as the growth in
interest bearing transaction accounts has increased the amount of deposit
liabilities that are interest rate sensitive and have maturities of less than
one year. Additionally, the maturity of certificates of deposit at Evergreen
Bank are primarily in the less than one year category. First Evergreen and its
subsidiary bank are able to meet the funding gap between earning assets and
interest sensitive liabilities with their relatively stable core base of demand
and savings deposits. The maintenance of a proper balance between earning
assets and interest sensitive liabilities is the primary function of asset and
liability management. First Evergreen intends to continue its objective of
matching maturities of deposit liabilities with maturities of earning assets as
closely as possible.
In the opinion of First Evergreen's management, First Evergreen's market does
not demonstrate any evolving trends, nor does First Evergreen have any
commitments that currently would require actions to place First Evergreen in a
position of greater liquidity. First Evergreen's consolidated statements of
cash flows should be read in conjunction with any assessment of liquidity.
INTEREST RATE SENSITIVITY
Interest rate sensitivity is closely related to liquidity. Interest
sensitivity gaps result from maturity mismatches between earning assets and
interest sensitive liabilities. First Evergreen continues to be at risk from
rising interest rates due to the systematic negative gap. Management minimizes
the effect of that risk by simulation modeling, through gap analysis and
monitoring portfolio duration.
The following table sets forth the balances in the major categories of interest
earning assets and interest sensitive liabilities at December 31, 1995 (in
thousands). This data is at a particular point in time; significant changes
can occur daily in the sensitivity relationships.
<TABLE>
<CAPTION>
Remaining Maturity or Earliest Possible Repricing - Unaudited
0 - 3 4 - 12 1 Year to Over
Months Months 5 Years 5 Years Total
<S> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS
Securities (amortized cost) $ 42,811 $ 215,801 $ 822,457 $ 135,706 $1,216,775
Loans 89,059 64,955 170,646 205,839 530,499
---------- --------- --------- --------- ----------
Total interest earning assets 131,870 280,756 993,103 341,545 1,747,274
---------- --------- --------- --------- ----------
Percent of interest earning assets 7.55% 16.06% 56.84% 19.55% 100.00%
INTEREST SENSITIVE LIABILITIES
Money market accounts $ 97,174 $ 0 $ 0 $ 0 $ 97,174
Time deposits of $100 or more 53,421 59,993 25,058 154 138,626
All other time deposits 132,063 275,047 197,304 3 604,417
Savings deposits and NOW accounts* 48,688 130,413 86,942 390,891 656,934
Federal funds purchased and securities
sold under agreements to repurchase 15,070 0 0 0 15,070
---------- --------- --------- --------- ----------
Total interest sensitive
liabilities 346,416 465,453 309,304 391,048 1,512,221
Percent of interest sensitive liabilities 22.91% 30.78% 20.45% 25.86% 100.00%
Interest sensitivity gap $(214,546) $(184,697) $ 683,799 $ (49,503) $ 235,053
Cumulative Interest sensitivity gap (214,546) (399,243) 284,556 235,053 235,053
Ratio of interest earning assets
to interest sensitive liabilities 0.38 0.60 3.21 0.87 1.16
</TABLE>
25
<PAGE> 20
Footnote from chart on previous page
* Although savings and NOW accounts do not reprice on a pre-established
contract, they are subject to immediate withdrawal. It has been First
Evergreen's experience that these deposits are relatively insensitive to
interest rates and generally behave like deposits with longer maturities.
To recognize this, historic core deposits are reported in the Over five
years category. Funds considered to be non-core have been distributed
evenly over the first eighteen months. Historical experience of these
non-core deposits indicates that customers are repositioning these funds
over a slightly longer period. This trend is likely due to the current
interest rate environment and has been accounted for in the table on the
previous page.
Total liabilities maturing or repricing within one year exceeded assets
maturing or repricing within one year by $399 million and $311 million at
December 31, 1995 and 1994 respectively. The negative gap position in the one
year or less period is the result of depositors continued repositioning of
funds in shorter term interest bearing instruments. Repricing of certain
categories of assets and liabilities is subject to market conditions and other
influences that are beyond the Corporation's control. As a result, certain
assets and liabilities indicated above as maturing or repricing within a stated
period may in fact mature or reprice in other periods or at different volumes.
Additionally, 64% of First Evergreen's total assets are in marketable, highly
liquid securities with laddered maturities to reduce the effect of interest
rate changes.
FINANCIAL CONDITION
The deposit base, the main source for funds employed in earning assets,
decreased slightly in 1995. Total deposits declined by $32,671 from December
31, 1994 to $1,661,946 at December 31, 1995. Rates on time deposits declined
throughout the year, although the savings rate remained at 3%. Deposit
customers continued the trend from 1994 of shifting savings funds into shorter
term deposits. As a result, the volume of time deposits increased by $119,616,
while the savings/NOW category declined by $140,168. Over the same period,
demand deposits and money market accounts also decreased by $8,277 and $3,842
respectively. Additional funding was provided by securities sold under
agreements to repurchase which increased $5,910. In 1994, total deposits
declined by $23,454. Rates on time deposits rose during the period, while the
savings rate also remained at 3%. As a result, the volume of time deposits
increased by $172,245, while the savings/NOW category declined by $218,114.
Over the same 1994 period, demand deposits and money market accounts increased
by $12,267 and $10,148 respectively. Additional funding was provided by federal
funds purchased and securities sold under agreements to repurchase which
increased by $6,000 and $7,160 respectively. Management closely monitors the
rates being offered on all its deposit products in response to changes in the
short term markets. During 1995, earning assets increased by $3,788. Due to
continued increased demand, the loan portfolio increased by nearly 11% or
$51,735. This increase was funded by a decline in the held to maturity
portfolio which decreased by $61,634. Also during the same 1995 period, the
available for sale portfolio grew by $13,687. In 1995, the average interest
rate spread expressed on a tax equivalent basis (net interest margin) declined
25 basis points to 3.17%. Also in the period, the return on average earning
assets increased 47 basis points, while the average cost of funds increased 72
basis points. Net interest margins related to 1994 and 1993 were 3.42% and
3.34% respectively.
Return on average equity declined to 12.29 % from 1994 and 1993 levels
of 13.68% and 16.17% respectively. Return on average assets remained unchanged
at 1.10%. In 1993 the return was 1.19%. Total stockholders' equity increased
$16,354 from $157,464 at December 31, 1994. A cash dividend of $13 per share
($5,260) was paid to stockholders of record on January 4, 1995. A dividend of
$13 per share ($5,286) was paid during 1994. Capital ratios are strong and
remain well above regulatory guidelines. First Evergreen's tier one leveraged
capital ratio increased 83 basis points reaching 9.10%, while the ratio for
total risk-based capital decreased 168 basis points, reaching 26.85%.
The following table compares First Evergreen's capital ratios at
December 31, 1995, with required regulatory guidelines:
<TABLE>
<CAPTION>
Tier 1 Leveraged Tier 1 Risk-Based Total Risk-Based
Capital Capital Capital
<S> <C> <C> <C>
Capital balances at December 31, 1995 $ 168,498 $ 168,498 $ 172,294
Required regulatory capital 55,500 25,700 51,400
--------- --------- ---------
Capital in excess of regulatory minimums $ 112,998 $ 142,798 $ 120,894
========= ========= =========
Capital ratios at December 31, 1995 9.10% 26.26% 26.85%
Regulatory capital ratios required at December 31, 1995 3.00% 4.00% 8.00%
</TABLE>
26
<PAGE> 21
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED TO 1994 AND 1993
In 1995, net interest income of $59,697 was earned. This represents a
decrease of $3,173 from 1994 as a result of narrowed net interest margins
previously noted. Net interest income in 1994 and 1993 was $62,870 and $60,463
respectively. The average balance of earning assets decreased $17,468 or 1.00%,
while their yield (on a tax equivalent basis) increased to 7.38% from 6.91% and
7.20% in 1994 and 1993 respectively. Interest income on a tax equivalent basis
increased $6,999 and $3,563 in 1995 and 1994 respectively.
The average volume in interest bearing liabilities decreased $37,829 or
2.5% during 1995. Also in 1995, the increase of $9,545 in interest expense
highlights the trend of deposits which were repositioned throughout the year
into higher yielding products. In 1994 and 1993, interest expense decreased
$5,755 and $8,233 respectively.
In 1995, based upon probable losses inherent within the loan portfolio,
management once again elected not to provide additional funding to the loan
loss reserve. Management suspended provisions to the reserve in June, 1992.
Provisions to the loan loss reserve will be reinstated if conditions or other
characteristics of the loan portfolio change or upon such time as management
deems it to be necessary. The volume of loans charged off as a percentage of
average loans outstanding in 1995, 1994 and 1993 was .01%, -0.2% and .04%,
respectively. Management is unaware of any trends inherent in the portfolio
which would call into question the overall quality of the loan portfolio during
1995 and prior years.
Total other operating income, excluding securities gains and losses,
increased $190 in 1995 due to modest increases in trust fees, service charges
on deposit accounts and net gains on the sale of other real estate owned
properties. Net security gains of $1,968 were realized in 1995. This sharply
contrasts with net losses of $1,372 realized in 1994. As a result of a strong
economy and record corporate profits, the bond and stock markets moved sharply
higher. In response to these conditions, management repositioned its available
for sale portfolio. Net security gains in 1993 were $257.
Total other operating expenses increased $1,403 in 1995. Employee
salaries and benefits, which represent the largest category of non-interest
expense, increased $2,172, or 10.72%. The increased expense is primarily due to
annual salary adjustments. The rate of increase in this category slowed by
nearly 2% in 1995 and it is management's intent to continue to shrink the rate
of increases. The number of employees expressed on a full-time equivalent basis
declined by 16, reaching 565. Insurance expense declined $1,974 due to the near
elimination of FDIC insurance costs. These costs in 1996 are expected to remain
at the present year-end levels. Total other expenses increased $653 due to
increases in advertising and contribution expenses resulting from expanded
community outreach programs. Additionally, costs incurred for armored services
and postage and mailings increased $111 and $172, respectively. Expenses
incurred in connection with other real estate owned continued to trend downward
as the associated number of properties were nearly eliminated by year-end.
In 1994, total other operating expenses increased $2,864. Employee salaries and
benefits increased $2,255 or 12.52%. The increased expense is primarily due to
annual salary adjustments and an increase in the number of employees expressed
on a full-time basis by 42 to 583. Outside fees and services increased $374 due
to higher data processing and consulting expenses. Equipment depreciation,
rentals and maintenance experienced a $329 increase due to equipment upgrades
at several locations. Total other expenses increased $284 due to reduced other
real estate carrying costs.
[CHART]
1) Return on Equity (Y Axis in Increments of 5)
<TABLE>
<S> <C>
1991 15.82%
1992 15.83%
1993 16.17%
1994 13.68%
1995 12.29%
</TABLE>
2) Return on Assets (Y Axis in Increments of .3)
<TABLE>
<S> <C>
1991 1.33%
1992 1.17%
1993 1.19%
1994 1.10%
1995 1.10%
</TABLE>
3) Net Income (Y Axis in Increments of 5 Million)
<TABLE>
<S> <C>
1991 16,814
1992 18,959
1993 21,970
1994 20,415
1995 20,230
</TABLE>
27
<PAGE> 22
FIRST EVERGREEN CORPORATION AND SUBSIDIARY
SELECTED STATISTICAL INFORMATION
DOLLARS IN THOUSANDS UNAUDITED
SECURITIES HELD TO MATURITY
BOOK VALUES
<TABLE>
<CAPTION>
December 31
1995 1994 1993
<S> <C> <C> <C>
U.S. Treasury obligations $ 251,116 $ 395,070 $ 529,584
U.S. Government agencies and mortgage backed securities 462,665 480,677 371,441
Obligations of states and political subdivisions 151,295 131,657 115,413
Collateralized mortgage obligations 208,345 127,651 186,025
Other securities 1,385 1,385 1,385
---------- ---------- ----------
Total $1,074,806 $1,136,440 $1,203,848
---------- ---------- ----------
</TABLE>
SECURITIES AVAILABLE FOR SALE
BOOK VALUES
<TABLE>
<CAPTION>
December 31
1995 1994 1993
<S> <C> <C> <C>
U.S. Treasury obligations $ 138,888 $ 128,582 $ 127,499
Collateralized mortgage obligations 3,381 0 0
---------- ---------- ----------
Total $ 142,269 $ 128,582 $ 127,499
---------- ---------- ----------
</TABLE>
SECURITIES HELD TO MATURITY
REMAINING MATURITY AND AVERAGE YIELD
<TABLE>
<CAPTION>
December 31, 1995
One Year or Less One to Five Years Five to Ten Years Over Ten Years
Book Yield Book Yield Book Yield Book Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations $120,158 5.21% $130,958 5.74% $ 0 .00% $ 0 .00%
U.S. Government agencies
and mortgage backed securities 105,892 8.00 310,869 7.73 15,861 8.08 30,043 8.81
Obligations of states and
political subdivisions (2) 21,143 9.72 62,784 9.12 56,284 8.95 11,084 10.25
Other securities (1) 11,419 6.58 179,121 7.08 9,655 6.37 9,535 7.82
-------- -------- ------- -------
Total maturities (3) $258,612 $683,732 $81,800 $50,662
-------- -------- ------- -------
</TABLE>
(1) Collateralized mortgage obligations and Federal Reserve Bank stock.
(2) The interest on non-taxable investment securities has been adjusted and
is calculated on a tax equivalent basis using a Federal tax rate of 35%.
(3) No securities of any issuer are held, exclusive of U.S. Treasury
obligations and U.S. Government agencies, which exceed 10% of
stockholder equity.
SECURITIES AVAILABLE FOR SALE
REMAINING MATURITY AND AVERAGE YIELD
<TABLE>
<CAPTION>
December 31, 1995
One Year or Less One to Five Years Five to Ten Years Over Ten Years
Book Yield Book Yield Book Yield Book Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations $0 0.00% $138,888 5.31% $0 0.00% $0 0.00%
Collateralized mortgage obligations 0 0.00 0 0.00 3,381 7.55 0 0.00
---- -------- ------ ----
$0 $138,888 $3,381 $0
Total ---- -------- ------ ----
</TABLE>
28
<PAGE> 23
SELECTED STATISTICAL INFORMATION - CONTINUED
LOANS
<TABLE>
<CAPTION>
TYPES OF LOANS December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Commercial and industrial $ 78,181 $ 73,051 $ 62,542 $ 59,006 $ 66,442
Real estate - residential 332,293 286,587 233,544 208,487 197,469
Real estate - commercial 91,353 81,344 76,198 68,669 56,768
Real estate - construction 4,290 714 3,006 3,832 4,881
Installment 24,404 37,116 41,149 48,293 49,500
------- ------- ------- ------- -------
530,521 478,812 416,439 388,287 375,060
Less unearned discount (22) (48) (98) (231) (130)
------- ------- ------- ------- -------
Total $ 530,499 $ 478,764 $416,341 $388,056 $374,930
------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES December 31, 1995
1 Year 1 to 5 Over
or Less Years 5 Years Total
<S> <C> <C> <C> <C>
Commercial and industrial $41,813 $29,315 $7,053 $78,181
Real estate - construction 4,255 35 0 4,290
------- ------- ------ -------
Total $46,068 $29,350 $7,053 $82,471
------- ------- ------ -------
</TABLE>
INTEREST SENSITIVITIES
<TABLE>
<CAPTION>
LOANS MATURING IN ONE YEAR AND OVER 1 to 5 Over
Years 5 Years Total
<S> <C> <C> <C>
Fixed rate $19,895 $6,602 $26,497
Floating rate 9,455 451 9,906
------- ------ -------
Total $29,350 $7,053 $36,403
------- ------ -------
</TABLE>
NONPERFORMING ASSETS (1)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Nonaccrual loans (2) $ 1,619 $ 414 $ 1,316 $ 3,247 $ 3,512
Past due 90 days or more (3) 2,351 1,852 1,337 1,444 2,480
Restructured loans (4) 0 0 0 0 0
Other real estate owned 224 1,256 3,564 2,928 0
</TABLE>
(1) Adoption of SFAS No. 114 in 1995 does not materially impact the
comparability of this disclosure.
(2) Loans accounted for on a nonaccrual basis. (See Note A for
further information.)
(3) Accruing loans which are contractually past due 90 days or more
as to principal or interest payments.
(4) Loans not included above which are "troubled debt
restructurings" as defined in Statement of Financial Accounting
Standards No. 15, Accounting by Debtors and Creditors for Troubled Debt
Restructurings.
In 1995, the United States economy continued to expand, while inflation
remained low at 2.5%. Economic performance moderately impacted the volume of
nonperforming assets which increased from $3,522 in 1994, to $4,194 in 1995.
The percentage of nonperforming assets to total loans in 1995 was relatively
unchanged reaching .79% from .74% in 1994.
29
<PAGE> 24
SELECTED STATISTICAL INFORMATION - continued
Consolidated Average Statements of Condition, Analysis of Interest Earnings
and Interest Differential Analysis
<TABLE>
<CAPTION>
1995 1994
Average Average
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Federal funds sold $ 24,344 $ 1,435 5.89% $ 12,579 $ 536 4.26%
Taxable investment securities 1,072,922 72,448 6.75 1,171,476 72,142 6.16
Non-taxable investment securities (l) 144,388 13,782 9.54 121,724 12,080 9.92
IDR bonds/non-taxable loans (2) 6,443 592 9.19 5,408 500 9.25
Loans 491,941 40,215 8.17 446,319 36,215 8.11
---------- ---------- ---- ---------- --------- ----
Total interest earning assets 1,740,038 $128,472 7.38 1,757,506 121,473 6.91
---------- -------- ---- ---------- ---------- ----
Other Assets:
Cash and due from banks 46,363 46,616
Less allowance for loan losses (3,862) (3,842)
Bank premises and equipment 29,179 27,323
Accrued interest receivable 22,402 25,483
Other real estate owned 844 2,898
Goodwill and intangibles 5,568 6,407
Other assets 3,548 1,795
---------- ----------
Total Assets $1,844,080 1,864,186
========== =========
Interest Bearing Liabilities:
Interest bearing transaction deposits $ 209,247 6,488 3.10 $ 214,332 6,253 2.92
Savings deposits 613,993 18,953 3.09 828,802 23,336 2.82
Time deposits of $100 or more 133,413 7,342 5.50 82,617 3,655 4.42
Other time deposits 546,119 30,441 5.57 421,693 20,830 4.94
Federal funds purchased, securities
sold under agreements to repurchase
and borrowed funds 10,666 520 4.88 3,823 125 3.27
---------- ---------- ---- ---------- ---------- ----
Total interest bearing liabilities 1,513,438 63,744 4.21 $1,551,267 54,199 3.49
---------- ---------- ---- ---------- ---------- ----
Net interest margin 3.17% 3.42%
===== ----
Other Liabilities and Stockholders' Equity:
Demand deposits 154,988 154,837
Accrued interest and other liabilities 11,409 8,881
Stockholders' equity 164,245 149,201
---------- ----------
Total liabilities and stockholders' equity $1,844,080 $1,864,186
========== ==========
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest earnings $ 64,728 $ 67,274
---------- ----------
- -----------------------------------------------------------------------------------------------------------------------------------
Net yield on interest earning assets 3.72% 3.83%
----- -----
- ------------------------------------------------------------------------------------------------------------------------------------
(1) The interest on non-taxable investment securities has been adjusted and is calculated on a tax equivalent basis
using a federal tax rate of 35%.
(2) The interest on non-taxable industrial development revenue bonds and other non-taxable loans (included in loans for
financial purposes) has been adjusted and is calculated on a tax equivalent basis using a federal tax rate of 35%.
(3) Changes not due solely to rate changes or volume changes are allocated based on the percentage of each to the total.
</TABLE>
30
<PAGE> 25
<TABLE>
<CAPTION>
1993 1995 Compared to 1994 1994 Compared to 1993
Average Change Attributable to (3) Change Attributable to (3)
Balance Interest Rate Volume Rate Total Volume Rate Total
<S> <C> <C> <C>
$ 27,050 $ 808 2.99% $ 638 $ 261 $ 899 $ (535) $ 263 $ (272)
1,205,024 77,390 6.42 (6,342) 6,648 306 (2,119) (3,129) (5,248)
118,573 12,576 10.61 2,178 (476) 1,702 328 (824) (496)
5,780 621 10.74 95 (3) 92 (38) (83) (121)
379,234 33,641 8.87 3,728 272 4,000 5,609 (3,035) 2,574
---------- -------- ----- --------- ------ ------- ------- ------- --------
1,735,661 125,036 7.20 296 6,702 6,999 3,245 (6,808) (3,563)
---------- -------- ----- --------- ------ ------- ------- ------- --------
47,533
(3,757)
23,235
22,816
3,328
7,245
3,065
----------
$1,839,036
==========
$ 209,617 6,724 3.21 (151) 386 235 149 (620) (471)
934,650 34,154 3.65 (6,473) 2,090 (4,383) (3,575) (7,243) (10,818)
45,284 2,003 4.42 2,640 1,047 3,687 1,652 0 1,652
362,959 16,928 4.66 6,696 2,915 9,611 2,858 1,044 3,902
2,699 145 5.37 310 85 395 48 (68) (20)
---------- -------- ----- --------- ------ ------- ------- ------- --------
1,555,209 59,954 3.86 3,022 6,523 9,545 1,132 (6,887) (5,755)
---------- -------- ----- --------- ------ ------- ------- ------- --------
3.34%
====
142,660
5,267
135,900
----------
$1,839,036 $ (2,726) $ 179 $(2,546) $ 2,113 $ 79 $ 2,192
========== ========= ====== ======= ======= ======= ========
$ 65,082
======== 3.75%
====
</TABLE>
31
<PAGE> 26
SELECTED STATISTICAL INFORMATION - continued
POTENTIAL PROBLEM LOANS
Effective December 31, 1995, the Company had $2,225 in domestic commercial
loans for which payments presently are current, but the borrowers are
currently experiencing financial difficulties. These loans are closely
monitored by management on a regular basis.
FOREIGN LOANS OUTSTANDING
There were no loans to foreign countries outstanding for the reported
periods.
SUMMARY OF LOAN LOSS EXPERIENCE
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Average total loans $498,384 $451,727 $385,014 $397,206 $365,412
======== ======== ======== ======== ========
Total loans at year end $530,499 $478,764 $416,341 $388,056 $374,930
======== ======== ======== ======== ========
Allowance for loan losses
at beginning of year $ 3,852 $ 3,764 $ 3,906 $ 3,925 $ 3,507
Loans charged off:
Commercial and industrial 187 117 306 852 89
Real estate - construction 0 0 0 0 0
Real estate - mortgage 0 4 137 582 0
Installment 70 60 100 463 64
-------- -------- -------- -------- --------
Total 257 181 543 1,897 153
-------- -------- -------- -------- --------
Recoveries of loans previously
charged off:
Commercial and industrial 131 83 321 229 16
Real estate - mortgage 0 63 0 0 0
Installment 70 123 80 132 15
-------- -------- -------- -------- --------
Total 201 269 401 361 31
-------- -------- -------- -------- --------
Net loans charged off 56 (88) 142 1,536 122
Provision for loan losses 0 0 0 231 540
Allowance of acquired entity 0 0 0 1,286 0
Allowance for loan losses at year -------- -------- -------- -------- --------
end $ 3,796 $ 3,852 $ 3,764 $ 3,906 $ 3,925
======== ======== ======== ======== ========
As a percent of average loans:
Net loans charged off 0.01% -0.02% 0.04% 0.39% 0.03%
Provision for loan losses 0.00 0.00 0.00 0.06 0.15
Allowance balance as a percent
of year-end loans 0.72 0.80 0.90 1.01 1.05
</TABLE>
The allowance for loan losses has been allocated according to the amount deemed
to be reasonably necessary to provide for the probable losses being incurred
within the following categories at the date indicated:
<TABLE>
December 31, 1995
Percent of loans in each
Allowance category to total loans
<S> <C> <C>
Commercial and industrial $ 996 14.74%
Real estate - construction 373 0.81
Real estate - residential 837 62.63
Real estate - commercial 439 17.22
Installment 236 4.60
Unallocated 915 n/a
------ ------
$3,796 100.00%
====== ======
</TABLE>
32
<PAGE> 1
EXHIBIT 16
December 26, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We have read Item 4 included in the attached Form 8-K dated December 22, 1995
of First Evergreen Corporation to be filed with the Securities and Exchange
Commission and are in agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 58,998,361
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 142,269,331
<INVESTMENTS-CARRYING> 1,074,806,486
<INVESTMENTS-MARKET> 1,104,283,793
<LOANS> 530,498,633
<ALLOWANCE> 3,795,947
<TOTAL-ASSETS> 1,888,087,910
<DEPOSITS> 1,661,945,658
<SHORT-TERM> 0
<LIABILITIES-OTHER> 52,323,788
<LONG-TERM> 0
<COMMON> 173,818,464
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 1,888,087,910
<INTEREST-LOAN> 40,599,803
<INTEREST-INVEST> 81,405,296
<INTEREST-OTHER> 1,435,560
<INTEREST-TOTAL> 123,440,659
<INTEREST-DEPOSIT> 63,224,087
<INTEREST-EXPENSE> 63,743,786
<INTEREST-INCOME-NET> 59,696,873
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 1,968,371
<EXPENSE-OTHER> 40,893,990
<INCOME-PRETAX> 26,802,679
<INCOME-PRE-EXTRAORDINARY> 26,802,679
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,229,679
<EPS-PRIMARY> 50.11
<EPS-DILUTED> 50.11
<YIELD-ACTUAL> 3.72
<LOANS-NON> 1,586,774
<LOANS-PAST> 2,351,236
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,225,058
<ALLOWANCE-OPEN> 3,852,391
<CHARGE-OFFS> 257,836
<RECOVERIES> 201,392
<ALLOWANCE-CLOSE> 3,795,947
<ALLOWANCE-DOMESTIC> 3,795,947
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 914,661
</TABLE>
<PAGE> 1
EXHIBIT 99
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS OF FIRST EVERGREEN CORPORATION
MEETING DATE: APRIL 25, 1996
The Annual Meeting of Stockholders of First Evergreen Corporation ("First
Evergreen") will be held at the Evergreen Park facility of the First National
Bank of Evergreen Park located at 3101 West 95th Street in Evergreen Park,
Illinois, on Thursday, April 25, 1996 at 2:00 p.m., Central Daylight Savings
Time, for the following purposes:
1. TO ELECT A BOARD OF DIRECTORS, each Director to hold office until the
next Annual Meeting of the Stockholders and until a successor shall
be elected and shall qualify;
2. TO RATIFY THE SELECTION OF ERNST & YOUNG LLP as independent public
accountants for First Evergreen; and
3. TO TRANSACT ANY OTHER BUSINESS which properly may be brought before
the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 19, 1996 as the
record date for the determination of Stockholders entitled to notice of and a
vote at the Meeting. If you are unable to attend the Meeting in person, please
sign the enclosed proxy form and mail it promptly in the envelope provided.
By Order of the Board of Directors
Dated: March 19, 1996
/s/STEPHEN M. HALLENBECK
- ------------------------------------------
Stephen M. Hallenbeck, Secretary/Treasurer
IMPORTANT NOTICE:
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN
THE ENCLOSED PROXY IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE
MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 2
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of First Evergreen
Corporation ("First Evergreen"), a Delaware corporation, for use at the Annual
Meeting of Stockholders to be held on April 25, 1996 (the "Meeting") at 2:00
p.m., Central Daylight Savings Time, at the Evergreen Park facility of the
First National Bank of Evergreen Park, 3101 West 95th Street in Evergreen Park,
Illinois. All expenses of this solicitation will be paid by First Evergreen.
A proxy may be revoked by delivering a written notice of revocation to First
Evergreen's office or in person at the Meeting at any time prior to the voting
thereof.
Stockholders of record at the close of business on March 19, 1996 are entitled
to notice of and to vote at the Meeting. Each share of Common Stock of First
Evergreen outstanding on the record date is entitled to one vote. (See VOTING
RIGHTS) At the close of business on Tuesday, March 19, 1996, 402,685 shares of
Common Stock of First Evergreen were outstanding.
The proxy statement and the accompanying proxy are first being mailed to First
Evergreen Stockholders on or about April 1, 1996.
The proxy also may be voted with discretionary authority in any other matters
properly presented before the Meeting unless a contrary specification is made.
ANNUAL REPORT TO STOCKHOLDERS
The First Evergreen Annual Report to Stockholders will be mailed on or about
April 1, 1996.
VOTING RIGHTS
All voting rights are vested in the Stockholders of First Evergreen Common
Stock, each share being entitled to one vote. There are no cumulative voting
rights in the election of directors.
ELECTION OF DIRECTORS
At the Meeting, First Evergreen Stockholders will be asked to elect a Board of
five (5) Directors for a term extending until the 1997 Annual Meeting of First
Evergreen Stockholders, and their respective successors are elected and shall
qualify. The following individuals have been nominated for election to the
First Evergreen Board of Directors:
Alfred E. Bleeker
Jerome J. Cismoski
Stephen M. Hallenbeck
Kenneth J. Ozinga
Martin F. Ozinga
<PAGE> 3
The following table contains certain information with respect to each of the
nominees:
<TABLE>
<CAPTION>
Name, age, year became a Director of Common Stock of First Evergreen
First Evergreen or a Subsidiary Bank, beneficially owned as of
principal occupation during last five years March 19, 1996
<S> <C> <C> <C>
OTHER DIRECTORSHIPS: NUMBER OF PERCENT OF
SHARES CLASS
1. ALFRED E. BLEEKER, 87 31,606 7.85%
Director of First Evergreen or a Subsidiary
Bank since 1951; Proprietor, Bleeker's Bowling
Lanes, a bowling and restaurant establishment.
2. JEROME J. CISMOSKI, 47 4,434 (1) 1.10%
Director of First Evergreen or a Subsidiary
Bank since 1976; President, Val-A Chicago,
Inc., distributors of agricultural products.
3. STEPHEN M. HALLENBECK, 54 16,747 (2) 4.16%
Director of First Evergreen or a Subsidiary
Bank since 1979; Executive Vice President of First
National Bank of Evergreen Park (6) since 1985;
Secretary/Treasurer of First Evergreen since 1991.
4. KENNETH J. OZINGA, 44 (5) 15,377 (3) 3.82%
Director of First Evergreen or a Subsidiary
Bank since 1982; Chairman and President,
First Evergreen Corporation and First National
Bank of Evergreen Park. (6)
5. MARTIN F. OZINGA, 54 (5) 4,591 (4) 1.14%
Director of First Evergreen or a Subsidiary
Bank since 1984; Senior Vice President of First
National Bank of Evergreen Park; Director of
First National Bank of Evergreen Park since 1987. (6)
</TABLE>
(1) Includes 3,341 shares held jointly with Mr. Cismoski's wife;
159 shares held by Mr. Cismoski's wife; 375 shares held in
trust for the benefit of Mr. Cismoski; and 62 shares held by
Mr. Cismoski's minor children.
(2) Includes 3,051 shares held jointly with Mr. Hallenbeck's wife;
10,276 shares held by Mr. Hallenbeck's wife; and 3,380 shares
held by Mr. Hallenbeck's children.
(3) Includes 10,790 shares held jointly with Mr. Ozinga's wife.
(4) Includes 2,573 shares held jointly with Mr. Ozinga's wife.
(5) Messrs. Kenneth J. Ozinga and Martin F. Ozinga are cousins.
(6) First National Bank of Evergreen Park is a subsidiary bank of
First Evergreen.
<PAGE> 4
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of ten meetings
during the year ended December 31, 1995. No director attended less
than seventy-five percent of the meetings.
One director of the Company, Jerome J. Cismoski, is a member of the Internal
Audit Committee of First National Bank of Evergreen Park, the Company's sole
subsidiary. The Committee is comprised of two other non-employee subsidiary
directors and met eight times during 1995. The Audit Committee recommends
engagement of the Company's independent public accountant and is primarily
responsible for the scope and adequacy of the Company's internal control
functions.
The Board of Directors has no nominating or compensation committee or
committees performing the functions of such.
OWNERSHIP OF FIRST EVERGREEN COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth all persons known to First Evergreen to be the
beneficial owner of more than five percent of First Evergreen Common Stock as
of March 19, 1996. Beneficial ownership of securities generally means the
power to vote or dispose of securities, regardless of any economic interest.
<TABLE>
<CAPTION>
Number of Shares
and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Alfred E. Bleeker 31,606 7.85%
9514 South Springfield Avenue
Evergreen Park, Illinois 60805
Daniel Butler, Jr. 22,948 (1) 5.70%
340 Lakeland Drive
Palos Park, Illinois 60464
First National Bank of Evergreen Park 42,406 (2) 10.53%
(a subsidiary of First Evergreen)
in various fiduciary capacities
3101 West 95th Street
Evergreen Park, Illinois 60805
All directors and officers as a group 73,880 18.35%
(six persons)
</TABLE>
Notes (1) and (2) appear on the following page
<PAGE> 5
NOTES FROM PRECEDING PAGE - BENEFICIAL OWNERSHIP
(1) Includes 11,210 shares held jointly with Mr. Butler's wife,
8,051 shares held by Mr. Butler's wife, 71 shares and 259
shares held in trust for the benefit of Mr. Butler and his
wife, respectively, and 3,161 shares held by Mr. Butler's
minor children.
(2) First National Bank of Evergreen Park's Trust Department does
not exercise voting power over any of these shares. No single
beneficiary accounts for more than five percent of First
Evergreen Common Stock. Excludes 330 shares controlled by
beneficial owners herein listed.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors recommends the appointment of Ernst & Young LLP to
express an independent opinion on the financial statements, controls over
financial reporting and compliance with FDIC-designated laws and regulations of
First Evergreen in 1996. The public accounting firm of Arthur Andersen LLP has
been engaged since 1990. There have been no disagreements with Arthur Andersen
LLP on any matter of accounting principles or practices, financial statement
disclosures, or audit scope or procedure. Consequently, Arthur Andersen LLP
has not issued an adverse or qualified opinion or disclaimer of opinion. It is
anticipated that a representative of Arthur Andersen LLP will be present at the
Meeting. If present, that representative will have an opportunity to make a
statement on behalf of the accounting firm, if it desires, and will be
available to respond to appropriate questions. In the absence of contrary
directions from our stockholders, the proxies will be voted in favor of the
election of Ernst & Young LLP as independent public accountant of First
Evergreen in 1996.
PROPOSALS OF STOCKHOLDERS
Proposals of Stockholders intended to be presented at the 1997 Annual
Stockholders Meeting must be received by First Evergreen's President prior to
January 7, 1997 for inclusion in the 1997 proxy statement and form of proxy.
GENERAL
The Board of Directors knows of no other matters to be acted upon at the
Meeting. However, if any other matter is lawfully brought before the Meeting,
the shares covered by your proxy will be voted thereon in accordance with the
best judgement of the persons acting under such proxy.
First Evergreen is filing with the Securities and Exchange Commission Form 10-K
for the year ended December 31, 1995. Copies of First Evergreen's Form 10-K
will be sent to Stockholders without charge upon written request. That request
should be directed to:
Chairman
FIRST EVERGREEN CORPORATION
3101 West 95th Street
Evergreen Park, IL 60805
<PAGE> 6
PROXY
This proxy is solicited by First Evergreen Corporation ("First
Evergreen"), Evergreen Park, Illinois, for the Annual Meeting of
Stockholders of First Evergreen to be held on the 25th day of April,
1996, at 2:00 p.m. Central Daylight Savings Time, at the First
National Bank of Evergreen Park, located at 3101 West 95th Street,
Evergreen Park, Illinois.
The undersigned hereby appoints Ronald J. Homa and Robert C. Wall, with full
power of substitution and revocation, to vote all the stock of First Evergreen
owned by the undersigned and entitled to vote at the Annual Meeting of
Stockholders of First Evergreen on the 25th day of April, 1996, or any
adjournment thereof, as effectively as the undersigned could so do if
personally present.
1. Election of Directors
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list
below.)
Alfred E. Bleeker, Jerome J. Cismoski, Stephen M. Hallenbeck.
Kenneth J. Ozinga, Martin F. Ozinga
2. Proposal to approve the appointment of Ernst & Young LLP as
independent public accountants for First Evergreen.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned Stockholder. If no direction is made, this proxy will be
voted for Proposal No. 1, Proposal No. 2, and Proposal No. 3, above.
______________________________________
______________________________________
______________________________________
Dated ________________________________
Please sign exactly as your names appear on the First Evergreen stock
certificates. When signing as attorney, executor, administrator, trustee,
etc., please give full title as such.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY, USING THE ENVELOPE
PROVIDED.
