SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended
June 30, 1994
Commission File Number
1-6906
_____________________________________
FIRST SECURITY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
87-6118148
(I.R.S. Employer
Identification No.)
79 South Main, P.O. Box 30006
Salt Lake City, Utah
(Address of principal executive offices)
84130-0006
(Zip Code)
(801) 246-5706
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
As of July 31, 1994, outstanding shares of common stock were:
Common Stock, par value $1.25 - 49,177,903
(net of 684,288 treasury shares)
FIRST SECURITY CORPORATION
INDEX
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Statements of Income -
Three Months and Year-To-Date Six Months Ended
June 30, 1994 and 1993
Condensed Consolidated Balance Sheets -
June 30, 1994, December 31, 1993, and June 30, 1993
Condensed Consolidated Statements of Cash Flows -
Year-To-Date Six Months Ended
June 30, 1994 and 1993
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Supplemental Tables:
Financial Highlights, Risk-Based Capital Ratios
Mergers and Acquisitions
Loans Outstanding
Rate/Volume Analysis
Part II. Other Information
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 11. Computation of Earnings Per Share
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Periods Ended June 30, 1994 and 1993
<CAPTION>
Three Months Year-To-Date Six Months
(in thousands, except per share data; unaudited) 1994 1993 %Chg 1994 1993 %Chg
<S> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Interest Income:
Interest and fees on loans................................ $146,781 $124,908 17.5 $282,784 $247,624 14.2
Interest and dividends on investment securities:
Available for sale...................................... 26,527 NA NA 49,199 NA NA
Held to maturity........................................ 3,685 NA NA 7,185 NA NA
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Total interest and dividends on investment securities 30,212 27,264 10.8 56,384 52,923 6.5
Trading account interest.................................. 11,427 5,640 102.6 20,953 11,017 90.2
Federal funds sold and securities purchased............... 369 2,230 (83.5) 1,076 3,975 (72.9)
Interest-bearing deposits in other banks.................. 16 48 (66.7) 46 99 (53.5)
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL INTEREST INCOME 188,805 160,090 17.9 361,243 315,638 14.4
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Interest Expense:
Interest on deposits...................................... 48,701 48,476 0.5 95,894 98,150 (2.3)
Interest on short-term borrowings......................... 19,042 8,819 115.9 29,708 16,545 79.6
Interest on long-term debt................................ 4,717 3,916 20.5 9,029 6,211 45.4
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL INTEREST EXPENSE 72,460 61,211 18.4 134,631 120,906 11.4
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Net Interest Income:
NET INTEREST INCOME 116,345 98,879 17.7 226,612 194,732 16.4
Provision for loan losses................................. 343 (78) 539.7 171 1,898 (91.0)
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 116,002 98,957 17.2 226,441 192,834 17.4
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Noninterest Income:
Service charges on deposit accounts....................... 15,610 13,820 13.0 30,470 27,191 12.1
Other service charges, collections, commissions and fees.. 18,259 11,584 57.6 31,236 20,536 52.1
Commissions and fees from fiduciary activities............ 5,105 4,728 8.0 9,958 9,036 10.2
Bankcard servicing & third-party processing fees.......... 8,633 7,779 11.0 17,344 15,170 14.3
Insurance commissions and fees............................ 3,162 2,306 37.1 5,763 4,932 16.8
Other..................................................... (566) (3,636) 84.4 (2,162) 399 (641.9)
Investment securities gains............................... (247) 158 (256.3) 2 342 (99.4)
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL NONINTEREST INCOME 49,956 36,739 36.0 92,611 77,606 19.3
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL INCOME 165,958 135,696 22.3 319,052 270,440 18.0
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Noninterest Expenses:
Salaries and employee benefits............................ 54,247 42,087 28.9 103,558 85,628 20.9
Net occupancy............................................. 6,367 5,336 19.3 12,118 10,809 12.1
Furniture and equipment................................... 7,747 6,471 19.7 14,421 12,754 13.1
Insurance................................................. 6,137 4,983 23.2 11,483 9,840 16.7
Stationery and supplies................................... 3,773 3,603 4.7 7,776 6,370 22.1
Bankcard interbank discount and interchange fees.......... 3,659 3,161 15.8 7,330 5,973 22.7
Advertising............................................... 2,573 2,009 28.1 3,917 3,379 15.9
Telephone................................................. 2,808 2,272 23.6 5,258 4,201 25.2
Other real estate expense and loss provision.............. (2,495) 2,162 (215.4) (2,467) 3,119 (179.1)
Legal..................................................... 923 1,200 (23.1) 1,635 2,319 (29.5)
Other..................................................... 24,785 16,797 47.6 46,863 30,915 51.6
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL NONINTEREST EXPENSES 110,524 90,081 22.7 211,892 175,307 20.9
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
INCOME BEFORE INCOME TAX PROVISION 55,434 45,615 21.5 107,160 95,133 12.6
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Provision for Income Taxes:
Operating income.......................................... 20,309 15,864 28.0 38,782 34,605 12.1
Securities transactions................................... (95) 58 (263.8) (4) 123 (103.3)
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL PROVISION FOR INCOME TAXES 20,214 15,922 27.0 38,778 34,728 11.7
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Net Income:
NET INCOME................................................ $35,220 $29,693 18.6 $68,382 $60,405 13.2
Dividend requirement of preferred stock................... 10 11 (9.1) 20 22 (9.1)
- - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
NET INCOME APPLICABLE TO COMMON STOCK $35,210 $29,682 18.6 $68,362 $60,383 13.2
=========================================================== ========== ========== ====== ========== ========== ======
Earnings Per Common Share:
EARNINGS PER COMMON SHARE................................... $0.71 $0.62 14.5 $1.38 $1.27 8.7
=========================================================== ========== ========== ====== ========== ========== ======
Cash Dividends Paid or Accrued Per Share:
Preferred Stock ($3.15 annual rate)....................... $0.79 $0.79 $1.58 $1.58
Common stock.............................................. $0.26 $0.23 13.0 $0.52 $0.42 23.8
=========================================================== ========== ========== ====== ========== ========== ======
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31 June 30 June/June
(in thousands; unaudited) 1994 1993 1993 % Change
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Assets:
Cash and due from banks............................................... $763,432 $673,877 $586,959 30.1
Interest-bearing deposits in other banks.............................. 1,195 16,461 13,930 (91.4)
Federal funds sold, securities purchased under resale agreements...... 79,459 381,154 383,056 (79.3)
Trading account securities............................................ 725,211 607,854 318,994 127.3
Investment securites: available for sale ............................. 2,127,690 NA NA NA
Investment securities: held to maturity .............................. 268,114 NA NA NA
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Total investment securities 2,395,804 1,762,783 1,862,131 28.7
(Market values: $2,397,087; $1,794,647; $1,894,389; respectively)
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Loans, net of unearned income......................................... 7,282,550 6,561,021 5,946,520 22.5
(Unearned income: $11,696; $12,182; $12,664; respectively)
Reserve for loan losses............................................... (132,714) (134,848) (126,896) 4.6
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Total loans, net 7,149,836 6,426,173 5,819,624 22.9
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Premises and equipment, net........................................... 164,074 145,718 138,177 18.7
Accrued income receivable............................................. 65,836 52,654 55,727 18.1
Other real estate and other foreclosed assets......................... 8,387 16,465 27,181 (69.1)
Intangible assets..................................................... 160,737 11,833 13,849 1,060.6
Other assets.......................................................... 220,946 116,717 270,654 (18.4)
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL ASSETS $11,734,917 $10,211,689 $9,490,282 23.7
======================================================================= ============ ============ ============ =========
Liabilities:
Deposits:
Noninterest-bearing................................................. $1,843,559 $1,697,687 $1,524,768 20.9
Interest-bearing.................................................... 6,043,972 5,806,020 5,453,683 10.8
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Total deposits 7,887,531 7,503,707 6,978,451 13.0
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Federal funds purchased, securities sold under repurchase agreements.. 2,333,260 1,387,109 1,127,019 107.0
U.S. Treasury demand notes............................................ 23,022 43,645 31,527 (27.0)
Other short-term borrowings........................................... 55,103 56,151 22,671 143.1
Accrued income taxes.................................................. 84,359 85,837 87,177 (3.2)
Accrued interest...................................................... 19,587 17,429 17,152 14.2
Other liabilities..................................................... 161,284 57,244 211,896 (23.9)
Long-term debt........................................................ 312,005 224,836 237,895 31.2
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL LIABILITIES 10,876,151 9,375,958 8,713,788 24.8
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Stockholders' Equity:
Preferred stock: Series "A", $3.15 cumulative convertible
(13; 13; 14; shares, respectively).................................. 675 703 726 (7.0)
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Common Stockholders' Equity:
Common stock: par value $1.25
(49,859; 48,787; 46,972; shares, respectively).................... 62,323 60,983 58,715 6.1
Paid-in surplus..................................................... 136,928 122,549 103,341 32.5
Retained earnings................................................... 700,582 657,446 619,372 13.1
Net unrealized gain (loss) on securities available for sale......... (26,548) NA NA NA
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Subtotal 873,285 840,978 781,428 11.8
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Common treasury stock, at cost
(682; 350; 355; shares, respectively)............................. (15,194) (5,950) (5,660) 168.4
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL COMMON STOCKHOLDERS' EQUITY 858,091 835,028 775,768 10.6
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL STOCKHOLDERS' EQUITY 858,766 835,731 776,494 10.6
- - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,734,917 $10,211,689 $9,490,282 23.7
======================================================================= ============ ============ ============ =========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Year-To-Date Six Months Ended June 30, 1994 and 1993
Year-To-Date Six Months
(in thousands; unaudited) 1994 1993
<S> <C> <C>
- - ----------------------------------------------------------------------- ----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ($96,115) $121,476
- - ----------------------------------------------------------------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities: available for sale........ 476,399 976
Proceeds from matured investment securities: available for sale......... 288,157 NA
Proceeds from matured investment securities: held to maturity........... 61,255 NA
- - ----------------------------------------------------------------------- ----------- -----------
Total proceeds from matured investment securities 349,412 438,649
Purchases of investment securities: available for sale.................. (1,403,514) NA
Purchases of investment securities: held to maturity.................... (32,910) NA
- - ----------------------------------------------------------------------- ----------- -----------
Total purchases of investment securities (1,436,424) (519,642)
Net (increase) decrease in interest-bearing deposits in other banks..... 15,266 (3,893)
Net (increase) decrease in credit card receivables...................... 3,488 26,183
Net (increase) decrease in loans ....................................... (825,614) (486,350)
Proceeds from sales of loans............................................ 445,628 260,444
Purchases of premises and equipment..................................... (16,954) (7,214)
Purchases of assets to be leased........................................ (132,753) (55,136)
Proceeds from sales of other real estate................................ 19,807 1,321
Payments to improve other real estate................................... (1,275) (1,353)
Purchases of subsidiaries, net of cash acquired......................... (101,909) 17,863
- - ----------------------------------------------------------------------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,204,929) (328,152)
- - ----------------------------------------------------------------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits......................................... 290,677 4,280
Increase (decrease) in Federal funds purchased, securities sold under
repurchase agreements, and U.S. Treasury demand notes................. 925,528 176,539
Net change in short-term borrowings and long-term debt.................. (96,901) 106,197
Sales of treasury and common stock...................................... 5,202 3,900
Purchases of treasury stock............................................. (10,246) (936)
Cash dividends.......................................................... (25,356) (17,668)
- - ----------------------------------------------------------------------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,088,904 272,312
- - ----------------------------------------------------------------------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (212,140) 65,636
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,055,031 904,379
- - ----------------------------------------------------------------------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $842,891 $970,015
======================================================================= =========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<CAPTION>
For the Year-To-Date Six Months Ended June 30, 1994 and 1993
Year-To-Date Six Months
(in thousands, except share amounts; unaudited) 1994 1993
<S> <C> <C>
- - ----------------------------------------------------------------------- ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) for:
Interest.............................................................. $132,473 $121,784
Income taxes.......................................................... 32,122 23,070
======================================================================= =========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Conversion of preferred shares to common shares:
Preferred shares converted............................................ 544 1,078
Common shares issued.................................................. 6,597 13,087
Conversion value...................................................... $29 $57
Loans transferred to other real estate.................................. $7,257 $2,424
Securities transferred from held to maturity to available for sale in
conjunction with adoption of SFAS No. 115............................. $1,417,217 NA
Net unrealized gain (loss) on securities available for sale
(included in stockholders' equity equity)............................. $26,548 NA
Pooling-of-interests acquisitions:
Assets acquired....................................................... $75,242 $116,743
Liabilities assumed................................................... $63,680 $108,397
FSC shares issued..................................................... 842,118 765,228
Purchase acquisitions:
Fair value of assets acquired......................................... $359,519
Liabilities assumed................................................... $244,588
Cash paid for the capital stock....................................... $116,233
======================================================================= =========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
FIRST SECURITY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of First Security Corporation ("FSC")
contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly: FSC's results of operations for the three
months and the year-to-date six months in the periods ended June 30,
1994 and 1993; FSC's financial position as of June 30, 1994, December
31, 1993, and June 30, 1993; and cash flows for the year-to-date six
months in the periods ended June 30, 1994 and 1993.
2. The results of operations for the three months and the year-to-date
six month periods ended June 30, 1994 and 1993 are not necessarily
indicative of the results to be expected for the full year.
3. As required by applicable accounting rules, all historical amounts
in this report have been restated to reflect the effects of the November
19, 1993 pooling-of-interests merger with First National Financial
Corporation ("FNFC"; located in Albuquerque, New Mexico).
Financial statements and commentary incorporate fair market
valuations for balances added, as well as earnings since their
acquisition, from 11 financial institutions acquired in 1993, and three
financial institutions acquired in the year-to-date six months of 1994.
Under applicable accounting rules, those acquisitions acquired as
pooling-of-interests mergers, except FNFC, were not material to FSC's
consolidated operations, so historical amounts were not restated.
On February 18, 1994, First Security Bank of Wyoming acquired the
Evanston and Bridger Valley, Wyoming branches of Equality State Bank
(headquartered in Cheyenne, Wyoming) with approximately $31 million in
assets and $31 million in deposits in those two branches. This
acquisition was accounted for using the purchase method of accounting.
On April 29, 1994, First Security Bank of Utah, N.A. (FSB Utah)
acquired CrossLand Mortgage Acquisition Corporation (CrossLand), the
parent company of CrossLand Mortgage Corp. (not affiliated with
CrossLand Savings Bank), a 1-to-4 family residential mortgage loan
originator and servicer which has 60 offices in 18 states across the
country. This acquisition was accounted for using the purchase method
of accounting.
On May 20, 1994, FSB Utah acquired Community First Bank
(headquartered in Clearfield, Utah) with five branches, $74 million in
assets, and $62 million in deposits. This acquisition was accounted for
using the pooling-of-interests method of accounting.
On July 15, 1994, First Security Bank of Idaho, N.A. acquired
American Ban Corporation (headquartered in Boise, Idaho) with four
branches, $64 million in assets, and $51 million in deposits. This
acquisition was accounted for using the purchase method of accounting.
4. For the periods ended June 30, 1994 and 1993, per share amounts
assuming full dilution were not separately disclosed because they did
not differ significantly from primary earnings per share.
5. For purposes of reporting cash flows, cash and cash equivalents
included cash and due from banks, as well as Federal funds sold and
securities purchased under resale agreements.
6. Information as to preferred and common shares (in thousands):
June 30 December 31 June 30
1994 1993 1993
Preferred Stock Outstanding 13 13 14
Common Stock Issued 49,859 48,787 46,972
Common Treasury Stock 682 350 355
7. On January 1, 1994, FSC adopted Statement of Financial Accounting
Standards No. 112 (SFAS 112), "Employers' Accounting for Postemployment
Benefits". SFAS 112 requires the Corporation to accrue benefits to be
provided to former or inactive employees after employment but before
retirement, such as salary continuation , severance pay, or health care
benefits. The impact of SFAS 112 on FSC has not been, and is not
expected to be, material in relation to the consolidated financial
statements.
8. On January 1, 1994, FSC adopted Statement of Financial Accounting
Standards No. 115 (SFAS 115), "Accounting for Certain Investments in
Debt and Equity Securities". SFAS 115 requires the Corporation to
classify its investment portfolio securities as either held to maturity,
available for sale, or trading. Held to maturity securities are
accounted for at amortized cost; available for sale securities are
accounted for at fair value with the tax-effected unrealized gain/loss
reported as a net amount in a separate component of stockholders'
equity; and trading securities are accounted for at fair value with
unrealized gains/losses included in earnings.
The adoption of SFAS 115 on January 1, 1994 resulted in the
reclassification of $1.42 billion of investment securities as available
for sale to reflect FSC's investment-holding strategy under the new
statement, and an increase in the carrying value of such investments of
approximately $13.98 million, with corresponding increases in
stockholders' equity of approximately $8.89 million and deferred income
tax liabilities of $5.10 million.
At June 30, 1994, investment securities available for sale had a
fair value of $2.13 billion and an amortized cost basis of $2.17
billion, which included gross unrealized holding gains of $9.68 million
and gross unrealized holding losses of $51.84 million that were
recognized on a tax-effected basis as a $26.55 million net unrealized
loss on securities available for sale in stockholders' equity.
Implementation of SFAS 115 will result in additions to or
deductions from FSC's total stockholders' equity as the result of
fluctuations in fair value of investment securities available for sale.
At June 30, 1994, investment securities held to maturity had a
fair value of $269.40 million and an amortized cost basis of $268.11
million, which included gross unrealized holding gains of $4.50 million
and gross unrealized holding losses of $3.21 million or a $1.29 million
net unrealized gain on investment securities held to maturity.
# # #
PART 1. FINANCIAL INFORMATION
Item 2: Management's Discussion and Analysis of Results of Operations
and Financial Condition
ANALYSIS OF RESULTS OF OPERATIONS
First Security Corporation ("FSC") earned record net income of $35.22
million for the second quarter of 1994, an increase of $5.53 million
(18.6%) over the $29.69 million earned in the second quarter of 1993
(see Financial Statements: Condensed Consolidated Statements of Income).
This was the highest quarterly net income ever earned by FSC, and was
the fourth time in the past six quarters that FSC achieved record
earnings. The increase in net income for the second quarter of 1994 was
due primarily to the 19.0% growth in average earning assets, combined
with a lower overall average funding cost and higher noninterest income.
Net income for the second quarter of 1994 generated a 1.29% return on
average assets ("ROAA") and a 16.49% return on average equity ("ROAE"),
compared with a 1.30% ROAA and a 15.49% ROAE for the year-ago quarter.
The quarter's net income per share was $0.71, up $0.09 (14.5%) from
$0.62 one year ago.
For the 1994 year-to-date period, net income totaled $68.38 million,
up $7.98 million (13.2%) over the corresponding period in 1993. This
generated a 1.31% ROAA and a 16.12% ROAE for year-to-date 1994, compared
with a 1.36% ROAA and a 16.15% ROAE for the same period in 1993. Year-
to-date net income per share was $1.38 for 1994, up $0.11 (8.7%) from
$1.27 for the year-ago period.
FSC's financial statements have been restated to reflect the November
19, 1993 pooling-of-interests merger with First National Financial
Corporation ("FNFC") and its wholly-owned subsidiary First National Bank
in Albuquerque (renamed First Security Bank of New Mexico),
headquartered in Albuquerque, New Mexico with $1.13 billion in deposits
and 26 branches.
Net interest income on a fully-taxable equivalent ("FTE") basis rose
to $118.31 million for the second quarter of 1994, up $17.21 million
(17.0%) from the year-ago quarter, and totaled $230.54 million for year-
to-date 1994, up $30.01 million (15.0%) from the year-ago period (see
Supplemental Table: Rate / Volume Analysis). These increases were due
to the growth in average earning assets, particularly in residential
mortgage loans and consumer loans, reflecting FSC's position as the
leading consumer lender in Utah and Idaho. The FTE net interest margin
was 4.79% for the second quarter of 1994, down from 4.87% for the year-
ago quarter and 4.92% for the first quarter of 1994. This lower
quarterly net interest margin was largely the result of FSC's reliance
upon borrowed funds to support earning asset growth which exceeded
deposit growth. The FTE net interest margin was 4.85% for year-to-date
1994, down from 4.95% for the year-ago period and 4.95% for all of 1993.
This lower year-to-date net interest margin reflected decreased yields
from fixed rate mortgage and instalment loans resulting from the runoff
of older, higher yielding balances. Those pressures were partially
offset by lower average funding costs and higher yields generated from
market-rate sensitive assets.
The provision for loan losses was $343 thousand for the second
quarter of 1994, up $421 thousand from a net recovery for the year-ago
quarter, and totaled $171 thousand for year-to-date 1994, down $1.73
million (91.0%) from the year-ago period (see Section: Asset Quality -
Reserve For Loan Losses; see also Supplemental Table: Financial
Highlights - Reconciliation of the Reserve For Loan Losses). Net loans
charged off included in this provision were $2.49 million for the
quarter, up $278 thousand (12.6%) from the year-ago quarter, and totaled
$3.16 million for year-to-date 1994, down $1.55 million (32.9%) from the
year-ago period. Reflecting excellent asset quality, the ratio of net
loans charged off to average loans was a low 0.14% for the quarter, down
from 0.15% for the year-ago quarter, and was 0.09% for year-to-date
1994, down from 0.17% for the year-ago period.
Noninterest income rose to $49.96 million for the second quarter of
1994, up $13.22 million (36.0%) from the year-ago quarter, and totaled
$92.61 million for year-to-date 1994, up $15.00 million (19.3%) from the
year-ago period. These increases came largely from acquisitions and
volume-related growth in service charges on accounts, real estate loan
servicing fees, bankcard and third-party processing fees, and trust
activities.
Noninterest expenses, including all acquisitions, were $110.52
million for the second quarter of 1994, up $20.44 million (22.7%) from
the year-ago quarter, and totaled $211.89 million for year-to-date 1994,
up $36.58 million (20.9%) from the year-ago period. These increases
were impacted by both acquisitions and volume-related growth.
In the 12 months since June 30, 1993, FSC completed 10 acquisitions
(in addition to FNFC) that did not require restatement of FSC's
financial statements, thereby creating significant period-to-period
increases in noninterest expenses. These acquisitions added 17 domestic
bank offices and 60 domestic mortgage loan offices to FSC's operations
and were the primary factor behind the 22.6% rise in the number of FSC
employees. CrossLand Mortgage Acquisition Corporation ("CrossLand") and
First Security Bank of Nevada ("FSB Nevada") were the largest of these
acquisitions, with combined noninterest expenses of $14.91 million for
the second quarter of 1994 and $17.97 million for year-to-date 1994.
FSC's "core" noninterest expenses, excluding the noninterest expenses
of CrossLand and FSB Nevada, were $95.62 million for the second quarter
of 1994, up $5.54 million (6.1%) from the year-ago quarter, and totaled
$193.92 million for year-to-date 1994, up $18.61 million (10.6%) from
the year-ago period.
FSC's efficiency ratio (the ratio of noninterest expenses to the sum
of FTE net interest income and noninterest income), including all
acquisitions, was 65.68% for the second quarter of 1994, compared with
65.35% for the year-ago quarter, and 65.57% for year-to-date 1994,
compared with 63.03% for the year-ago period.
FSC's "core" efficiency ratio, excluding the total impact of
CrossLand and FSB Nevada, was 62.51% for the second quarter of 1994,
improved from 65.35% for the year-ago quarter, and 63.99% for year-to-
date 1994, compared with 63.03% for the year-ago period.
The provision for income taxes for the second quarter of 1994 was
$20.21 million on pre-tax income of $55.43 million, resulting in an
effective quarterly tax rate of 36.5% compared with 34.9% one year ago.
For year-to-date 1994, the provision for income taxes totaled $38.78
million on pre-tax income of $107.16 million, resulting in an effective
year-to-date tax rate of 36.2% compared with 36.5% for the year-ago
period.
ANALYSIS OF FINANCIAL CONDITION
As described in this and following sections, FSC continued to
increase its earning assets, strengthen its asset quality, and maintain
a strong total capital position as of June 30, 1994, as compared to both
December 31, 1993, and June 30, 1993.
FSC's total assets were a record $11.73 billion at June 30, 1994, up
$2.24 billion (23.7%) from June 30, 1993 and up $1.52 billion (14.9%)
from December 31, 1993 (see Financial Statements: Condensed Consolidated
Balance Sheets). Total earning assets were $10.48 billion at quarter
end, up $1.96 billion (23.0%) from one year ago and up $1.15 billion
(12.4%) from the year end (see Section: Interest-Earning Assets and
Asset Quality). This was due primarily to growth in the loan portfolio,
plus the positive impact of recent acquisitions, and planned corporate
growth. Loans were a record $7.28 billion at quarter end, up $1.34
billion (22.5%) from one year ago and up $722 million (11.0%) from year
end. Increases occurred in every loan category, particularly in
consumer loans and real estate secured loans.
The combined balance of interest-bearing deposits in other banks,
Federal funds sold and securities purchased under resale agreements, and
trading account securities was $805.87 million at June 30, 1994, up
$89.89 million (12.6%) from June 30, 1993, but down $199.60 million
(19.9%) from December 31, 1993. Historically, these balances have
fluctuated significantly in response to both market conditions and the
Corporation's need for funds. Fluctuations in other assets and other
liabilities are due to accounts receivable and accounts payable related
to unsettled transactions arising from the purchase and sale of
securities. Intangible assets were $160.74 million at June 30, 1994, up
$146.89 million (1,060.6%) from June 30, 1993 and up $148.90 million
(1,258.4%) from December 31, 1993. This was due to the acquisition of
CrossLand, which created $63.85 million in mortgage servicing rights and
$85.05 million in goodwill.
Total deposits were a record $7.89 billion at June 30, 1994, up $909
million (13.0%) from June 30, 1993, and up $384 million (5.1%) from
December 31, 1993. As with total assets, the increase from one year ago
was due to the positive impact of recent acquisitions and planned
corporate growth. At quarter end, total deposits consisted of:
interest-bearing deposits of $6.04 billion, up $590 million (10.8%) from
one year ago and up $238 million (4.1%) from year end; and noninterest-
bearing deposits of $1.84 billion, up $319 million (20.9%) from one year
ago and up $146 million (8.6%) from year end. The relatively high
percentage of noninterest-bearing deposits to total deposits has helped
to reduce FSC's cost of supporting its earning assets, and was 23.37% at
June 30, 1994, compared with 21.85% one year ago and 22.62% at year end.
In addition to deposits, FSC supported the growth in its earning
assets with borrowed funds and equity. Borrowed funds totaled $2.72
billion at June 30, 1994, up $1.30 billion (91.9%) from June 30, 1993,
and up $1.01 billion (59.1%) from December 31, 1993. These increases
occurred in: Federal funds purchased and securities sold under
repurchase agreements, which were $2.33 billion at quarter end, up $1.21
billion (107.0%) from one year ago and up $946 million (68.2%) from the
year end; and long-term debt, which was $312.01 million at quarter end,
up $74.11 million (31.2%) from one year ago and up $87.17 million
(38.8%) from the year end, due to advances from the Federal Home Loan
Bank to support retention of mortgage loans originated by the
Corporation.
Maintaining a strong total capital position has been and continues to
be a high priority for FSC (see Section: Capital Adequacy). Total
stockholders' equity increased to a record $858.77 million at June 30,
1994, up $82.27 million (10.6%) from June 30, 1993, and up $23.04
million (2.8%) from December 31, 1993. This growth was due primarily to
record earnings combined with the effects of acquisitions.
INTEREST-EARNING ASSETS and ASSET QUALITY
FSC borrowers reside principally in those states where the
Corporation has its banking offices (Utah, Idaho, New Mexico, Oregon,
Nevada, and Wyoming) as well as in contiguous market areas. FSC has
policies and procedures designed to mitigate credit risk and to maintain
the quality of the Corporation's loan and investment securities
portfolios. These include underwriting standards for new credits and
the continuous monitoring and reporting of asset quality and adequacy of
the reserve for loan losses.
Loans:
FSC's loan portfolio, net of unearned income but before the
reserve for loan losses, totaled a record $7.28 billion at June 30,
1994, up $1.34 billion (22.5%) from June 30, 1993 and up $722 million
(11.0%) from December 31, 1993. In comparing the various components of
the Corporation's loan portfolio at June 30, 1994, with June 30, 1993
and December 31, 1993, the following points should be noted (see
Supplemental Table: Loans Outstanding):
1. Commercial loans totaled $1.64 billion, up $169 million (11.4%)
from the year-ago quarter and up $70 million (4.5%) from year-end 1993.
This was due primarily to increases in loans made to FSC's small- and
middle-market customers.
2. Real estate secured loans totaled $2.84 billion, up $538
million (23.4%) from the year-ago quarter and up $296 million (11.6%)
from year-end 1993. This was due in large part to the CrossLand
acquisition, combined with the effects of other acquisitions and
increased retention of loans. For balance sheet management purposes,
FSC did not retain all newly-originated fixed-rate mortgage loans but
passed some through to secondary markets while retaining the majority of
the loan servicing. FSC's acquisition of CrossLand allows FSC to expand
its real estate lending activities nationwide (see Section: Mergers and
Acquisitions).
3. Consumer loans totaled $2.50 billion, up $576 million (30.0%)
from the year-ago quarter and up $330 million (15.2%) from year-end
1993. This was due primarily to growth in indirect auto loans,
reflecting FSC's position as the leading consumer lender in both Utah
and Idaho.
Problem Assets:
Problem assets were reduced to $42.18 million at June 30, 1994,
down $58.67 million (58.2%) from June 30, 1993, and down $17.79 million
(29.7%) from December 31, 1993 (see Supplemental Table: Financial
Highlights - Problem Assets and Financial Highlights - Selected Ratios).
The ratio of total problem assets to total loans and ORE was 0.58% at
quarter end, down from 1.69% one year ago and 0.91% at year end. This
decrease was due to a healthy regional economy and continued high loan
underwriting standards. Despite a general downward trend in problem
assets over the past two years, it has been FSC's experience that
economic cycles and loan-specific events beyond its control cause
cyclical fluctuations in problem assets, sometimes with little or no
warning. This has led the Corporation to take a conservative approach
in its analysis of the reserve for loan losses. As discussed below,
significant reductions were achieved in nearly all categories of problem
assets as of June 30, 1994.
Nonaccruing loans were $24.61 million at June 30, 1994, down
$39.91 million (61.9%) from June 30, 1993, and down $11.74 million
(32.3%) from December 31, 1993. Nonaccruing loans equaled 0.34% of the
loan portfolio at quarter end, down from 1.09% one year ago and 0.55% at
year end.
ORE and other foreclosed assets were $8.39 million at June 30,
1994, down $18.79 million (69.1%) from June 30, 1993, and down $8.08
million (49.1%) from December 31, 1993. ORE property values are
reviewed at least annually, and the portfolio is adjusted to the lower
of cost or fair value less estimated selling costs.
Accruing loans past due 90 days or more were $9.18 million at
quarter end, down $34 thousand (0.4%) from June 30, 1993, but up $2.03
million (28.4%) from year end.
Potential problem loans identified by FSC were $19.18 million at
June 30, 1994, down $4.45 million (18.8%) from year-end 1993. Potential
problem loans consisted primarily of commercial real estate loans and
commercial loans. These loans are less than 90 days delinquent and are
accruing. In identifiying potential problem loans, FSC considers the
repayment source, the value of the collateral, and the borrower's
ability and willingness to repay the loan. All significant additions to
problem assets had been previously identified as potential problem
loans. Meaningful comparisons of the current quarter with periods prior
to December 31, 1993 are not possible because FNFC did not identify
potential problem loans; potential problem loans excluding FSB New
Mexico and FSB Nevada were $26.36 million at June 30, 1993.
Reserve for Loan Losses:
In keeping with its philosophy of maintaining a conservative
balance sheet, particularly in the face of uncertainties in the
national/global economy and the strong economic expansion in its primary
markets, FSC continued to maintain its conservative reserve for loan
loss position. The Corporation's philosophy regarding the adequacy and
use of its reserve was discussed in detail on pages 50 through 53 of its
combined 1993 Annual Report and Form 10-K.
The reserve for loan losses was $132.71 million at June 30, 1994,
up $5.82 million (4.6%) from June 30, 1993, but down $2.13 million
(1.6%) from December 31, 1993 (see Supplemental Table: Financial
Highlights - Reconciliation of the Reserve for Loan Losses). Growth in
the reserve was less than growth in loans due to improved asset quality
and the acquisition of CrossLand which had loans held for resale which
did not need corresponding reserves. The resulting ratio of the reserve
for loan losses to total loans was 1.82% at quarter end, down from 2.13%
one year ago and 2.06% at year end. At the same time, the "coverage"
ratio (the ratio of the reserve for loan losses to nonaccruing loans)
was 539.27% on June 30, 1994, up from 196.68% one year ago and 370.93%
at year end. This increase in the reserve was mostly the result of
merger transactions which added reserves of $6.18 million during the
last 12 months and $851 thousand in the year-to-date six months.
FSC charges loan losses against the reserve for loan losses when
such losses become probable and subject to reasonable estimation. Net
loans charged off were $2.49 million for the quarter, up $278 thousand
(12.6%) from the year-ago quarter, and totaled $3.16 million for year-
to-date 1994, down $1.55 million (32.9%) from the year-ago period (see
Supplemental Table: Financial Highlights - Reconciliation of the Reserve
for Loan Losses). Net losses continued to be low due to the combined
effect of a healthy regional economy, excellent asset quality, and a
high level of recoveries on loans charged off. The ratio of net loans
charged off to average loans was a low 0.14% for the quarter, down from
0.15% for the year-ago quarter, and was 0.09% for year-to-date 1994,
down from 0.17% for the year-ago period.
STOCKHOLDERS' EQUITY and CAPITAL ADEQUACY
Maintaining a strong total capital position has been and continues to
be a high priority for FSC. Total stockholders' equity increased to a
record $858.77 million at June 30, 1994, up $82.27 million (10.6%) from
June 30, 1993, and up $23.04 million (2.8%) from December 31, 1993.
This was due primarily to record earnings combined with the effects of
acquisitions. The acquisition of CrossLand and the resulting growth in
total assets and intangible assets impacted the Corporation's equity
ratios during the second quarter of 1994. The ratio of stockholders'
equity to total assets was 7.32% at June 30, 1994, compared with 8.18%
one year ago and 8.18% at year-end 1993. For the same periods, the
ratio of tangible common equity to tangible total assets was 6.03%,
compared with 8.04% one year ago and 8.07% at year-end 1993 (see
Supplemental Table: Financial Highlights - Selected Ratios).
FSC's risk-based capital ratios at June 30, 1994, were: Tier 1 at
9.92%, compared with 11.82% at year end, and Total Capital at 12.12%,
compared with 14.15% at year end (see Supplemental Table: Financial
Highlights - Risk-Based Capital Ratios). All of FSC's equity-related
ratios exceeded the regulatory minimums, reflecting the Corporation's
long-standing emphasis on a strong total capital position. FSC and its
subsidiary banks are classed as "well-capitalized institutions"
according to the regulatory definition for risk-based capital ratios.
On January 24, 1994, FSC increased its quarterly cash dividend paid to
$0.26 per share, up $0.03 per share (13.0%) from the previous $0.23 per
share. This increased quarterly cash dividend, paid June 6, 1994 to
shareholders of record on May 20, 1994, equals an annualized dividend
rate of $1.04 per share, up $0.12 per share (13.0%) from the previous
$0.92 per year.
The continuing 1994 dividend marked the 60th consecutive year in
which the Corporation has paid cash dividends. National and state
banking and insurance regulations impose restrictions on the ability of
FSC's bank and insurance subsidiaries to transfer funds to the
Corporation in the form of loans or dividends. Such restrictions have
not had, nor are they expected to have, any effect on FSC's current
dividend policy. The Corporation's current and past record of dividend
payments should not be construed as a guarantee of similar dividend
payments in the future.
MERGERS AND ACQUISITIONS
FSC's merger and acquisition activity (See Supplemental Table: Mergers
and Acquisitions) reflects management's strategy of diversifying and
enhancing the Corporation's financial services delivery system through
the expansion and geographical diversification of its bank branch network
and nonbank activities in new and existing markets. Management believes
that long-term returns on the stockholders' investment will benefit from
these acquisitions, and will continue its strategy of acquiring solid,
well-managed financial services companies when suitable opportunities
arise.
On April 29, 1994, First Security Bank of Utah, N.A. (FSB Utah)
acquired CrossLand Mortgage Acquisition Corporation ("CrossLand"),
the parent company of CrossLand Mortgage Corp. (not affiliated
with CrossLand Savings Bank), a 1-to-4 family residential mortgage
loan originator and servicer which has 60 offices in 18 states
across the country. This acquisition was accounted for using the
purchase method of accounting.
On May 20, 1994, FSB Utah acquired Community First Bank
(headquartered in Clearfield, Utah) with five branches, $74
million in assets, and $62 million in deposits. This acquisition
was accounted for using the pooling-of-interests method of
accounting.
On July 15, 1994, First Security Bank of Idaho, N.A. acquired
American Ban Corporation (headquartered in Boise, Idaho) with four
branches, $64 million in assets, and $51 million in deposits.
This acquisition was accounted for using the purchase method of
accounting.
Currently, FSC has announced a pending purchase of Star Valley State
Bank ("Star Valley"; located in Afton, Wyoming) with one branch and $57
million in deposits. This acquisition is expected to be completed on
August 22, 1994.
NATIONAL & REGIONAL ECONOMY
Changes in monetary policy and rising interest rates dominated the
United States economic landscape and financial markets in the second
quarter. With a series of four adjustments, the Federal Reserve
increased short-term interest rates from 3.00% to 4.25%. Yields in the
nation's bond market also rose by essentially the same magnitude, thus
keeping the yield-curve spread nearly unchanged. Economic growth in the
second quarter of 1994 was 3.7% - slightly faster than the 3.3% gain
recorded in the first quarter of 1994. Job growth has improved and
should remain healthy in the second half of 1994. Financial markets
continue to evaluate future inflation potential with considerable
caution. Inflation, as measured by the broad indices, remains below
3.0%, but investors are concerned about higher commodity prices, near-
capacity utilization of resources, and the U.S. dollar's weakness in
foreign exchange markets. In the months ahead, as cyclical pressures
continue to mount, further increases in short-term interest rates will
probably occur in the marketplace.
The regional economy served by FSC remains among the fastest-growing
areas in the United States. Job growth in the second quarter continued
to be exceptionally strong, accelerating above the 1993 average. In
April, Nevada, Utah, and Idaho were the top three states in new
employment opportunities. Despite higher mortgage rates, single-family
and apartment construction and residential real estate sales experienced
significant increases during the January to May period. Consumer
confidence is strong, which, combined with a growing population, is
sustaining large gains in retail sales.
# # #
PART 1. FINANCIAL INFORMATION
Item 2. Supplemental Tables
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS
<CAPTION>
(restated, in thousands, except per share data and ratios; unaudited)
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr Year To Date Six Months
1994 1994 1993 1993 1993 1994 1993 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
Common Stock Data:
Earnings per common share....................... 0.71 0.67 0.43 0.68 0.62 1.38 1.27 8.7
Dividends paid per common share................. 0.26 0.26 0.23 0.23 0.23 0.52 0.42 23.8
Book value EOP.................................. 17.45 17.44 17.24 17.12 16.64 17.45 16.64 4.9
Market price (bid) EOP.......................... 29.00 27.75 25.75 28.00 28.25 29.00 28.25 2.7
High bid for the period....................... 31.00 29.00 30.00 28.50 30.00 31.00 30.25 2.5
Low bid for the period........................ 27.25 25.75 24.00 26.50 25.50 25.75 25.50 1.0
Market capitalization EOP: mktprice x #comshrs.. 1,426,133 1,337,994 1,247,253 1,322,804 1,316,930 1,426,133 1,316,930 8.3
Market price EOP / book value EOP............(%) 166.19 159.12 149.36 163.55 169.76 166.19 169.76
Dividend payout ratio: dividend / EPS........(%) 36.62 38.81 53.49 33.82 37.10 37.68 33.07
Dividend yield: dividend / market price......(%) 3.59 3.75 3.57 3.29 3.26 3.59 3.26
Price / earnings ratio: mktprice / 4 qtrs earn.. 11.6 11.6 10.8 10.7 14.6 11.6 14.6
Common shares outstanding: EOP.................. 49,177 48,216 48,437 47,243 46,617 49,177 46,617 5.5
Common shares outstanding: average.............. 49,845 49,478 48,969 48,147 47,829 49,662 47,473 4.6
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
Income:
Net interest income............................. 116,345 110,267 105,863 103,343 98,879 226,612 194,732 16.4
Fully-taxable equivalent (FTE) adjustment....... 1,966 1,963 2,922 (1,092) 2,221 3,929 5,803 -32.3
Net interest income, FTE........................ 118,311 112,230 108,785 102,251 101,100 230,541 200,535 15.0
Provision for loan losses....................... 343 (172) 4,647 5,139 (78) 171 1,898 -91.0
Noninterest income.............................. 49,956 42,655 46,446 43,107 36,739 92,611 77,606 19.3
Noninterest expenses............................ 110,524 101,368 116,015 94,824 90,081 211,892 175,307 20.9
Net income...................................... 35,220 33,162 21,064 32,587 29,693 68,382 60,405 13.2
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
Average Balance Sheet:
Investment securities........................... 2,270,250 2,066,065 1,713,775 1,768,370 1,932,218 2,168,722 1,844,963 17.5
Loans, net of unearned income................... 6,993,753 6,547,493 6,314,632 6,037,540 5,745,825 6,771,483 5,654,293 19.8
Reserve for loan losses......................... (134,270) (135,122) (130,881) (127,787) (128,874) (134,694) (128,258) 5.0
Total interest-earning assets................... 9,883,013 9,131,644 8,683,703 8,384,769 8,304,335 9,509,031 8,100,465 17.4
Total assets....................................10,956,238 10,060,915 9,638,743 9,301,245 9,180,421 10,511,041 8,951,113 17.4
Interest-bearing deposits....................... 6,038,334 5,859,165 5,667,076 5,510,779 5,506,463 5,949,245 5,465,002 8.9
Short-term borrowed funds....................... 1,955,541 1,360,105 1,172,030 1,125,109 1,151,294 1,659,467 1,090,317 52.2
Long-term debt.................................. 300,304 276,130 225,701 235,474 232,054 288,284 177,232 62.7
Total interest-bearing liabilities.............. 8,294,179 7,495,400 7,064,807 6,871,362 6,889,811 7,896,996 6,732,551 17.3
Total deposits.................................. 7,654,370 7,381,661 7,265,005 6,985,568 6,889,948 7,518,769 6,784,136 10.8
Stockholders' equity............................ 856,672 854,677 830,817 798,433 769,074 855,680 754,195 13.5
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
End of Period Balance Sheet:
Investment securities........................... 2,395,804 2,230,114 1,762,783 1,760,168 1,862,131 2,395,804 1,862,131 28.7
Loans, net of unearned income................... 7,282,550 6,674,067 6,561,021 6,185,830 5,946,520 7,282,550 5,946,520 22.5
Reserve for loan losses......................... (132,714) (134,216) (134,848) (130,726) (126,896) (132,714) (126,896) 4.6
Total interest-earning assets...................10,484,219 9,816,274 9,329,273 8,797,725 8,524,631 10,484,219 8,524,631 23.0
Total assets....................................11,734,917 10,745,283 10,211,689 9,725,657 9,490,282 11,734,917 9,490,282 23.7
Interest-bearing deposits....................... 6,043,972 5,953,168 5,806,020 5,523,565 5,453,683 6,043,972 5,453,683 10.8
Short-term borrowed funds....................... 2,411,385 1,848,100 1,486,905 1,289,505 1,181,217 2,411,385 1,181,217 104.1
Long-term debt.................................. 312,005 297,538 224,836 226,505 237,895 312,005 237,895 31.2
Total interest-bearing liabilities.............. 8,767,362 8,098,806 7,517,761 7,039,575 6,872,795 8,767,362 6,872,795 27.6
Total deposits.................................. 7,887,531 7,509,666 7,503,707 7,061,649 6,978,451 7,887,531 6,978,451 13.0
Stockholders' equity............................ 858,766 841,647 835,731 809,677 776,494 858,766 776,494 10.6
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
End of Period Problem Assets:
Nonaccruing loans:
Commercial.................................... 8,373 8,874 9,408 13,143 12,565 8,373 12,565 -33.4
Real estate................................... 15,394 16,603 23,817 39,181 50,584 15,394 50,584 -69.6
Consumer...................................... 203 139 546 294 281 203 281 -27.8
Direct lease financing........................ 640 895 1,484 151 300 640 300 113.3
Renegotiated.................................. 0 1,257 1,099 938 790 0 790 NA
Total nonaccruing loans......................... 24,610 27,768 36,354 53,707 64,520 24,610 64,520 -61.9
ORE and other foreclosed assets................. 8,387 14,842 16,465 23,052 27,181 8,387 27,181 -69.1
Total nonperforming assets...................... 32,997 42,610 52,819 76,759 91,701 32,997 91,701 -64.0
Accruing loans past due 90 days or more......... 9,184 10,318 7,155 8,310 9,150 9,184 9,150 0.4
Total problem assets............................ 42,181 52,928 59,974 85,069 100,851 42,181 100,851 -58.2
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
End of Period Other Data (not rounded to thousands):
Full-time equivalent employees.................. 7,427 6,420 6,318 6,259 6,059 7,427 6,059 22.6
Total domestic bank offices..................... 253 249 245 239 236 253 236 7.2
=============================================== ========== ========== ========== ========== ========== ========== ========== ======
<FN>
See Notes to Condensed Consolidated Financial Statements.
EOP: End of period.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS - Continued
<CAPTION>
(in thousands, except per share data and ratios; unaudited)
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr Year To Date Six Months
1994 1994 1993 1993 1993 1994 1993 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
Reconciliation of the Reserve for Loan Losses:
Balance, beginning of period.................... 134,216 134,848 130,726 126,896 127,329 134,848 127,847 5.5
Loans charged off:
Commercial.................................... 2,667 887 4,653 2,690 1,659 3,554 2,355 50.9
Real estate................................... 447 1,030 4,809 704 1,014 1,477 2,067 -28.5
Consumer...................................... 5,793 6,637 6,029 4,834 5,190 12,430 10,860 14.5
Direct lease financing........................ 86 37 1,310 51 30 123 105 17.1
Total loans charged off......................... 8,993 8,591 16,801 8,279 7,893 17,584 15,387 14.3
Recoveries on loans charged off:
Commercial.................................... (2,312) (3,988) (5,279) (2,150) (2,116) (6,300) (4,360) 44.5
Real estate................................... (870) (1,113) (4,214) (1,069) (764) (1,983) (1,162) 70.7
Consumer...................................... (3,050) (2,817) (2,504) (2,649) (2,777) (5,867) (5,102) 15.0
Direct lease financing........................ (271) (7) (29) (27) (24) (278) (57) 387.7
Total recoveries of loans charged off........... (6,503) (7,925) (12,026) (5,895) (5,681) (14,428) (10,681) 35.1
Net loans charged off (recovered)............... 2,490 666 4,775 2,384 2,212 3,156 4,706 -32.9
Provision for loan losses....................... 343 (172) 4,647 5,139 (78) 171 1,898 -91.0
Reserves acquired in merger transactions........ 645 206 4,250 1,075 1,857 851 1,857 -54.2
Balance, end of period.......................... 132,714 134,216 134,848 130,726 126,896 132,714 126,896 4.6
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
Net loans charged off:
Commercial.................................... 355 (3,101) (626) 540 (457) (2,746) (2,005) 37.0
Real estate................................... (423) (83) 595 (365) 250 (506) 905 -155.9
Consumer...................................... 2,743 3,820 3,525 2,185 2,413 6,563 5,758 14.0
Direct lease financing........................ (185) 30 1,281 24 6 (155) 48 -422.9
Net loans charged off........................... 2,490 666 4,775 2,384 2,212 3,156 4,706 -32.9
- - ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------
Selected Ratios (%):
Return on average assets........................ 1.29 1.34 0.87 1.39 1.30 1.31 1.36
Return on average stockholders' equity.......... 16.49 15.74 10.06 16.19 15.49 16.12 16.15
Net interest margin, FTE........................ 4.79 4.92 5.01 4.88 4.87 4.85 4.95
Net interest spread, FTE........................ 4.23 4.32 4.37 4.25 4.27 4.27 4.35
Efficiency ratio:
(nonint exp / (net int inc FTE + nonint inc)). 65.68 65.45 74.74 65.23 65.35 65.57 63.03
Productivity ratio:
(nonint exp / average assets)................. 4.05 4.09 4.78 4.04 3.94 4.07 3.95
Stockholders' equity / assets................... 7.32 7.83 8.18 8.33 8.18 7.32 8.18
Tangible common equity / tangible assets........ 6.03 7.72 8.07 8.20 8.04 6.03 8.04
Loans / deposits................................ 92.33 88.87 87.44 87.60 85.21 92.33 85.21
Loans / assets.................................. 62.06 62.11 64.25 63.60 62.66 62.06 62.66
Reserve for loan losses at quarter end to:
Total loans................................... 1.82 2.01 2.06 2.11 2.13 1.82 2.13
Nonaccruing loans............................. 539.27 483.35 370.93 243.41 196.68 539.27 196.68
Nonaccruing + accruing loans past due 90 days. 392.71 352.40 309.93 210.79 172.25 392.71 172.25
Nonaccruing loans / total loans................. 0.34 0.42 0.55 0.87 1.09 0.34 1.09
Nonaccruing + accruing loans past due 90 days
/ total loans................................. 0.46 0.57 0.66 1.00 1.24 0.46 1.24
Nonperforming assets to:
Total loans + ORE............................. 0.45 0.64 0.80 1.24 1.54 0.45 1.54
Total assets.................................. 0.28 0.40 0.52 0.79 0.97 0.28 0.97
Total equity.................................. 3.84 5.06 6.32 9.48 11.81 3.84 11.81
Total equity + reserve for loan losses........ 3.33 4.37 5.44 8.16 10.15 3.33 10.15
Problem assets to:
Total loans + ORE............................. 0.58 0.79 0.91 1.37 1.69 0.58 1.69
Total assets.................................. 0.36 0.49 0.59 0.87 1.06 0.36 1.06
Total equity.................................. 4.91 6.29 7.18 10.51 12.99 4.91 12.99
Total equity + reserve for loan losses........ 4.25 5.42 6.18 9.05 11.16 4.25 11.16
Net loans charged off / average loans........... 0.14 0.04 0.30 0.16 0.15 0.09 0.17
=============================================== ========== ========== ========== ========== ========== ========== ========== ======
Risk-Based Capital Ratios (%): Well-
As of June 30, 1994 FSC FSB FSB FSB CapitalizedRegulatory
Consolidate Utah Idaho NewMexico Institution Minimum
---------- ---------- ---------- ---------- ---------- ----------
Tier 1.......................................... 9.92 9.82 8.26 12.02 6.00 4.00
Total Capital (Tier 1 + 2)...................... 12.12 11.48 10.46 13.29 10.00 8.00
Leverage Ratio.................................. 6.78 6.48 6.44 5.91 6.00-7.00 4.00-5.00
=============================================== ========== ========== ========== ========== ========== ========== ========== ======
<FN>
See Notes to Condensed Consolidated Financial Statements.
EOP: End of period.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
MERGERS AND ACQUISITIONS
<CAPTION>
(unaudited)
Acquisition # Bank Offices Deposits
Date: Type: Acquired Institution: Home Office: Acquire: Retain: $ 000
<S> <C> <C> <C> <C> <C> <C>
- - ------ ----------------- ------------------------------------ ---------------------- -------- -------- -----------
1993:
01-Mar Purchase Fenton Insurance Agency Salt Lake City, UT - - -
01-Apr Pool-of-interests First Bancshares St. George, UT 5 5 72,910
01-May Pool-of-interests Benton County Bank Corvallis, OR 2 2 31,987
02-Aug Purchase Bank of America Arizona Deposits only, UT - - 6,753
26-Aug Pool-of-interests Desert SouthWest Community Bancorp Las Vegas, NV 1 1 43,242
02-Sep Pool-of-interests Kennevick Insurance Agency Boise, ID - - -
30-Sep Purchase Bank One of Utah Deposits only, UT - - 5,772
28-Oct Pool-of-interests State Bank of Green River Green River, WY 1 1 27,957
19-Nov Pool-of-interests First National Financial Corporation Albuquerque, NM 26 26 1,127,302
19-Nov Pool-of-interests Continental Bancorporation Las Vegas, NV 4 4 198,157
30-Nov Purchase First Professional Bank Core deposits only, UT - - 6,020
1994:
18-Feb Purchase Equality State Bank 2 branches only, WY 2 2 30,544
29-Apr Purchase CrossLand Mortgage Acquisition Corp. Salt Lake City, UT - - -
20-May Pool-of-interests Community First Bank Clearfield, UT 5 5 62,000
18-Jul Purchase American Ban Corporation Boise, ID 4 4 51,000
22-Aug Purchase Star Valley State Bank Afton, WY 1 1 56,582
- - ------ ----------------- ------------------------------------ ---------------------- -------- -------- -----------
TOTALS 51 51 $1,720,226
====== ================= ==================================== ====================== ======== ======== ===========
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
LOANS OUTSTANDING, NET OF UNEARNED INCOME
<CAPTION>
June 30, 1994 December 31, 1993 June 30, 1993 (A)
%Total %Total %Total June/June
(in thousands; unaudited) Balance Loans Balance Loans Balance Loans %Chg
<S> <C> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Loans:
Commercial / Industrial................. $1,220,464 16.7 $1,164,835 17.8 NA NA NA
Agricultural............................ 288,789 4.0 255,122 3.9 NA NA NA
Other Commercial........................ 132,646 1.8 151,443 2.3 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL COMMERCIAL LOANS 1,641,899 22.5 1,571,400 24.0 $1,473,249 24.8 11.4
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Real Estate Secured Loans:
Residential Real Estate Loans:
Term.................................. 1,383,575 19.0 1,239,395 18.9 NA NA NA
Home equity........................... 313,059 4.3 280,776 4.3 NA NA NA
Construction.......................... 165,052 2.2 147,526 2.2 NA NA NA
Construction Land..................... 12,444 0.2 13,187 0.2 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Total Residential Real Estate Loans 1,874,130 25.7 1,680,884 25.6 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Real Estate (CRE) Loans:
Term: owner occupied.................. 357,375 4.9 319,542 4.9 NA NA NA
Term: nonowner occupied............... 453,144 6.2 391,851 6.0 NA NA NA
Construction: owner occupied.......... 38,466 0.6 42,249 0.6 NA NA NA
Construction: nonowner occupied....... 58,722 0.8 37,480 0.6 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Subtotal: CRE Owner Occupied 395,841 5.5 361,791 5.5 NA NA NA
Subtotal: CRE Nonowner Occupied 511,866 7.0 429,331 6.6 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Land....................... 41,737 0.6 54,197 0.8 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Total Commercial Real Estate Loans 949,444 13.1 845,319 12.9 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Farm Land............................... 15,429 0.2 17,277 0.3 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL REAL ESTATE SECURED LOANS 2,839,003 39.0 2,543,480 38.8 2,300,833 38.7 23.4
Memo: Total RE Term Loans............... 2,559,805 35.2 2,299,393 35.1 2,138,417 36.0 19.7
Memo: Total RE Construction Loans....... 279,198 3.8 244,087 3.7 162,416 2.7 71.9
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Consumer Loans:
Auto.................................... 1,890,488 26.0 1,540,213 23.4 NA NA NA
Student................................. 111,952 1.5 110,231 1.7 NA NA NA
Credit Card Receivables................. 272,788 3.7 275,467 4.2 NA NA NA
Other Consumer.......................... 222,661 3.1 242,388 3.7 NA NA NA
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL CONSUMER LOANS 2,497,889 34.3 2,168,299 33.0 1,921,764 32.3 30.0
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Direct Lease Financing:
TOTAL DIRECT LEASE FINANCING.............. 303,759 4.2 277,842 4.2 250,674 4.2 21.2
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
LOANS, NET OF UNEARNED INCOME 7,282,550 100.0 6,561,021 100.0 5,946,520 100.0 22.5
Reserve for Loan Losses................. (132,714) (134,848) (126,896) 4.6
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL LOANS, NET $7,149,836 $6,426,173 $5,819,624 22.9
========================================= =========== ====== =========== ====== =========== ====== ========
<FN>
(A) June 30, 1993 figures have been restated to reflect the November 19, 1993 pooling-of-interests merger
with First National Financial Corp. (FNFC). Meaningful comparisons of individual loan categories with
periods prior to December 31, 1993 are not possible because FNFC's loan detail did not permit restate-
ment; only the subtotals and totals shown for the year-ago quarter have been restated to include FNFC.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
RATE / VOLUME ANALYSIS
(Fully Taxable Equivalent; in thousands; unaudited) (A)
<CAPTION>
For the Three Months Ended June 30, 1994 and 1993
Avg Balance Avg Balance Yield/Rate % Interest Inc/Exp(B) Change Changes Due To:
1994 1993 1994 1993 1994 1993 1994-93 Volume Rate(C)
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-EARNING ASSETS/INCOME:
Loans, net of unearned income and
$6,851,853 $5,613,666 8.62 8.95 deferred taxes on leases (D) $147,623 $125,596 $22,027 $27,702 ($5,675)
2,002,866 5.90 Investment securities: available for sale (E) 29,549
267,384 2.67 Investment securities: held to maturity (E) 1,782
2,270,250 1,932,218 5.52 5.96 Total investment securities (E) 31,331 28,792 2,539 5,037 (2,498)
712,980 458,436 6.41 4.93 Trading account securities 11,432 5,645 5,787 3,134 2,653
46,372 294,019 3.18 3.03 Federal funds sold & RP's purchased 369 2,230 (1,861) (1,878) 17
1,558 5,996 4.11 3.20 Interest-bearing deposits other banks 16 48 (32) (36) 4
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$9,883,013 $8,304,335 7.72 7.82 TOTAL INTEREST-EARNING ASSETS 190,771 162,311 28,460 33,959 (5,499)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES/EXPENSE:
Interest-bearing deposits:
$1,096,922 $943,087 1.68 1.87 NOW accounts 4,608 4,414 194 720 (526)
2,574,893 2,160,885 2.93 3.04 Savings accounts 18,881 16,420 2,461 3,146 (685)
422,439 369,553 4.09 4.16 Time deposits $100,000 & over 4,317 3,842 475 550 (75)
1,944,080 2,032,938 4.30 4.68 Other time deposits 20,895 23,800 (2,905) (1,040) (1,865)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
6,038,334 5,506,463 3.23 3.52 TOTAL INTEREST-BEARING DEPOSITS 48,701 48,476 225 3,376 (3,151)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
1,903,429 1,096,105 3.85 2.94 Federal funds purchased & RP's sold 18,308 8,067 10,241 5,942 4,299
52,112 55,189 5.63 5.45 Other short-term borrowings 734 752 (18) (42) 24
300,304 232,054 6.28 6.75 Long-term debt 4,717 3,916 801 1,152 (351)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$8,294,179 $6,889,811 3.49 3.55 TOTAL INTEREST-BEARING LIABILITIES 72,460 61,211 11,249 10,428 821
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
7.72 7.82 Interest income/earning assets
2.93 2.95 Interest expense/earning assets
------ ------ --------------------------------------------
4.79 4.87 Net interest income/earning assets 118,311 101,100 17,211 $23,531 ($6,320)
Less fully taxable equivalent adjust 1,966 2,221 (255)
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONSOLIDATED
STATEMENT OF INCOME $116,345 $98,879 $17,466
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<CAPTION>
For the Year-To-Date Six Months Ended June 30, 1994 and 1993
Avg Balance Avg Balance Yield/Rate % Interest Inc/Exp(B) Change Changes Due To:
1994 1993 1994 1993 1994 1993 1994-93 Volume Rate(C)
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-EARNING ASSETS/INCOME:
Loans, net of unearned income and
$6,631,518 $5,520,447 8.58 9.07 deferred taxes on leases (D) $284,397 $250,341 $34,056 $50,385 ($16,329)
1,886,149 5.66 Investment securities: available for sale (E) 53,399
282,573 3.74 Investment securities: held to maturity (E) 5,282
2,168,722 1,844,963 5.41 6.07 Total investment securities (E) 58,681 55,998 2,683 9,827 (7,144)
638,423 466,303 6.57 4.73 Trading account securities 20,972 11,028 9,944 4,071 5,873
67,930 262,795 3.17 3.03 Federal funds sold & RP's purchased 1,076 3,975 (2,899) (2,948) 49
2,438 5,957 3.77 3.32 Interest-bearing deposits other banks 46 99 (53) (58) 5
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$9,509,031 $8,100,465 7.68 7.94 TOTAL INTEREST-EARNING ASSETS 365,172 321,441 43,731 61,277 (17,546)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES/EXPENSE:
Interest-bearing deposits:
$1,076,344 $931,498 1.69 1.95 NOW accounts 9,091 9,100 (9) 1,415 (1,424)
2,529,756 2,124,400 2.92 3.11 Savings accounts 36,983 33,030 3,953 6,302 (2,349)
405,653 351,772 4.05 4.16 Time deposits $100,000 & over 8,219 7,315 904 1,120 (216)
1,937,492 2,057,332 4.29 4.73 Other time deposits 41,601 48,706 (7,105) (2,837) (4,268)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
5,949,245 5,465,002 3.22 3.59 TOTAL INTEREST-BEARING DEPOSITS 95,894 98,151 (2,257) 6,000 (8,257)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
1,608,370 1,038,935 3.53 2.93 Federal funds purchased & RP's sold 28,382 15,218 13,164 8,341 4,823
51,097 51,382 5.19 5.16 Other short-term borrowings 1,326 1,326 0 (7) 7
288,284 177,232 6.26 7.01 Long-term debt 9,029 6,211 2,818 3,892 (1,074)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$7,896,996 $6,732,551 3.41 3.59 TOTAL INTEREST-BEARING LIABILITIES 134,631 120,906 13,725 18,226 (4,501)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
7.68 7.94 Interest income/earning assets
2.83 2.99 Interest expense/earning assets
------ ------ --------------------------------------------
4.85 4.95 Net interest income/earning assets 230,541 200,535 30,006 $43,051 ($13,045)
Less fully taxable equivalent adjust 3,929 5,803 (1,874)
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONSOLIDATED
STATEMENT OF INCOME $226,612 $194,732 $31,880
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<FN>
(A): Figures have been restated where applicable to reflect the Nov. 19, 1993 pooling-of-interests merger with First National
Financial Corp..
(B): Interest and rates are presented on a fully taxable equivalent basis, calculated on federal and state taxes applicable to the
subsidiary carrying the asset. The combined tax rate was approximately 39% in 1993 and 1994.
(C): Changes not due entirely to changes in volume or rate have been allocated to rate.
(D): Loans include nonaccruing and renegotiated loans. Interest on loans includes fees of $4,786 and $3,231 for the 1994 and 1993
quarters, respectively, and $8,841 and $5,801 for the 1994 and 1993 year-to-date periods, respectively.
(E): SFAS 115 "Accounting for Certain Investments in Debt and Equity Securities" was adopted January 1, 1994; per the new accounting
requirements, detailed comparisons with prior periods are not available (NA).
</TABLE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
First Security Corporation (FSC) and its subsidiaries are subject
from time to time to various claims and legal actions filed or
threatened by customers and others arising in connection with the
Corporation's regular business activities. In all litigation filed
against it, FSC vigorously defends itself against unfounded claims, with
a concomitant cost in legal fees and expenses. Some legal actions filed
against the Corporation seek inflated damage amounts, often in an effort
to force compromise of a troubled loan transaction, and are disclosed
from time to time in filings with the SEC as required by applicable
rules. Since the filing of FSC's 1993 Annual Report and Form 10-K,
there have been no material developments in connection with pending
legal proceedings not already disclosed in previous filings with the
SEC.
Item 4. Submission of Matters to a Vote of Security Holders
At the regularly scheduled annual meeting of shareholders held on
April 25, 1994, there were 40,821,150 voting shares, or 84.4% of all
voting shares outstanding, represented at the meeting. All current
members of the Board of Directors were nominated for re-election by
Management, and all nominees listed in the proxy statement were elected
by the margins noted:
Votes Votes
Nominee: For: Against: %:
James C. Beardall 40,498,712 322,439 99.2
Rodney H. Brady 40,516,736 304,414 99.2
James E. Bruce 40,507,977 313,173 99.2
Thomas D. Dee, II 40,503,571 317,580 99.2
Spencer F. Eccles 40,499,083 322,067 99.2
Morgan J. Evans 40,521,100 300,050 99.3
David P. Gardner 40,477,636 373,515 99.1
Kendall D. Garff 40,437,696 383,454 99.0
U. Edwin Garrison 40,519,366 301,785 99.3
David B. Haight 40,373,009 447,788 98.9
Jay Dee Harris 40,458,438 362,712 99.1
Robert T. Heiner 40,452,287 368,864 99.1
Howard W. Hunter 40,340,146 481,004 98.8
Karen H. Huntsman 40,439,619 381,179 99.0
G. Frank Joklik 40,381,485 439,402 98.9
B. Z. Kastler 40,383,610 437,540 98.9
Joseph G. Maloof 40,386,342 434,809 98.9
Scott S. Parker 40,468,411 352,739 99.1
Arthur K. Smith 40,447,916 372,881 99.1
James L. Sorenson 40,291,159 529,538 98.7
Harold J. Steele 40,378,401 442,396 98.9
In addition to the election of the Board of Directors, a vote was
taken on Shareholder Proposal No. 2: "Proposed Increase in the Number of
Shares Available Under the First Security Corporation Comprehensive
Management Incentive Plan to 6,437,500 Shares, and Cap on Number of
Shares that May Be Awarded to Any Single Person Under the Plan". The
Proposal was approved as follows:
Votes Votes
Proposal: For: Against: %:
Shareholder Proposal # 2 32,298,629 5,689,109 85.0
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits:
Exhibit 11. Computation of Earnings Per Share
(b). Reports on Form 8-K:
FSC filed no reports on Form 8-K during the second quarter of
1994.
# # #
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
FIRST SECURITY CORPORATION
DATE: August 09, 1994 BY____[SIGNED]______________________________
Scott C. Ulbrich
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
# # #
EXHIBIT 11. Computation of Earnings Per Share
<TABLE>
FIRST SECURITY CORPORATION
COMPUTATION OF EARNINGS PER SHARE
For the Periods Ended June 30, 1994 and 1993
<CAPTION>
Three Months YearToDate Six Months
(in thousands, except per share amounts; unaudited) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
- - --------------------------------------------------- ---------- ---------- ---------- ----------
Net Income:
Per statement of consolidated income.............. $35,220 $29,693 $68,382 $60,405
Deduct dividend requirements of preferred stock... 10 11 20 22
- - --------------------------------------------------- ---------- ---------- ---------- ----------
Net income applicable to common stock............... 35,210 29,682 68,362 60,383
Add dividend requirements of preferred stock...... 10 11 20 22
- - --------------------------------------------------- ---------- ---------- ---------- ----------
Net income assuming full dilution................... $35,220 $29,693 $68,382 $60,405
=================================================== ========== ========== ========== ==========
Net Income Per Share:
Assuming no dilution.............................. $0.71 $0.62 $1.38 $1.28
Assuming full dilution............................ $0.71 $0.62 $1.38 $1.27
=================================================== ========== ========== ========== ==========
Average common shares outstanding:
Average common shares outstanding................. 49,344 46,895 49,095 46,536
Common stock equivalents (options)................ 1,025 1,142 1,022 1,172
Treasury shares..................................... (682) (377) (615) (407)
- - --------------------------------------------------- ---------- ---------- ---------- ----------
Assuming no dilution ............................. 49,687 47,660 49,502 47,301
Issuable assuming conversion of preferred stock... 158 169 160 172
- - --------------------------------------------------- ---------- ---------- ---------- ----------
Assuming full dilution............................ 49,845 47,829 49,662 47,473
=================================================== ========== ========== ========== ==========
Note: Per share amounts assuming full dilution were computed assuming all outstanding shares of
preferred stock were converted into common shares on the basis of 12.15 shares of common for
each share of preferred, with the elimination of dividends on the preferred stock. Common stock
equivalents are common stock options outstanding accounted for on the treasury stock method for
purposes of these calculations.
</TABLE>
