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 Commission File Number
September 30, 1994 1-6906
________________________________________________________________________
FIRST SECURITY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 87-6118148
(State of incorporation) (I.R.S. Employer Identification No.)
79 South Main, P.O. Box 30006
Salt Lake City, Utah 84130-0006
(Address of principal executive offices) (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 October 31, 1994, outstanding shares of common stock were:
Common Stock, par value $1.25 - 49,512,506
(net of 387,170 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 Nine Months Ended
September 30, 1994 and 1993
Condensed Consolidated Balance Sheets -
September 30, 1994, December 31, 1993, and September 30, 1993
Condensed Consolidated Statements of Cash Flows -
Year-To-Date Nine Months Ended
September 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 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 11. Computation of Earnings Per Share
Exhibit 27. Financial Data Schedule
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Periods Ended September 30, 1994 and 1993
<CAPTION>
Three Months Nine 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................................ $160,634 $131,058 22.6 $443,418 $378,682 17.1
Interest and dividends on investment securities:
Available for sale...................................... 29,410 NA NA 78,609 NA NA
Held to maturity........................................ 3,003 NA NA 10,188 NA NA
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Total interest and dividends on investment securities 32,413 24,584 31.8 88,797 77,507 14.6
Trading account interest.................................. 6,789 5,243 29.5 27,742 16,260 70.6
Federal funds sold and securities purchased............... 494 2,132 (76.8) 1,570 6,107 (74.3)
Interest-bearing deposits in other banks.................. 35 224 (84.4) 81 323 (74.9)
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL INTEREST INCOME 200,365 163,241 22.7 561,608 478,879 17.3
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Interest Expense:
Interest on deposits...................................... 51,447 47,485 8.3 147,341 145,635 1.2
Interest on short-term borrowings......................... 27,755 8,534 225.2 57,463 25,079 129.1
Interest on long-term debt................................ 4,627 3,879 19.3 13,656 10,090 35.3
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL INTEREST EXPENSE 83,829 59,898 40.0 218,460 180,804 20.8
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Net Interest Income:
NET INTEREST INCOME 116,536 103,343 12.8 343,148 298,075 15.1
Provision for loan losses................................. 180 5,139 (96.5) 351 7,037 (95.0)
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 116,356 98,204 18.5 342,797 291,038 17.8
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Noninterest Income:
Service charges on deposit accounts....................... 16,169 14,326 12.9 46,639 41,517 12.3
Other service charges, collections, commissions and fees.. 10,940 14,353 (23.8) 24,528 26,151 (6.2)
Bankcard servicing fees & third-party processing fees..... 7,099 8,788 (19.2) 24,443 23,958 2.0
Fiduciary (trust) commissions & fees...................... 4,854 4,675 3.8 14,812 13,711 8.0
Insurance commissions & fees.............................. 3,362 2,406 39.7 9,125 7,338 24.4
Real estate upfront fees on loans sold.................... 1,136 1,046 8.6 8,549 2,063 314.4
Real estate servicing fees on loans sold.................. 7,228 1,641 340.5 13,984 4,846 188.6
Real estate gain on sales of loans & servicing rights..... 5,768 3,299 74.8 10,757 8,200 31.2
Other..................................................... 3,660 (7,713) 147.5 (12) (7,699) 99.8
Investment securities gains............................... (42) 286 (114.7) (40) 628 (106.4)
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL NONINTEREST INCOME 60,174 43,107 39.6 152,785 120,713 26.6
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL INCOME 176,530 141,311 24.9 495,582 411,751 20.4
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Noninterest Expenses:
Salaries and employee benefits............................ 59,550 45,488 30.9 163,108 131,116 24.4
Advertising............................................... 2,328 1,825 27.6 6,245 5,204 20.0
Amortization of intangibles............................... 5,594 806 594.0 10,399 2,244 363.4
Bankcard interbank discount and interchange fees.......... 4,282 3,725 15.0 11,612 9,698 19.7
Furniture and equipment................................... 7,746 6,449 20.1 22,167 19,203 15.4
Insurance................................................. 5,929 5,231 13.3 17,412 15,071 15.5
Loan costs................................................ 7,070 1,751 303.8 11,895 4,764 149.7
Occupancy, net............................................ 6,865 4,533 51.4 18,983 15,342 23.7
Other real estate expense and loss provision.............. (667) 809 (182.4) (3,134) 3,928 (179.8)
Stationery and supplies................................... 3,940 3,911 0.7 11,716 10,281 14.0
Telephone................................................. 3,317 2,220 49.4 8,575 6,421 33.5
Other..................................................... 12,068 18,076 (33.2) 50,936 46,859 8.7
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL NONINTEREST EXPENSES 118,022 94,824 24.5 329,914 270,131 22.1
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
INCOME BEFORE INCOME TAX PROVISION 58,508 46,487 25.9 165,668 141,620 17.0
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Provision for Income Taxes:
Operating income.......................................... 21,744 13,814 57.4 60,526 48,419 25.0
Securities transactions................................... (20) 86 (123.3) (24) 209 (111.5)
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
TOTAL PROVISION FOR INCOME TAXES 21,724 13,900 56.3 60,502 48,628 24.4
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
Net Income:
NET INCOME................................................ $36,784 $32,587 12.9 $105,166 $92,992 13.1
Dividend requirement of preferred stock................... 10 10 0.0 30 32 (6.3)
- - - ----------------------------------------------------------- ---------- ---------- ------ ---------- ---------- ------
NET INCOME APPLICABLE TO COMMON STOCK $36,774 $32,577 12.9 $105,136 $92,960 13.1
=========================================================== ========== ========== ====== ========== ========== ======
Earnings Per Common Share:
EARNINGS PER COMMON SHARE................................... $0.73 $0.68 7.4 $2.11 $1.95 8.2
=========================================================== ========== ========== ====== ========== ========== ======
Cash Dividends Paid or Accrued Per Share:
Preferred Stock ($3.15 annual rate)....................... $0.79 $0.79 $2.36 $2.36
Common stock.............................................. $0.26 $0.23 13.0 $0.78 $0.65 20.0
=========================================================== ========== ========== ====== ========== ========== ======
<FN>
10-Q = See "Notes to Condensed Consolidated Financial Statements".
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31 September 30 Sept/Sept
(in thousands; unaudited) 1994 1993 1993 % Change
<S> <C> <C> <C> <C>
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Assets:
Cash and due from banks............................................... $600,192 $673,877 $628,945 (4.6)
Interest-bearing deposits in other banks.............................. 1,882 16,461 34,923 (94.6)
Federal funds sold, securities purchased under resale agreements...... 70,109 381,154 288,221 (75.7)
Trading account securities............................................ 398,087 607,854 528,583 (24.7)
Investment securites: available for sale.............................. 2,087,639 NA NA NA
Investment securities: held to maturity............................... 260,485 NA NA NA
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Total investment securities 2,348,124 1,762,783 1,760,168 33.4
(Market values: $2,347,984; $1,794,647; $1,374,525; respectively)
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Loans, net of unearned income......................................... 7,745,350 6,561,021 6,185,830 25.2
(Unearned income: $8,600; $12,182; $12,387; respectively)
Reserve for loan losses............................................... (134,653) (134,848) (130,726) 3.0
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Total loans, net 7,610,697 6,426,173 6,055,104 25.7
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Premises and equipment, net........................................... 176,638 145,718 141,808 24.6
Accrued income receivable............................................. 75,633 52,654 52,909 42.9
Other real estate and other foreclosed assets......................... 3,148 16,465 23,052 (86.3)
Intangible assets..................................................... 171,583 11,833 13,009 1,219.0
Other assets.......................................................... 148,796 116,717 198,935 (25.2)
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL ASSETS $11,604,889 $10,211,689 $9,725,657 19.3
======================================================================= ============ ============ ============ =========
Liabilities:
Deposits: noninterest-bearing......................................... $1,734,255 $1,697,687 $1,538,084 12.8
Deposits: Interest-bearing............................................ 6,201,229 5,806,020 5,523,565 12.3
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Total deposits 7,935,484 7,503,707 7,061,649 12.4
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Federal funds purchased, securities sold under repurchase agreements.. 2,210,389 1,387,109 1,230,943 79.6
U.S. Treasury demand notes............................................ 21,350 43,645 26,544 (19.6)
Other short-term borrowings........................................... 66,362 56,151 32,018 107.3
Accrued income taxes.................................................. 81,870 85,837 88,466 (7.5)
Accrued interest...................................................... 17,951 17,429 13,592 32.1
Other liabilities..................................................... 93,036 57,244 236,263 (60.6)
Long-term debt........................................................ 292,058 224,836 226,505 28.9
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL LIABILITIES 10,718,500 9,375,958 8,915,980 20.2
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Stockholders' Equity:
Preferred stock: Series "A", $3.15 cumulative convertible
(Shares outstanding: 13; 13; 14; respectively)...................... 668 703 711 (6.0)
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Common Stockholders' Equity:
Common stock: par value $1.25
(Shares outstanding: 49,533; 48,787; 47,243; respectively)........ 62,368 60,983 59,503 4.8
Paid-in surplus..................................................... 140,880 122,549 111,750 26.1
Retained earnings................................................... 724,474 657,446 643,486 12.6
Net unrealized gain (loss) on securities available for sale......... (33,499) NA NA NA
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Subtotal 894,223 840,978 814,739 9.8
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
Common treasury stock, at cost
(Shares: 361; 350; 359; respectively)............................ (8,502) (5,950) (5,773) 47.3
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL COMMON STOCKHOLDERS' EQUITY 885,721 835,028 808,966 9.5
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL STOCKHOLDERS' EQUITY 886,389 835,731 809,677 9.5
- - - ----------------------------------------------------------------------- ------------ ------------ ------------ ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,604,889 $10,211,689 $9,725,657 19.3
======================================================================= ============ ============ ============ =========
<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 Nine Months Ended September 30, 1994 and 1993
Year-To-Date Nine Months
(in thousands; unaudited) 1994 1993
<S> <C> <C>
- - - ----------------------------------------------------------------------- ----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $254,177 $46,437
- - - ----------------------------------------------------------------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities: available for sale........ 601,505 976
Proceeds from matured investment securities: available for sale......... 395,583 NA
Proceeds from matured investment securities: held to maturity........... 75,718 NA
- - - ----------------------------------------------------------------------- ----------- -----------
Total proceeds from matured investment securities 471,301 673,403
Purchases of investment securities: available for sale.................. (1,561,057) NA
Purchases of investment securities: held to maturity.................... (64,511) NA
- - - ----------------------------------------------------------------------- ----------- -----------
Total purchases of investment securities (1,625,568) (645,550)
Net (increase) decrease in interest-bearing deposits in other banks..... 14,579 (24,887)
Net (increase) decrease in credit card receivables...................... 2,708 22,564
Net (increase) decrease in loans ....................................... (1,344,114) (1,065,993)
Proceeds from sales of loans............................................ 586,226 663,759
Purchases of premises and equipment..................................... (24,778) (12,663)
Purchases of assets to be leased........................................ (139,305) (60,278)
Proceeds from sales of other real estate................................ 30,248 8,054
Payments to improve other real estate................................... (1,614) (2,676)
Purchases of subsidiaries, net of cash acquired......................... (70,507) 23,489
- - - ----------------------------------------------------------------------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,499,319) (419,802)
- - - ----------------------------------------------------------------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits......................................... 229,786 44,600
Increase (decrease) in Federal funds purchased, securities sold under
repurchase agreements, and U.S. Treasury demand notes................. 800,985 275,480
Net change in short-term borrowings and long-term debt.................. (122,873) 88,790
Sales of treasury and common stock...................................... 7,930 5,840
Purchases of treasury stock............................................. (17,168) (1,048)
Cash dividends.......................................................... (38,248) (27,510)
- - - ----------------------------------------------------------------------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 860,412 386,152
- - - ----------------------------------------------------------------------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (384,730) 12,787
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,055,031 904,379
- - - ----------------------------------------------------------------------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $670,301 $917,166
======================================================================= =========== ===========
<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 Nine Months Ended September 30, 1994 and 1993
Year-To-Date Nine Months
(in thousands, except share amounts; unaudited) 1994 1993
<S> <C> <C>
- - - ----------------------------------------------------------------------- ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) for:
Interest.............................................................. $217,938 $185,242
Income taxes.......................................................... 52,922 32,973
======================================================================= =========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Conversion of preferred shares to common shares:
Preferred shares converted............................................ 682 1,369
Common shares issued.................................................. 8,268 16,616
Conversion value...................................................... $36 $72
Loans transferred to other real estate.................................. $11,191 $7,298
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)............................. ($33,499) NA
Pooling-of-interests acquisitions:
Assets acquired....................................................... $75,242 $166,441
Liabilities assumed................................................... 63,680 152,319
FSC shares issued..................................................... 842,066 1,196,646
Purchase acquisitions:
Fair value of assets acquired......................................... $490,819 $12,724
Liabilities assumed................................................... 359,167 12,525
Cash paid for the capital stock....................................... 116,233 199
FSC shares issued..................................................... 479,995 0
======================================================================= =========== ===========
<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 nine months in the periods ended September
30, 1994 and 1993; FSC's financial position as of September 30, 1994,
December 31, 1993, and September 30, 1993; and cash flows for the year-
to-date nine months in the periods ended September 30, 1994 and 1993.
2. The results of operations for the three months and the year-to-date
nine month periods ended September 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 acquisitions completed in 1993, and five
acquisitions completed in the year-to-date nine 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 ("FSB
Wyoming") acquired the Evanston and Bridger Valley, Wyoming branches of
Equality State Bank (headquartered in Cheyenne, Wyoming) with $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 had 60 offices in 18 states across the
country and $330 million in assets. 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, $75 million in
assets, and $63 million in deposits. This acquisition was accounted for
using the pooling-of-interests method of accounting.
On July 18, 1994, First Security Bank of Idaho, N.A. ("FSB Idaho")
acquired American Ban Corporation (headquartered in Boise, Idaho) and
its subsidiary American Bank of Commerce with four branches, $63 million
in assets, and $51 million in deposits. This acquisition was accounted
for using the purchase method of accounting.
On August 23, 1994, FSB Wyoming acquired Star Valley State Bank
(headquartered in Afton, Wyoming) with two branches, $66 million in
assets, and $58 million in deposits. This stock acquisition was
accounted for using the purchase method of accounting.
4. For the periods ended September 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):
September 30 December 31 September 30
1994 1993 1993
Preferred Stock Outstanding 13 13 14
Common Stock Issued 49,533 48,787 47,243
Common Treasury Stock 361 350 359
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 debt and equity 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 September 30, 1994, investment securities available for sale
had a fair value of $2.09 billion and an amortized cost basis of $2.14
billion, which included gross unrealized holding gains of $7.33 million
and gross unrealized holding losses of $60.56 million that were
recognized in stockholders' equity on a tax-effected basis as a $33.50
million net unrealized loss on securities available for sale.
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 September 30, 1994, investment securities held to maturity had
a fair value of $260.35 million and an amortized cost basis of $260.49
million, which included gross unrealized holding gains of $3.68 million
and gross unrealized holding losses of $3.82 million or a $140 thousand
net unrealized loss on investment securities held to maturity.
9. The acquisition of CrossLand on April 29, 1994, created intangible
assets for FSC of: $63.85 million in mortgage servicing rights, which is
being amortized over the expected life of the loans serviced; and $85.05
million in goodwill, which is being amortized on a straight line basis
over a 15 year period.
10. Subsequent to September 30, 1994, FSC and two of its subsidiaries,
FSB Utah and FSB Idaho have issued additional debt instruments for
general funding purposes. On October 3, 1994, FSB Utah issued $71
million of 7.190% Bank Notes due October 3, 1997. Then on October 4,
1994, FSB Idaho issued $50 million of Bank Notes while FSB Utah issued
an additional $24 million of Bank Notes; both issuances were priced at
6.880% and are due October 4, 1996. On October 18, 1994, the
Corporation issued $100 million of 7.875% Senior Notes due October 15,
1999.
# # #
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 $36.78
million for the third quarter of 1994, an increase of $4.20 million
(12.9%) over the $32.59 million earned in the third quarter of 1993 (see
Financial Statements "Condensed Consolidated Statements of Income").
These earnings generated a 1.26% return on average assets ("ROAA") and a
16.74% return on average equity ("ROAE"), compared with a 1.39% ROAA and
a 16.19% ROAE for the year-ago quarter. The quarter's net income per
share was $0.73, up $0.05 (7.4%) from $0.68 one year ago.
The increase in net income for the third quarter of 1994 was due
primarily to the 24.4% growth in average earning assets, combined with
higher noninterest income.
Net income totaled $105.17 million for year-to-date 1994, up $12.17
million (13.1%) over the corresponding year-to-date period in 1993.
These earnings generated a 1.29% ROAA and a 16.33% ROAE for year-to-date
1994, compared with a 1.37% ROAA and a 16.17% ROAE for the same period
in 1993. Year-to-date net income per share was $2.11 for 1994, up $0.16
(8.2%) from $1.95 for the year-ago period.
FSC's financial statements for prior years 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.
Net Interest Income
Net interest income on a fully-taxable equivalent ("FTE") basis rose
to $118.54 million for the third quarter of 1994, up $16.29 million
(15.9%) from the year-ago quarter, and totaled $349.08 million for year-
to-date 1994, up $46.29 million (15.3%) from the year-ago period (see
also Supplemental Table "Rate / Volume Analysis"). The FTE net interest
margin was 4.55% for the third quarter of 1994, down from 4.88% for the
year-ago quarter, and was 4.74% for year-to-date 1994, down from 4.93%
for the year-ago period and 4.95% for all of 1993. The lower quarterly
and year-to-date FTE net interest margins reflected FSC's reliance on
interest-bearing funds, specifically borrowed funds, to support earning
asset growth which exceeded deposit growth.
Provision for Loan Losses
The provision for loan losses was $180 thousand for the third quarter
of 1994, down $4.96 million (96.5%) from the year-ago quarter, and
totaled $351 thousand for year-to-date 1994, down $6.69 million (95.0%)
from the year-ago period (see also MDA 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 $576 thousand for the quarter, down
$1.81 million (75.8%) from the year-ago quarter, and totaled $3.73
million for year-to-date 1994, down $3.36 million (47.4%) from the year-
ago period. Reflecting excellent overall asset quality, the ratio of
net loan chargeoffs to average loans was an extremely low 0.03% for the
quarter, down from 0.16% for the year-ago quarter, and was 0.07% for
year-to-date 1994, down from 0.16% for the year-ago period.
Noninterest Income and Noninterest Expense
FSC's noninterest income and expenses have been impacted by recent
acquisitions (see also Supplemental Table "Mergers and Acquisitions").
Since September 30, 1993, FSC has completed 8 acquisitions (in addition
to FNFC) that did not require restatement of FSC's historic financial
statements, thereby creating significant period-to-period increases in
both noninterest income and noninterest expenses and thereby making
prior period comparisons difficult. These acquisitions added 18
domestic bank offices and 60 domestic mortgage loan offices to FSC's
operations and were the primary factor behind the 19.8% rise in the
number of FSC employees.
FSC is concerned by the recent performance in the mortgage banking
industry. While year-to-date loan originations in the Corporation's
bank subsidiaries have remained strong, originations nationally for
FSC's newly acquired mortgage banking subsidiary, CrossLand Mortgage
Acquisition Corp. ("CrossLand"), were down over 34% from record
originations in the year-ago period, making it very unlikely that
CrossLand will be neutral to earnings per share in 1994.
Noninterest income, including all acquisitions, rose to $60.17
million for the third quarter of 1994, up $17.07 million (39.6%) from
the year-ago quarter, and totaled $152.79 million for year-to-date 1994,
up $32.07 million (26.6%) from the year-ago period. These increases
came largely from volume-related growth in real estate loan origination
and servicing fees, service charges on accounts, and other service
charges, and from acquisitions. The acquisition of CrossLand Mortgage
Acquisition Corp. ("CrossLand") was largely responsible for the increase
in noninterest income from real estate lending activities.
Noninterest expenses, including all acquisitions, were $118.02
million for the third quarter of 1994, up $23.20 million (24.5%) from
the year-ago quarter, and totaled $329.91 million for year-to-date 1994,
up $59.78 million (22.1%) from the year-ago period. These increases
were impacted by both volume-related growth and acquisitions.
FSC's noninterest expenses, excluding the noninterest expenses of
certain acquisitions not restated for, were $98.33 million for the third
quarter of 1994, up $3.51 million (3.7%) from the year-ago quarter, and
totaled $292.77 million for year-to-date 1994, up $22.64 million (8.4%)
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 66.04% for the third quarter of 1994, compared with
65.23% for the year-ago quarter, and 65.74% for year-to-date 1994,
compared with 63.79% for the year-ago period.
FSC's efficiency ratio, excluding the total impact of certain
acquisitions not restated for, was 61.63% for the third quarter of 1994,
improved from 65.23% for the year-ago quarter, and 63.29% for year-to-
date 1994, improved from 63.95% for the year-ago period.
Provision for Income Taxes
The provision for income taxes was $21.72 million on pre-tax income
of $58.51 million for the third quarter of 1994, resulting in an
effective quarterly tax rate of 37.1% compared with 29.9% one year ago.
The provision for income taxes totaled $60.50 million on pre-tax income
of $165.67 million for year-to-date 1994, resulting in an effective
year-to-date tax rate of 36.5% compared with 34.3% 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
its well-capitalized position as of September 30, 1994, as compared to
both December 31, 1993, and September 30, 1993 (see Financial Statements
"Condensed Consolidated Balance Sheets").
Assets
FSC's assets totaled $11.60 billion at September 30, 1994, up $1.88
billion (19.3%) from September 30, 1993 and up $1.39 billion (13.6%)
from December 31, 1993. Total earning assets were $10.56 billion at
quarter end, up $1.77 billion (20.1%) from one year ago and up $1.23
billion (13.2%) from the year end (see also MDA section "Interest-
Earning Assets and Asset Quality"). This increase was due primarily to
growth in the loan portfolio, plus the positive impact of recent
acquisitions, and planned corporate growth. Loans were $7.75 billion at
quarter end, up $1.56 billion (25.2%) from one year ago and up $1.18
billion (18.1%) from year end. Increases occurred in every loan
category, particularly in consumer loans, real estate secured loans, and
commercial 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 $470.08 million at September 30, 1994,
down $381.65 million (44.8%) from September 30, 1993, and down $535.39
million (53.2%) from December 31, 1993. Historically, these balances
have fluctuated significantly in response to both market conditions and
the Corporation's need for funds. The increases in premises and
equipment are due to acquisitions, while 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 $171.58 million at September
30, 1994, up $158.57 million (1,219.0%) from September 30, 1993 and up
$159.75 million (1,350.0%) from December 31, 1993. This increase was
due primarily to the acquisition of CrossLand, which created $63.85
million in mortgage servicing rights and $85.05 million in goodwill.
Liabilities and Stockholders' Equity
FSC's deposits totaled $7.94 billion at September 30, 1994, up $874
million (12.4%) from September 30, 1993, and up $432 million (5.8%) 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 $6.20 billion, up $678 million (12.3%) from
one year ago and up $395 million (6.8%) from year end; and noninterest-
bearing deposits of $1.73 billion, up $196 million (12.8%) from one year
ago and up $37 million (2.2%) from year end.
In addition to deposits, FSC supported the growth in its earning
assets with borrowed funds and equity. Borrowed funds, which included
Federal funds purchased and securities sold under repurchase agreements
and long-term debt, totaled $2.59 billion at September 30, 1994, up
$1.07 billion (70.9%) from September 30, 1993, and up $878 million
(51.3%) from December 31, 1993. Federal funds purchased and securities
sold under repurchase agreements were $2.21 billion at quarter end, up
$979 million (79.6%) from one year ago and up $823 million (59.4%) from
the year end. Long-term debt, net of $21.36 million of current
maturities of long-term debt reclassed from long-term debt to other
short-term borrowing, was $292.06 million at quarter end, up $65.55
million (28.9%) from one year ago and up $67.22 million (29.9%) from the
year end, due to advances from the Federal Home Loan Bank to support
retention of mortgage loans originated by the Corporation.
Subsequent to September 30, 1994, FSC and two of its subsidiaries,
First Security Bank of Utah, N.A. ("FSB Utah") and First Security Bank
of Idaho, N.A. ("FSB Idaho") have issued additional debt instruments for
general funding purposes. On October 3, 1994, FSB Utah issued $71
million of 7.190% Bank Notes due October 3, 1997. Then on October 4,
1994, FSB Idaho issued $50 million of Bank Notes while FSB Utah issued
an additional $24 million of Bank Notes; both issuances were priced at
6.880% and are due October 4, 1996. On October 18, 1994, the
Corporation issued $100 million of 7.875% Senior Notes due October 15,
1999.
Maintaining a well-capitalized position continues to be a high
priority for FSC (see also MDA section "Stockholders' Equity and Capital
Adequacy"). Total stockholders' equity increased to a record $886.39
million at September 30, 1994, up $76.71 million (9.5%) from September
30, 1993, and up $50.66 million (6.1%) 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 $7.75 billion at September 30, 1994, up $1.56
billion (25.2%) from September 30, 1993 and up $1.18 billion (18.1%)
from December 31, 1993 (see Financial Statements "Condensed Consolidated
Balance Sheets"; see also Supplemental Table "Loans Outstanding"). In
comparing the various components of the Corporation's loan portfolio at
September 30, 1994, with September 30, 1993 and December 31, 1993, the
following points should be noted:
1. Commercial loans totaled $1.73 billion, up $281 million (19.4%)
from the year-ago quarter and up $162 million (10.3%) from year-end
1993. This growth was due primarily to increases in loans made to FSC's
small- and middle-market customers.
2. Real estate secured loans totaled $2.98 billion, up $576 million
(23.9%) from the year-ago quarter and up $441 million (17.3%) from year-
end 1993. This growth was due in large part to increased retention of
loans, which were primarily adjustable-rate mortgages, combined with the
CrossLand acquisition and the effects of other acquisitions. For
balance sheet management purposes, FSC did not retain all newly-
originated fixed-rate mortgage loans but sold the majority, including
servicing, to secondary markets.
3. Consumer loans totaled $2.71 billion, up $648 million (31.4%) from
the year-ago quarter and up $542 million (25.0%) from year-end 1993.
This increase was due primarily to growth in indirect auto loans,
reflecting FSC's position as the leading consumer lender in FSC's
primary market area.
Problem Assets
Problem assets were reduced to $32.65 million at September 30, 1994,
down $52.42 million (61.6%) from September 30, 1993, and down $27.33
million (45.6%) from December 31, 1993 (see also Supplemental Table
"Financial Highlights - Problem Assets" and "Financial Highlights -
Selected Ratios"). The ratio of total problem assets to total loans and
ORE was 0.42% at quarter end, down from 1.37% 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 September 30, 1994.
Nonaccruing loans were $20.23 million at September 30, 1994, down
$33.48 million (62.3%) from September 30, 1993, and down $16.12 million
(44.3%) from December 31, 1993. Nonaccruing loans equaled 0.26% of the
loan portfolio at quarter end, down from 0.87% one year ago and 0.55% at
year end.
ORE and other foreclosed assets were $3.15 million at September 30,
1994, down $19.90 million (86.3%) from September 30, 1993, and down
$13.32 million (80.9%) from December 31, 1993, due to the resolution of
older problem assets. 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 $9.27 million at
September 30, 1994, up $955 thousand (11.5%) from September 30, 1993,
and up $2.11 million (29.5%) from December 31, 1993.
Potential problem loans identified by FSC were $20.86 million at
September 30, 1994, up $1.23 million (6.3%) from $19.63 at September 30,
1993, but down $3.91 million (15.8%) from $24.77 at December 31, 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 $19.63 million at September 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 $134.65 million at September 30,
1994, up $3.93 million (3.0%) from September 30, 1993, but down $195
thousand (0.1%) from December 31, 1993 (see also 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 1.74% at quarter end,
down from 2.11% 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 665.54% on September 30, 1994, up from 243.41%
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 $7.44
million during the last 12 months and $3.19 million in the year-to-date
nine 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 $576 thousand for the quarter, down $1.81 million
(75.8%) from the year-ago quarter, and totaled $3.73 million for year-
to-date 1994, down $3.36 million (47.4%) from the year-ago period (see
also 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. Reflecting
excellent asset quality, the ratio of net loan chargeoffs to average
loans was an extremely low 0.03% for the quarter, down from 0.16% for
the year-ago quarter, and was 0.07% for year-to-date 1994, down from
0.16% for the year-ago period.
STOCKHOLDERS' EQUITY and CAPITAL ADEQUACY
Maintaining a well-capitalized position continues to be a high
priority for FSC. Total stockholders' equity increased to a record
$886.39 million at September 30, 1994, up $76.71 million (9.5%) from
September 30, 1993, and up $50.66 million (6.1%) from December 31, 1993.
This growth 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 third quarter of 1994. The ratio of
stockholders' equity to total assets was 7.64% at September 30, 1994,
compared with 8.33% 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 6.25%, compared with 8.20% one year ago and 8.07% at year-end
1993 (see also Supplemental Table "Financial Highlights - Selected
Ratios").
FSC's risk-based capital ratios at September 30, 1994, were: Tier 1
at 9.79%, compared with 11.82% at year end; and Total Capital at 11.96%,
compared with 14.15% at year end (see also Supplemental Table "Financial
Highlights - Risk-Based Capital Ratios"). The decrease in the
Corporation's risk-based capital ratios was due primarily to corporate
growth and the additional intangible assets created with the CrossLand
acquisition. All of FSC's equity-related ratios exceeded the regulatory
minimums, reflecting the Corporation's long-standing emphasis on a well-
capitalized 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. The quarterly cash dividend of $0.26, paid September 6, 1994
to shareholders of record on August 23, 1994, equaled 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 dividends 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 July 18, 1994, FSB Idaho acquired American Ban Corporation
(headquartered in Boise, Idaho), and its subsidiary American Bank of
Commerce with four branches, $63 million in assets, and $51 million in
deposits. This acquisition was accounted for using the purchase method
of accounting.
On August 23, 1994, First Security Bank of Wyoming acquired Star
Valley State Bank (headquartered in Afton, Wyoming) with two branches,
$66 million in assets, and $58 million in deposits. This stock
acquisition was accounted for using the purchase method of accounting.
NATIONAL AND REGIONAL ECONOMY
The prospect of above 3% U.S. economic growth persisting well into 1995
bodes well for additional job expansion and production increases. It
also means higher interest rates, with inflation functioning as the
connecting link.
The factory sector in the U.S. economy is operating near full
capacity, and the nation's labor resources, including skilled and in
many cases even semi-skilled labor, have reached full employment. This
favorable economic growth environment is the typical lagged response to
the stimulative monetary policy and the very low interest rates of 1992
and 1993. While interest rates have increased over the past nine months
and some segments of real estate finance have slowed, the overall
economy has not been seriously impacted.
As the economy reaches and perhaps exceeds normal full capacity, the
predictable result is rising costs and higher inflation. The Federal
Reserve, appropriately committed to minimizing inflation, is thus
pushing interest rates higher. That whole process is ongoing and will
most likely extend into 1995.
The Intermountain states remain the fastest-growing region in the
nation. Higher mortgage rates may be dampening the pace of residential
construction growth, but that will probably be offset by additional
expansion in commercial and industrial construction. Overall, the
economic outlook for the Intermountain Region continues to be highly
favorable.
# # #
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS
<CAPTION>
(restated, in thousands, except per share data and ratios; unaudited)
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr Year To Date Nine Months
1994 1994 1994 1993 1993 1994 1993 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Common Stock Data:
Earnings per common share..................... 0.73 0.71 0.67 0.43 0.68 2.11 1.95 8.2
Dividends paid per common share............... 0.26 0.26 0.26 0.23 0.23 0.78 0.65 20.0
Book value EOP................................ 17.88 17.45 17.44 17.24 17.12 17.88 17.12 4.4
Tangible book value EOP....................... 14.42 14.18 17.18 17.00 16.85 14.42 16.85 (14.4)
Market price (bid) EOP........................ 28.50 29.00 27.75 25.75 28.00 28.50 28.00 1.8
High bid for the period..................... 32.00 31.00 29.00 30.00 28.50 32.00 30.25 5.8
Low bid for the period...................... 27.75 27.25 25.75 24.00 26.50 25.75 25.50 1.0
Market capitalization EOP: mktprice x #comshrs 1,411,691 1,426,133 1,337,994 1,247,253 1,322,804 1,411,691 1,322,804 6.7
Market price EOP / book value EOP..........(%) 159.40 166.19 159.12 149.36 163.55 159.40 163.55
Dividend payout ratio: dividend / EPS......(%) 35.62 36.62 38.81 53.49 33.82 36.97 33.33
Dividend yield: dividend / market price....(%) 3.65 3.59 3.75 3.57 3.29 3.65 3.29
Price / earnings ratio: mktprice / 4 qtrs earn 11.2 11.6 11.6 10.8 10.7 11.2 10.7
Common shares outstanding: EOP................ 49,533 49,177 48,216 48,437 47,243 49,533 47,243 4.8
Common shares outstanding: average............ 50,505 49,845 49,478 48,969 48,147 49,946 47,700 4.7
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Income:
Net interest income........................... 116,536 116,345 110,267 105,863 103,343 343,148 298,075 15.1
Fully-taxable equivalent (FTE) adjustment..... 2,002 1,966 1,963 2,922 (1,092) 5,931 4,711 25.9
Net interest income, FTE...................... 118,538 118,311 112,230 108,785 102,251 349,079 302,786 15.3
Provision for loan losses..................... 180 343 (172) 4,647 5,139 351 7,037 (95.0)
Noninterest income............................ 60,174 49,956 42,655 46,446 43,107 152,785 120,713 26.6
Noninterest expenses.......................... 118,022 110,524 101,368 116,015 94,824 329,914 270,131 22.1
Net income.................................... 36,784 35,220 33,162 21,064 32,587 105,166 92,992 13.1
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Balance Sheet - Average:
Investment securities......................... 2,372,101 2,270,250 2,066,065 1,713,775 1,768,370 2,237,260 1,819,151 23.0
Loans, net of unearned income................. 7,489,686 6,993,753 6,547,493 6,314,632 6,037,540 7,013,515 5,748,092 22.0
Reserve for loan losses....................... (134,492) (134,270) (135,122) (130,881) (127,787) (134,626) (128,100) 5.1
Total interest-earning assets.................10,427,360 9,883,013 9,131,644 8,683,703 8,384,769 9,818,505 8,196,920 19.8
Total assets..................................11,589,745 10,956,238 10,060,915 9,638,743 9,301,245 10,874,327 9,071,202 19.9
Interest-bearing deposits..................... 6,175,251 6,038,334 5,859,165 5,667,076 5,510,779 6,025,408 5,480,428 9.9
Short-term borrowed funds..................... 2,388,601 1,955,541 1,360,105 1,172,030 1,125,109 1,905,183 1,104,138 72.5
Long-term debt................................ 306,808 300,304 276,130 225,701 235,474 294,526 196,859 49.6
Total interest-bearing liabilities............ 8,870,660 8,294,179 7,495,400 7,064,807 6,871,362 8,225,117 6,781,425 21.3
Total deposits................................ 7,816,292 7,654,370 7,381,661 7,265,005 6,985,568 7,618,777 6,852,018 11.2
Stockholders' equity.......................... 872,004 856,672 854,677 830,817 798,433 861,181 769,102 12.0
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Balance Sheet - End of Period:
Investment securities......................... 2,348,124 2,395,804 2,230,114 1,762,783 1,760,168 2,348,124 1,760,168 33.4
Loans, net of unearned income................. 7,745,350 7,282,550 6,674,067 6,561,021 6,185,830 7,745,350 6,185,830 25.2
Reserve for loan losses....................... (134,653) (132,714) (134,216) (134,848) (130,726) (134,653) (130,726) 3.0
Total interest-earning assets.................10,563,552 10,484,219 9,816,274 9,329,273 8,797,725 10,563,552 8,797,725 20.1
Total assets..................................11,604,889 11,734,917 10,745,283 10,211,689 9,725,657 11,604,889 9,725,657 19.3
Interest-bearing deposits..................... 6,201,229 6,043,972 5,953,168 5,806,020 5,523,565 6,201,229 5,523,565 12.3
Short-term borrowed funds..................... 2,298,101 2,411,385 1,848,100 1,486,905 1,289,505 2,298,101 1,289,505 78.2
Long-term debt................................ 292,058 312,005 297,538 224,836 226,505 292,058 226,505 28.9
Total interest-bearing liabilities............ 8,791,388 8,767,362 8,098,806 7,517,761 7,039,575 8,791,388 7,039,575 24.9
Total deposits................................ 7,935,484 7,887,531 7,509,666 7,503,707 7,061,649 7,935,484 7,061,649 12.4
Stockholders' equity.......................... 886,389 858,766 841,647 835,731 809,677 886,389 809,677 9.5
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Problem Assets - End of Period:
Nonaccruing loans:
Commercial.................................. 7,781 8,373 8,874 9,408 13,143 7,781 13,143 (40.8)
Real estate................................. 12,130 15,394 16,603 23,817 39,181 12,130 39,181 (69.0)
Consumer.................................... 173 203 139 546 294 173 294 (41.2)
Direct lease financing...................... 148 640 895 1,484 151 148 151 (2.0)
Renegotiated................................ 0 0 1,257 1,099 938 0 938 NA
Total nonaccruing loans....................... 20,232 24,610 27,768 36,354 53,707 20,232 53,707 (62.3)
ORE and other foreclosed assets............... 3,148 8,387 14,842 16,465 23,052 3,148 23,052 (86.3)
Total nonperforming assets.................... 23,380 32,997 42,610 52,819 76,759 23,380 76,759 (69.5)
Accruing loans past due 90 days or more....... 9,265 9,184 10,318 7,155 8,310 9,265 8,310 11.5
Total problem assets.......................... 32,645 42,181 52,928 59,974 85,069 32,645 85,069 (61.6)
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Other Data - End of Period (not rounded to thousands):
Full-time equivalent employees................ 7,499 7,427 6,420 6,318 6,259 7,499 6,259 19.8
Domestic bank offices:
First Security Bank of Utah................. 118 118 114 113 113 118 113 4.4
First Security Bank of Idaho................ 91 87 87 86 84 91 84 8.3
First Security Bank of New Mexico........... 26 26 26 26 26 26 26 0.0
First Security Bank of Oregon............... 13 13 13 13 13 13 13 0.0
First Security Bank of Nevada............... 5 5 5 5 1 5 1 400.0
First Security Bank of Wyoming.............. 6 4 4 2 1 6 1 500.0
Total First Security Corporation............ 259 253 249 245 238 259 238 8.8
============================================= ========== ========== ========== ========== ========== ========== ========== ========
<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)
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr Year To Date Nine Months
1994 1994 1994 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.................. 132,714 134,216 134,848 130,726 126,896 134,848 127,847 5.5
Loans charged off:
Commercial.................................. 1,015 2,667 887 4,653 2,690 4,569 5,045 (9.4)
Real estate................................. 473 447 1,030 4,809 704 1,950 2,771 (29.6)
Consumer.................................... 7,335 5,793 6,637 6,029 4,834 19,765 15,694 25.9
Direct lease financing...................... 12 86 37 1,310 51 135 156 (13.5)
Total loans charged off....................... 8,835 8,993 8,591 16,801 8,279 26,419 23,666 11.6
Recoveries on loans charged off:
Commercial.................................. (3,291) (2,312) (3,988) (5,279) (2,150) (9,591) (6,510) 47.3
Real estate................................. (1,354) (870) (1,113) (4,214) (1,069) (3,337) (2,231) 49.6
Consumer.................................... (3,100) (3,050) (2,817) (2,504) (2,649) (8,967) (7,751) 15.7
Direct lease financing...................... (514) (271) (7) (29) (27) (792) (84) 842.9
Total recoveries of loans charged off......... (8,259) (6,503) (7,925) (12,026) (5,895) (22,687) (16,576) 36.9
Net loans charged off (recovered)............. 576 2,490 666 4,775 2,384 3,732 7,090 (47.4)
Provision for loan losses..................... 180 343 (172) 4,647 5,139 351 7,037 (95.0)
Reserves acquired in merger transactions...... 2,335 645 206 4,250 1,075 3,186 2,932 8.7
Balance, end of period........................ 134,653 132,714 134,216 134,848 130,726 134,653 130,726 3.0
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net loans charged off:
Commercial.................................. (2,276) 355 (3,101) (626) 540 (5,022) (1,465) 242.8
Real estate................................. (881) (423) (83) 595 (365) (1,387) 540 (356.9)
Consumer.................................... 4,235 2,743 3,820 3,525 2,185 10,798 7,943 35.9
Direct lease financing...................... (502) (185) 30 1,281 24 (657) 72 (1,012.5)
Net loans charged off......................... 576 2,490 666 4,775 2,384 3,732 7,090 (47.4)
- - - --------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Selected Ratios (%):
Return on average assets...................... 1.26 1.29 1.34 0.87 1.39 1.29 1.37
Return on average stockholders' equity........ 16.74 16.49 15.74 10.06 16.19 16.33 16.17
Net interest margin, FTE...................... 4.55 4.79 4.92 5.01 4.88 4.74 4.93
Net interest spread, FTE...................... 3.98 4.23 4.32 4.37 4.25 4.17 4.32
Efficiency ratio:
(nonint exp / (net int inc FTE + nonint inc) 66.04 65.68 65.45 74.74 65.23 65.74 63.79
Productivity ratio:
(nonint exp / average assets)............... 4.04 4.05 4.09 4.78 4.04 4.06 3.98
Stockholders' equity / assets................. 7.64 7.32 7.83 8.18 8.33 7.64 8.33
Tangible common equity / tangible assets...... 6.25 6.03 7.72 8.07 8.20 6.25 8.20
Loans / deposits.............................. 97.60 92.33 88.87 87.44 87.60 97.60 87.60
Loans / assets................................ 66.74 62.06 62.11 64.25 63.60 66.74 63.60
Reserve for loan losses EOP to:
Total loans................................. 1.74 1.82 2.01 2.06 2.11 1.74 2.11
Nonaccruing loans........................... 665.54 539.27 483.35 370.93 243.41 665.54 243.41
Nonaccruing + accruing loans past due 90 day 456.50 392.71 352.40 309.93 210.79 456.50 210.79
Nonaccruing loans / total loans............... 0.26 0.34 0.42 0.55 0.87 0.26 0.87
Nonaccrue + accrue loans past due / total loan 0.38 0.46 0.57 0.66 1.00 0.38 1.00
Nonperforming assets EOP to:
Total loans + ORE........................... 0.30 0.45 0.64 0.80 1.24 0.30 1.24
Total assets................................ 0.20 0.28 0.40 0.52 0.79 0.20 0.79
Total equity................................ 2.64 3.84 5.06 6.32 9.48 2.64 9.48
Total equity + reserve for loan losses...... 2.29 3.33 4.37 5.44 8.16 2.29 8.16
Problem assets EOP to:
Total loans + ORE........................... 0.42 0.58 0.79 0.91 1.37 0.42 1.37
Total assets................................ 0.28 0.36 0.49 0.59 0.87 0.28 0.87
Total equity................................ 3.68 4.91 6.29 7.18 10.51 3.68 10.51
Total equity + reserve for loan losses...... 3.20 4.25 5.42 6.18 9.05 3.20 9.05
Net loans charged off / average loans......... 0.03 0.14 0.04 0.30 0.16 0.07 0.16
============================================= ========== ========== ========== ========== ========== ========== ========== ========
Risk-Based Capital Ratios (%):
As of September 30, 1994 FSC FSB FSB FSB
Consolidate Utah Idaho NewMexico
---------- ---------- ---------- ----------
Tier 1........................................ 9.79 9.90 8.08 11.57
Total Capital (Tier 1 + 2).................... 11.96 11.54 10.25 12.83
Leverage Ratio................................ 7.00 7.06 6.47 5.97
============================================= ========== ========== ========== ========== ========== ========== ========== ========
<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 Assets Deposits
Date: Type: Acquired Institution: Home Office: Acquired Retained $ 000 $ 000
<S> <C> <C> <C> <C> <C> <C> <C>
- - - ------ ------------------ ------------------------------------- ----------------------- -------- -------- ----------- -----------
1993:
01-Mar Purchase Fenton Insurance Agency Salt Lake City, UT - - 104 -
01-Apr Pool-of-interests First Bancshares St. George, UT 5 5 79,808 72,910
01-May Pool-of-interests Benton County Bank Corvallis, OR 2 2 36,731 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 49,490 43,242
02-Sep Pool-of-interests Kennevick Insurance Agency Boise, ID - - 160 -
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 32,886 27,957
19-Nov Pool-of-interests First National Financial Corporation Albuquerque, NM 26 26 1,242,880 1,127,302
19-Nov Pool-of-interests Continental Bancorporation Las Vegas, NV 4 4 203,128 198,157
30-Nov Purchase First Professional Bank Core deposits only, UT - - 6,030 6,020
1994:
18-Feb Purchase Equality State Bank 2 branches only, WY 2 2 31,420 31,338
29-Apr Purchase CrossLand Mortgage Acquisition Corp. Salt Lake City, UT - - 330,156 -
20-May Pool-of-interests Community First Bank Clearfield, UT 5 5 75,242 62,556
18-Jul Purchase American Ban Corporation Boise, ID 4 4 63,352 50,914
23-Aug Purchase Star Valley State Bank Afton, WY 2 2 65,891 57,930
- - - ------ ------------------ ------------------------------------- ----------------------- -------- -------- ----------- -----------
TOTALS 52 52 $2,217,278 $1,722,838
====== ================== ===================================== ======================= ======== ======== =========== ===========
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
LOANS OUTSTANDING, NET OF UNEARNED INCOME
<CAPTION>
September 30, 1994 December 31, 1993 September 30, 1994
%Total %Total %Total Sept/Sept
(in thousands; unaudited) Balance Loans Balance Loans Balance(A) Loans %Chg
<S> <C> <C> <C> <C> <C> <C> <C>
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Loans:
Commercial / Industrial................. $1,265,184 16.3 $1,164,835 17.8 NA NA NA
Agricultural............................ 316,543 4.1 255,122 3.9 NA NA NA
Other Commercial........................ 151,815 2.0 151,443 2.3 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL COMMERCIAL LOANS 1,733,542 22.4 1,571,400 24.0 $1,452,153 23.5 19.4
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Real Estate Secured Loans:
Residential Real Estate Loans:
Term.................................. 1,465,040 18.9 1,239,395 18.9 NA NA NA
Home equity........................... 337,395 4.4 280,776 4.3 NA NA NA
Construction.......................... 181,532 2.3 147,526 2.2 NA NA NA
Construction Land..................... 6,622 0.1 13,187 0.2 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Total Residential Real Estate Loans 1,990,589 25.7 1,680,884 25.6 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Real Estate (CRE) Loans:
Term: owner occupied.................. 349,687 4.5 319,542 4.9 NA NA NA
Term: nonowner occupied............... 471,715 6.1 391,851 6.0 NA NA NA
Construction: owner occupied.......... 42,452 0.5 42,249 0.6 NA NA NA
Construction: nonowner occupied....... 69,964 0.9 37,480 0.6 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Subtotal: CRE Owner Occupied 392,139 5.0 361,791 5.5 NA NA NA
Subtotal: CRE Nonowner Occupied 541,679 7.0 429,331 6.6 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Land....................... 43,100 0.6 54,197 0.8 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Total Commercial Real Estate Loans 976,918 12.6 845,319 12.9 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Farm Land............................... 16,573 0.2 17,277 0.3 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL REAL ESTATE SECURED LOANS 2,984,080 38.5 2,543,480 38.8 2,408,227 38.9 23.9
Memo: Total RE Term Loans............... 2,678,451 34.6 2,299,393 35.1 2,212,390 35.8 21.1
Memo: Total RE Construction Loans....... 305,629 3.9 244,087 3.7 195,837 3.2 56.1
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Consumer Loans:
Auto.................................... 2,130,654 27.5 1,540,213 23.4 NA NA NA
Student................................. 88,398 1.2 110,231 1.7 NA NA NA
Credit Card Receivables................. 273,477 3.5 275,467 4.2 NA NA NA
Other Consumer.......................... 218,232 2.8 242,388 3.7 NA NA NA
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL CONSUMER LOANS 2,710,761 35.0 2,168,299 33.0 2,063,255 33.4 31.4
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Direct Lease Financing:
TOTAL DIRECT LEASE FINANCING.............. 316,967 4.1 277,842 4.2 262,195 4.2 20.9
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
LOANS, NET OF UNEARNED INCOME 7,745,350 100.0 6,561,021 100.0 6,185,830 100.0 25.2
Reserve for Loan Losses................. (134,653) (134,848) (130,726) 3.0
- - - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL LOANS, NET $7,610,697 $6,426,173 $6,055,104 25.7
========================================= =========== ====== =========== ====== =========== ====== ========
<FN>
(A) September 30, 1993 figures have been restated to reflect the Nov. 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 September 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
$7,342,317 $5,908,977 8.80 8.70 deferred taxes on leases (D) $161,508 $128,540 $32,968 $31,180 $1,788
2,108,122 NA 5.58 NA Investment securities: available for sale (E) 29,419 NA NA NA NA
263,979 NA 6.24 NA Investment securities: held to maturity (E) 4,118 NA NA NA NA
2,372,101 1,768,370 5.66 5.88 Total investment securities (E) 33,537 25,997 7,540 8,876 (1,336)
669,955 404,013 4.06 5.20 Trading account securities 6,793 5,256 1,537 3,460 (1,923)
40,364 275,859 4.90 3.09 Federal funds sold & RP's purchased 494 2,132 (1,638) (1,820) 182
2,623 27,550 5.34 3.25 Interest-bearing deposits other banks 35 224 (189) (203) 14
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$10,427,360 $8,384,769 7.76 7.74 TOTAL INTEREST-EARN ASSETS / INCOME 202,367 162,149 40,218 41,493 (1,275)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSES:
Interest-bearing deposits:
$1,116,191 $965,708 1.71 1.90 NOW accounts 4,766 4,593 173 716 (543)
2,607,300 2,250,449 2.93 3.05 Savings accounts 19,068 17,144 1,924 2,719 (795)
405,552 330,143 4.54 4.24 Time deposits $100,000 & over 4,607 3,497 1,110 799 311
2,046,208 1,964,479 4.50 4.53 Other time deposits 23,006 22,250 756 926 (170)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
6,175,251 5,510,779 3.33 3.45 TOTAL INTEREST-BEARING DEPOSITS 51,447 47,484 3,963 5,160 (1,197)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
2,308,671 1,069,362 4.59 2.96 Federal funds purchased & RP's sold 26,519 7,923 18,596 9,182 9,414
79,930 55,747 6.19 4.39 Other short-term borrowings 1,236 612 624 265 359
306,808 235,474 6.03 6.59 Long-term debt 4,627 3,879 748 1,175 (427)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$8,870,660 $6,871,362 3.78 3.49 TOT INTEREST-BEAR LIABILITY/EXPENSE 83,829 59,898 23,931 15,782 8,149
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
7.76 7.74 Interest income / earning assets
3.21 2.86 Interest expense / earning assets
------ ------ --------------------------------------------
4.55 4.88 Net interest income / earning assets 118,538 102,251 16,287 $25,711 ($9,424)
Less fully taxable equivalent adjust 2,002 (1,092) 3,094
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONDENSED
CONSOLIDATED STATEMENT OF INCOME $116,536 $103,343 $13,193
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<CAPTION>
For the Year-To-Date Nine Months Ended September 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
$6,871,055 $5,652,027 8.65 8.94 deferred taxes on leases (D) $445,905 $378,882 $67,023 $81,717 ($14,694)
1,959,375 NA 5.35 NA Investment securities: available for sale (E) 78,662 NA NA NA NA
277,885 NA 6.50 NA Investment securities: held to maturity (E) 13,556 NA NA NA NA
2,237,260 1,819,151 5.50 6.01 Total investment securities (E) 92,218 81,993 10,225 18,845 (8,620)
649,049 445,312 5.70 4.88 Trading account securities 27,765 16,285 11,480 7,451 4,029
58,641 267,197 3.57 3.05 Federal funds sold & RP's purchased 1,570 6,107 (4,537) (4,767) 230
2,500 13,233 4.32 3.25 Interest-bearing deposits other banks 81 323 (242) (262) 20
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$9,818,505 $8,196,920 7.71 7.87 TOTAL INTEREST-EARN ASSETS / INCOME 567,539 483,590 83,949 102,984 (19,035)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSES:
Interest-bearing deposits:
$1,089,772 $943,026 1.70 1.94 NOW accounts 13,857 13,693 164 2,131 (1,967)
2,555,888 2,166,878 2.92 3.09 Savings accounts 56,051 50,172 5,879 9,007 (3,128)
405,619 344,483 4.22 4.19 Time deposits $100,000 & over 12,826 10,813 2,013 1,919 94
1,974,129 2,026,041 4.36 4.67 Other time deposits 64,607 70,956 (6,349) (1,818) (4,531)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
6,025,408 5,480,428 3.26 3.54 TOTAL INTEREST-BEARING DEPOSITS 147,341 145,634 1,707 11,239 (9,532)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
1,844,369 1,049,188 3.97 2.96 Federal funds purchased & RP's sold 54,897 23,323 31,574 17,677 13,897
60,814 54,950 5.63 4.26 Other short-term borrowings 2,567 1,757 810 187 623
294,526 196,859 6.18 6.83 Long-term debt 13,655 10,090 3,565 5,006 (1,441)
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
$8,225,117 $6,781,425 3.54 3.55 TOT INTEREST-BEAR LIABILITY/EXPENSE 218,460 180,804 37,656 34,109 3,547
- - - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
7.71 7.87 Interest income / earning assets
2.97 2.94 Interest expense / earning assets
------ ------ --------------------------------------------
4.74 4.93 Net interest income / earning assets 349,079 302,786 46,293 $68,875 ($22,582)
Less fully taxable equivalent adjust 5,931 4,711 1,220
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONDENSED
CONSOLIDATED STATEMENT OF INCOME $343,148 $298,075 $45,073
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<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 (FTE) 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 $4,144 and $3,490 for the 1994 and 1993
quarters, respectively, and $13,151 and $9,291 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, except for the following:
Purported class action lawsuits have been filed in two jurisdictions
(Florida and Illinois) on behalf of mortgage borrowers from CrossLand
Mortgage Corp. ("CrossLand") alleging technical violations of Federal
"Truth in Lending" rules based on lending and disclosure practices
believed to be in compliance with such rules at the time. Rescissions
of the loans as well as statutory and compensatory damages are requested
in the lawsuits as filed. Discovery is now beginning and the classes
have not yet been certified. FSC believes it has indemnification claims
against the sellers of CrossLand for a substantial portion of any
damages which plaintiffs may establish in these litigations.
Item 6. Exhibits, and Reports on Form 8-K
(a). Exhibits:
Exhibit 11. Computation of Earnings Per Share
Exhibit 27. Financial Data Schedule
(b). Reports on Form 8-K:
On October 17, 1994, FSC issued a report on Form 8-K announcing
the closing on October 18, 1994 of the sale of $100,000,000 face amount
of 7.875% Senior Notes due October 15, 1999.
# # #
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: November 10, 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 September 30, 1994 and 1993
<CAPTION>
Three Months YearToDate Nine Months
(in thousands, except per share amounts; unaudited) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
- - - --------------------------------------------------- ---------- ---------- ---------- ----------
Net Income:
Per statement of consolidated income.............. $36,784 $32,587 $105,166 $92,992
Deduct dividend requirements of preferred stock... 10 10 30 32
- - - --------------------------------------------------- ---------- ---------- ---------- ----------
Net income applicable to common stock............... 36,774 32,577 105,136 92,960
Add dividend requirements of preferred stock...... 10 10 30 32
- - - --------------------------------------------------- ---------- ---------- ---------- ----------
Net income assuming full dilution................... $36,784 $32,587 $105,166 $92,992
=================================================== ========== ========== ========== ==========
Net Income Per Share:
Assuming no dilution.............................. $0.73 $0.68 $2.11 $1.96
Assuming full dilution............................ $0.73 $0.68 $2.11 $1.95
=================================================== ========== ========== ========== ==========
Average common shares outstanding:
Average common shares outstanding................. 49,873 47,267 49,357 46,782
Common stock equivalents (options)................ 1,047 1,062 1,031 1,135
Treasury shares..................................... (570) (348) (600) (387)
- - - --------------------------------------------------- ---------- ---------- ---------- ----------
Assuming no dilution ............................. 50,350 47,981 49,788 47,530
Issuable assuming conversion of preferred stock... 155 166 158 170
- - - --------------------------------------------------- ---------- ---------- ---------- ----------
Assuming full dilution............................ 50,505 48,147 49,946 47,700
=================================================== ========== ========== ========== ==========
<FN>
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>
EXHIBIT 27. Financial Data Schedule
FIRST SECURITY CORPORATION
[ARTICLE] 9
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1993
[PERIOD-START] JAN-01-1994
[PERIOD-END] SEP-30-1994
[CASH] 600,192
[INT-BEARING-DEPOSITS] 1,882
[FED-FUNDS-SOLD] 70,109
[TRADING-ASSETS] 398,087
[INVESTMENTS-HELD-FOR-SALE] 2,087,639
[INVESTMENTS-CARRYING] 260,485
[INVESTMENTS-MARKET] 2,347,984
[LOANS] 7,745,350
[ALLOWANCE] 134,653
[TOTAL-ASSETS] 11,604,889
[DEPOSITS] 7,935,484
[SHORT-TERM] 2,298,101
[LIABILITIES-OTHER] 192,857
[LONG-TERM] 292,058
[COMMON] 885,721
[PREFERRED-MANDATORY] 0
[PREFERRED] 668
[OTHER-SE] 0
[TOTAL-LIABILITIES-AND-EQUITY] 11,604,889
[INTEREST-LOAN] 443,418
[INTEREST-INVEST] 88,797
[INTEREST-OTHER] 29,393
[INTEREST-TOTAL] 561,608
[INTEREST-DEPOSIT] 147,341
[INTEREST-EXPENSE] 218,460
[INTEREST-INCOME-NET] 343,148
[LOAN-LOSSES] 351
[SECURITIES-GAINS] (40)
[EXPENSE-OTHER] 329,914
[INCOME-PRETAX] 165,668
[INCOME-PRE-EXTRAORDINARY] 105,166
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 105,166
[EPS-PRIMARY] 2.11
[EPS-DILUTED] 2.11
[YIELD-ACTUAL] 4.74
[LOANS-NON] 20,232
[LOANS-PAST] 9,265
[LOANS-TROUBLED] 0
[LOANS-PROBLEM] 20,860
[ALLOWANCE-OPEN] 134,848
[CHARGE-OFFS] 18,160
[RECOVERIES] 14,428
[ALLOWANCE-CLOSE] 134,653
[ALLOWANCE-DOMESTIC] 134,653
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 0
</TABLE>
