<PAGE>
UNITED STATES
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 the quarterly period ended September 30, 1995
Commission File Number 1-6906
FIRST SECURITY CORPORATION
(Exact name of registrant as specified in its charter)
State of incorporation Delaware
I.R.S. Employer Identification No. 87-6118148
Address of principal executive offices 79 South Main, P.O. Box 30006
Salt Lake City, Utah
Zip Code 84130-0006
Registrant's telephone number, including area code (801) 246-5706
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, 1995, outstanding shares of Common Stock, par value $1.25
were 50,056,405 (net of 408,893 treasury shares).
<PAGE>
FIRST SECURITY CORPORATION
INDEX
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Income Statements
Three Months and Year-To-Date Nine Months Ended
September 30, 1995 and 1994
Condensed Consolidated Balance Sheets
September 30, 1995, December 31, 1994, and September 30, 1994
Condensed Consolidated Statements of Cash Flows
Year-To-Date Nine Months Ended
September 30, 1995 and 1994
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
Rate / Volume Analysis
Loans
Mergers and Acquisitions
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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data; unaudited)
<CAPTION>
Three Months To-Date Nine Months
For the Periods Ended September 30, 1995 and 1994 1995 1994 $Chg %Chg 1995 1994 $Chg %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
INTEREST INCOME:
Interest & fees on loans ............................... 190,079 160,634 29,445 18.3 559,616 443,418 116,198 26.2
Federal funds sold & securities purchased .............. 3,228 494 2,734 553.4 6,035 1,570 4,465 284.4
Interest-bearing deposits in other banks ............... 446 35 411 1174.3 476 81 395 487.7
Trading account securities ............................. 4,843 6,789 (1,946) -28.7 18,295 27,742 (9,447) -34.1
Securities available for sale .......................... 32,261 29,410 2,851 9.7 92,743 78,609 14,134 18.0
Securities held to maturity ............................ 3,727 3,003 724 24.1 11,037 10,188 849 8.3
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
TOTAL INTEREST INCOME 234,584 200,365 34,219 17.1 688,202 561,608 126,594 22.5
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
INTEREST EXPENSE:
Deposits ............................................... 79,139 51,447 27,692 53.8 221,662 147,341 74,321 50.4
Short-term borrowings .................................. 21,560 27,755 (6,195) -22.3 80,791 57,463 23,328 40.6
Long-term debt ......................................... 14,106 4,627 9,479 204.9 38,306 13,656 24,650 180.5
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
TOTAL INTEREST EXPENSE 114,805 83,829 30,976 37.0 340,759 218,460 122,299 56.0
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
NET INTEREST INCOME:
NET INTEREST INCOME 119,779 116,536 3,243 2.8 347,443 343,148 4,295 1.3
Provision for loan losses .............................. 6,587 180 6,407 3559.4 13,177 351 12,826 3654.1
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 113,192 116,356 (3,164) -2.7 334,266 342,797 (8,531) -2.5
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
NONINTEREST INCOME:
Service charges on deposit accounts .................... 17,647 16,169 1,478 9.1 50,804 46,639 4,165 8.9
Other service charges, collections, commissions, & fees 9,689 7,361 2,328 31.6 25,751 20,477 5,274 25.8
Bankcard servicing fees & third-party processing fees .. 6,951 7,099 (148) -2.1 18,931 24,443 (5,512) -22.6
Insurance commissions & fees ........................... 3,190 3,362 (172) -5.1 10,351 9,125 1,226 13.4
Mortgage banking activities, net........................ 21,101 9,566 11,535 120.6 54,815 22,810 32,005 140.3
Trust (fiduciary) commissions & fees ................... 5,122 4,854 268 5.5 15,344 14,812 532 3.6
Securities gains (losses) .............................. 1,105 (42) 1,147 NM 2,037 (40) 2,077 NM
Trading account securities gains (losses) .............. 1,150 2,333 (1,183) -50.7 6,446 (4,165) 10,611 NM
Other .................................................. 4,137 4,906 (769) -15.7 15,517 8,204 7,313 89.1
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
TOTAL NONINTEREST INCOME 70,092 55,608 14,484 26.0 199,996 142,305 57,691 40.5
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
TOTAL INCOME 183,284 171,964 11,320 6.6 534,262 485,102 49,160 10.1
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
NONINTEREST EXPENSES:
Salaries & employee benefits ........................... 66,706 59,551 7,155 12.0 192,518 163,108 29,410 18.0
Advertising ............................................ 2,324 2,328 (4) -0.2 6,338 6,245 93 1.5
Amortization of intangibles ............................ 2,173 2,283 (110) -4.8 6,660 4,440 2,220 50.0
Bankcard interbank interchange ......................... 4,419 4,282 137 3.2 12,993 11,612 1,381 11.9
Furniture & equipment .................................. 8,758 7,746 1,012 13.1 25,992 22,167 3,825 17.3
Insurance .............................................. 1,041 5,930 (4,889) -82.4 13,099 17,412 (4,313) -24.8
Occupancy, net ......................................... 6,763 6,866 (103) -1.5 20,703 18,983 1,720 9.1
Other real estate expense & loss provision (recovery) .. (1,415) (667) (748) -112.1 (2,436) (3,134) 698 22.3
Stationery & supplies .................................. 5,103 3,940 1,163 29.5 13,553 11,716 1,837 15.7
Telephone .............................................. 3,525 3,317 208 6.3 9,878 8,575 1,303 15.2
Other .................................................. 21,878 17,880 3,998 22.4 58,824 58,310 514 0.9
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
TOTAL NONINTEREST EXPENSES 121,275 113,456 7,819 6.9 358,122 319,434 38,688 12.1
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
INCOME BEFORE INCOME TAX PROVISION 62,009 58,508 3,501 6.0 176,140 165,668 10,472 6.3
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
PROVISION FOR INCOME TAXES:
Operating earnings ..................................... 22,249 21,744 505 2.3 64,202 60,526 3,676 6.1
Securities gains (losses) .............................. 417 (20) 437 NM 762 (24) 786 NM
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
TOTAL PROVISION FOR INCOME TAXES 22,666 21,724 942 4.3 64,964 60,502 4,462 7.4
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
NET INCOME 39,343 36,784 2,559 7.0 111,176 105,166 6,010 5.7
======================================================= ========= ========= ========= ======= ========= ========= ========= =======
Preferred stock dividend requirement ................... 9 10 (1) -10.0 27 30 (3) -10.0
- ------------------------------------------------------- --------- --------- --------- ------- --------- --------- --------- -------
NET INCOME APPLICABLE TO COMMON STOCK 39,334 36,774 2,560 7.0 111,149 105,136 6,013 5.7
======================================================= ========= ========= ========= ======= ========= ========= ========= =======
Common stock dividend .................................. 13,996 12,882 1,114 8.6 41,953 38,218 3,735 9.8
======================================================= ========= ========= ========= ======= ========= ========= ========= =======
EARNINGS PER COMMON SHARE:
Earnings per common share: primary ..................... 0.77 0.73 0.04 5.5 2.19 2.11 0.08 3.8
Earnings per common share: fully diluted ............... 0.77 0.73 0.04 5.5 2.18 2.11 0.07 3.3
Common stock shares outstanding: average primary ....... 50,977 50,350 627 1.2 50,752 49,788 964 1.9
Common stock shares outstanding: average fully diluted . 51,114 50,505 609 1.2 50,892 49,946 946 1.9
======================================================= ========= ========= ========= ======= ========= ========= ========= =======
CASH DIVIDENDS PAID OR ACCRUED PER SHARE:
Preferred Stock ($3.15 annual rate) .................... 0.79 0.79 2.36 2.36
Common stock ........................................... 0.28 0.26 0.02 7.7 0.84 0.78 0.06 7.7
======================================================= ========= ========= ========= ======= ========= ========= ========= =======
<FN>
See "Notes to Condensed Consolidated Financial Statements".
Reclassifications of prior period amounts have been made where necessary to conform with current classifications adopted pursuant
to SFAS No. 122 "Accounting for Mortgage Servicing Rights" adopted by FSCO as of July 1, 1995.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands; unaudited)
<CAPTION>
Sep. 30 Dec. 31 Sep. 30 Sep/Sep Sep/Sep
1995 1994 1994 $ Chg % Chg
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
ASSETS:
Cash & due from banks .................................................. 701,353 678,353 600,192 101,161 16.9
Federal funds sold & securities purchased under resale agreements ...... 158,038 43,551 70,109 87,929 125.4
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total cash & cash equivalents 859,391 721,904 670,301 189,090 28.2
Interest-bearing deposits in other banks ............................... 41,563 1,585 1,882 39,681 2108.4
Trading account securities ............................................. 484,761 553,826 398,087 86,674 21.8
Securities available for sale, at fair value ........................... 2,219,488 1,993,797 2,087,639 131,849 6.3
(Amortized Cost: $2,219,059; $2,080,408; $2,140,874; respectively)
Securities held to maturity, at cost ................................... 247,493 252,622 260,485 (12,992) -5.0
(Fair value: $251,159; $249,971; $260,345; respectively)
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Loans, net of unearned income .......................................... 8,303,049 8,173,678 7,745,350 557,699 7.2
(Unearned income: $10,265; $7,380; $8,600; respectively)
Reserve for loan losses ................................................ (131,878) (133,855) (134,653) 2,775 -2.1
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total loans, net 8,171,171 8,039,823 7,610,697 560,474 7.4
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Premises & equipment, net .............................................. 209,926 188,418 176,638 33,288 18.8
Accrued income receivable .............................................. 83,508 85,655 75,633 7,875 10.4
Other real estate & other foreclosed assets ............................ 4,472 3,352 3,148 1,324 42.1
Other assets ........................................................... 208,277 141,801 148,796 59,481 40.0
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Goodwill ............................................................... 96,485 106,827 108,490 (12,005) -11.1
Mortgage servicing rights .............................................. 46,276 56,147 59,391 (13,115) -22.1
Other intangible assets ................................................ 2,203 3,225 3,702 (1,499) -40.5
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total intangible assets .............................................. 144,964 166,199 171,583 (26,619) -15.5
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL ASSETS 12,675,014 12,148,982 11,604,889 1,070,125 9.2
======================================================================= =========== =========== =========== =========== =======
LIABILITIES:
Noninterest-bearing deposits ........................................... 1,857,584 1,719,388 1,734,255 123,329 7.1
Interest-bearing deposits .............................................. 6,831,503 6,333,956 6,201,229 630,274 10.2
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total deposits 8,689,087 8,053,344 7,935,484 753,603 9.5
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Federal funds purchased & securities sold under repurchase agreements .. 1,472,452 2,160,587 2,210,389 (737,937) -33.4
U.S. Treasury demand notes ............................................. 30,799 33,552 21,350 9,449 44.3
Other short-term borrowings ............................................ 172,247 151,000 66,362 105,885 159.6
Accrued income taxes ................................................... 123,726 81,710 81,870 41,856 51.1
Accrued interest payable ............................................... 38,822 27,709 17,951 20,871 116.3
Other liabilities ...................................................... 271,757 65,911 92,766 178,991 192.9
Long-term debt ......................................................... 856,550 685,426 292,058 564,492 193.3
Minority equity in subsidiaries ........................................ 304 269 270 34 12.6
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL LIABILITIES 11,655,744 11,259,508 10,718,500 937,244 8.7
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
STOCKHOLDERS' EQUITY:
Preferred stockholders' equity: Series "A" $3.15 cumulative convertible 589 629 668 (79) -11.8
(Shares outstanding: 11,213; 11,977; 12,714; respectively)
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Common Stockholders' Equity:
Common stock: par value $1.25 ......................................... 63,051 62,446 62,368 683 1.1
(Shares outstanding: 50,441,110; 49,957,176; 49,894,094; respectively)
Paid-in surplus ........................................................ 149,777 142,928 140,880 8,897 6.3
Retained earnings ...................................................... 815,651 746,454 724,474 91,177 12.6
Net unrealized gain (loss) on securities available for sale ............ 71 (54,341) (33,499) 33,570 -100.2
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Subtotal 1,028,550 897,487 894,223 134,327 15.0
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Common treasury stock, at cost ......................................... (9,869) (8,642) (8,502) (1,367) 16.1
(Shares: 401,604; 362,355; 361,255; respectively)
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total common stockholders' equity 1,018,681 888,845 885,721 132,960 15.0
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL STOCKHOLDERS' EQUITY 1,019,270 889,474 886,389 132,881 15.0
- ----------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 12,675,014 12,148,982 11,604,889 1,070,125 9.2
======================================================================= =========== =========== =========== =========== =======
<FN>
See "Notes to Condensed Consolidated Financial Statements".
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<CAPTION>
For the Nine Months Ended September 30, 1995 and 1994 1995 1994
<S> <C> <C>
- ----------------------------------------------------------------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) BY OPERATING ACTIVITIES 730,436 840,403
- ----------------------------------------------------------------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale ............................. 37,369 601,505
Redemption of matured securities available for sale .............................. 657,708 395,583
Redemption of matured securities held to maturity ................................ 55,971 75,718
Purchases of securities available for sale ....................................... (830,549) (1,561,057)
Purchases of securities held to maturity ......................................... (51,763) (64,511)
Net (increase) decrease in interest-bearing deposits in other banks .............. (39,753) 14,579
Net (increase) decrease in loans ................................................. (465,095) (1,344,114)
Purchases of premises and equipment .............................................. (33,256) (161,375)
Proceeds from sales of other real estate ......................................... 6,948 30,248
Payments to improve other real estate ............................................ (824) (1,614)
Net cash (paid for) received from acquisitions ................................... 603 (70,507)
- ----------------------------------------------------------------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (662,641) (2,085,545)
- ----------------------------------------------------------------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits .............................................. 635,743 229,786
Net increase (decrease) in Federal funds purchased, securities sold
under repurchase agreements, and U.S. Treasury demand notes .................... (690,888) 800,985
Proceeds from issuance of nonrecourse debt on leveraged leases ................... 0 0
Payments on nonrecourse debt on leveraged leases ................................. (30,869) (29,206)
Proceeds from issuance of long-term debt and short-term borrowings ............... 224,923 145,642
Payments on long-term debt and short-term borrowings ............................. (32,786) (239,309)
Proceeds from issuance of common stock and sales of treasury stock ............... 9,525 7,930
Purchases of treasury stock ...................................................... (3,976) (17,168)
Dividends paid ................................................................... (41,980) (38,248)
- ----------------------------------------------------------------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 69,692 860,412
- ----------------------------------------------------------------------- -------------- --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 137,487 (384,730)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 721,904 1,055,031
- ----------------------------------------------------------------------- -------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 859,391 670,301
======================================================================= ============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
- ----------------------------------------------------------------------- -------------- --------------
CASH PAID (RECEIVED) FOR:
Interest ....................................................................... 329,646 217,938
Income taxes ................................................................... 49,843 52,922
======================================================================= ============== ==============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of preferred shares to common shares:
Preferred shares converted (not rounded) ..................................... 764 682
Common shares issued (not rounded) ........................................... 9,269 8,268
Conversion value ............................................................. 40 36
Transfer of loans to other real estate............................................ 4,530 11,191
Securities transferred from held to maturity to available for sale
in conjunction with adoption of SFAS No. 115 ................................... 0 1,417,217
Net unrealized gain (loss) on securities available for sale
(included in stockholders' equity) ............................................. 54,412 (33,499)
Pooling-of-interests acquisitions:
Assets acquired ................................................................ 1,874 75,242
Liabilities assumed ............................................................ 1,235 63,680
FSCO shares issued (not rounded) ............................................... 133,838 842,066
Purchase acquisitions:
Fair value of assets acquired .................................................. 853 490,819
Liabilities assumed ............................................................ 0 359,167
Cash paid for the capital stock ................................................ 853 116,233
FSCO shares issued (not rounded) ............................................... 0 479,995
======================================================================= ============== ==============
<FN>
See "Notes to Condensed Consolidated Financial Statements".
</TABLE>
<PAGE>
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 ("FSCO")
contain all adjustments (consisting of normal recurring accruals) necessary to
present fairly: FSCO's results of operations for the three months and the
year-to-date nine months in the periods ended September 30, 1995 and 1994;
FSCO's financial position as of September 30, 1995, December 31, 1994, and
September 30, 1994; and cash flows for the year-to-date nine months in the
periods ended September 30, 1995 and 1994.
2. The results of operations for the three months and the year-to-date nine
month periods ended September 30, 1995 and 1994 are not necessarily indicative
of the results to be expected for the full year.
3. FSCO's financial statements and commentary incorporate fair market values
for balances added from purchase transactions and historical values for
balances added from pooling-of-interests mergers, as well as earnings since
their acquisition, from 5 acquisitions completed in 1994 and 3 acquisitions
completed in year-to-date 1995 (see: Supplemental Tables "Mergers and
Acquisitions"). Under applicable accounting rules, those acquisitions
acquired as pooling-of-interests mergers were not material to FSCO's
consolidated operations, so historical amounts were not restated.
The April 29, 1994 acquisition of CrossLand Mortgage Acquisition
Corporation ("CrossLand Mortgage") created $63.9 million in purchased mortgage
servicing rights and $85.0 million in goodwill carried as intangible assets on
FSCO's condensed consolidated balance sheets.
4. On May 12, 1995, the Financial Accounting Standards Board issued SFAS 122
"Accounting for Mortgage Servicing Rights", an amendment to SFAS 65. FSCO
adopted this standard effective July 1, 1995. The adoption of this standard
had no material effect on net income from ongoing mortgage banking activities.
SFAS 122 requires that a portion of the cost of originating a mortgage loan
be allocated to the mortgage servicing right based on its fair value relative
to the loan as a whole. In order to determine the fair value of servicing
rights, FSCO uses market prices under comparable servicing sales contracts,
when available, or alternatively uses a valuation model that calculates the
present value of future cash flows to determine the fair value of the
servicing right. This valuation method requires FSCO to incorporate
assumptions that market participants would use in estimating future net
servicing income.
In determining possible impairment of mortgage servicing rights at the end
of each quarter, the originated servicing portfolio is disaggregated into its
predominant characteristics, which FSCO has determined to be loan type,
investor type, and interest rate. The segmented portfolio is then valued,
using market prices under comparable servicing sales contracts, when
available, or alternatively using the same model as is used to determine the
fair value of such rights at origination, updated with current assumptions.
The calculated value is then compared to the book value of each segment of the
portfolio to determine if a reserve for impairment is required.
FSCO recorded mortgage servicing rights of $10.0 million for the quarter
ended September 30, 1995.
5. On July 17, 1995, FSCO issued $125 million of 7.00% Subordinated Notes due
July 15, 2005.
6. On July 31, 1995, FSCO securitized and sold $251 million of direct and
indirect auto loans and recognized a net after tax loss of $773 thousand.
FSCO will continue to service these loans for the investors.
# # #
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 2: Management's Discussion and Analysis of Results of Operations and
Financial Condition ("MDA")
ANALYSIS OF RESULTS OF OPERATIONS
First Security Corporation ("FSCO") earned net income totaling $111.2
million for the first nine months of 1995, an increase of $6.0 million (5.7%)
from $105.2 million earned in the corresponding period in 1994 (see Financial
Statements: "Condensed Consolidated Income Statements"; and Supplemental
Tables "Financial Highlights"). Net income for year-to-date 1995 generated a
1.23% return on average assets ("ROAA") and a 15.35% return on average equity
("ROAE") on FSCO's strong average equity to assets ratio of 8.01%, compared
with a 1.29% ROAA and a 16.33% ROAE for the year-ago period. Fully-diluted
earnings per share for the year to date were $2.18, up $0.07 (3.3%) from $2.11
for the year-ago period.
Net income was $39.3 million for the third quarter of 1995, up $2.6 million
(7.0%) from $36.8 million earned in the third quarter of 1994. During the
quarter, FSCO received a $5.1 million payment ($3.1 million after tax) from
the Federal Deposit Insurance Corporation representing a repayment of excess
insurance premiums paid during the months of June through September 1995. Net
income for the quarter generated a 1.28% ROAA and a 15.46% ROAE, compared with
a 1.26% ROAA and 16.74% ROAE for the year-ago quarter. Fully-diluted earnings
per share for the quarter were $0.77, up $0.04 (5.5%) from $0.73 for the year-
ago quarter.
FSCO acquired CrossLand Mortgage in a purchase accounting transaction on
April 29, 1994, midway through the 1994 year-to-date period (see: MDA "Mergers
and Acquisitions"). This impacted FSCO's noninterest income and noninterest
expenses, so that comparisons of operating results for year-to-date 1995 with
year-to-date 1994 may not be indicative of FSCO's actual comparative
performance. CrossLand Mortgage has made a positive contribution to FSCO's
1995 net income as sales of servicing were combined with third quarter 1995
loan production, which was up 62.4% from the year-ago quarter and was the best
quarter since its acquisition.
Net Interest Income
Net interest income on a fully-taxable equivalent ("FTE") basis totaled
$353.5 million for year-to-date 1995, up $4.4 million (1.3%) from the year-ago
period, and was $121.9 million for the third quarter of 1995, up $3.4 million
(2.8%) from the year-ago quarter (see: Supplemental Tables "Financial
Highlights" and "Rate / Volume Analysis"). For both the year to date and
quarter, these increases were due to higher yields and volume growth for
interest-earning assets inclusive of the impact of the securitization and sale
of $251 million of direct and indirect auto loans during the quarter.
The net interest margin was 4.32% for the year to date, down from 4.74% for
the year-ago period, while the 4.46% third quarter was down from 4.55% for the
year-ago quarter. For both the year to date and quarter, these decreases were
due to higher interest rates plus increased balances in certificates of
deposit (CDs) and long-term debt as FSCO took steps to extend maturities,
moderate interest rate risk, and increase general liquidity. This was
partially offset by higher yields and volumes for interest-earning assets, and
for the quarter, a 35.8% reduction in average short-term borrowed funds.
The net interest margin of 4.46% for the third quarter of 1995 was much
improved from the 4.06% low in the first quarter of 1995 and stabilized from
the second quarter of 1995.
Provision for Loan Losses
The provision for loan losses totaled $13.2 million for year-to-date 1995,
up from $0.4 million for the year-ago period, and was $6.6 million for the
third quarter of 1995, up from $0.2 million for the year-ago quarter (see: MDA
"Interest-Earning Assets and Asset Quality - Provision For Loan Losses"; and
Supplemental Tables "Financial Highlights - Reconciliation of the Reserve For
Loan Losses").
Noninterest Income
Noninterest income totaled $200.0 million for year-to-date 1995, up $57.7
million (40.5%) from the year-ago period, and was $70.1 million for the third
quarter of 1995, up $14.5 million (26.0%) from the year-ago quarter (see:
Financial Statements "Condensed Consolidated Income Statements"). For both
the year to date and quarter, these increases were due primarily to FSCO's
continued emphasis on increasing and diversifying its sources of noninterest
income, and the positive impact of CrossLand Mortgage on mortgage banking
activities. These increases were partially offset by declines in bankcard
servicing fees and third-party processing fees. FSCO's investment strategies
in both the trading account and securities portfolios continued to generate
gains, amounting to a combined $8.5 million for the year to date and $2.3
million for the quarter.
The acquisition of CrossLand Mortgage has further diversified FSCO's
noninterest income and increased the ratio of noninterest income to total
income FTE to 36.14% for the year to date, up from 28.96% for the year-ago
period.
Noninterest Expenses
Noninterest expenses totaled $358.1 million for year-to-date 1995, up $38.7
million (12.1%) from the year-ago period, and were $121.3 million for the
third quarter of 1995, up $7.8 million (6.9%) from the year-ago quarter (see:
Financial Statements "Condensed Consolidated Income Statements"). For both
the year to date and quarter, these increases were due to the combination of
volume-related growth, salaries and benefits expenses related to increased
loan production, and acquisitions. These were partially offset by a lower
FDIC insurance rate.
Noninterest expenses for the third quarter of 1995 increased only 2.0% from
the second quarter of 1995 and 2.8% from the first quarter of 1995. This was
a direct result of FSCO's commitment to control costs.
The operating expense ratio (the ratio of noninterest expenses to the sum
of net interest income FTE and noninterest income) was 64.71% for year-to-date
1995, an improvement from 65.01% for the year-ago period and 65.82% for all of
1994, and was 63.17% for the third quarter of 1995, an improvement from 65.15%
for the year-ago quarter and a high of 66.35% at year end.
FSCO has improved its operating expense ratio for three quarters in a row,
decreasing it by 318 basis points from 66.35% at year end and 206 basis points
from 65.23% in the second quarter of 1995.
ANALYSIS OF FINANCIAL CONDITION
In the third quarter of 1995, FSCO continued to increase its interest-
earning assets, maintain strong asset quality, improve its liquidity, and
strengthen its well-capitalized position, as compared with September 30, 1994
and December 31, 1994.
FSCO's assets totaled $12.7 billion at September 30, 1995, up $1.1 billion
(9.2%) from September 30, 1994, and up $526 million (4.3%) from December 31,
1994. Total interest-earning assets were $11.5 billion at quarter end, up
$891 million (8.4%) from one year ago, and up $435 million (4.0%) from the
year end (see: MDA "Interest-Earning Assets and Asset Quality"). Intangible
assets were $145.0 million at September 30, 1995, down $26.6 million (15.5%)
from September 30, 1994, and down $21.2 million (12.8%) from December 31,
1994, due to the effects of ongoing amortization plus a reduction of the
intangibles resulting from the sale of mortgage servicing rights.
Fluctuations in other assets and other liabilities were in part due to the
effect of timing differences on cash, accounts receivable, and accounts
payable resulting from unsettled transactions in the purchase and sale of
securities.
FSCO's liabilities totaled $11.7 billion at September 30, 1995, up $937
million (8.7%) from September 30, 1994, and up $396 million (3.5%) from
December 31, 1994. Total interest-bearing liabilities were $9.36 billion at
quarter end, up $572 million (6.5%) from one year ago, but essentially
unchanged from year end (see: MDA "Liquidity").
Stockholders' equity in FSCO increased to a record $1.0 billion at
September 30, 1995, up $133 million (15.0%) from September 30, 1994, and up
$130 million (14.6%) from December 31, 1994 (see: MDA "Stockholders' Equity
and Capital Adequacy").
FSCO's financial condition is discussed in greater detail in the following
MDA sections "Interest-Earning Assets and Asset Quality", "Liquidity", and
"Stockholders' Equity and Capital Adequacy".
INTEREST-EARNING ASSETS and ASSET QUALITY
Loans
FSCO's borrowers reside primarily in states where FSCO has banking offices
as well as in contiguous market areas. FSCO has policies and procedures
designed to maintain the quality of its loans. These include setting
underwriting standards for new credits and the continuous monitoring and
reporting of asset quality and adequacy of the reserve for loan losses. These
policies were discussed in greater detail in FSCO's 1994 Form 10-K: "Interest-
Earning Assets and Asset Quality - Loans".
FSCO's loan portfolio, net of unearned income but before the reserve for
loan losses, totaled $8.3 billion at September 30, 1995, up $558 million
(7.2%) from September 30, 1994, and up $129 million (1.6%) from December 31,
1994 (see: Supplemental Tables "Loans Outstanding"). The increase from one
year ago was due primarily to increases in real estate loans and commercial
loans.
The ratio of loans to assets was 65.51% at September 30, 1995, compared
with 66.74% one year ago and 67.28% at year end.
The components of FSCO's loan portfolio at September 30, 1995, compared
with September 30, 1994, and December 31, 1994, respectively, included:
* Commercial loans were $2.0 billion, up $279 million (16.1%) from one year
ago, and up $177 million (9.6%) from year end. This growth was due primarily
to a broad-based business expansion in FSCO's market areas with increases in
loans to customers of all sizes.
* Real estate secured loans were $3.4 billion, up $380 million (12.7%) from
one year ago, and up $222 million (7.1%) from year end. This growth was due
to increases in residential term and home equity loans, and commercial
construction and term (nonowner occupied) loans. For balance sheet management
purposes, FSCO does not retain all newly-originated fixed-rate mortgage loans
but sells a portion to secondary markets.
* Consumer loans were $2.6 billion, down $118 million (4.4%) from one year
ago, and down $261 million (9.2%) from year end. These decreases were due to
the July 31, 1995 securitization and sale of $251 million of direct and
indirect auto loans. FSCO remains the leading consumer lender in the
Corporation's primary market area.
Problem Assets and Potential Problem Assets
Superior asset quality continues to be a primary objective for FSCO.
Despite a general downward trend in problem assets since 1991, it has been
FSCO's experience that economic cycles and loan-specific events cause
fluctuations in problem assets, sometimes with little or no warning. FSCO
carefully considers these potential fluctuations in the analysis of its
reserve for loan losses.
Problem assets increased to $41.4 million at September 30, 1995, up $8.7
million (26.7%) from September 30, 1994, and up $2.1 million (5.5%) from
December 31, 1994 (see: Supplemental Tables "Financial Highlights - Problem
Assets, - Selected Ratios"). These increases were due primarily to isolated
agricultural loan problems related to commodity prices that temporarily offset
a healthy regional economy and continued high loan underwriting standards.
The ratio of total problem assets to total loans and ORE was 0.50% at
quarter end, indicating the continuing high quality of FSCO's interest-earning
assets, up slightly from 0.42% one year ago and 0.48% at year end.
The components of FSCO's problem assets at September 30, 1995, compared
with September 30, 1994, and December 31, 1994, respectively, included:
* Nonaccruing loans were $25.4 million, up $5.1 million (25.4%) from one
year ago, and up $1.5 million (6.3%) from year end. These increases were
primarily due to one large agricultural credit that was previously identified
as a potential problem asset. No losses are expected from this credit as it
is well-secured. The ratio of nonaccruing loans to total loans was 0.31%, up
slightly from 0.26% one year ago and 0.29% at year end.
* ORE and other foreclosed assets were $4.5 million, up $1.3 million
(42.1%) from one year ago, and up $1.1 million (33.4%) from year end. These
increases were due in part to a decrease in the ORE valuation reserve. 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 $11.5 million, up $2.2
million (24.3%) from one year ago, but down $0.5 million (4.0%) from year end.
Potential problem loans identified by FSCO were $17.2 million at September
30, 1995, down $3.5 million (17.0%) from September 30, 1994, but up $5.2
million (43.3%) from December 31, 1994. The increase from year end was due to
a combination of small commercial loans, agricultural loans, and 1-4 family
residential term loans. Potential problem loans consisted primarily of small
commercial loans, agricultural loans, and 1-4 family residential term loans.
Reserve for Loan Losses
It is FSCO's philosophy to maintain a conservative balance sheet, including
its reserve for loan losses. This was discussed in greater detail in FSCO's
1994 Form 10-K: "Interest-Earning Assets and Asset Quality - Reserve for Loan
Losses". FSCO continually analyzes the reserve and adjusts it as needed to
maintain a conservative position.
The reserve for loan losses was $131.9 million at September 30, 1995, down
$2.8 million (2.1%) from September 30, 1994, and down $2.0 million (1.5%) from
December 31, 1994 (see: Supplemental Tables "Financial Highlights -
Reconciliation of the Reserve for Loan Losses, - Selected Ratios"). These
slight reductions in the reserve reflected continued good asset quality.
Merger transactions added reserves of $2.1 million since one year ago but none
since year end. The reserve at September 30, 1995 was increased $1.5 million
(1.1%) from June 30, 1995. Based on its analysis of reserve adequacy, FSCO's
management considered the reserve for loan losses at September 30, 1995 to be
adequate to cover potential losses in the foreseeable future.
The "coverage" ratio of the reserve to nonaccruing loans was 519.59% at
quarter end, down from 665.54% one year ago and 560.81% at year end. At the
same time, the ratio of the reserve to total loans was 1.59% at quarter end,
down from 1.74% one year ago and 1.64% at year end.
FSCO charges loan losses against the reserve for loan losses when such
losses become probable and subject to reasonable estimation. Net loans
charged off totaled $15.2 million for year-to-date 1995, up $11.4 million
(306.1%) from the year-ago period, and were $5.1 million for the third quarter
of 1995, up $4.5 million (784.9%) from the year-ago quarter. Net chargeoffs
continued at a favorable rate of approximately $5 million per quarter, with
the increases primarily due to large recoveries one year ago in commercial
loans, real estate loans, and leases. FSCO continued to maintain strong asset
quality and to benefit from the positive effects of a healthy regional
economy.
The ratio of net loan chargeoffs to average loans remained low at 0.25% for
both the year to date and third quarter, although up from 0.07% for the year-
ago period and 0.03% for the year-ago quarter, respectively, and up from 0.10%
for all of 1994.
Provision for Loan Losses
The provision for loan losses totaled $13.2 million for year-to-date 1995,
up from $0.4 million for the year-ago period, and was $6.6 million for the
third quarter of 1995, up from $0.2 million for the year-ago quarter (see:
Supplemental Tables "Financial Highlights - Reconciliation of the Reserve For
Loan Losses"). These increases were due to the combination of 16.8% growth in
year-to-date average loans and higher net loans charged off. During the 1995
periods, FSCO kept the provision for loan losses essentially equivalent to net
chargeoffs, allowing the reserve to remain relatively constant.
Investment Securities
FSCO manages its securities available for sale and securities held to
maturity portfolios within policies which are designed to achieve desired
liquidity levels, manage interest rate sensitivity risk, meet earnings
objectives, and fulfill requirements for collateral to support deposit and/or
repurchase agreement activities (see: Financial Statements "Condensed
Consolidated Balance Sheets"). FSCO's investment strategy remains flexible
and carefully reviewed by management, shifting periodically in response to
changing conditions. The average life of the investment securities portfolios
is relatively short, providing a constant cash flow from maturing assets.
FSCO's securities available for sale were $2.2 billion at September 30,
1995, up $132 million (6.3%) from September 30, 1994, and up $226 million
(11.3%) from December 31, 1994. FSCO's securities held to maturity were $247
million at September 30, 1995, down $13 million (5.0%) from September 30,
1994, and down $5 million (2.0%) from December 31, 1994.
Other Interest-Earning Assets
The combined balance of Federal funds sold and securities purchased under
resale agreements, interest-bearing deposits in other banks, and trading
account securities was $684 million at September 30, 1995, up $214 million
(45.6%) from September 30, 1994, and up $85 million (14.3%) from December 31,
1994 (see: Financial Statements "Condensed Consolidated Balance Sheets").
Historically, these balances have fluctuated significantly in response to both
market conditions and FSCO's preference for liquidity.
LIQUIDITY
FSCO has established specific policies and procedures governing liquidity
management through its asset/liability management committee ("ALCO") process.
These policies and processes were discussed in greater detail in FSCO's 1994
Form 10-K: "Asset/Liability Management"; and "Liquidity".
FSCO works to maintain an adequate liquidity position through stable core
deposits generated from its branch network, short-term securities portfolios,
other interest-earning assets, and the prudent use of debt (see: MDA
"Interest-Earning Assets and Asset Quality", "Deposits", and Borrowed Funds").
Maturing balances in the large loan portfolios also provide flexibility in
managing cash flows. The ability to redeploy these funds is an important
source of medium to long-term liquidity.
Backup sources of liquidity are provided by credit lines to FSCO and by
Federal funds lines carried by FSCO's subsidiary Banks. Additional liquidity
could be generated through: issuance of new corporate debt or equity
securities under an existing shelf registration with the Securities and
Exchange Commission; Bank Note issuance; borrowings from the Federal Home Loan
Bank, of which FSB Utah, FSB Idaho, and FSB Oregon are members; asset sales
and securitizations; and borrowings from the Federal Reserve System.
Deposits
FSCO's deposits totaled $8.7 billion at September 30, 1995, up $754 million
(9.5%) from September 30, 1994, and up $636 million (7.9%) from December 31,
1994 (see: Financial Statements "Condensed Consolidated Balance Sheets" and
Supplemental Tables "Rate / Volume Analysis"). These increases occurred as
FSCO took steps to acquire CDs. The mix of deposits at quarter end remained
essentially unchanged as interest-bearing deposits were 78.62% of total
deposits, compared to 78.15% one year ago and 78.65% at year end.
Borrowed Funds
Borrowed funds totaled $2.5 billion at September 30, 1995, down $58 million
(2.2%) from September 30, 1994, and down $499 million (16.4%) from December
31, 1994 (see: Financial Statements "Condensed Consolidated Balance Sheets").
Borrowed funds were increased during 1994 to support strong loan growth that
exceeded deposit growth throughout FSCO's market areas. Since year end, loan
sales and repayments have largely offset loan originations, so that deposit
growth exceeded net loan growth and supported a reduction of short-term
borrowings.
The components of FSCO's borrowed funds at September 30, 1995, compared
with September 30, 1994, and December 31, 1994, respectively, included:
* Federal funds purchased and securities sold under repurchase agreements
were $1.5 billion, down $738 million (33.4%) from one year ago, and down $688
million (31.8%) from year end.
* All other short-term borrowings were $203 million, up $115 million
(131.5%) from one year ago, and up $18 million (10.0%) from year end.
* Long-term debt was $857 million, up $564 million (193.3%) from one year
ago, and up $171 million (25.0%) from year end as FSCO moved to take advantage
of a favorable interest rate environment. On July 17, 1995, FSCO issued $125
million of 7.00% Subordinated Notes due July 15, 2005.
STOCKHOLDERS' EQUITY and CAPITAL ADEQUACY
FSCO and its subsidiary Banks exceeded regulatory requirements for "well
capitalized" status throughout 1994 and for year-to-date 1995. It is FSCO's
policy to maintain this status at both the consolidated and subsidiary Bank
levels, and to achieve a minimum tangible common equity to assets ratio of
7.00%.
Application of SFAS 115 has resulted in, and will continue to result in,
additions to or deductions from FSCO's total stockholders' equity as the
result of fluctuations in the fair value of securities available for sale.
These fluctuations are shown in the "Net unrealized gain (loss) on securities
available for sale" component of equity.
Stockholders' equity in FSCO increased to a record $1.0 billion at
September 30, 1995, up $133 million (15.0%) from September 30, 1994, and up
$130 million (14.6%) from December 31, 1994 (see: Financial Statements
"Condensed Consolidated Balance Sheets"). This growth was due to record
earnings plus the improvement in the SFAS 115 component of equity.
The ratio of stockholders' equity to total assets was 8.04% at quarter end,
up from 7.64% one year ago and 7.32% at year end. At the same time, the ratio
of tangible common equity to tangible total assets was 6.97%, up from 6.25%
one year ago and 6.03% at year end (see: Supplemental Tables "Financial
Highlights - Selected Ratios"). Changes in these equity ratios were due to
record earnings plus the improvement in the SFAS 115 component of equity.
FSCO's risk-based capital ratios (see: Supplemental Tables "Financial
Highlights - Risk-Based Capital Ratios") at September 30, 1995, compared with
September 30, 1994, and December 31, 1994, respectively, were:
* Tier 1 (well capitalized: 6.0% or above) at 10.52%, compared with 9.79%
one year ago, and 9.84% at year end.
* Total Capital (well capitalized: 10.0% or above) at 14.06%, compared with
11.96% one year ago, and 11.98% at year end.
* Leverage (well capitalized: 5.0% or above) at 7.32%, compared with 7.00%
one year ago, and 6.88% at year end.
As with its equity ratios, the changes in FSCO's risk-based capital ratios
were due in part to FSCO's record earnings plus the effect of issuing $125
million in subordinated debt during the quarter.
COMMON STOCK
On July 31, 1995, FSCO's Board of Directors declared a regular quarterly
cash dividend of $0.28 per share of FSCO's Common Stock (see: Supplemental
Tables "Financial Highlights"). This dividend, payable September 4, 1995 to
shareholders of record on August 18, 1995, equals an annual rate of $1.12 per
share. At the market closing bid price of $28.13 per share on Friday, July
28, 1995, the annual dividend yield on FSCO's Common Stock was 3.98%.
On October 30, 1995, FSCO's Board of Directors declared a regular quarterly
cash dividend of $0.28 per share of FSCO's Common Stock. This dividend,
payable December 4, 1995 to shareholders of record on November 17, 1995,
equals an annual rate of $1.12 per share. At the market closing bid price of
$32.50 per share on Friday, October 27, 1995, the annual dividend yield on
FSCO's Common Stock was 3.45%.
FSCO has paid cash dividends for 61 consecutive years. National and state
banking and insurance regulations impose restrictions on the ability of FSCO's
bank and insurance subsidiaries to transfer funds to FSCO in the form of loans
or dividends. Such restrictions have not had, nor are they expected to have,
any effect on FSCO's current ability to pay dividends. FSCO'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
FSCO's merger and acquisition activity reflects management's strategy of
diversifying and enhancing FSCO's financial services delivery system through
the expansion and geographical diversification of its bank branch network and
nonbank activities (see: Supplemental Tables "Mergers and Acquisitions").
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 in new and existing markets.
Since September 30, 1994, FSCO has acquired 3 financial institutions, 1 of
which was accounted for as a purchase transaction and 2 of which were
accounted for as pooling-of-interests transactions. None of the pooling-of-
interests transactions were of sufficient size to require restatement of
FSCO's historical financial statements. On April 29, 1994, FSCO acquired
CrossLand Mortgage which was the largest cash purchase ever made by the
Corporation.
PROJECT "VISION" - FIRST SECURITY'S CORPORATE REDESIGN PROGRAM
On July 11, FSCO announced the implementation of a corporate redesign
effort aimed at enhancing customer service and improving the Corporation's
operating efficiency. Project "VISION", the six-month customer-focused
redesign program will help FSCO to improve customer service while at the same
time identifying operational changes that will help the Corporation become a
more efficient provider of banking and financial services.
NATIONAL & REGIONAL ECONOMY
The U.S. economy bounced back in the third quarter of 1995 relative to the
prior period when excess inventory positions were being liquidated. The
economic improvement, however, may moderate in the fourth quarter. Going
forward into 1996, real growth will likely vary near 2.5%, a level which
should keep the jobless rate from seriously rising, but at the same time
restraining inflation below 3%.
There is some concern that buying momentum in the consumer sector is
withering. Job growth and income gains may struggle to generate the
purchasing power necessary to sustain final demand, particularly with
relatively high consumer debt levels. Accordingly, it is possible that upon
completion of a Federal budget package, the Federal Reserve could edge
interest rates a notch lower. This may psychologically help Christmas sales
and carry-over spending, particularly for the purchase of consumer durables,
into the new year.
The Intermountain Area's third-quarter economic performance continued very
strong. For example, Utah's October employment growth exceeded 6% (54,000 new
jobs), while the unemployment rate in the Salt Lake area dropped below 3%.
Labor markets in Nevada, New Mexico, and Oregon have recorded vigorous gains,
whereas somewhat less rapid growth is evident in Idaho and Wyoming. A
commercial construction boom is providing strong growth momentum throughout
the region. The pattern of net in-migration to this region is continuing and
economic prospects remain highly favorable.
# # #
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Continued: Supplemental Tables
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS
(in thousands, except per share data and ratios; unaudited)
<CAPTION>
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr Year-To-Date Nine Months
1995 1995 1995 1994 1994 1995 1994 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Common Stock Data:
Earnings per common share: primary ............ 0.77 0.72 0.70 0.69 0.73 2.19 2.11 3.8
Earnings per common share: fully diluted ...... 0.77 0.71 0.70 0.69 0.73 2.18 2.11 3.3
Dividends paid per common share ............... 0.28 0.28 0.28 0.26 0.26 0.84 0.78 7.7
Book value EOP ................................ 20.36 19.82 18.96 17.92 17.88 20.36 17.88 13.8
Tangible book value EOP ....................... 17.46 16.90 15.95 14.57 14.42 17.46 14.42 21.1
Market price (bid) EOP ........................ 31.38 28.00 24.00 22.75 28.50 31.38 28.50 10.1
High bid for the period ..................... 33.25 28.63 25.63 28.50 32.00 33.25 32.00 3.9
Low bid for the period ...................... 27.50 23.00 22.00 21.50 27.75 22.00 25.25 -12.9
Market capitalization EOP: mktprice x #shrs ... 1,569,974 1,398,348 1,197,768 1,128,286 1,411,691 1,569,974 1,411,691 11.2
Market price EOP / book value EOP (%) ......... 154.10 141.27 126.58 126.95 159.40 154.10 159.40
Dividend payout ratio: DPS / EPS (%) .......... 36.36 38.89 40.00 37.68 35.62 38.36 36.97
Dividend yield EOP: dividend / mktprice (%) ... 3.57 4.00 4.67 4.57 3.65 3.57 3.65
Price / earnings ratio: mktprice / 4 qtrs earn 10.9 9.9 8.5 8.1 11.2 10.9 11.2
Common shares: EOP ............................ 50,039 49,941 49,907 49,595 49,533 50,039 49,533 1.0
Common shares: avg primary .................... 50,977 50,710 50,566 50,341 50,350 50,752 49,788 1.9
Common shares: avg fully diluted .............. 51,114 50,850 50,709 50,491 50,505 50,892 49,946 1.9
Preferred shares outstanding: EOP ............. 11 11 12 12 13 11 13 -15.4
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Income Statement:
Interest income ............................... 234,584 233,068 220,550 211,909 200,365 688,202 561,608 22.5
Interest expense .............................. 114,805 114,466 111,488 96,955 83,829 340,759 218,460 56.0
Net interest income ........................... 119,779 118,602 109,062 114,954 116,536 347,443 343,148 1.3
Fully-taxable equivalent (FTE) adjustment ..... 2,114 1,874 2,025 1,944 2,002 6,013 5,931 1.4
Net interest income, FTE ...................... 121,893 120,476 111,087 116,898 118,538 353,456 349,079 1.3
Provision for loan losses ..................... 6,587 3,742 2,848 474 180 13,177 351 3654.1
Noninterest income ............................ 70,092 61,845 68,059 55,244 55,608 199,996 142,305 40.5
Noninterest expenses .......................... 121,275 118,929 117,918 114,215 113,456 358,122 319,434 12.1
Provision for income taxes .................... 22,666 21,543 20,755 20,541 21,724 64,964 60,502 7.4
Net income .................................... 39,343 36,233 35,600 34,968 36,784 111,176 105,166 5.7
Preferred stock dividend requirement .......... 9 9 9 9 10 27 30 -10.0
Common stock dividend ......................... 13,996 13,976 13,981 12,869 12,882 41,953 38,218 9.8
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Balance Sheet - End of Period:
Trading account securities .................... 484,761 477,560 437,415 553,826 398,087 484,761 398,087 21.8
Securities available for sale ................. 2,219,488 2,086,509 2,044,257 1,993,797 2,087,639 2,219,488 2,087,639 6.3
Securities held to maturity ................... 247,493 251,982 243,915 252,622 260,485 247,493 260,485 -5.0
Loans, net of unearned income ................. 8,303,049 8,356,657 8,183,306 8,173,678 7,745,350 8,303,049 7,745,350 7.2
Reserve for loan losses ....................... (131,878) (130,388) (131,603) (133,855) (134,653) (131,878) (134,653) -2.1
Total interest-earning assets .................11,454,392 11,291,982 11,119,493 11,019,059 10,563,552 11,454,392 10,563,552 8.4
Intangible assets ............................. 144,964 145,369 149,828 166,199 171,583 144,964 171,583 -15.5
Other assets .................................. 1,207,536 1,119,216 1,051,592 1,097,579 1,004,407 1,207,536 1,004,407 20.2
Total assets ..................................12,675,014 12,426,179 12,189,310 12,148,982 11,604,889 12,675,014 11,604,889 9.2
Noninterest-bearing deposits .................. 1,857,584 1,748,031 1,655,669 1,719,388 1,734,255 1,857,584 1,734,255 7.1
Interest-bearing deposits ..................... 6,831,503 6,843,356 6,617,045 6,333,956 6,201,229 6,831,503 6,201,229 10.2
Total deposits ................................ 8,689,087 8,591,387 8,272,714 8,053,344 7,935,484 8,689,087 7,935,484 9.5
Short-term borrowed funds ..................... 1,675,498 1,920,093 2,076,923 2,345,139 2,298,101 1,675,498 2,298,101 -27.1
Long-term debt ................................ 856,550 666,858 683,785 685,426 292,058 856,550 292,058 193.3
Total interest-bearing liabilities ............ 9,363,551 9,430,307 9,377,753 9,364,521 8,791,388 9,363,551 8,791,388 6.5
Other liabilities ............................. 434,305 257,349 208,942 175,330 192,587 434,305 192,587 125.5
Minority equity in subsidiaries ............... 304 298 285 269 270 304 270 12.6
Preferred stockholders' equity ................ 589 594 610 629 668 589 668 -11.8
Common stockholders' equity ................... 1,018,681 989,600 946,051 888,845 885,721 1,018,681 885,721 15.0
Parent company investment in subsidiaries ..... 1,057,376 1,030,242 990,493 932,738 916,427 1,057,376 916,427 15.4
Off-balance sheet letters of credit ........... 188,211 191,692 178,191 202,694 194,657 188,211 194,657 -3.3
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Problem Assets & Potential Problem Assets - End of Period:
Nonaccruing loans:
Commercial .................................. 11,046 5,501 5,731 8,903 7,781 11,046 7,781 42.0
Real estate: term ........................... 11,831 10,047 11,412 12,246 11,020 11,831 11,020 7.4
Real estate: construction ................... 1,278 1,637 1,057 1,714 1,110 1,278 1,110 15.1
Consumer .................................... 75 85 97 168 173 75 173 -56.6
Leases ...................................... 1,151 1,432 908 837 148 1,151 148 677.7
Total nonaccruing loans ....................... 25,381 18,702 19,205 23,868 20,232 25,381 20,232 25.4
ORE and other foreclosed assets ............... 4,472 4,340 2,334 3,352 3,148 4,472 3,148 42.1
Total nonperforming assets .................... 29,853 23,042 21,539 27,220 23,380 29,853 23,380 27.7
Accruing loans past due 90 days or more ....... 11,515 11,076 11,518 12,001 9,265 11,515 9,265 24.3
Total problem assets .......................... 41,368 34,118 33,057 39,221 32,645 41,368 32,645 26.7
Potential problem assets ...................... 17,223 19,652 19,943 12,018 20,741 17,223 20,741 -17.0
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Other Data - End of Period (not rounded):
Full-time equivalent employees ................ 7,758 7,755 7,656 7,621 7,499 7,758 7,499 3.5
Domestic bank offices:
First Security Bank of Utah ................. 124 124 120 119 118 124 118 5.1
First Security Bank of Idaho ................ 91 91 91 91 91 91 91 0.0
First Security Bank of New Mexico ........... 27 27 27 27 26 27 26 3.8
First Security Bank of Oregon ............... 13 13 13 13 13 13 13 0.0
First Security Bank of Nevada ............... 8 6 5 5 5 8 5 60.0
First Security Bank of Wyoming .............. 6 6 6 6 6 6 6 0.0
Total domestic bank offices ................... 269 267 262 261 259 269 259 3.9
============================================== ========== ========== ========== ========== ========== ========== ========== =======
<FN>
Note: EOP: End of period. EPS: Earnings Per Share. DPS: Dividends Per Share. NM: Not meaningful.
Reclassifications of prior period amounts have been made where necessary to conform with current classifications adopted pursuant
to SFAS No. 122 "Accounting for Mortgage Servicing Rights" adopted by FSCO as of July 1, 1995.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS - Continued
(in thousands, except per share data and ratios; unaudited)
<CAPTION>
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr Year-To-Date Nine Months
1995 1995 1995 1994 1994 1995 1994 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Balance Sheet - Average:
Trading account securities .................... 294,378 345,158 677,507 570,726 669,955 437,611 649,049 -32.6
Securities available for sale ................. 2,096,740 2,042,127 1,976,800 2,059,821 2,108,122 2,040,144 1,959,375 4.1
Securities held to maturity ................... 243,993 238,637 250,957 246,917 263,979 243,354 277,885 -12.4
Loans, net of unearned income ................. 8,207,753 8,233,243 8,133,412 7,928,754 7,489,686 8,191,337 7,013,515 16.8
Reserve for loan losses ....................... (130,358) (131,321) (133,747) (135,325) (134,492) (131,796) (134,626) -2.1
Deferred taxes on leases ...................... (160,855) (160,041) (157,360) (153,585) (147,368) (159,431) (142,460) 11.9
Total int-earning assets - defer tax on leases 10,932,739 10,825,695 10,948,403 10,705,435 10,427,360 10,901,816 9,818,505 11.0
Intangible assets ............................. 141,780 148,187 164,105 169,375 169,246 151,275 100,196 51.0
Other assets .................................. 1,045,896 1,003,232 984,449 1,034,843 980,263 1,011,418 947,726 6.7
Total assets ..................................12,150,912 12,005,834 12,120,570 11,927,913 11,589,745 12,092,144 10,874,261 11.2
Noninterest-bearing deposits .................. 1,690,536 1,585,255 1,545,225 1,684,321 1,641,041 1,607,133 1,593,369 0.9
Interest-bearing deposits ..................... 6,887,306 6,766,077 6,423,604 6,255,221 6,175,251 6,694,028 6,025,408 11.1
Total deposits ................................ 8,577,842 8,351,332 7,968,829 7,939,542 7,816,292 8,301,161 7,618,777 9.0
Short-term borrowed funds ..................... 1,534,440 1,761,411 2,348,062 2,310,480 2,388,601 1,878,324 1,905,183 -1.4
Long-term debt ................................ 791,348 682,382 684,497 586,407 306,808 719,800 294,526 144.4
Total interest-bearing liabilities ............ 9,213,094 9,209,870 9,456,163 9,152,108 8,870,660 9,292,152 8,225,117 13.0
Other liabilities ............................. 237,052 235,550 199,827 200,059 205,775 224,279 194,330 15.4
Minority equity in subsidiaries ............... 300 291 276 270 265 289 263 9.9
Preferred stockholders' equity ................ 593 603 616 650 671 604 685 -11.8
Common stockholders' equity ................... 1,009,339 974,265 918,463 890,505 871,333 967,688 860,497 12.5
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Reconciliation of the Reserve for Loan Losses:
Balance, beginning of period .................. 130,388 131,603 133,855 134,653 132,714 133,855 134,848 -0.7
Loans charged off:
Commercial .................................. 954 726 1,074 1,052 1,015 6,897 4,130 67.0
Real estate: term ........................... 103 573 694 274 267 1,267 1,177 7.6
Real estate: construction ................... 0 1 93 0 206 94 300 -68.7
Consumer: instalment ........................ 7,319 8,008 9,425 8,098 5,719 17,433 9,063 92.4
Consumer: credit card ....................... 2,464 2,291 2,447 1,845 1,616 4,738 3,367 40.7
Leases ...................................... (1) 600 0 104 12 600 123 387.8
Total loans charged off ....................... 10,839 12,199 13,733 11,373 8,835 31,029 18,160 70.9
Recoveries on loans charged off:
Commercial .................................. (1,215) (2,216) (2,412) (1,547) (3,291) (4,628) (6,300) -26.5
Real estate: term ........................... (399) (560) (1,765) (2,394) (1,317) (2,325) (1,940) 19.8
Real estate: construction ................... (43) (30) (22) (121) (37) (52) (43) 20.9
Consumer: instalment ........................ (3,178) (3,843) (3,930) (3,562) (2,624) (7,773) (4,915) 58.1
Consumer: credit card ....................... (500) (553) (504) (362) (476) (1,057) (952) 11.0
Leases ...................................... (407) (40) 0 (27) (514) (40) (278) -85.6
Total recoveries of loans charged off ......... (5,742) (7,242) (8,633) (8,013) (8,259) (15,875) (14,428) 10.0
Net loans charged off (recovered) ............. 5,097 4,957 5,100 3,360 576 15,154 3,732 306.1
Provision for loan losses ..................... 6,587 3,742 2,848 474 180 13,177 351 3654.1
Acquisitions & reclassifications .............. 0 0 0 2,088 2,335 0 3,186 -100.0
Balance, end of period ........................ 131,878 130,388 131,603 133,855 134,653 131,878 134,653 -2.1
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Selected Ratios (%):
Return on average assets ...................... 1.28 1.21 1.19 1.16 1.26 1.23 1.29
Return on average stockholders' equity ........ 15.46 14.91 15.71 15.57 16.74 15.35 16.33
Net interest margin, FTE ...................... 4.46 4.45 4.06 4.37 4.55 4.32 4.74
Net interest spread, FTE ...................... 3.68 3.71 3.41 3.75 3.98 3.60 4.17
Operating expense ratio:
(nonint exp / (net int inc FTE + nonint inc)) 63.17 65.23 65.82 66.35 65.15 64.71 65.01
Productivity ratio: (nonint exp / avg assets) . 3.96 3.97 3.95 3.80 3.88 3.96 3.93
Stockholders' equity / assets ................. 8.04 7.97 7.77 7.32 7.64 8.04 7.64
Avg stockholders' equity / avg assets ......... 8.31 8.12 7.58 7.47 7.52 8.01 7.92
Tangible common equity / tangible assets ...... 6.97 6.87 6.61 6.03 6.25 6.97 6.25
Loans / deposits .............................. 95.56 97.27 98.92 101.49 97.60 95.56 97.60
Loans / assets ................................ 65.51 67.25 67.14 67.28 66.74 65.51 66.74
Reserve for loan losses EOP to:
Total loans ................................. 1.59 1.56 1.61 1.64 1.74 1.59 1.74
Nonaccruing loans ........................... 519.59 697.19 685.25 560.81 665.54 519.59 665.54
Nonaccruing + accruing loans past due 90 days 357.43 437.87 428.35 373.18 456.50 357.43 456.50
Nonaccruing loans / total loans ............... 0.31 0.22 0.23 0.29 0.26 0.31 0.26
Nonaccruing + accr. loans past due / total loan 0.44 0.36 0.38 0.44 0.38 0.44 0.38
Nonperforming assets EOP to:
Total loans + ORE ........................... 0.36 0.28 0.26 0.33 0.30 0.36 0.30
Total assets ................................ 0.24 0.19 0.18 0.22 0.20 0.24 0.20
Total equity ................................ 2.93 2.33 2.28 3.06 2.64 2.93 2.64
Total equity + reserve for loan losses ...... 2.59 2.06 2.00 2.66 2.29 2.59 2.29
Problem assets EOP to:
Total loans + ORE ........................... 0.50 0.41 0.40 0.48 0.42 0.50 0.42
Total assets ................................ 0.33 0.27 0.27 0.32 0.28 0.33 0.28
Total equity ................................ 4.06 3.45 3.49 4.41 3.68 4.06 3.68
Total equity + reserve for loan losses ...... 3.59 3.04 3.07 3.83 3.20 3.59 3.20
Net loans charged off / average loans ......... 0.25 0.24 0.25 0.17 0.03 0.25 0.07
============================================== ========== ========== ========== ========== ========== ========== ========== =======
Risk-Based Capital Ratios: FSC FSB FSB FSB FSB FSB FSB
As of September 30, 1995 Consolidate Utah Idaho New Mexico Oregon Nevada Wyoming
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Tier 1 risk-based capital ratio (%) ........... 10.52 10.64 9.03 13.23 10.63 10.50 10.73
Total (Tier 1+2) risk-based capital ratio (%) . 14.06 12.26 11.07 14.49 11.88 11.76 11.99
Leverage Ratio (%) ............................ 7.32 7.16 7.07 6.49 8.92 7.76 7.00
Tier 1 equity ................................. 920,815 434,349 268,183 106,966 36,903 27,164 14,414
Total (Tier 1+2) equity ....................... 1,230,520 500,450 328,659 117,198 41,250 30,412 16,107
Total risk-based assets - loan loss residual .. 8,754,215 4,080,589 2,968,540 808,810 347,321 258,701 134,379
============================================== ========== ========== ========== ========== ========== ========== ========== =======
<FN>
Note: EOP: End of period. EPS: Earnings Per Share. DPS: Dividends Per Share. NM: Not meaningful.
Reclassifications of prior period amounts have been made where necessary to conform with current classifications adopted pursuant
to SFAS No. 122 "Accounting for Mortgage Servicing Rights" adopted by FSCO as of July 1, 1995.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
RATE / VOLUME ANALYSIS
(Fully Taxable Equivalent; in thousands; unaudited)
<CAPTION>
For the Three Months Ended September 30, 1995 and 1994
Average Balance Yield/Rate % Interest Inc/Exp (A) Change Changes Due To:
1995 1994 1995 1994 1995 1994 1995-94 Volume Rate(B)
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-EARNING ASSETS / INCOME:
Loans, net of unearned income and
8,046,898 7,342,317 9.49 8.80 deferred taxes on leases (C) .............. 190,990 161,509 29,481 15,499 13,982
220,984 40,364 5.84 4.90 Federal funds sold & securities purchased ... 3,228 494 2,734 2,211 523
29,746 2,623 6.00 5.34 Interest-bearing deposits in other banks..... 446 35 411 362 49
294,378 669,955 6.59 4.06 Trading account securities .................. 4,851 6,793 (1,942) (3,808) 1,866
2,096,740 2,108,122 6.16 5.58 Securities available for sale ............... 32,281 29,419 2,862 (159) 3,021
243,993 263,979 8.04 6.24 Securities held to maturity ................. 4,902 4,117 785 (312) 1,097
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
10,932,739 10,427,360 8.66 7.76 TOTAL INTEREST-EARNING ASSETS / INCOME 236,698 202,367 34,331 13,793 20,538
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSE:
Interest-bearing deposits:
1,057,126 1,116,191 1.94 1.71 NOW accounts .............................. 5,134 4,766 368 (252) 620
2,388,909 2,607,300 3.84 2.93 Savings accounts .......................... 22,915 19,068 3,847 (1,597) 5,444
735,368 405,552 6.14 4.54 Time deposits $100,000 & over ............. 11,297 4,607 6,690 3,747 2,943
2,705,903 2,046,208 5.88 4.50 Other time deposits ....................... 39,793 23,006 16,787 7,417 9,370
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
6,887,306 6,175,251 4.60 3.33 TOTAL INTEREST-BEARING DEPOSITS 79,139 51,447 27,692 9,315 18,377
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
1,346,186 2,308,671 5.52 4.59 Federal funds purchased & securities sold ... 18,573 26,519 (7,946) (11,056) 3,110
188,254 79,930 6.35 6.19 Other short-term borrowings ................. 2,987 1,236 1,751 1,675 76
791,348 306,808 7.13 6.03 Long-term debt .............................. 14,106 4,627 9,479 7,307 2,172
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
9,213,094 8,870,660 4.98 3.78 TOTAL INTEREST-BEARING LIABILITIES / EXPENSE 114,805 83,829 30,976 7,241 23,735
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
8.66 7.76 Interest income / earning assets
4.20 3.21 Interest expense / earning assets
------ ------ --------------------------------------------
4.46 4.55 Net interest income / earning assets ........ 121,893 118,538 3,355 6,552 (3,197)
Less fully taxable equivalent adjustment .... 2,114 2,002 112
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONDENSED
CONSOLIDATED INCOME STATEMENTS 119,779 116,536 3,243
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<CAPTION>
For the Nine Months Ended September 30, 1995 and 1994
Average Balance Yield/Rate % Interest Inc/Exp (A) Change Changes Due To:
1995 1994 1995 1994 1995 1994 1995-94 Volume Rate(B)
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-EARNING ASSETS / INCOME:
Loans, net of unearned income and
8,031,906 6,871,055 9.33 8.65 deferred taxes on leases (C) .............. 562,053 445,905 116,148 75,335 40,813
137,812 58,641 5.84 3.57 Federal funds sold & securities purchased ... 6,035 1,570 4,465 2,120 2,345
10,989 2,500 5.78 4.32 Interest-bearing deposits in other banks..... 476 81 395 275 120
437,611 649,049 5.58 5.70 Trading account securities .................. 18,314 27,765 (9,451) (9,045) (406)
2,040,144 1,959,375 6.06 5.35 Securities available for sale ............... 92,775 78,662 14,113 3,243 10,870
243,354 277,885 7.98 6.50 Securities held to maturity ................. 14,562 13,556 1,006 (1,685) 2,691
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
10,901,816 9,818,505 8.49 7.71 TOTAL INTEREST-EARNING ASSETS / INCOME 694,215 567,539 126,676 70,243 56,433
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSE:
Interest-bearing deposits:
1,066,450 1,089,772 1.96 1.70 NOW accounts .............................. 15,655 13,857 1,798 (297) 2,095
2,346,524 2,555,888 3.75 2.92 Savings accounts .......................... 65,985 56,051 9,934 (4,591) 14,525
695,686 405,619 5.99 4.22 Time deposits $100,000 & over ............. 31,261 12,826 18,435 9,172 9,263
2,585,368 1,974,129 5.61 4.36 Other time deposits ....................... 108,761 64,607 44,154 20,004 24,150
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
6,694,028 6,025,408 4.42 3.26 TOTAL INTEREST-BEARING DEPOSITS 221,662 147,341 74,321 24,288 50,033
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
1,696,667 1,844,369 5.65 3.97 Federal funds purchased & securities sold ... 71,958 54,896 17,062 (4,396) 21,458
181,657 60,814 6.48 5.63 Other short-term borrowings ................. 8,833 2,567 6,266 5,101 1,165
719,800 294,526 7.10 6.18 Long-term debt .............................. 38,306 13,656 24,650 19,718 4,932
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
9,292,152 8,225,117 4.89 3.54 TOTAL INTEREST-BEARING LIABILITIES / EXPENSE 340,759 218,460 122,299 44,711 77,588
- ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
8.49 7.71 Interest income / earning assets
4.17 2.97 Interest expense / earning assets
------ ------ --------------------------------------------
4.32 4.74 Net interest income / earning assets ........ 353,456 349,079 4,377 25,532 (21,155)
Less fully taxable equivalent adjustment .... 6,013 5,931 82
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONDENSED
CONSOLIDATED INCOME STATEMENTS 347,443 343,148 4,295
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<FN>
(A) 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 1995 and 1994.
(B) Changes not due entirely to changes in volume or rate have been allocated to rate.
(C) Loans include nonaccruing and renegotiated loans. Interest on loans includes fees of $5.2 million and $4.1 million for the
1995 and 1994 quarters respectively, and $15.4 million and $13.2 million for 1995 and 1994 year-to-date periods, respectively.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
LOANS OUTSTANDING, NET OF UNEARNED INCOME
(in thousands; unaudited)
<CAPTION>
September 30, 1995 December 31, 1994 September 30, 1994
%Total %Total %Total Sep/Sep
Balance Loans Balance Loans Balance Loans %Chg
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
COMMERCIAL LOANS:
Commercial / Industrial .................. 1,538,144 18.5 1,390,620 17.0 1,265,184 16.3 21.6
Agricultural ............................. 309,133 3.7 291,807 3.6 316,543 4.1 -2.3
Other Commercial ......................... 165,622 2.0 153,365 1.9 151,815 2.0 9.1
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL COMMERCIAL LOANS 2,012,899 24.2 1,835,792 22.5 1,733,542 22.4 16.1
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
REAL ESTATE SECURED LOANS:
Residential Real Estate Loans:
Term ................................... 1,591,242 19.2 1,560,700 19.1 1,465,040 18.9 8.6
Home equity ............................ 422,957 5.1 358,858 4.4 337,395 4.4 25.4
Construction ........................... 213,571 2.6 180,544 2.2 181,532 2.3 17.6
Construction Land ...................... 3,306 0.0 5,798 0.1 6,622 0.1 -50.1
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Total Residential Real Estate Loans 2,231,076 26.9 2,105,900 25.8 1,990,589 25.7 12.1
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Real Estate (CRE) Loans:
Term: owner occupied ................... 331,001 4.0 367,990 4.5 349,687 4.5 -5.3
Term: nonowner occupied ................ 531,475 6.4 479,100 5.9 471,715 6.1 12.7
Construction: owner occupied ........... 83,383 1.0 53,989 0.7 42,452 0.5 96.4
Construction: nonowner occupied ........ 132,064 1.6 78,145 0.9 69,964 0.9 88.8
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Subtotal: CRE Owner Occupied 414,384 5.0 421,979 5.2 392,139 5.1 5.7
Subtotal: CRE Nonowner Occupied 663,539 8.0 557,245 6.8 541,679 7.0 22.5
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Commercial Land ........................ 40,150 0.5 43,331 0.5 43,100 0.6 -6.8
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Total Commercial Real Estate Loans 1,118,073 13.5 1,022,555 12.5 976,918 12.6 14.4
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Farm Land ................................ 15,220 0.2 13,966 0.1 16,573 0.2 -8.2
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL REAL ESTATE SECURED LOANS 3,364,369 40.5 3,142,421 38.4 2,984,080 38.5 12.7
Memo: Total RE Term Loans .............. 2,926,133 35.2 2,819,051 34.5 2,678,451 34.6 9.2
Memo: Total RE Construction Loans ...... 438,236 5.3 323,370 3.9 305,629 3.9 43.4
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Consumer Loans:
Auto ..................................... 1,901,416 22.9 2,129,128 26.0 2,130,654 27.5 -10.8
Student .................................. 55,132 0.7 130,158 1.6 88,398 1.1 -37.6
Credit Card Receivables .................. 308,368 3.7 306,270 3.7 273,477 3.5 12.8
Other Consumer ........................... 327,551 3.9 288,392 3.5 218,232 2.8 50.1
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL CONSUMER LOANS 2,592,467 31.2 2,853,948 34.9 2,710,761 35.0 -4.4
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
Leases:
TOTAL LEASES ............................. 333,314 4.0 341,517 4.2 316,967 4.1 5.2
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
LOANS, NET OF UNEARNED INCOME 8,303,049 100.0 8,173,678 100.0 7,745,350 100.0 7.2
Memo: Unearned Income .................. (10,265) (7,380) (8,600) 19.4
Reserve for Loan Losses .................. (131,878) (133,855) (134,653) -2.1
- ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL LOANS, NET 8,171,171 8,039,823 7,610,697 7.4
========================================= =========== ====== =========== ====== =========== ====== ========
<FN>
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
MERGERS AND ACQUISITIONS
(unaudited)
<CAPTION>
Acquisition Offices Assets Deposits
Date: Type: Acquired Institution: Home Office: Acquired: $ 000 $ 000
<S> <C> <C> <C> <C> <C> <C>
- ------ ------------------ ------------------------------------- ----------------------- -------- ----------- -----------
1994:
18-Feb Purchase Equality State Bank 2 branches only, WY 2 31,399 30,545
29-Apr Purchase CrossLand Mortgage Acquisition Corp. Salt Lake City, UT 60 328,068 -
20-May Pool-of-interests Community First Bank Clearfield, UT 5 75,242 62,602
18-Jul Purchase American Ban Corporation Boise, ID 4 75,816 50,914
23-Aug Purchase Star Valley State Bank Afton, WY 2 73,578 57,930
1995:
13-Feb Pool-of-interests Gaskill Insurance Agency, Inc. Ogden, UT 2 1,447 -
17-Mar Purchase Performance Mortgage Corp. Certain assets only 7 853 -
31-May Pool-of-interests CKC Insurance Salem, OR 1 427 -
- ------ ------------------ ------------------------------------- ----------------------- -------- ----------- -----------
TOTALS 83 586,830 201,991
====== ================== ===================================== ======================= ======== =========== ===========
<FN>
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
FSCO and its subsidiaries are subject to various claims and legal actions
filed or threatened by customers and others in connection with FSCO's regular
business activities. In all litigation filed against it, FSCO vigorously
defends itself against unfounded claims, with a concomitant cost in legal fees
and expenses. Some legal actions filed against FSCO seek inflated damages,
often in an effort to force compromise of a troubled loan transaction, and are
disclosed in required filings with the SEC. Since the filing of FSCO's 1994
Annual Report on 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 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:
FSCO filed no reports on Form 8-K during the third quarter of 1995.
# # #
<PAGE>
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 08, 1995 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
(in thousands, except per share amounts; unaudited)
<CAPTION>
Three Months Year-To-Date 9 Months
For the Periods Ended September 30, 1995 and 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C>
- ----------------------------------------------------------- ---------- ---------- ---------- ----------
Net Income:
Net income per condensed consolidated income statements .... 39,343 36,784 111,176 105,166
Deduct dividend requirement of preferred stock ............. 9 10 27 30
- ----------------------------------------------------------- ---------- ---------- ---------- ----------
NET INCOME APPLICABLE TO COMMON STOCK (PRIMARY) 39,334 36,774 111,149 105,136
Add dividend requirement of preferred stock ................ 9 10 27 30
- ----------------------------------------------------------- ---------- ---------- ---------- ----------
NET INCOME FULLY DILUTED 39,343 36,784 111,176 105,166
=========================================================== ========== ========== ========== ==========
Earnings Per Common Share:
EARNINGS PER COMMON SHARE: PRIMARY 0.77 0.73 2.19 2.11
EARNINGS PER COMMON SHARE: FULLY DILUTED 0.77 0.73 2.18 2.11
=========================================================== ========== ========== ========== ==========
Average Common Shares Outstanding:
Common stock ............................................... 50,391 49,873 50,292 49,357
Common stock equivalents (options) ......................... 976 1,047 826 1,031
Treasury shares ............................................ (390) (570) (366) (600)
- ----------------------------------------------------------- ---------- ---------- ---------- ----------
COMMON STOCK SHARES OUTSTANDING: AVERAGE PRIMARY 50,977 50,350 50,752 49,788
Preferred stock: average common equivalents ................ 137 155 140 158
- ----------------------------------------------------------- ---------- ---------- ---------- ----------
COMMON STOCK SHARES OUTSTANDING: AVERAGE FULLY DILUTED 51,114 50,505 50,892 49,946
=========================================================== ========== ========== ========== ==========
<FN>
Note: Earnings Per Common Share Fully Diluted were computed assuming that all outstanding shares of
preferred stock were converted into common stock 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
computations.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 701,353
<INT-BEARING-DEPOSITS> 41,563
<FED-FUNDS-SOLD> 158,038
<TRADING-ASSETS> 484,761
<INVESTMENTS-HELD-FOR-SALE> 2,219,488
<INVESTMENTS-CARRYING> 247,493
<INVESTMENTS-MARKET> 251,159
<LOANS> 8,303,049
<ALLOWANCE> (131,878)
<TOTAL-ASSETS> 12,675,014
<DEPOSITS> 8,689,087
<SHORT-TERM> 1,675,498
<LIABILITIES-OTHER> 434,609
<LONG-TERM> 856,550
0
589
<COMMON> 1,018,681
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 12,675,014
<INTEREST-LOAN> 190,079
<INTEREST-INVEST> 35,988
<INTEREST-OTHER> 8,517
<INTEREST-TOTAL> 234,584
<INTEREST-DEPOSIT> 79,139
<INTEREST-EXPENSE> 114,805
<INTEREST-INCOME-NET> 119,779
<LOAN-LOSSES> 6,587
<SECURITIES-GAINS> 1,105
<EXPENSE-OTHER> 121,275
<INCOME-PRETAX> 62,009
<INCOME-PRE-EXTRAORDINARY> 62,009
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,343
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
<YIELD-ACTUAL> 4.46
<LOANS-NON> 25,381
<LOANS-PAST> 11,515
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 41,368
<ALLOWANCE-OPEN> 130,388
<CHARGE-OFFS> 10,839
<RECOVERIES> (5,742)
<ALLOWANCE-CLOSE> 131,878
<ALLOWANCE-DOMESTIC> 131,878
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
