<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 March 31, 1996
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 April 30, 1996, outstanding shares of Common Stock, par value $1.25,
were 75,401,991 (net of 581,525 treasury shares).
FIRST SECURITY CORPORATION
INDEX
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Income Statements
Three Months Ended
March 31, 1996 and 1995
Consolidated Balance Sheets
March 31, 1996, December 31, 1995, and March 31, 1995
Condensed Consolidated Statements of Cash Flows
Year-To-Date Three Months Ended
March 31, 1996 and 1995
Notes to 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
Part II. Other Information
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 11. Computation of Earnings Per Share
Exhibit 27. Financial Data Schedule
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
FIRST SECURITY CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data; unaudited)
<CAPTION>
Three Months
For the Periods Ended March 31, 1996 and 1995 1996 1995 $Chg %Chg
<S> <C> <C> <C> <C>
- - ------------------------------------------------------- --------- --------- --------- -------
Interest Income:
Interest & fees on loans ............................... 185,672 178,462 7,210 4.0
Federal funds sold & securities purchased .............. 1,833 938 895 95.4
Interest-bearing deposits in other banks ............... 197 18 179 994.4
Trading account securities ............................. 4,538 8,135 (3,597) (44.2)
Securities available for sale .......................... 40,872 29,261 11,611 39.7
Securities held to maturity ............................ 0 3,736 (3,736) (100.0)
- - ------------------------------------------------------- --------- --------- --------- -------
Total Interest Income 233,112 220,550 12,562 5.7
- - ------------------------------------------------------- --------- --------- --------- -------
Interest Expense:
Deposits ............................................... 77,484 65,988 11,496 17.4
Short-term borrowings .................................. 24,349 33,378 (9,029) (27.1)
Long-term debt ......................................... 11,503 12,122 (619) (5.1)
- - ------------------------------------------------------- --------- --------- --------- -------
Total Interest Expense 113,336 111,488 1,848 1.7
- - ------------------------------------------------------- --------- --------- --------- -------
Net Interest Income 119,776 109,062 10,714 9.8
Provision for loan losses .............................. 8,738 2,848 5,890 206.8
- - ------------------------------------------------------- --------- --------- --------- -------
Net Interest Income After Provision For Loan Losses 111,038 106,214 4,824 4.5
- - ------------------------------------------------------- --------- --------- --------- -------
Noninterest Income:
Service charges on deposit accounts .................... 17,439 16,367 1,072 6.5
Other service charges, collections, commissions, & fees 10,730 7,417 3,313 44.7
Bankcard servicing fees & third-party processing fees .. 6,497 5,982 515 8.6
Insurance commissions & fees ........................... 3,484 3,695 (211) (5.7)
Mortgage banking activities, net (A) ................... 18,904 17,220 1,684 9.8
Trust (fiduciary) commissions & fees ................... 5,179 5,030 149 3.0
Trading account securities gains (losses) .............. 812 5,673 (4,861) (85.7)
Securities gains (losses) .............................. 0 903 (903) (100.0)
Other .................................................. 3,516 5,772 (2,256) (39.1)
- - ------------------------------------------------------- --------- --------- --------- -------
Total Noninterest Income 66,561 68,059 (1,498) (2.2)
- - ------------------------------------------------------- --------- --------- --------- -------
Total Income 177,599 174,273 3,326 1.9
- - ------------------------------------------------------- --------- --------- --------- -------
Noninterest Expenses:
Salaries & employee benefits ........................... 68,029 62,188 5,841 9.4
Advertising ............................................ 1,500 2,077 (577) (27.8)
Amortization of intangibles (A) ........................ 1,961 2,238 (277) (12.4)
Bankcard interbank interchange ......................... 4,417 4,471 (54) (1.2)
Furniture & equipment .................................. 8,699 9,223 (524) (5.7)
Insurance .............................................. 1,764 5,988 (4,224) (70.5)
Occupancy, net ......................................... 7,347 7,029 318 4.5
Other real estate expense & loss provision (recovery) .. (235) (499) 264 52.9
Stationery & supplies .................................. 4,741 4,070 671 16.5
Telephone .............................................. 3,142 3,100 42 1.4
Other .................................................. 19,487 18,033 1,454 8.1
- - ------------------------------------------------------- --------- --------- --------- -------
Total Noninterest Expenses 120,852 117,918 2,934 2.5
- - ------------------------------------------------------- --------- --------- --------- -------
Income Before Provision For Income Taxes 56,747 56,355 392 0.7
- - ------------------------------------------------------- --------- --------- --------- -------
Provision For Income Taxes:
Operating earnings ..................................... 20,457 20,420 37 0.2
Securities gains (losses) .............................. 0 335 (335) (100.0)
- - ------------------------------------------------------- --------- --------- --------- -------
Total Provision For Income Taxes 20,457 20,755 (298) (1.4)
- - ------------------------------------------------------- --------- --------- --------- -------
NET INCOME 36,290 35,600 690 1.9
======================================================= ========= ========= ========= =======
Preferred stock dividend requirement ................... 8 9 (1) (11.1)
- - ------------------------------------------------------- --------- --------- --------- -------
Net Income Applicable To Common Stock 36,282 35,591 691 1.9
======================================================= ========= ========= ========= =======
Common stock dividend .................................. 15,974 13,981 1,993 14.3
======================================================= ========= ========= ========= =======
EARNINGS PER COMMON SHARE:
Earnings per common share: primary ..................... 0.47 0.47 0.00 0.0
Earnings per common share: fully diluted ............... 0.47 0.47 0.00 0.0
Common shares outstanding: primary [Avg] ............... 77,164 75,849 1,315 1.7
Common shares outstanding: fully diluted [Avg] ......... 77,360 76,064 1,296 1.7
======================================================= ========= ========= ========= =======
CASH DIVIDENDS PAID OR ACCRUED PER SHARE:
Preferred Stock ($3.15 annual rate) .................... 0.79 0.79
Common stock ........................................... 0.21 0.19 0.02 10.5
======================================================= ========= ========= ========= =======
<FN>
Notes:
See "Notes to Consolidated Financial Statements".
(A) On July 1, 1995, FSCO adopted SFAS 122, "Accounting for Mortgage Servicing Rights". Per SFAS 122, prior periods have been
reclassified where necessary.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands; unaudited)
<CAPTION>
Mar. 31 Dec. 31 Mar. 31 Mar/Mar Mar/Mar
1996 1995 1995 $ Chg % Chg
<S> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
ASSETS:
Cash & due from banks ...................................................... 714,026 818,664 605,218 108,808 18.0
Federal funds sold & securities purchased under resale agreements .......... 113,838 148,069 209,114 (95,276) (45.6)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total Cash & Cash Equivalents 827,864 966,733 814,332 13,532 1.7
Interest-bearing deposits in other banks ................................... 31,365 21,563 1,486 29,879 2010.7
Trading account securities ................................................. 272,443 638,393 437,415 (164,972) (37.7)
Securities available for sale, at fair value (A) ........................... 2,693,820 2,623,557 2,044,257 649,563 31.8
(Amortized Cost: $2,697,866; $2,599,943; $2,080,996; respectively)
Securities held to maturity, at cost (A) ................................... 0 0 243,915 (243,915) (100.0)
(Fair value: $0; $0; $244,619 respectively)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Loans, net of unearned income .............................................. 8,375,060 8,315,095 8,183,306 191,754 2.3
(Unearned income: $32,416; $16,250; $6,018; respectively)
Reserve for loan losses .................................................... (130,653) (129,982) (131,603) 950 (0.7)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total Loans, Net 8,244,407 8,185,113 8,051,703 192,704 2.4
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Premises & equipment, net .................................................. 212,741 209,138 194,112 18,629 9.6
Accrued income receivable .................................................. 82,172 82,143 77,908 4,264 5.5
Other real estate & other foreclosed assets ................................ 5,209 4,134 2,334 2,875 123.2
Other assets ............................................................... 226,007 155,014 172,020 53,987 31.4
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Goodwill ................................................................... 93,297 94,660 105,554 (12,257) (11.6)
Mortgage servicing rights .................................................. 60,075 52,604 41,401 18,674 45.1
Other intangible assets .................................................... 2,372 1,555 2,873 (501) (17.4)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total Intangible Assets .................................................. 155,744 148,819 149,828 5,916 3.9
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL ASSETS 12,751,772 13,034,607 12,189,310 562,462 4.6
=========================================================================== =========== =========== =========== =========== =======
LIABILITIES:
Deposits: noninterest-bearing .............................................. 1,787,827 1,884,931 1,655,669 132,158 8.0
Deposits: interest-bearing ................................................. 7,069,406 6,888,711 6,617,045 452,361 6.8
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total Deposits 8,857,233 8,773,642 8,272,714 584,519 7.1
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Federal funds purchased & securities sold under repurchase agreements ...... 1,503,899 1,937,456 1,906,256 (402,357) (21.1)
U.S. Treasury demand notes ................................................. 31,686 33,897 20,632 11,054 53.6
Other short-term borrowings ................................................ 276,633 227,336 150,036 126,597 84.4
Accrued income taxes ....................................................... 141,315 131,510 120,832 20,483 17.0
Accrued interest payable ................................................... 38,148 48,737 34,330 3,818 11.1
Other liabilities .......................................................... 190,303 130,936 53,779 136,524 253.9
Long-term debt ............................................................. 675,460 720,521 683,785 (8,325) (1.2)
Minority equity in subsidiaries ............................................ 315 309 285 30 10.5
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL LIABILITIES 11,714,992 12,004,344 11,242,649 472,343 4.2
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
STOCKHOLDERS' EQUITY:
Preferred stock: Series "A" $3.15 cumulative convertible ................... 563 571 610 (47) (7.7)
(Shares issued: 11; 11; 12; respectively)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Common Stockholders' Equity:
Common stock: par value $1.25 ............................................. 94,959 94,674 94,275 684 0.7
(Shares issued: 75,967; 75,740; 75,420; respectively)
Paid-in surplus ............................................................ 122,911 120,084 115,906 7,005 6.0
Retained earnings .......................................................... 830,766 810,458 768,064 62,702 8.2
Net unrealized gain (loss) on securities available for sale (net of taxes) . (2,681) 14,547 (23,158) 20,477 (88.4)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Subtotal 1,045,955 1,039,763 955,087 90,868 9.5
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Common treasury stock, at cost ............................................. (9,738) (10,071) (9,036) (702) 7.8
(Shares: 579; 607; 559; respectively)
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
Total Common Stockholders' Equity 1,036,217 1,029,692 946,051 90,166 9.5
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL STOCKHOLDERS' EQUITY 1,036,780 1,030,263 946,661 90,119 9.5
- - --------------------------------------------------------------------------- ----------- ----------- ----------- ----------- -------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 12,751,772 13,034,607 12,189,310 562,462 4.6
=========================================================================== =========== =========== =========== =========== =======
<FN>
Notes:
See "Notes to Consolidated Financial Statements".
(A) In December 1995, FSCO elected to reclassify all of its securities previously classified as "Held to Maturity" to
"Available for Sale" pursuant to SFAS 115 supplemental guidance.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<CAPTION>
For the Three Months Ended March 31, 1996 and 1995 1996 1995
<S> <C> <C>
- - --------------------------------------------------------------------------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) BY OPERATING ACTIVITIES 480,857 303,335
- - --------------------------------------------------------------------------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption of matured securities available for sale .............................. 241,974 312,707
Redemption of matured securities held to maturity ................................ 0 8,703
Purchases of securities available for sale ....................................... (339,645) (311,969)
Purchases of securities held to maturity ......................................... 0 (943)
Net (increase) decrease in interest-bearing deposits in other banks .............. (9,802) 324
Net (increase) decrease in loans ................................................. (127,920) (138,038)
Purchases of premises and equipment .............................................. (7,268) (8,895)
Proceeds from sales of other real estate ......................................... 1,736 2,636
Payments to improve other real estate ............................................ (714) (134)
Net cash (paid for) received from acquisitions ................................... (41) 354
- - --------------------------------------------------------------------------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (241,680) (135,255)
- - --------------------------------------------------------------------------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits .............................................. 83,590 219,370
Net increase (decrease) in Federal funds purchased, securities sold
under repurchase agreements, and U.S. Treasury demand notes .................... (435,768) (267,252)
Payments on nonrecourse debt on leveraged leases ................................. (17,601) (15,080)
Proceeds from issuance of long-term debt and short-term borrowings ............... 58,381 37
Payments on long-term debt and short-term borrowings ............................. (54,144) (2,856)
Proceeds from issuance of common stock and sales of treasury stock ............... 4,019 7,020
Purchases of treasury stock ...................................................... (541) (2,901)
Dividends paid ................................................................... (15,982) (13,990)
- - --------------------------------------------------------------------------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (378,046) (75,652)
- - --------------------------------------------------------------------------------- -------------- --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (138,869) 92,428
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 966,733 721,904
- - --------------------------------------------------------------------------------- -------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 827,864 814,332
================================================================================= ============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
- - --------------------------------------------------------------------------------- -------------- --------------
CASH PAID (RECEIVED) FOR:
Interest ....................................................................... 123,925 104,867
Income taxes ................................................................... (222) 43
================================================================================= ============== ==============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of preferred shares to common shares:
Preferred shares converted (not rounded) ..................................... 140 352
Common shares issued (not rounded) ........................................... 1,773 4,272
Conversion value ............................................................. 7 18
Transfer of loans to other real estate............................................ 1,782 935
Net unrealized gain (loss) on securities available for sale
(included in stockholders' equity) ............................................. (17,228) 31,183
Pooling-of-interests acquisitions:
Assets acquired ................................................................ 0 1,447
Liabilities assumed ............................................................ 0 1,173
FSCO shares issued (not rounded) ............................................... 0 99
================================================================================= ============== ==============
<FN>
See "Notes to Consolidated Financial Statements".
</TABLE>
<PAGE>
FIRST SECURITY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited 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 in the periods ended
March 31, 1996 and 1995; FSCO's financial position as of March 31, 1996,
December 31, 1995, and March 31, 1995; and cash flows for the year-to-date
three months in the periods ended March 31, 1996 and 1995.
2. The results of operations for the three months periods ended March 31,
1996 and 1995 are not necessarily indicative of the results to be expected for
the full year.
3. FSCO's financial statements include restatements and reclassifications of
prior periods as follows:
* Restatement of common stock data where appropriate to reflect a 3-for-2
stock split in the form of a 50% stock dividend paid in February 1996;
* Reclassification of noninterest income and noninterest expenses to
reflect the July 1, 1995, adoption of SFAS 122, "Accounting for Mortgage
Servicing Rights";
4. In December 1995, FSCO moved all securities classified as "Held to
Maturity" to "Available for Sale" pursuant to SFAS 115 supplemental guidance.
Prior periods were not reclassified.
5. In October 1995, the Financial Accounting Standards Board issued SFAS 123
"Accounting for Stock-Based Compensation" which became effective for FSCO
beginning January 1, 1996. SFAS 123 requires expanded disclosures of stock-
based compensation arrangements with employees and encourages (but does not
require) compensation cost to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply APB Opinion 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. FSCO will continue to apply
APB Opinion 25 in its financial statements and will disclose in a footnote to
its 1996 Annual Report on Form 10-K the proforma effect on net income and
earnings per share, as if FSCO had applied the new standard.
# # #
<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 of $36.3 million for
the first quarter of 1996, up $690 thousand or 1.9% from $35.6 million earned
in the first quarter of 1995 (see: Financial Statements "Consolidated Income
Statements"; and Supplemental Tables "Financial Highlights"). This net income
for the quarter generated a 1.17% ROAA and a 13.97% ROAE, compared with a
1.19% ROAA and 15.71% ROAE for the year-ago quarter. Fully-diluted earnings
per share for the quarter were $0.47, unchanged from the year-ago quarter.
FSCO recently announced Project VISION, a comprehensive corporate redesign
which includes a major restructuring of FSCO to better meet customers' needs,
and to increase efficiency, performance, and shareholder value. To date, FSCO
is encouraged by the progress it has made in implementing Project VISION and
by the results achieved. However, FSCO's quarter-to-quarter comparative
performance has been impacted by the increase of mortgage demand in the first
quarter of 1996 and by one-time events in the first quarter of 1995.
Net Interest Income
Net interest income on a fully-taxable equivalent ("FTE") basis was $122.1
million for the first quarter of 1996, up $11.0 million or 9.9% from the year-
ago quarter (see: Supplemental Tables "Financial Highlights" and "Rate /
Volume Analysis"). This increase was due to higher yields and volume growth
for interest-earning assets for the first quarter of 1996.
The net interest margin was 4.37% for the first quarter of 1996, up from a
low of 4.06% in the first quarter of 1995. This increase was due to growth in
loans and all other interest-earning assets except trading account securities,
and was funded by increased interest-bearing deposits and debt. FSCO expects
that its quarterly net interest margin will fluctuate throughout 1996, ranging
in a band from approximately 4.25% to 4.50%.
Provision for Loan Losses
The provision for loan losses was $8.7 million for the first quarter of
1996, up $5.9 million or 206.8% 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 was $66.6 million for the first quarter of 1996, down
$1.5 million or 2.2% from the year-ago quarter (see: Financial Statements
"Consolidated Income Statements"). This decrease was due to a $4.9 million
decline in trading account securities gains that were a function of market
activities. The decrease was partially offset by increases in other
noninterest income categories that were the result of FSCO's emphasis on
increasing and diversifying its sources of noninterest income, plus the
positive impact of its overall mortgage banking activities.
For the first quarter of 1996, FSCO's CrossLand Mortgage subsidiary
increased its loan production by 109.5% over the year-ago quarter. The
mortgage banking activities income generated by this growth more than offset a
$1.5 million secondary marketing loss during the first quarter of 1996 due to
an upward spike in interest rates in March.
During the first quarter of 1995, CrossLand Mortgage took advantage of an
exceptionally strong loan servicing market and sold loan servicing rights in a
bulk sale, generating a $7.50 million pre-tax gain. After adjusting for this
gain, noninterest income for the first quarter of 1996 increased by $6.0
million or 9.9% over the adjusted noninterest income for the first quarter of
1995.
Noninterest Expenses
Noninterest expenses were $120.9 million for the first quarter of 1996, up
$2.9 million or 2.5% from the year-ago quarter (see: Financial Statements
"Consolidated Income Statements"). This increase was due primarily to higher
salaries and benefits expenses resulting from both increased loan production
plus miscellaneous personnel costs. The increase was partially offset by
decreases in advertising, amortization, bankcard, furniture and equipment, and
FDIC insurance expenses.
The operating expense ratio (the ratio of noninterest expenses to the sum
of net interest income FTE and noninterest income) was 64.05% for the first
quarter of 1996, improved from 65.82% for the first quarter of 1995.
The full improvement of the operating expense ratio has been masked by
FSCO's Project VISION restructuring charge, and by CrossLand Mortgage's
increase in loan production and related costs. During the fourth quarter of
1995, FSCO announced the expected results of Project VISION and took an
associated one-time restructuring charge of $44.0 million. During the first
quarter of 1996, CrossLand Mortgage sharply increased its loan production and
resulting loan production expenses as compared to the first quarter of 1995.
Adjusted noninterest expenses, excluding CrossLand Mortgage's operations in
all quarters and the restructuring charge in the fourth quarter of 1995, were
$102.9 million for the first quarter of 1996, down $4.0 million or 3.7% from
the year-ago quarter and down $5.1 million or 4.7% from the fourth quarter of
1995.
ANALYSIS OF FINANCIAL CONDITION
As of March 31, 1996, FSCO continued to increase its interest-earning
assets, maintain strong asset quality and liquidity, and strengthen its well-
capitalized position, as compared with March 31, 1995 and December 31, 1995.
FSCO's assets totaled $12.8 billion at March 31, 1996, up $562 million or
4.6% from March 31, 1995, but down $283 million or 2.2% from December 31,
1995. Total interest-earning assets were $11.5 billion at quarter end, up
$367 million or 3.3% from one year ago, but down $260 million or 2.2% from the
year end (see: MDA "Interest-Earning Assets and Asset Quality"). Intangible
assets were $155.7 million at March 31, 1996, up $5.9 million or 3.9% from
March 31, 1995, and up $6.9 million or 4.7% from December 31, 1995, due to
increased originated mortgage servicing rights from higher loan production.
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 March 31, 1996, up $472 million
or 4.2% from March 31, 1995, but down $289 million or 2.4% from December 31,
1995. Total interest-bearing liabilities were $9.6 billion at quarter end, up
$179 million or 1.9% from one year ago, but down $251 million or 2.6% from the
year end (see: MDA "Liquidity").
Stockholders' equity in FSCO was $1.0 billion at March 31, 1996, up $90.1
million or 9.5% from March 31, 1995, and up $6.5 million or 0.6% from December
31, 1995 (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"; "Asset / Liability
Management"; and "Stockholders' Equity and Capital Adequacy".
INTEREST-EARNING ASSETS and ASSET QUALITY
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. FSCO's investment strategy remains flexible
and carefully reviewed by management, shifting periodically in response to
changing conditions. The average life of the securities portfolios is
relatively short, providing a constant cash flow from maturing assets. With
the exception of U.S. Government and U.S. Government-sponsored agencies, FSCO
had no concentrations of securities from any single issuer that constituted
10% or more of stockholders' equity at March 31, 1996.
In December, 1995, FSCO took advantage of a one-time opportunity provided
by SFAS 115 supplemental guidance to reposition its securities portfolios by
transferring all of its held to maturity securities to the available for sale
portfolio. This repositioning provides FSCO the flexibility to manage its
entire securities portfolio consistently with balance sheet needs and market
opportunities.
FSCO's securities available for sale were $2.7 billion at March 31, 1996,
up $650 million or 31.8% from March 31, 1995, and up $70 million or 2.7% from
December 31, 1995 (see: Financial Statements "Consolidated Balance Sheets").
Loans
FSCO's borrowers reside primarily in the states where FSCO has its banking
offices and in markets contiguous to those states. FSCO's lending is
generally concentrated in small- and medium-sized businesses and consumers.
There is substantial economic diversification across the six-state region,
which along with the customer mix, provides excellent natural diversification
for FSCO's various loan portfolios. FSCO has a high quality loan portfolio
and has policies and procedures in place designed to maintain this high
quality. These policies and procedures include underwriting standards for new
credits and continuous monitoring and reporting of loan quality, coupled with
continuous analysis to determine the adequacy of the reserve for loan losses.
FSCO's loan portfolio, net of unearned income but before the reserve for
loan losses, totaled a record $8.4 billion at March 31, 1996, up $192 million
or 2.3% from March 31, 1995, and up $60 million or 0.7% from December 31, 1995
(see: Supplemental Tables "Loans Outstanding" and "Financial Highlights").
The increase from one year ago was due to increases in real estate loans,
leases, and commercial loans. The ratio of loans to assets was 65.68% at
quarter end, compared with 67.14% one year ago and 63.79% at year end.
The components of FSCO's loan portfolio at March 31, 1996, compared with
March 31, 1995, and December 31, 1995, respectively, included:
* Commercial loans were $1.9 billion, up $79 million or 4.3% from one year
ago, and essentially unchanged from year end. The growth from one year ago
was due primarily to an ongoing 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 $216 million or 6.8% from
one year ago, and up $55 million or 1.6% from year end. This growth was due
to increases in 1-4 family residential home equity and construction loans, and
commercial term and construction 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 $243 million or 8.6% from one year
ago, and down $42 million or 1.6% from year end. The decrease from one year
ago was due to the July 31, 1995 securitization and sale of $251 million of
direct and indirect auto loans, while the decrease from year end was due to
seasonal factors. FSCO remains the leading consumer lender in its primary
market area.
Problem Assets and Potential Problem Assets
Strong asset quality continues to be a primary objective for FSCO. FSCO's
interest-earning asset quality remained good at March 31, 1996 when compared
to industry standards. However, it has been FSCO's experience that economic
cycles and loan-specific events cause fluctuations in problem assets,
sometimes with little or no warning.
Problem assets were $44.1 million at March 31, 1996, up $11.1 million or
33.5% from March 31, 1995, and up $4.1 million or 10.2% from December 31, 1995
(see: Supplemental Tables "Financial Highlights - Problem Assets, - Selected
Ratios"). This increase was primarily due to several commercial loans. The
ratio of total problem assets to total loans and ORE was 0.53% at quarter end,
indicating the continuing high quality of FSCO's interest-earning assets, up
from 0.40% one year ago and 0.48% at year end.
The components of FSCO's problem assets at March 31, 1996, compared with
March 31, 1995, and December 31, 1995, respectively, included:
* Nonaccruing loans were $25.4 million, up $6.2 million or 32.3% from one
year ago, and up $3.0 million or 13.2% from year end. These increases were
primarily due to a large agricultural credit in the third quarter of 1995 (no
losses are expected as it is well-secured), and two commercial loans in the
first quarter of 1996. The ratio of nonaccruing loans to total loans was
0.30%, up from 0.23% one year ago and 0.27% at year end.
* ORE and other foreclosed assets were $5.2 million, up $2.9 million or
123.2% from one year ago, and up $1.1 million or 26.0% from year end. These
increases consisted primarily of 1-4 family residential properties. 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 $13.5 million, up $2.0
million or 17.2% from one year ago, primarily from consumer loans, but
essentially unchanged from year end.
Potential problem loans identified by FSCO were $7.6 million at March 31,
1996, down $12.3 million or 61.9% from March 31, 1995, and down $4.7 million
or 38.3% from December 31, 1995. These decreases were primarily due to
transfers of potential problem loans to nonaccruing 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. FSCO carefully considers actual and potential
fluctuations in problem assets in the analysis and establishment of its
reserve for loan losses. The adequacy of FSCO's reserve for loan losses is
evaluated quarterly based on policies established by the board of directors of
its subsidiary banks and regulatory and accounting guidelines. The reserve
for loan losses was discussed in greater detail in FSCO's 1995 Form 10-K
Annual Report: "Interest-Earning Assets and Asset Quality - Reserve for Loan
Losses".
The reserve for loan losses was $130.7 million at March 31, 1996, down $1.0
million or 0.7% from March 31, 1995, but up $671 thousand or 0.5% from
December 31, 1995 (see: Supplemental Tables "Financial Highlights -
Reconciliation of the Reserve for Loan Losses"). This essentially unchanged
reserve position reflected FSCO's continued good asset quality. Based on its
analysis of reserve adequacy, FSCO's management considered the reserve for
loan losses at March 31, 1996 to be adequate to cover potential losses in the
foreseeable future.
The "coverage" ratio of the reserve to nonaccruing loans was 514.18% at
March 31, 1996, down from 685.25% at March 31, 1995, and down from 579.06% at
December 31, 1995, while the ratio of the reserve to total loans was 1.56% at
quarter end, down from 1.61% one year ago but unchanged from year end (see:
Supplemental Tables "Financial Highlights - Selected Ratios").
If the continuous analysis of reserve adequacy indicates that replenishment
of, or additions to, the reserve for loan losses is appropriate, the existing
reserve is adjusted by means of the provision for loan losses.
Provision for Loan Losses
The provision for loan losses was $8.7 million for the first quarter of
1996, up $5.9 million or 206.8% for the year-ago quarter (see: Supplemental
Tables "Financial Highlights - Reconciliation of the Reserve For Loan
Losses"). This increase was due to lower commercial loan recoveries.
However, commercial loan recoveries continue to exceed losses.
Although FSCO's consumer and credit card losses were higher, mirroring
national trends in delinquencies and losses, they continued to be in line with
industry standards. FSCO raised its underwriting standards during 1995 to
return its delinquency and loss patterns to more historical FSCO levels.
Recoveries on commercial and real estate term loans have had a major impact on
FSCO's overall net loans charged off in the last few years, but FSCO does not
expect that these levels of recoveries will continue.
For the periods under consideration, FSCO kept the provision for loan
losses approximately equivalent to net chargeoffs, allowing the reserve to
remain essentially unchanged. Net loans charged off against reserves were
$8.1 million for the first quarter of 1996, up $3.0 million or 58.2% from the
year-ago quarter. The ratio of net loans charged off to average loans
remained at a low 0.39% for the first quarter of 1996, up from 0.25% for the
year-ago quarter and 0.30% for all of 1995.
ASSET / LIABILITY MANAGEMENT
FSCO's asset / liability management committee ("ALCO") process is
responsible for the identification, assessment, and management of corporate
capital adequacy (see: MDA "Stockholders' Equity and Capital Adequacy"), and
the liquidity and interest rate risk of FSCO's business lines. FSCO's ALCO
process, its components, and the associated objectives, policies and
procedures, were discussed in greater detail in FSCO's 1995 Form 10-K Annual
Report: "Asset / Liability Management".
Liquidity
FSCO maintains an adequate liquidity position in large part through stable
core deposits generated from its wide-spread branch network, the prudent usage
of debt, and from a high quality securities portfolio (see: MDA "Interest-
Earning Assets and Asset Quality"). Maturing balances in the large loan
portfolios, and the sale or securitization of assets, are also important
sources of medium to long term liquidity.
Backup sources of liquidity are provided by: credit lines to FSCO; Federal
funds lines carried by FSCO's subsidiary banks; borrowings from the Federal
Home Loan Bank; bank note issuances by FSCO's subsidiary banks; and borrowings
from the Federal Reserve System.
Deposits totaled $8.9 billion at March 31, 1996, up $585 million or 7.1%
from March 31, 1995, and up $84 million or 1.0% from December 31, 1995. (see:
Financial Statements "Consolidated Balance Sheets"; and Supplemental Tables
"Rate / Volume Analysis"). This increase occurred as FSCO placed renewed
emphasis on its deposit gathering functions. The ratio of loans to deposits
was 94.56% at quarter end, down from 98.92% one year ago and down from 94.77%
from year end.
Debt, which included short-term borrowings and long-term debt, totaled $2.5
billion at March 31, 1996, down $273 million or 9.9% from March 31, 1995, and
down $432 million or 14.8% from December 31, 1995 (see: Financial Statements
"Consolidated Balance Sheets"). Debt was decreased as loan sales,
securitizations, and repayments have largely offset loan originations, so that
deposit growth exceeded net loan growth and supported a reduction of debt.
The components of FSCO's debt at March 31, 1996, compared with March 31,
1995, and December 31, 1995, respectively, included:
* Federal funds purchased and securities sold under repurchase agreements
were $1.5 billion, down $402 million or 21.1% from one year ago, and down $434
million or 22.4% from year end.
* All other short-term borrowed funds were $308 million, up $138 million or
80.7% from one year ago, and up $47 million or 18.0% from year end.
* Long-term debt was $675 million, essentially unchanged from one year ago,
but down $45 million or 6.3% from year end.
The changes in short-term borrowings and long-term debt reflect the July
1995 issuance of $125 million of subordinated notes, offset by maturations of
debt from long term to short term in the amounts of $166 million since March
31, 1995 and $46 million since year end.
Interest Rate Risk
Many of FSCO's strategic ALCO actions in the first quarter of 1996
continued to focus on maintaining acceptable liquidity levels and on
maintaining a position of minimal interest rate risk exposure while ongoing
actions included an emphasis on deposit gathering functions and taking
advantage of various lending opportunities throughout FSCO's market areas.
FSCO has used off-balance sheet derivative products for many years in
managing interest rate risk and in the trading account. The components of
FSCO's off-balance sheet derivative products were discussed in greater detail
in FSCO's 1995 Form 10-K Annual Report: "Asset / Liability Management". As of
March 31, 1996, the notional amount of derivatives held for interest rate risk
management purposes was $1.3 billion, down $0.1 billion from year-end 1995,
while the notional amount of derivatives held for the trading account was $9.1
billion, down $1.6 billion from year-end 1995. These decreases were due to
the maturing of several derivative instruments during the first quarter of
1996.
STOCKHOLDERS' EQUITY and CAPITAL ADEQUACY
FSCO and its subsidiary banks have exceeded regulatory requirements for
"well capitalized" status every year since these requirements were
established, including year-to-date 1996. It is FSCO's policy to maintain the
"well capitalized" status at both the consolidated and subsidiary bank levels.
FSCO's goal for its minimum tangible common equity to assets ratio is 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 was $1.0 billion at March 31, 1996, up $90.1
million or 9.5% from March 31, 1995, and up $6.5 million or 0.6% from December
31, 1995 (see: Financial Statements "Consolidated Balance Sheets"). This
growth was due to earnings, combined with volatility in the SFAS 115 net
unrealized gain (loss) on securities available for sale which increased $20.5
million from one year ago but decreased $17.2 million from year-end 1995.
The ratio of stockholders' equity to total assets was 8.13% at quarter end,
up from 7.77% one year ago and 7.90% at year end. At the same time, the ratio
of tangible common equity to tangible total assets was 6.99%, up from 6.61%
one year ago and 6.84% at year end (see: Supplemental Tables "Financial
Highlights - Selected Ratios").
FSCO's risk-based capital ratios (see: Supplemental Tables "Financial
Highlights - Risk-Based Capital Ratios") at March 31, 1996, compared with
March 31, 1995, and December 31, 1995, respectively, were:
* Tier 1 ("well capitalized" = 6.00% or above) at 10.49%, up from 10.00%
one year ago, and 10.35% at year end.
* Total Capital ("well capitalized" = 10.00% or above) at 13.96%, compared
with 12.12% one year ago, and 13.86% at year end.
* Leverage ("well capitalized" = 5.00% or above) at 7.46%, up from 7.11%
one year ago, and 7.12% at year end.
COMMON STOCK
On January 29, 1996, FSCO declared a three-for-two common stock split in
the form of a 50% stock dividend payable on February 15, 1996, to shareholders
of record as of February 12, 1996. As a result of the split, shareholders
received one additional share of FSCO common stock for every two shares held.
ALL SHARE AND PER SHARE DATA IN THIS REPORT HAVE BEEN RESTATED TO REFLECT THIS
STOCK SPLIT.
On January 29, 1996, FSCO also increased its regular quarterly common stock
cash dividend to $0.21 per share, up $0.0233 per share or 12.5% from the
previous $0.1867 per restated share (see: Supplemental Tables "Financial
Highlights"). The increased cash dividend was paid on March 4, 1996, to
shareholders of record on February 16, 1996. This equates to an annual
dividend rate of $0.84 per share. At the market closing price of $23.17 per
restated share on Friday, January 26, 1996 (the last market day before the
announcement of the dividend increase), the annual dividend yield on FSCO
common stock would have been approximately 3.63%.
For over 61 consecutive years, FSCO has paid cash dividends on its common
stock. 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.
First Security Corporation's common stock is traded on the NASDAQ/NMS under
the symbol "FSCO".
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. 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.
FSCO has completed no acquisitions since May 31, 1995.
PROJECT "VISION" - FSCO'S CUSTOMER FOCUSED CORPORATE REDESIGN PROGRAM
FSCO's Project VISION is a comprehensive corporate redesign which includes
a major restructuring of FSCO by lines of business to better meet customers'
needs, and to increase efficiency, performance, and shareholder value. The
Project VISION restructuring, currently in process of implementation, is
FSCO's top priority for 1996 and is planned to be completed by the end of the
year.
FSCO's redesign will have a direct impact on its current staffing levels.
To keep involuntary separations to a minimum, FSCO instituted a hiring freeze
and a voluntary election out program. Of the resulting 1,577 total positions
eliminated, 249 employees chose to leave the company voluntarily, 82 employees
were placed in a re-deployment pool, 211 positions were absorbed by the hiring
freeze, 466 positions will be assimilated through attrition in 1996, and only
569 employees are leaving the company involuntarily, most of whom have work-
through dates scheduled throughout 1996. There were 7,088 full-time
equivalent employees (FTEE) at March 31, 1996, representing reductions of 568
FTEE or 7.4% from one year ago and 442 FTEE or 5.9% from year-end 1995.
During the first quarter of 1996, 98% of the ideas scheduled for
implementation were implemented. FSCO remains confident that it will achieve
the Project VISION results announced in December 1995.
NATIONAL & REGIONAL ECONOMY
Financial market perceptions have changed dramatically over the past three
months. Instead of the no-growth, declining-interest-rate scenario underlying
market developments early in the first quarter, it now appears that the pace
of economic expansion will strengthen in the second quarter, and many market-
determined interest rates are now significantly higher. First quarter
economic data were distorted by extreme weather conditions, labor strikes and
the federal-government shutdown. Nevertheless, accumulated evidence now seems
sufficient to eliminate any prospect of additional easings in Federal Reserve
monetary policy, with worries regarding possible future tightenings a more
relevant concern.
Aided by the lower interest rates in January and February, automobile and
residential real estate sales nationwide improved in the first quarter. The
stronger sales climate, propelled by rising consumer confidence, probably
removed most of the excess inventory positions previously evident in the
manufacturing sector. Additionally, the recent jump in food and energy
prices, combined with moderately higher wages, will possibly edge the
inflation rate above 3 percent.
Economic growth in the Intermountain Region's economy remained highly
favorable in the first quarter. Significant gains in residential real estate
production and sales were achieved. Furthermore, expansion in commercial
construction continues very strong in most metropolitan areas. Job growth is
still very impressive; however, rates of increase in several states such as
Utah and New Mexico may ease modestly below the extraordinary gains recorded
in 1994 and 1995.
# # #
<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>
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr Year-To-Date Three Months
1996 1995 1995 1995 1995 1996 1995 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Common Stock Data (A):
Earnings per common share: primary ............ 0.47 0.11 0.51 0.48 0.47 0.47 0.47 0.0
Earnings per common share: fully diluted ...... 0.47 0.11 0.51 0.48 0.47 0.47 0.47 0.0
Dividends paid per common share ............... 0.21 0.19 0.19 0.19 0.19 0.21 0.19 10.5
Book value [EOP] .............................. 13.75 13.71 13.57 13.21 12.64 13.75 12.64 8.7
Tangible book value [EOP] ..................... 11.68 11.72 11.64 11.27 10.64 11.68 10.64 9.8
Market price (bid) [EOP] ...................... 27.75 25.33 20.92 18.67 16.00 27.75 16.00 73.4
High bid for the period ..................... 27.75 25.33 22.17 19.09 17.09 27.75 17.09 62.4
Low bid for the period ...................... 23.17 20.33 18.33 15.33 14.67 23.17 14.67 57.9
Market capitalization (mktprice x #shrs) [EOP] 2,092,017 1,903,094 1,569,974 1,398,348 1,197,768 2,092,017 1,197,768 74.7
Market price / book value [EOP] % ............. 201.82 184.76 154.10 141.27 126.58 201.82 126.58
Dividend payout ratio (DPCS / EPCS) % ......... 44.68 172.73 36.36 38.89 40.00 44.68 40.00
Dividend yield (DPCS / mktprice) [EOP] % ...... 3.03 3.00 3.57 4.00 4.67 3.03 4.67
Price / earnings ratio (mktprice / 4 qtrs earn) 17.7x 16.2x 10.9x 9.9x 8.5x 17.7x 8.5x
Common shares [EOP] ........................... 75,388 75,133 75,059 74,912 74,861 75,388 74,861 0.7
Common shares: primary [Avg] .................. 77,164 76,883 76,466 76,065 75,849 77,164 75,849 1.7
Common shares: fully diluted [Avg] ............ 77,360 77,087 76,671 76,275 76,064 77,360 76,064 1.7
Preferred shares outstanding [EOP] ............ 11 11 11 11 12 11 12 (8.3)
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Income Statement:
Interest income ............................... 233,112 246,657 234,584 233,068 220,550 233,112 220,550 5.7
Interest expense .............................. 113,336 119,109 114,805 114,466 111,488 113,336 111,488 1.7
Net interest income ........................... 119,776 127,548 119,779 118,602 109,062 119,776 109,062 9.8
Fully taxable equivalent (FTE) adjustment ..... 2,333 2,323 2,114 1,874 2,025 2,333 2,025 15.2
Net interest income, FTE ...................... 122,109 129,871 121,893 120,476 111,087 122,109 111,087 9.9
Provision for loan losses ..................... 8,738 7,905 6,587 3,742 2,848 8,738 2,848 206.8
Noninterest income (B) ........................ 66,561 66,496 70,092 61,845 68,059 66,561 68,059 (2.2)
Noninterest expenses (B) ...................... 120,852 172,083 121,275 118,929 117,918 120,852 117,918 2.5
Provision for income taxes .................... 20,457 5,227 22,666 21,543 20,755 20,457 20,755 (1.4)
Net income .................................... 36,290 8,829 39,343 36,233 35,600 36,290 35,600 1.9
Preferred stock dividend requirement .......... 8 8 9 9 9 8 9 (11.1)
Common stock dividend ......................... 15,974 14,013 13,996 13,976 13,981 15,974 13,981 14.3
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Balance Sheet - End of Period:
Trading account securities .................... 272,443 638,393 484,761 477,560 437,415 272,443 437,415 (37.7)
Securities available for sale (C) ............. 2,693,820 2,623,557 2,219,488 2,086,509 2,044,257 2,693,820 2,044,257 31.8
Securities held to maturity (C) ............... 0 0 247,493 251,982 243,915 0 243,915 (100.0)
Loans, net of unearned income ................. 8,375,060 8,315,095 8,303,049 8,356,657 8,183,306 8,375,060 8,183,306 2.3
Reserve for loan losses ....................... (130,653) (129,982) (131,878) (130,388) (131,603) (130,653) (131,603) (0.7)
Total interest-earning assets .................11,486,526 11,746,677 11,454,392 11,291,982 11,119,493 11,486,526 11,119,493 3.3
Other assets .................................. 1,240,155 1,269,093 1,207,536 1,119,216 1,051,592 1,240,155 1,051,592 17.9
Intangible assets ............................. 155,744 148,819 144,964 145,369 149,828 155,744 149,828 3.9
Total assets ..................................12,751,772 13,034,607 12,675,014 12,426,179 12,189,310 12,751,772 12,189,310 4.6
Noninterest-bearing deposits .................. 1,787,827 1,884,931 1,857,584 1,748,031 1,655,669 1,787,827 1,655,669 8.0
Interest-bearing deposits ..................... 7,069,406 6,888,711 6,831,503 6,843,356 6,617,045 7,069,406 6,617,045 6.8
Total deposits ................................ 8,857,233 8,773,642 8,689,087 8,591,387 8,272,714 8,857,233 8,272,714 7.1
Short-term borrowed funds ..................... 1,812,218 2,198,689 1,675,498 1,920,093 2,076,924 1,812,218 2,076,924 (12.7)
Long-term debt ................................ 675,460 720,521 856,550 666,858 683,785 675,460 683,785 (1.2)
Total interest-bearing liabilities ............ 9,557,084 9,807,921 9,363,551 9,430,307 9,377,754 9,557,084 9,377,754 1.9
Other liabilities ............................. 369,766 311,183 434,305 257,349 208,941 369,766 208,941 77.0
Minority equity in subsidiaries ............... 315 309 304 298 285 315 285 10.5
Preferred stockholders' equity ................ 563 571 589 594 610 563 610 (7.7)
Common stockholders' equity ................... 1,036,217 1,029,692 1,018,681 989,600 946,051 1,036,217 946,051 9.5
Parent company investment in subsidiaries ..... 1,090,036 1,071,320 1,057,376 1,030,242 990,493 1,090,036 990,493 10.0
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Problem Assets & Potential Problem Assets - End of Period:
Nonaccruing loans:
Commercial .................................. 11,670 9,158 11,046 5,501 5,731 11,670 5,731 103.6
Real estate term ............................ 11,703 10,430 11,831 10,047 11,412 11,703 11,412 2.5
Real estate construction .................... 1,609 2,349 1,278 1,637 1,057 1,609 1,057 52.2
Consumer .................................... 95 110 75 85 97 95 97 (2.1)
Leases ...................................... 333 400 1,151 1,432 908 333 908 (63.3)
Total nonaccruing loans ....................... 25,410 22,447 25,381 18,702 19,205 25,410 19,205 32.3
ORE & other foreclosed assets ................. 5,209 4,134 4,472 4,340 2,334 5,209 2,334 123.2
Total nonperforming assets .................... 30,619 26,581 29,853 23,042 21,539 30,619 21,539 42.2
Accruing loans past due 90 days or more ....... 13,501 13,455 11,515 11,076 11,518 13,501 11,518 17.2
Total problem assets .......................... 44,120 40,036 41,368 34,118 33,057 44,120 33,057 33.5
Potential problem assets ...................... 7,595 12,319 17,223 19,652 19,943 7,595 19,943 (61.9)
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Other Data - End of Period (not rounded):
Full-time equivalent employees ................ 7,088 7,530 7,758 7,755 7,656 7,088 7,656 (7.4)
Domestic bank offices:
FSB Utah .................................... 127 127 124 124 120 127 120 5.8
FSB Idaho ................................... 91 91 91 91 91 91 91 0.0
FSB New Mexico .............................. 26 27 27 27 27 26 27 (3.7)
FSB Oregon .................................. 13 13 13 13 13 13 13 0.0
FSB Nevada .................................. 8 8 8 6 5 8 5 60.0
FSB Wyoming ................................. 6 6 6 6 6 6 6 0.0
Total domestic bank offices ................... 271 272 269 267 262 271 262 3.4
============================================== ========== ========== ========== ========== ========== ========== ========== =======
<FN>
Notes:
EOP: End Of Period. Avg: Average. EPCS: Earnings Per Common Share. DPCS: Dividends Per Common Share. NM: Not Meaningful.
(A) Figures have been restated where appropriate to reflect a 3-for-2 stock split in the form of a 50% stock dividend paid in
February 1996.
(B) On July 1, 1995, FSCO adopted SFAS 122, "Accounting for Mortgage Servicing Rights". Per SFAS 122, prior periods have been
reclassified where necessary.
(C) In December 1995, FSCO elected to reclassify all of its securities previously classified as "Held to Maturity" to
"Available for Sale" pursuant to SFAS 115 supplemental guidance.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS - Continued
(in thousands, except per share data and ratios; unaudited)
<CAPTION>
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr Year-To-Date Three Months
1996 1995 1995 1995 1995 1996 1995 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Balance Sheet - Average:
Trading account securities .................... 328,072 637,492 294,378 345,158 677,507 328,072 677,507 (51.6)
Securities available for sale (C) ............. 2,609,266 2,330,460 2,096,740 2,042,127 1,976,800 2,609,266 1,980,286 31.8
Securities held to maturity (C) ............... 0 173,374 243,993 238,637 250,957 0 247,471 (100.0)
Loans, net of unearned income ................. 8,254,010 8,212,849 8,207,753 8,233,243 8,133,412 8,254,010 8,133,412 1.5
Reserve for loan losses ....................... (130,063) (131,138) (130,358) (131,321) (133,747) (130,063) (133,747) (2.8)
Deferred taxes on leases ...................... (164,953) (162,656) (160,855) (160,041) (157,360) (164,953) (157,360) 4.8
Total int-earning assets - defer tax on leases 11,174,290 11,359,039 10,932,739 10,825,695 10,948,403 11,174,290 10,948,403 2.1
Other assets .................................. 1,115,502 1,437,133 1,045,896 1,003,232 984,449 1,115,502 984,452 13.3
Intangible assets ............................. 150,022 145,665 141,780 148,187 164,105 150,022 164,105 (8.6)
Total assets ..................................12,474,704 12,648,043 12,150,912 12,005,834 12,120,570 12,474,704 12,120,573 2.9
Noninterest-bearing deposits .................. 1,708,154 1,761,612 1,690,536 1,585,255 1,545,225 1,708,154 1,545,225 10.5
Interest-bearing deposits ..................... 6,938,872 6,899,375 6,887,306 6,766,077 6,423,604 6,938,872 6,423,604 8.0
Total deposits ................................ 8,647,026 8,660,987 8,577,842 8,351,332 7,968,829 8,647,026 7,968,829 8.5
Short-term borrowed funds ..................... 1,817,625 1,934,202 1,534,440 1,761,411 2,348,062 1,817,625 2,348,062 (22.6)
Long-term debt ................................ 691,535 755,457 791,348 682,382 684,497 691,535 684,497 1.0
Total interest-bearing liabilities ............ 9,448,032 9,589,034 9,213,094 9,209,870 9,456,163 9,448,032 9,456,163 (0.1)
Other liabilities ............................. 273,040 257,850 237,052 235,550 199,827 273,040 199,828 36.6
Minority equity in subsidiaries ............... 311 308 300 291 276 311 276 12.7
Preferred stockholders' equity ................ 566 583 593 603 616 566 616 (8.1)
Common stockholders' equity ................... 1,044,601 1,038,656 1,009,339 974,265 918,463 1,044,601 918,464 13.7
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Reconciliation of the Reserve for Loan Losses:
Reserve for loan losses, beginning of period .. 129,982 131,878 130,388 131,603 133,855 129,982 133,855 (2.9)
Loans (charged off):
Commercial .................................. (1,139) (1,574) (954) (726) (1,074) (1,139) (1,074) 6.1
Real estate term ............................ (145) (1,803) (103) (573) (694) (145) (694) (79.1)
Real estate construction .................... 0 (6) 0 (1) (93) 0 (93) (100.0)
Consumer instalment ......................... (10,053) (9,151) (7,319) (8,008) (9,425) (10,053) (9,425) 6.7
Consumer credit card ........................ (2,992) (2,884) (2,464) (2,291) (2,447) (2,992) (2,447) 22.3
Leases ...................................... (796) (358) 1 (600) 0 (796) 0 NM
Total loans (charged off) ..................... (15,125) (15,776) (10,839) (12,199) (13,733) (15,125) (13,733) 10.1
Recoveries on loans charged off:
Commercial .................................. 1,641 1,469 1,215 2,216 2,412 1,641 2,412 (32.0)
Real estate term ............................ 709 239 399 560 1,765 709 1,765 (59.8)
Real estate construction .................... 7 68 43 30 22 7 22 (68.2)
Consumer instalment ......................... 4,133 3,658 3,178 3,843 3,930 4,133 3,930 5.2
Consumer credit card ........................ 535 525 500 553 504 535 504 6.2
Leases ...................................... 33 16 407 40 0 33 0 NM
Total recoveries of loans charged off ......... 7,058 5,975 5,742 7,242 8,633 7,058 8,633 (18.2)
Net loans (charged off) recovered ............. (8,067) (9,801) (5,097) (4,957) (5,100) (8,067) (5,100) 58.2
Provision for loan losses ..................... 8,738 7,905 6,587 3,742 2,848 8,738 2,848 206.8
Reserve for loan losses, end of period ........ 130,653 129,982 131,878 130,388 131,603 130,653 131,603 (0.7)
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Selected Ratios (%):
Return on average assets ...................... 1.17 0.28 1.28 1.21 1.19 1.17 1.19
Return on average stockholders' equity ........ 13.97 3.37 15.46 14.91 15.71 13.97 15.71
Net interest margin, FTE ...................... 4.37 4.57 4.46 4.45 4.06 4.37 4.06
Net interest spread, FTE ...................... 3.63 3.80 3.68 3.71 3.41 3.63 3.41
Operating expense ratio (A)
(nonint exp / (net int inc FTE + nonint inc)) 64.05 87.63 63.17 65.23 65.82 64.05 65.82
Productivity ratio (nonint exp / avg assets)(A) 3.90 5.40 3.96 3.97 3.95 3.90 3.95
Stockholders' equity / assets [EOP] ........... 8.13 7.90 8.04 7.97 7.77 8.13 7.77
Stockholders' equity / assets [Avg] ........... 8.38 8.22 8.31 8.12 7.58 8.38 7.58
Tangible common equity / tangible assets [EOP] 6.99 6.84 6.97 6.87 6.61 6.99 6.61
Loans / deposits [EOP] ........................ 94.56 94.77 95.56 97.27 98.92 94.56 98.92
Loans / assets [EOP] .......................... 65.68 63.79 65.51 67.25 67.14 65.68 67.14
Reserve for loan losses [EOP] /:
Total loans ................................. 1.56 1.56 1.59 1.56 1.61 1.56 1.61
Nonaccruing loans ........................... 514.18 579.06 519.59 697.19 685.25 514.18 685.25
Nonaccruing + accruing loans past due 90 days 335.77 362.05 357.43 437.87 428.35 335.77 428.35
Nonaccruing loans / total loans ............... 0.30 0.27 0.31 0.22 0.23 0.30 0.23
Nonaccruing + accr loans past due / total loans 0.46 0.43 0.44 0.36 0.38 0.46 0.38
Nonperforming assets /:
Total loans + ORE ........................... 0.37 0.32 0.36 0.28 0.26 0.37 0.26
Total assets ................................ 0.24 0.20 0.24 0.19 0.18 0.24 0.18
Total equity ................................ 2.95 2.58 2.93 2.33 2.28 2.95 2.28
Total equity + reserve for loan losses ...... 2.62 2.29 2.59 2.06 2.00 2.62 2.00
Problem assets /:
Total loans + ORE ........................... 0.53 0.48 0.50 0.41 0.40 0.53 0.40
Total assets ................................ 0.35 0.31 0.33 0.27 0.27 0.35 0.27
Total equity ................................ 4.26 3.89 4.06 3.45 3.49 4.26 3.49
Total equity + reserve for loan losses ...... 3.78 3.45 3.59 3.04 3.07 3.78 3.07
Net loans charged off / average loans ......... 0.39 0.47 0.25 0.24 0.25 0.39 0.25
============================================== ========== ========== ========== ========== ========== ========== ========== =======
Risk-Based Capital Ratios: FSC FSB FSB FSB FSB FSB FSB
As of March 31, 1996 Consolidate Utah Idaho NewMexico Oregon Nevada Wyoming
- - ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Leverage ratio (%) ............................ 7.46 12.37 7.32 6.35 8.94 7.44 7.60
Tier 1 risk-based capital ratio (%) ........... 10.49 10.77 9.20 13.27 10.84 10.48 11.68
Total (Tier 1+2) risk-based capital ratio (%) . 13.96 12.37 11.16 14.53 12.09 11.74 12.94
Tier 1 capital ................................ 944,107 462,713 284,949 105,504 37,402 28,343 15,838
Total (Tier 1 + Tier 2) capital ............... 1,256,868 531,495 345,425 115,551 41,722 31,753 17,547
Total risk-based assets - loan loss reserve ... 9,003,020 4,298,185 3,095,889 795,322 344,995 270,511 135,651
============================================== ========== ========== ========== ========== ========== ========== ========== =======
<FN>
Notes:
EOP: End Of Period. Avg: Average. EPCS: Earnings Per Common Share. DPCS: Dividends Per Common Share. NM: Not Meaningful.
(A) Figures have been restated where appropriate to reflect a 3-for-2 stock split in the form of a 50% stock dividend paid in
February 1996.
(B) On July 1, 1995, FSCO adopted SFAS 122, "Accounting for Mortgage Servicing Rights". Per SFAS 122, prior periods have been
reclassified where necessary.
(C) In December 1995, FSCO elected to reclassify all of its securities previously classified as "Held to Maturity" to
"Available for Sale" pursuant to SFAS 115 supplemental guidance.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
RATE / VOLUME ANALYSIS
(Fully taxable equivalent; in thousands; unaudited)
<CAPTION>
For the Three Months Ended March 31, 1996 and 1995
Average Balance Yield/Rate % Interest Inc/Exp (A) Change Changes Due To:
1996 1995 1996 1995 1996 1995 1996-95 Volume Rate(B)
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-EARNING ASSETS / INCOME:
Loans, net of unearned income and
8,089,057 7,976,052 9.24 8.99 . deferred taxes on leases (C) .............. 186,924 179,275 7,649 2,540 5,109
136,194 65,550 5.38 5.72 .Federal funds sold & securities purchased ... 1,833 938 895 1,011 (116)
11,701 1,537 6.73 4.68 .Interest-bearing deposits in other banks..... 197 18 179 119 60
328,072 677,507 5.54 4.81 .Trading account securities .................. 4,546 8,139 (3,593) (4,198) 605
2,609,266 1,980,286 6.43 5.91 .Securities available for sale ............... 41,945 29,268 12,677 9,296 3,381
0 247,471 0.00 7.98 .Securities held to maturity ................. 0 4,937 (4,937) (4,937) 0
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
11,174,290 10,948,403 8.43 8.13 TOTAL INTEREST-EARNING ASSETS / INCOME 235,445 222,575 12,870 3,831 9,039
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSE:
Interest-bearing deposits:
1,088,096 1,078,892 1.82 1.96 .Interest-bearing demand accounts ............ 4,957 5,283 (326) 45 (371)
2,471,752 2,356,254 3.70 3.59 .Savings & money market accounts ............. 22,884 21,130 1,754 1,036 718
679,424 584,290 5.85 5.66 .Time deposits of $100,000 or more ........... 9,940 8,275 1,665 1,347 318
2,699,600 2,404,168 5.88 5.21 .Other time deposits ......................... 39,703 31,300 8,403 3,846 4,557
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
6,938,872 6,423,604 4.47 4.11 TOTAL INTEREST-BEARING DEPOSITS 77,484 65,988 11,496 6,274 5,222
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
1,539,823 2,173,435 5.06 5.61 .Federal funds purchased & securities sold ... 19,472 30,500 (11,028) (8,892) (2,136)
277,802 174,627 7.02 6.59 .Other short-term borrowings ................. 4,877 2,878 1,999 1,700 299
691,535 684,497 6.65 7.08 .Long-term debt .............................. 11,503 12,122 (619) 125 (744)
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
9,448,032 9,456,163 4.80 4.72 TOTAL INTEREST-BEARING LIABILITIES / EXPENSE 113,336 111,488 1,848 (793) 2,641
- - ----------- ----------- ------ ------ -------------------------------------------- --------- --------- -------- -------- --------
8.43 8.13 .Interest income / earning assets
4.06 4.07 .Interest expense / earning assets
------ ------ --------------------------------------------
4.37 4.06 .Net interest income / earning assets ........ 122,109 111,087 11,022 4,624 6,398
Less fully taxable equivalent adjustment .... 2,333 2,025 308
------ ------ -------------------------------------------- --------- --------- -------- -------- --------
NET INTEREST INCOME, PER CONDENSED
CONSOLIDATED INCOME STATEMENTS 119,776 109,062 10,714
=========== =========== ====== ====== ============================================ ========= ========= ======== ======== ========
<FN>
Notes:
(A) Interest is 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% for 1996 and 1995.
(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 $5,014 and $4,503 for the 1996 and 1995
quarters respectively.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
LOANS, NET OF UNEARNED INCOME
(in thousands; unaudited)
<CAPTION>
March 31, 1996 December 31, 1995 March 31, 1995
%Total %Total %Total Mar/Mar
Balance Loans Balance Loans Balance Loans %Chg
<S> <C> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
COMMERCIAL LOANS:
Commercial & industrial .................. 1,599,420 19.1 1,559,533 18.8 1,425,606 17.4 12.2
Agricultural ............................. 230,907 2.8 280,179 3.4 246,327 3.0 (6.3)
Other commercial ......................... 100,529 1.2 112,073 1.3 179,466 2.2 (44.0)
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL COMMERCIAL LOANS 1,930,856 23.1 1,951,785 23.5 1,851,399 22.6 4.3
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
REAL ESTATE SECURED LOANS:
1-4 family residential: term ............. 1,489,226 17.8 1,457,811 17.5 1,504,804 18.4 (1.0)
1-4 family residential: home equity ...... 454,402 5.4 451,980 5.4 374,055 4.6 21.5
1-4 family residential: construction ..... 257,159 3.1 221,551 2.7 204,287 2.5 25.9
Commercial & other: term ................. 953,505 11.4 943,046 11.4 911,803 11.1 4.6
Commercial & other: construction ......... 223,406 2.6 248,622 3.0 167,173 2.0 33.6
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL REAL ESTATE SECURED LOANS 3,377,698 40.3 3,323,010 40.0 3,162,122 38.6 6.8
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
CONSUMER LOANS:
Credit cards & related ................... 288,701 3.5 311,271 3.7 296,940 3.6 (2.8)
Other consumer ........................... 2,297,506 27.4 2,316,540 27.9 2,532,146 31.0 (9.3)
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL CONSUMER LOANS 2,586,207 30.9 2,627,811 31.6 2,829,086 34.6 (8.6)
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL LEASES ............................. 480,299 5.7 412,489 4.9 340,699 4.2 41.0
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
LOANS, NET OF UNEARNED INCOME 8,375,060 100.0 8,315,095 100.0 8,183,306 100.0 2.3
Memo: Unearned Income .................. (32,416) (16,250) (6,018) 438.7
Reserve for Loan Losses .................. (130,653) (129,982) (131,603) (0.7)
- - ----------------------------------------- ----------- ------ ----------- ------ ----------- ------ --------
TOTAL LOANS, NET 8,244,407 8,185,113 8,051,703 2.4
========================================= =========== ====== =========== ====== =========== ====== ========
<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 1995
Form 10-K Annual Report, there have been no material developments in
connection with pending legal proceedings not already disclosed in previous
filings with the SEC, except as follows:
In its Form 10-K Annual Report for the year ended December 31, 1994, FSCO
reported the filing of a class action lawsuit in United States District Court
in Illinois alleging violations of federal Truth in Lending statutes by FSCO's
CrossLand Mortgage subsidiary. Summary judgment on liability has been
rendered against FSCO in this case, although certification of the case as a
class action is still pending before the Court. The violations found were
technical in nature and based on strict liability provided in the applicable
federal statutes. Steps have been taken to implement new procedures to avoid
similar claims in the future. Based on information currently available, total
damages in this case payable by FSCO should not exceed $2,000,000, and could
be under $1,000,000. Any damages paid likely can be recovered by
indemnification claims against the former owners of CrossLand Mortgage. It is
possible that payment of damages by FSCO to the plaintiffs in this case could
occur in the second quarter of 1996, although such payment is more likely in
the third quarter.
A purported class action lawsuit has been filed against FSCO and others in
United States District Court in New Mexico alleging unfair trade practices,
fraud, RICO and federal Truth in Lending violations in connection with the
policies of First Security Bank of New Mexico to force-place insurance on
vehicles subject to loans whose owners fail to procure such insurance. FSCO
intends to vigorously defend itself against such liability. Management
believes that no reasonably foreseeable ultimate outcome of this litigation
could have a material adverse impact on the business or assets of FSCO.
Item 4. Submission of Matters to a Vote of Security Holders
FSCO held its Annual Shareholders' Meeting on April 22, 1996. At this
meeting, there were 62,677,417 "voting shares" (62,671,515 common shares and
5,902 preferred shares) present or represented by proxy, which was equal to
83.21% of the 75,323,788 total shares (75,313,084 common shares and 10,704
preferred shares) outstanding. Votes were taken on the following Shareholder
Proposals, described in FSCO's Proxy Statement dated March 15, 1996:
* Shareholder Proposal #1 "To elect a Board of Directors to serve for the
ensuing year". All current members of the Board of Directors, except U. Edwin
Garrison who retired from the Board, were nominated for re-election by
Management. The results of this vote were as follows::
Votes Votes Votes For /
Nominee: For: Against: Abstain: Voting Shares:
Beardall, James C. 62,425,383 252,034 0 99.60%
Brady, Rodney H. 62,417,692 259,725 0 99.59%
Bruce, James E. 62,364,239 313,178 0 99.50%
Dee, Thomas D. II 62,376,021 301,396 0 99.52%
Eccles, Spencer F. 62,379,450 297,967 0 99.52%
Evans, Morgan J. 62,424,784 252,633 0 99.60%
Gardner, David P. 62,382,678 294,739 0 99.53%
Garff, Robert H. 62,385,172 292,245 0 99.53%
Haight, David B. 62,253,938 423,479 0 99.32%
Harris, Jay Dee 62,345,744 331,673 0 99.47%
Heiner, Robert T. 62,282,764 394,653 0 99.37%
Huntsman, Karen H. 62,354,058 323,359 0 99.48%
Joklik, G. Frank 62,342,384 335,033 0 99.47%
Kastler, B. Z. 62,338,605 338,812 0 99.46%
Maloof, Joseph G. 62,067,094 610,323 0 99.03%
Parker, Scott S. 62,412,406 265,011 0 99.58%
Smith, Arthur K. 62,385,925 291,492 0 99.53%
Sorenson, James L. 62,242,494 434,923 0 99.31%
Steele, Harold J. 62,331,646 345,771 0 99.45%
* Shareholder Proposal #2 "To consider and vote on the proposed increase in
the number of authorized shares of common stock that can be issued by the
Company, from the present 150,000,000 shares to a new level of 300,000,000
shares". The results of this vote were as follows:
Votes Votes Votes For /
For: Against: Abstain: Voting Shares:
52,309,333 9,945,751 401,302 83.46%
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 January 31, 1996, FSCO filed a report on Form 8-K, reporting that on
January 29, 1996, First Security Corporation ("FSCO") issued a press release
announcing FSCO's three-for-two stock split and an increase in FSCO's
quarterly cash dividend.
# # #
<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: May 10, 1996 BY:_[SIGNED]________________________________________
Scott C. Ulbrich
Executive Vice President Finance and Capital Markets
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
For the Periods Ended March 31, 1996 and 1995 1996 1995
<S> <C> <C>
- - ----------------------------------------------------------- ---------- ----------
Net Income:
Net income per consolidated income statements .............. 36,290 35,600
Deduct dividend requirement of preferred stock ............. 8 9
- - ----------------------------------------------------------- ---------- ----------
NET INCOME APPLICABLE TO COMMON STOCK (PRIMARY) 36,282 35,591
Add dividend requirement of preferred stock ................ 8 9
- - ----------------------------------------------------------- ---------- ----------
NET INCOME FULLY DILUTED 36,290 35,600
=========================================================== ========== ==========
Earnings Per Common Share:
EARNINGS PER COMMON SHARE: PRIMARY 0.47 0.47
EARNINGS PER COMMON SHARE: FULLY DILUTED 0.47 0.47
=========================================================== ========== ==========
Average Common Shares Outstanding:
Common stock ............................................... 75,844 75,277
Common stock equivalents (options) ......................... 1,874 1,064
Treasury shares ............................................ (554) (492)
- - ----------------------------------------------------------- ---------- ----------
COMMON STOCK SHARES OUTSTANDING: AVERAGE PRIMARY 77,164 75,849
Preferred stock: average common equivalents ................ 196 215
- - ----------------------------------------------------------- ---------- ----------
COMMON STOCK SHARES OUTSTANDING: AVERAGE FULLY DILUTED 77,360 76,064
=========================================================== ========== ==========
<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 18.225 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 714,026
<INT-BEARING-DEPOSITS> 31,365
<FED-FUNDS-SOLD> 113,838
<TRADING-ASSETS> 272,443
<INVESTMENTS-HELD-FOR-SALE> 2,693,820
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 8,375,060
<ALLOWANCE> (130,653)
<TOTAL-ASSETS> 12,751,772
<DEPOSITS> 8,857,233
<SHORT-TERM> 1,812,218
<LIABILITIES-OTHER> 370,081
<LONG-TERM> 675,460
0
563
<COMMON> 1,036,217
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 12,751,772
<INTEREST-LOAN> 185,672
<INTEREST-INVEST> 40,872
<INTEREST-OTHER> 6,568
<INTEREST-TOTAL> 233,112
<INTEREST-DEPOSIT> 77,484
<INTEREST-EXPENSE> 113,336
<INTEREST-INCOME-NET> 119,776
<LOAN-LOSSES> 8,738
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 120,852
<INCOME-PRETAX> 56,747
<INCOME-PRE-EXTRAORDINARY> 56,747
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,290
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 4.37
<LOANS-NON> 25,410
<LOANS-PAST> 13,501
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 44,120
<ALLOWANCE-OPEN> 129,982
<CHARGE-OFFS> (15,125)
<RECOVERIES> 7,058
<ALLOWANCE-CLOSE> 130,653
<ALLOWANCE-DOMESTIC> 130,653
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
