<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report January 22, 1999
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) 246-5976
Item 5. Other Information
On January 21, 1999, First Security Corporation (FSCO) issued a press release
announcing its earnings and other financial data for the year and quarter ended
December 31, 1998, a copy of which is attached to this report as Exhibit A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST SECURITY CORPORATION
(Registrant)
/s/ Brad D. Hardy January 22, 1999
__________________________________________________________ __________________
Brad D. Hardy (Date)
Executive Vice President, Corporate Services,
General Counsel, and
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT A
FOR IMMEDIATE RELEASE Contact: Brad D. Hardy
January 21, 1999 (801) 246-5976
FIRST SECURITY ACHIEVES RECORD EARNINGS FOR 1998
Notes:
* all FSCO financial data prior to June 30, 1998 were previously restated for
the pooling-of-interests merger with First Security Bank of California (FSB
California, formerly California State Bank);
* full year 1998 earnings and selected other data reported below are BEFORE
one-time FSB California merger charges of $8.9 million pre-tax (including
$6.9 million of noninterest expenses) or $7.2 million after tax.
Highlights:
* Net income: $254.9 million for 1998 (before merger charges), up 18.4%; $67.3
million fourth quarter, up 16.0%.
* Earnings per share diluted: $1.32 for 1998 (before merger charges), up 15.8%;
$0.35 fourth quarter, up 16.7%.
* Noninterest income: $474.4 million for 1998, up 32.8%; $132.4 million fourth
quarter, up 23.9%.
* Total assets: $21.8 billion at December 31, 1998, up 19.9%.
* Stockholders' equity: $1.6 billion, up 13.9%.
* December 21, 1998, FSCO acquired Marine National Bank (Irvine, California).
* December 30, 1998, FSCO announced agreement to acquire XEON Financial
Corporation (Stateline, Nevada).
* January 13, 1999, FSCO announced agreement to acquire Comstock Bancorp (Reno,
Nevada).
SALT LAKE CITY -- First Security Corporation (Nasdaq: FSCO) earned record
net income, before one-time FSB California merger charges, of $254.9 million
for 1998, up $39.6 million or 18.4% from 1997. This net income generated a
1.32% return on average assets (ROAA) and a 16.69% return on average equity
(ROAE) for the year, compared with a 1.35% ROAA and a 16.60% ROAE for the prior
year. Earnings per share (EPS) diluted were $1.32 for 1998, up $0.18 or 15.8%
from 1997. The tangible ROAA was 1.54%, the tangible ROAE was 24.68%, and
tangible EPS diluted were $1.51 for 1998, up from a 1.48% tangible ROAA, a
21.81% tangible ROAE, and tangible EPS diluted of $1.23 for 1997.
FSCO's net income, after merger charges, was a record $247.7 million for
1998, up $32.4 million or 15.1% from 1997. This net income generated a 1.28%
ROAA and a 16.21% ROAE. Earnings per share diluted were $1.28 for 1998, up
$0.14 or 12.3% from 1997. The tangible ROAA was 1.50%, the tangible ROAE was
24.07%, and tangible EPS diluted were $1.47 for 1998.
FSCO's net income was $67.3 million for the fourth quarter of 1998, up $9.3
million or 16.0% from the fourth quarter of 1997. This net income generated a
1.31% ROAA and a 16.50% ROAE for the quarter, compared with a 1.33% ROAA and a
16.63% ROAE for the year-ago quarter. Earnings per share diluted were $0.35
for the fourth quarter of 1998, up $0.05 or 16.7% from the year-ago quarter.
The tangible ROAA was 1.56%, the tangible ROAE was 25.08%, and tangible EPS
diluted were $0.41 for the quarter, up from a 1.39% tangible ROAA, a 21.31%
tangible ROAE, and tangible EPS diluted of $0.31 for the year-ago quarter.
Spencer F. Eccles, FSCO chairman and chief executive officer, said, "First
Security is pleased with its excellent performance in 1998, a year in which we
generated record earnings before and after the costs of multiple acquisitions
and technology and "Year 2000" (Y2K) related expenditures. Key factors leading
to these strong results included a 20.4% growth in average loans, a 14.1%
growth in average deposits, and a 32.8% increase in noninterest income, all
achieved through the continued 110% efforts of our dedicated employees."
Revenues
FSCO's revenues (net interest income plus noninterest income) were $1.2
billion for 1998, up $0.2 billion or 19.8% from 1997, and were $319.2 million
for the fourth quarter of 1998, up $46.7 million or 17.1% from the year-ago
quarter.
FSCO's net interest income on a fully taxable equivalent (FTE) basis was
$714.1 million for 1998, up $77.6 million or 12.2% from 1997, and was $189.4
million for the fourth quarter of 1998, up $19.6 million or 11.5% from the
year-ago quarter. These increases were due to a combination of continued
strong demand for loans, growth in the securities portfolios, and the positive
impact of recent purchase acquisitions.
FSCO's net interest margin was 4.15% for 1998, down 32 basis points from
1997, and was 4.17% for the fourth quarter of 1998, down 24 basis points from
the year-ago quarter. These decreases were due primarily to the strong volume
growth in loans, especially refinanced mortgages and consumer loans, which were
originated at lower rates but funded by additional short term borrowed funds,
long-term debt, and deposits at relatively constant rates. FSCO's net interest
margin has remained essentially unchanged for four quarters in a row, while net
interest income was increased through volume growth in lending activities.
FSCO's noninterest income was $474.4 million for 1998, up $117.2 million or
32.8% from 1997, and was $132.4 million for the fourth quarter of 1998, up
$25.6 million or 23.9% from the year-ago quarter. These increases were due to
several factors including: strong growth in mortgage banking activities; gains
from ongoing asset securitizations and sales; growth in other service charges
and trust fees; and securities gains. FSCO's noninterest income amounted to a
record 40.27% of total revenues for 1998, up from 36.33% for 1997, and was a
record 41.50% of total revenues for the quarter, up from 39.23% for the year-
ago quarter.
Noninterest Expenses
FSCO's noninterest expenses, before one-time FSB California merger
noninterest expenses of $6.9 million, were $716.1 million for 1998, up $127.2
million or 21.6% from 1997. Noninterest expenses, including merger expenses,
were $723.1 million for 1998, up $134.2 million or 22.8% from 1997.
Noninterest expenses were $193.5 million for the fourth quarter of 1998, up
$28.5 million or 17.3% from the year-ago quarter. These increases were
primarily due to the following: additional operating expenses of recent
purchase acquisitions; additions of revenue-generating personnel; ongoing
volume growth; the cost of necessary technological advances and upgrades
including Year 2000 (Y2K) expenditures; and one-time costs for the FSB
California and other mergers and for the creation of a "Section 20" securities
broker / dealer subsidiary. Mr. Eccles commented, "We continue our extra
efforts to effectively manage ongoing noninterest expenses while expending the
funds needed to support strong growth, multiple acquisitions, and strategic
investments in technology appropriate for a high performance financial services
company."
FSCO's operating expense ratio (the ratio of noninterest expenses to the sum
of net interest income FTE and noninterest income) was: 60.26%, before merger
charges, for 1998, up 99 basis points from 1997; 60.84%, after merger charges,
for the year, up 157 basis points from one year ago; and 60.11% for the fourth
quarter of 1998, up 48 basis points from the year-ago quarter.
CrossLand Mortgage Corp., FSCO's very profitable mortgage banking
subsidiary, has a higher operating expense ratio than FSCO's bank subsidiaries
due to its labor intensive business of originating, selling, and servicing
mortgage loans. Excluding CrossLand Mortgage and the FSB California merger
charges, FSCO's operating expense ratio was 56.16% for 1998, up only 14 basis
points from 1997. Excluding only CrossLand Mortgage, FSCO's operating expense
ratio was 56.85% for the year, up 83 basis points from 1997, and was 55.48% for
the fourth quarter of 1998, down 198 basis points from the year-ago quarter.
Assets, Interest-Earning Assets and Asset Quality
FSCO's total assets were $21.8 billion at December 31, 1998, up $3.6 billion
or 19.9% from year-end 1997. Loans, net of unearned income, were $14.0 billion
at year end, up $2.8 billion or 24.8% from one year ago. Available for sale
securities were $4.8 billion at year end, up $0.4 billion or 9.5% from one year
ago.
The ratio of nonperforming assets to total loans and other real estate was
0.35% at December 31, 1998, down from 0.40% at year-end 1997. Nonperforming
assets totaled $49.4 million at year end, up $4.6 million or 10.2% from one
year ago.
FSCO's reserve for loan losses was increased to $173.4 million at December
31, 1998, up $15.8 million or 10.0% from year-end 1997. The coverage ratio of
the reserve to nonaccruing loans was 378.39% at year end, down from 427.17% one
year ago. The ratio of the reserve to total loans was 1.24% at year end, down
from 1.40% one year ago.
The annualized ratio of net loans charged off to average loans was a low
0.49% for 1998, down from 0.51% for the prior year, and was 0.61% for the
fourth quarter of 1998, up slightly from 0.59% for the year-ago quarter. Net
loans charged off against the reserve were $60.9 million for 1998, up $7.9
million or 14.9% from 1997, and were $20.4 million for the fourth quarter of
1998, up $3.8 million or 22.7% from the year-ago quarter. FSCO's provision for
loan losses was $71.9 million for 1998, up $8.5 million or 13.5% from 1997, and
was $22.9 million for the fourth quarter of 1998, up $1.6 million or 7.6% from
the year-ago quarter.
Stockholders' Equity and Common Stock
FSCO's stockholders' equity was increased to $1.6 billion at December 31,
1998, up $0.2 billion or 13.9% from year-end 1997. This growth was due to the
following: earnings retained; issuances of new FSCO common stock for
acquisitions; and the impact of the SFAS 130 accumulated other comprehensive
income which consisted of unrealized net gains on available for sale
securities; partially offset by repurchases of common stock in the public
markets in 1997 and 1998. FSCO's ratio of stockholders' equity to total assets
was 7.33% at December 31, 1998, down from 7.72% at year-end 1997. The ratio of
tangible common equity to tangible assets was 5.55% at year end, down from
6.24% one year ago, reflecting the goodwill recognized from mergers, common
stock repurchases, and the ongoing origination of mortgage servicing rights.
Mergers and Acquisitions
On December 21, 1998, FSCO and its FSB California subsidiary acquired Marine
National Bank (MNB) in a cash purchase transaction. MNB was a wholly owned
subsidiary of Shinhan Bank of Seoul, Korea, and is located in Irvine,
California. At September 30, 1998, MNB had $260 million in assets, $200
million in deposits, and $32 million in equity.
On December 30, 1998, FSCO and its FSB Nevada subsidiary announced the
signing of a definitive agreement to acquire XEON Financial Corporation (XEON,
located in Stateline, Nevada) and its subsidiary Nevada Banking Company. At
September 30, 1998, XEON had $122 million in assets and $109 million in
deposits. This merger is expected to close in the spring of 1999, pending
regulatory and shareholder approval.
On January 13, 1999, FSCO and its FSB Nevada subsidiary announced the
signing of a definitive agreement to acquire Comstock Bancorp (Comstock,
located in Reno, Nevada) and its subsidiary Comstock Bank. At year end,
Comstock had approximately $225 million in assets. This merger is expected to
close in the spring of 1999, pending regulatory and shareholder approval.
National and Regional Economy
The fourth-quarter plunge in commodity prices, particularly crude oil and
gasoline, helped sustain consumer spending at a surprisingly strong level.
Accordingly, fourth-quarter real gross domestic product should at least reach,
and may exceed, 2.5%. Growth expectations for 1999 have also been revised
modestly higher to a range of 2.0% to 2.5%. This is somewhat slower than
1998's 3.7% gain, but significant weakness now looks avoidable.
Through the end of 1998, the international forces of deflation acted as a
tax cut for consumers at the expense of raw-material commodity producers. Thus
far, the positive influence of declining inflation and interest rates, rising
real wages and recovery in equity markets has far outweighed the ultimate
consumer pain of deflation, i.e., lost jobs. Certainly, the Boeing
announcement that some 48,000 employees would be laid off clearly illustrates
the consequences of deflation. As Y2K spending in 1999 is accelerated,
technology companies are anticipating an improved sales and pricing
environment. All in all, the spread of deflationary pain into the U.S.
consumer sector should be moderate but not debilitating.
The global financial crisis and its associated adverse impacts on U.S.
international trade could well continue in 1999 and beyond. While the worst
may now be past in certain Asian economies, the 1999 U.S. trade deficit may
widen further, reflecting weaker export growth to Latin America and Europe. It
would not be surprising if the lingering global financial crisis triggers more
volatility in U.S. financial markets.
Perhaps two additional Fed easings are expected in 1999. The Fed has
signaled that it will provide sufficient liquidity to sustain moderate U.S.
growth; there is plenty of room for additional cuts if deemed necessary. Long-
term interest rates in 1999 may vary within a rather narrow range centered at
5.00%.
Regional economic outlooks generally point to slower, but hopefully
sustainable, growth. Narrowing profit margins in various producing sectors may
lead to additional layoffs, but the consumer sector should remain generally
healthy.
Business
With $21.8 billion in assets and $12.7 billion in deposits, First Security
Corporation is the second largest independent financial services organization
headquartered in the West, and is the nation's oldest multistate bank holding
company, having been incorporated on June 15, 1928. FSCO's banks currently
operate 322 full service domestic bank offices in Utah, Idaho, Oregon, Wyoming,
New Mexico, Nevada, and California. Nonbank subsidiaries include a residential
mortgage loan company, a leasing company, two insurance subsidiaries, an
investment management company, a full-service retail securities broker /
dealer, a "Section 20" full-service securities broker / dealer, a bankcard
transaction processing company, an information technology subsidiary, and a
small business investment corporation.
Internet Address: news, financial updates and information about products and
services can be found on FSCO's web site at www.firstsecuritybank.com.
Forward-Looking Statements
Mr. Eccles commented on the outlook for FSCO in 1999, saying "Based on our
present assessment of our business environment, we are currently comfortable
with forward looking estimated earnings per share diluted increasing in a range
of approximately eight to ten percent for the full 1999 year over 1998. We
believe this range of expected earnings is appropriate for many reasons,
including international and national economic uncertainties, and accelerating
technology expenses for the resolution of Y2K issues and for strategic
investment in systems infrastructure. In addition, we look forward to the
previously-announced acquisitions of Van Kasper & Company in the first quarter
of 1999, and XEON Financial Corporation and Comstock Bancorp in the first half
of 1999."
Except for the historical information in this document, the matters
described herein are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. FSCO cautions readers not to
place undue reliance on any forward-looking statements, which speak only as of
the date made.
FSCO advises readers that various risks and uncertainties could affect
FSCO's financial performance and could cause FSCO's actual results for future
periods to differ materially from those anticipated or projected. These risks
and uncertainties include, but are not limited to, those related to: the
economic environment, particularly in the regions where FSCO operates;
competitive products and pricing; changes in prevailing interest rates; credit
and other risks of lending and investment activities; fiscal and monetary
policies of the U.S. and other governments; regulations affecting financial
institutions; acquisitions and the integration of acquired businesses;
technology and associated risks; and other risks and uncertainties affecting
FSCO's operations and personnel.
Be advised that FSCO, as part of its core business, regularly evaluates the
potential acquisition of, and holds discussions with, prospective acquisition
candidates, which candidates may conduct any type of businesses permissible for
a bank holding company and its affiliates. FSCO's discussions in this document
are subject to the changes that may result if any such acquisition transaction
is completed. FSCO restates its guiding principle that it will not comment on
or publicly announce any such acquisition until after a binding and definitive
acquisition agreement has been reached.
FSCO specifically disclaims any obligation to update any forward-looking
statements to reflect occurrences or unanticipated events or circumstances
after the date of such statements.
# # #
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS
(in thousands, except per share data and ratios; unaudited) (A)
<CAPTION>
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr Year-To-Date Twelve Months
1998 1998 1998 1998 1997 1998 1997 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Common & Preferred Stock Data:
Earnings per common share basic 0.36 0.34 0.30 0.33 0.31 1.32 1.18 11.9
Earnings per common share diluted 0.35 0.33 0.29 0.32 0.30 1.28 1.14 12.3
Tangible EPCS diluted 0.41 0.37 0.33 0.35 0.31 1.47 1.23 19.5
Dividends paid per common share 0.130 0.130 0.130 0.130 0.113 0.520 0.441 17.9
Book value per common share [EOP] 8.54 8.54 8.21 8.02 7.59 8.54 7.59 12.5
Tangible book value per common share [EOP] 6.35 6.64 6.34 6.21 6.05 6.35 6.05 5.0
Market price (bid) [EOP] 23.313 16.688 21.375 23.813 27.917 23.313 27.917 (16.5)
High bid for the period 23.313 23.938 24.750 26.167 27.917 26.167 27.917 (6.3)
Low bid for the period 15.938 15.500 21.000 21.833 19.083 15.500 14.222 9.0
Market capitalization (mktprice x #shrs) [EOP] 4,352,817 3,144,703 4,016,256 4,457,936 5,148,509 4,352,817 5,148,509 (15.5)
Market price / book value per com share [EOP] % 272.99 195.41 260.35 296.92 367.81 272.99 367.81
Dividend payout ratio (DPCS / EPCS basic) % 36.11 38.24 43.33 39.39 36.45 39.39 37.37
Dividend yield (DPCS / mktprice) [EOP] % 2.23 3.12 2.43 2.18 1.62 2.23 1.62
Price / earnings ratio(mktprice/4qtrsEPCSbasic) 17.5x 13.0x 17.2x 19.4x 23.7x 17.5x 23.7x
Common shares basic [EOP] 186,712 188,441 187,895 187,206 184,422 186,712 184,422 1.2
Common shares basic [Avg] 188,370 187,931 187,623 186,336 184,583 187,572 182,240 2.9
Common shares diluted [Avg] 193,756 193,621 194,471 193,510 191,671 193,840 188,739 2.7
Preferred shares [EOP] 9 9 9 10 10 9 10 (10.0)
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Income Statement:
Interest income 369,193 366,416 350,950 334,101 328,965 1,420,660 1,213,378 17.1
Interest expense 182,478 186,661 178,012 169,810 163,388 716,961 587,439 22.0
Net interest income 186,715 179,755 172,938 164,291 165,577 703,699 625,939 12.4
Fully taxable equivalent (FTE) adjustment 2,716 2,259 2,827 2,579 4,298 10,381 10,492 (1.1)
Net interest income, FTE 189,431 182,014 175,765 166,870 169,875 714,080 636,431 12.2
Provision for loan losses 22,861 18,068 18,396 12,598 21,243 71,923 63,386 13.5
Noninterest income 132,444 114,896 118,534 108,516 106,876 474,390 357,157 32.8
Noninterest expenses 193,489 179,516 184,277 165,806 164,944 723,088 588,904 22.8
Provision for income taxes 35,496 33,976 32,892 33,034 28,235 135,398 115,532 17.2
Net income 67,313 63,091 55,907 61,369 58,031 247,680 215,274 15.1
Preferred stock dividend requirement 7 7 7 7 7 28 30 (6.7)
Common stock dividend 24,580 24,472 22,943 23,586 20,038 95,581 77,955 22.6
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Balance Sheet - End of Period:
Trading account securities 329,109 73,067 53,343 318,224 255,320 329,109 255,320 28.9
Available for sale (AFS) securities 4,764,127 4,912,396 4,806,559 4,386,629 4,351,525 4,764,127 4,351,525 9.5
Memo: fair value adjustment AFS securities 48,251 79,150 39,154 34,640 37,678 48,251 37,678 28.1
Loans, net of unearned income 14,013,417 12,926,926 12,530,360 12,436,407 11,230,766 14,013,417 11,230,766 24.8
Reserve for loan losses (173,350) (169,058) (166,658) (163,256) (157,525) (173,350) (157,525) 10.0
Total interest-earning assets 19,337,468 17,954,191 17,417,190 17,219,384 16,044,477 19,337,468 16,044,477 20.5
Intangible assets 409,367 357,459 351,547 338,844 285,156 409,367 285,156 43.6
Total assets 21,768,237 19,859,300 19,360,006 19,132,896 18,151,783 21,768,237 18,151,783 19.9
Noninterest-bearing deposits 2,752,009 2,431,637 2,402,497 2,339,665 2,431,006 2,752,009 2,431,006 13.2
Interest-bearing deposits 9,906,565 9,511,979 9,514,706 9,483,289 8,986,628 9,906,565 8,986,628 10.2
Total deposits 12,658,574 11,943,616 11,917,203 11,822,954 11,417,634 12,658,574 11,417,634 10.9
Short-term borrowed funds 4,265,589 4,026,919 3,905,250 3,986,966 3,605,199 4,265,589 3,605,199 18.3
Long-term debt 2,609,558 1,749,478 1,513,044 1,339,892 1,304,463 2,609,558 1,304,463 100.0
Total interest-bearing liabilities 16,781,712 15,288,376 14,933,000 14,810,147 13,896,290 16,781,712 13,896,290 20.8
Preferred stockholders' equity 484 491 493 501 501 484 501 (3.4)
Common stockholders' equity 1,595,011 1,609,515 1,542,377 1,500,734 1,400,345 1,595,011 1,400,345 13.9
Parent company investment in subsidiaries 1,945,390 1,788,947 1,719,975 1,678,122 1,555,112 1,945,390 1,555,112 25.1
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Problem Assets & Potential Problem Assets - End of Period:
Total nonaccruing loans 45,812 41,185 39,713 36,553 36,876 45,812 36,876 24.2
Other real estate 3,617 2,798 3,908 4,342 7,981 3,617 7,981 (54.7)
Total nonperforming assets 49,429 43,983 43,621 40,895 44,857 49,429 44,857 10.2
Accruing loans past due 90 days or more 23,758 20,369 22,833 19,693 20,841 23,758 20,841 14.0
Total problem assets 73,187 64,352 66,454 60,588 65,698 73,187 65,698 11.4
Potential problem assets 47,319 55,150 37,229 11,493 7,423 47,319 7,423 537.5
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Other Data - End of Period (not rounded):
Full-time equivalent employees 9,424 9,229 8,854 8,472 7,996 9,424 7,996 17.9
Domestic bank offices:
FS Bank (Utah) 134 133 132 130 129 134 129 3.9
FS Bank (Idaho) 88 88 88 88 88 88 88 0.0
FS Bank (Oregon) 14 14 14 13 13 14 13 7.7
FS Bank (Wyoming) 8 8 8 8 8 8 8 0.0
FSB New Mexico 34 32 31 31 31 34 31 9.7
FSB Southern New Mexico 11 11 11 11 0 11 0 NM
FSB Nevada 15 14 14 14 14 15 14 7.1
FSB California 18 17 17 17 17 18 17 5.9
Total domestic bank offices 322 317 315 312 300 322 300 7.3
============================================== ========== ========== ========== ========== ========== ========== ========== =======
<FN>
EOP: End Of Period. Avg: Average. EPCS: Earnings Per Common Share. DPCS: Dividends Per Common Share. NM: Not Meaningful.
(A) All FSCO financial data have been previously restated for the May 30, 1998 pooling-of-interests merger with FSB California.
All FSCO financial data have been previously restated for a 3-for-2 common stock split in the form of a 50% stock dividend,
paid in February 1998.
Certain reclassifications of 1997 amounts have been made to conform to 1998 classifications.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
FINANCIAL HIGHLIGHTS - Continued
(in thousands, except per share data and ratios; unaudited) (A)
<CAPTION>
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr Year-To-Date Twelve Months
1998 1998 1998 1998 1997 1998 1997 %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Balance Sheet - Average:
Trading account securities 139,293 64,310 138,157 295,414 163,330 158,605 217,337 (27.0)
Available for sale (AFS) securities 4,870,349 4,824,517 4,524,500 4,310,715 4,190,292 4,634,580 3,703,409 25.1
Memo: fair value adjustment AFS securities 62,380 41,719 33,956 41,342 28,511 44,898 7,061 535.9
Loans, net of unearned income 13,310,822 12,844,942 12,374,882 11,656,881 11,214,784 12,552,230 10,428,044 20.4
Reserve for loan losses (170,129) (167,555) (164,256) (160,269) (153,922) (165,585) (148,055) 11.8
Deferred taxes on leases (200,571) (193,572) (198,673) (196,556) (192,903) (197,343) (187,588) 5.2
Total interest-earning assets, excluding
fair value adjustment AFS securities
& deferred taxes on leases 18,175,389 17,580,579 16,939,894 16,091,448 15,415,241 17,203,589 14,234,308 20.9
Intangible assets 371,371 351,880 349,850 308,452 271,770 345,578 229,895 50.3
Total assets 20,438,993 19,652,528 18,998,533 18,085,153 17,295,476 19,301,233 15,983,748 20.8
Noninterest-bearing deposits 2,510,491 2,302,410 2,252,282 2,181,985 2,231,130 2,312,666 2,203,031 5.0
Interest-bearing deposits 9,587,111 9,531,570 9,459,908 9,207,647 8,658,839 9,447,832 8,103,960 16.6
Total deposits 12,097,602 11,833,980 11,712,190 11,389,632 10,889,969 11,760,498 10,306,991 14.1
Short-term borrowed funds 3,779,161 4,146,642 3,851,257 3,522,497 3,350,840 3,826,474 2,969,746 28.8
Long-term debt 2,350,927 1,611,966 1,433,195 1,314,965 1,246,482 1,680,421 1,040,147 61.6
Total interest-bearing liabilities 15,717,199 15,290,178 14,744,360 14,045,109 13,256,161 14,954,727 12,113,853 23.5
Preferred stockholders' equity 487 492 497 501 506 494 524 (5.7)
Common stockholders' equity 1,617,608 1,557,403 1,519,335 1,411,739 1,384,287 1,527,170 1,296,192 17.8
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Reconciliation of the Reserve for Loan Losses:
Reserve for loan losses, beginning 169,058 166,658 163,256 157,525 152,951 157,525 142,693 10.4
Net loans (charged off) recovered (20,445) (15,668) (14,994) (9,794) (16,669) (60,901) (53,013) 14.9
Provision for loan losses 22,861 18,068 18,396 12,598 21,243 71,923 63,386 13.5
Acquisitions 1,876 0 0 2,927 0 4,803 4,459 7.7
Reserve for loan losses, ending 173,350 169,058 166,658 163,256 157,525 173,350 157,525 10.0
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------
Selected Ratios (%):
Return on average assets (ROAA) 1.31 1.27 1.18 1.38 1.33 1.28 1.35
Tangible ROAA 1.56 1.49 1.40 1.56 1.39 1.50 1.48
Return on average stockholders' equity (ROAE) 16.50 16.07 14.75 17.62 16.63 16.21 16.60
Tangible ROAE 25.08 23.81 22.26 25.14 21.31 24.07 21.81
Net interest margin, FTE 4.17 4.14 4.15 4.15 4.41 4.15 4.47
Net interest spread, FTE 3.54 3.51 3.52 3.53 3.72 3.53 3.75
Operating expense ratio
(nonint exp / (net int inc FTE + nonint inc)) 60.11 60.46 62.62 60.21 59.60 60.84 59.27
Tangible operating expense ratio 56.75 57.44 59.57 57.71 59.04 57.84 57.58
Productivity ratio (nonint exp / avg assets) 3.76 3.62 3.89 3.72 3.78 3.75 3.68
Stockholders' equity / assets [EOP] 7.33 8.11 7.97 7.85 7.72 7.33 7.72
Stockholders' equity / assets [Avg] 7.92 7.93 8.00 7.81 8.01 7.91 8.11
Tangible common equity / tangible assets [EOP] 5.55 6.42 6.26 6.18 6.24 5.55 6.24
Loans / deposits [EOP] 110.70 108.23 105.15 105.19 98.36 110.70 98.36
Loans / assets [EOP] 64.38 65.09 64.72 65.00 61.87 64.38 61.87
Reserve for loan losses [EOP] /:
Total loans 1.24 1.31 1.33 1.31 1.40 1.24 1.40
Nonaccruing loans 378.39 410.48 419.66 446.63 427.17 378.39 427.17
Nonaccruing + accruing loans past due 90 days 249.17 274.65 266.46 290.25 272.93 249.17 272.93
Nonaccruing loans / total loans 0.33 0.32 0.32 0.29 0.33 0.33 0.33
Nonaccruing + accr loans past due / total loans 0.50 0.48 0.50 0.45 0.51 0.50 0.51
Nonperforming assets /:
Total loans + other real estate 0.35 0.34 0.35 0.33 0.40 0.35 0.40
Total assets 0.23 0.22 0.23 0.21 0.25 0.23 0.25
Total equity 3.10 2.73 2.83 2.72 3.20 3.10 3.20
Total equity + reserve for loan losses 2.79 2.47 2.55 2.46 2.88 2.79 2.88
Problem assets /:
Total loans + other real estate 0.52 0.50 0.53 0.49 0.58 0.52 0.58
Total assets 0.34 0.32 0.34 0.32 0.36 0.34 0.36
Total equity 4.59 4.00 4.31 4.04 4.69 4.59 4.69
Total equity + reserve for loan losses 4.14 3.62 3.89 3.64 4.22 4.14 4.22
Net loans charged off / average loans 0.61 0.48 0.49 0.34 0.59 0.49 0.51
============================================== ========== ========== ========== ========== ========== ========== ========== =======
Capital Ratios & Risk-Based Capital Ratios (%) - as of September 30, 1998:
FSCO FS Bank FSB NM FSB SNM FSB Nev. FSB Cal.
---------- ---------- ---------- ---------- ---------- ----------
Leverage ratio 7.67 7.14 6.59 11.93 7.93 8.13
Tier 1 risk-based capital ratio 10.19 9.12 13.33 19.32 14.82 11.48
Total (Tier 1 + 2) risk-based capital ratio 12.60 10.33 14.58 20.49 16.08 12.73
Tier 1 risk-based capital $ 1,500,468 1,093,162 131,287 48,329 81,800 70,538
Total (Tier 1 + 2) risk-based capital $ 1,854,526 1,237,186 143,679 51,256 88,738 78,241
Total risk-based assets - loan loss reserve $ 14,720,888 11,981,551 985,184 250,096 551,843 614,534
============================================== ========== ========== ========== ========== ========== ========== ========== =======
<FN>
EOP: End Of Period. Avg: Average. EPCS: Earnings Per Common Share. DPCS: Dividends Per Common Share. NM: Not Meaningful.
(A) All FSCO financial data have been previously restated for the May 30, 1998 pooling-of-interests merger with FSB California.
All FSCO financial data have been previously restated for a 3-for-2 common stock split in the form of a 50% stock dividend,
paid in February 1998.
Certain reclassifications of 1997 amounts have been made to conform to 1998 classifications.
</TABLE>
<TABLE>
FIRST SECURITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share data; unaudited) (A)
<CAPTION>
Three Months Year-To-Date Twelve Months
For the Periods Ended December 31, 1998 and 1997 1998 1997 $Chg %Chg 1998 1997 $Chg %Chg
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
INTEREST INCOME:
Interest & fees on loans 289,239 257,307 31,932 12.4 1,111,417 954,992 156,425 16.4
Federal funds sold & securities purchased 1,513 955 558 58.4 5,538 4,249 1,289 30.3
Interest-bearing deposits in other banks 67 (16) 83 518.8 177 69 108 156.5
Trading account securities 2,243 2,362 (119) (5.0) 9,173 12,686 (3,513) (27.7)
Available for sale securities 76,131 68,357 7,774 11.4 294,355 241,382 52,973 21.9
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
TOTAL INTEREST INCOME 369,193 328,965 40,228 12.2 1,420,660 1,213,378 207,282 17.1
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
INTEREST EXPENSE:
Deposits 98,183 95,566 2,617 2.7 403,886 352,656 51,230 14.5
Short-term borrowings 47,940 46,487 1,453 3.1 204,902 163,096 41,806 25.6
Long-term debt 36,355 21,335 15,020 70.4 108,173 71,687 36,486 50.9
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
TOTAL INTEREST EXPENSE 182,478 163,388 19,090 11.7 716,961 587,439 129,522 22.0
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
NET INTEREST INCOME 186,715 165,577 21,138 12.8 703,699 625,939 77,760 12.4
Provision for loan losses 22,861 21,242 1,619 7.6 71,923 63,386 8,537 13.5
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSS 163,854 144,335 19,519 13.5 631,776 562,553 69,223 12.3
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
NONINTEREST INCOME:
Service charges on deposit accounts 23,009 24,446 (1,437) (5.9) 90,755 90,835 (80) (0.1)
Other service charges, collections, commissions & fees 19,395 16,999 2,396 14.1 71,797 55,473 16,324 29.4
Asset sale / securitization gains 29,910 9,498 20,412 214.9 47,619 17,515 30,104 171.9
Bankcard servicing fees & third-party processing fees 4,119 8,372 (4,253) (50.8) 31,247 34,295 (3,048) (8.9)
Insurance commissions & fees 4,340 4,206 134 3.2 16,966 16,975 (9) (0.1)
Mortgage banking & loan servicing activities 59,100 35,928 23,172 64.5 215,538 117,859 97,679 82.9
Mortgage loan servicing right amortization (13,254) (4,178) (9,076) (217.2) (41,495) (16,146) (25,349) (157.0)
Trust (fiduciary) commissions & fees 8,178 7,736 442 5.7 29,474 26,195 3,279 12.5
Trading account securities gains (losses) 576 756 (180) (23.8) 994 1,446 (452) (31.3)
Available for sale securities gains (losses) 4,765 193 4,572 2368.9 8,075 3,150 4,925 156.3
Other (7,694) 2,919 (10,613) (363.6) 3,420 9,560 (6,140) (64.2)
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
TOTAL NONINTEREST INCOME 132,444 106,875 25,569 23.9 474,390 357,157 117,233 32.8
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
NONINTEREST EXPENSES:
Salaries & employee benefits 102,018 85,427 16,591 19.4 386,715 304,903 81,812 26.8
Amortization of intangibles 3,319 (842) 4,161 494.2 11,666 7,537 4,129 54.8
Armored & messenger 1,833 1,560 273 17.5 6,658 6,065 593 9.8
Bankcard interbank interchange & fees 5,586 8,715 (3,129) (35.9) 32,147 34,130 (1,983) (5.8)
Credit, appraisal, & repossessions 8,324 6,585 1,739 26.4 27,931 17,176 10,755 62.6
Fees 3,313 2,968 345 11.6 14,645 11,589 3,056 26.4
Furniture & equipment 16,717 11,632 5,085 43.7 58,181 46,263 11,918 25.8
Insurance 971 1,070 (99) (9.3) 4,372 4,655 (283) (6.1)
Marketing 4,426 4,448 (22) (0.5) 14,757 14,258 499 3.5
Occupancy, net 10,869 9,836 1,033 10.5 39,063 36,729 2,334 6.4
Other real estate expense & loss provision (recovery) 341 319 22 6.9 845 2,022 (1,177) (58.2)
Postage 3,579 3,057 522 17.1 13,508 11,367 2,141 18.8
Professional 4,059 5,661 (1,602) (28.3) 18,918 15,082 3,836 25.4
Stationery & supplies 6,751 5,303 1,448 27.3 22,311 18,259 4,052 22.2
Telephone 5,272 4,098 1,174 28.6 17,306 16,317 989 6.1
Travel 3,954 2,776 1,178 42.4 12,773 9,797 2,976 30.4
Other 12,157 12,331 (174) (1.4) 41,292 32,755 8,537 26.1
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
TOTAL NONINTEREST EXPENSES 193,489 164,944 28,545 17.3 723,088 588,904 134,184 22.8
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES 102,809 86,266 16,543 19.2 383,078 330,806 52,272 15.8
Provision for income taxes 35,496 28,235 7,261 25.7 135,398 115,532 19,866 17.2
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
NET INCOME 67,313 58,031 9,282 16.0 247,680 215,274 32,406 15.1
====================================================== ========= ========= ======== ======= ========== ========== ======== =======
Dividend requirement of preferred stock 7 7 0 0.0 28 30 (2) (6.7)
- ------------------------------------------------------ --------- --------- -------- ------- ---------- ---------- -------- -------
NET INCOME APPLICABLE TO COMMON STOCK 67,306 58,024 9,282 16.0 247,652 215,244 32,408 15.1
====================================================== ========= ========= ======== ======= ========== ========== ======== =======
Common stock dividend 24,580 20,308 4,272 21.0 95,581 77,955 17,626 22.6
====================================================== ========= ========= ======== ======= ========== ========== ======== =======
EARNINGS PER COMMON SHARE:
Earnings per common share basic 0.36 0.31 0.05 16.1 1.32 1.18 0.14 11.9
Earnings per common share diluted 0.35 0.30 0.05 16.7 1.28 1.14 0.14 12.3
Common shares basic [Avg] 188,370 184,583 3,787 2.1 187,572 182,240 5,332 2.9
Common shares diluted [Avg] 193,756 191,671 2,085 1.1 193,840 188,739 5,101 2.7
====================================================== ========= ========= ======== ======= ========== ========== ======== =======
CASH DIVIDENDS PAID OR ACCRUED PER SHARE:
Preferred stock dividend ($3.15 annual rate) 0.79 0.79 0.00 0.0 3.15 3.15 0.00 0.0
Common stock dividend 0.13 0.11 0.02 15.0 0.52 0.44 0.08 17.9
====================================================== ========= ========= ======== ======= ========== ========== ======== =======
<FN>
(A) All FSCO financial data have been previously restated for the May 30, 1998 pooling-of-interests merger with FSB California.
Certain reclassifications of 1997 amounts have been made to conform to 1998 classifications.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in thousands; unaudited) (A)
<CAPTION>
December 31 December 31 Dec/Dec Dec/Dec
1998 1997 $Chg %Chg
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
ASSETS:
Cash & due from banks 1,026,335 1,219,435 (193,100) (15.8)
Federal funds sold & securities purchased under resale agreements 230,210 206,266 23,944 11.6
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Total Cash & Cash Equivalents 1,256,545 1,425,701 (169,156) (11.9)
Interest-bearing deposits in other banks 605 600 5 0.8
Trading account securities 329,109 255,320 73,789 28.9
Available for sale securities, at fair value 4,764,127 4,351,525 412,602 9.5
(Amortized cost: $4,715,876; and $4,313,847; respectively)
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Loans, net of unearned income 14,013,417 11,230,766 2,782,651 24.8
(Unearned income: $127,593; and $106,369; respectively)
Reserve for loan losses (173,350) (157,525) (15,825) 10.0
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Total Loans, Net 13,840,067 11,073,241 2,766,826 25.0
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Premises & equipment, net 378,032 288,433 89,599 31.1
Accrued income receivable 113,399 106,974 6,425 6.0
Other real estate 3,617 7,981 (4,364) (54.7)
Other assets 673,369 356,852 316,517 88.7
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Goodwill 224,802 174,928 49,874 28.5
Loan servicing rights 174,196 108,630 65,566 60.4
Other intangible assets 10,369 1,598 8,771 548.9
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Total Intangible Assets 409,367 285,156 124,211 43.6
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
TOTAL ASSETS 21,768,237 18,151,783 3,616,454 19.9
===================================================================== ============ ============ ============ =======
LIABILITIES:
Deposits: noninterest-bearing 2,752,009 2,431,006 321,003 13.2
Deposits: interest-bearing 9,906,565 8,986,628 919,937 10.2
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Total Deposits 12,658,574 11,417,634 1,240,940 10.9
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Federal funds purchased & securities sold under repurchase agreements 3,747,084 3,252,259 494,825 15.2
U.S. Treasury demand notes 25,081 21,050 4,031 19.1
Other short-term borrowings 493,424 331,890 161,534 48.7
Accrued income taxes 333,881 255,062 78,819 30.9
Accrued interest payable 58,778 51,928 6,850 13.2
Other liabilities 246,362 116,651 129,711 111.2
Long-term debt 2,609,558 1,304,463 1,305,095 100.0
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
TOTAL LIABILITIES 20,172,742 16,750,937 3,421,805 20.4
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
STOCKHOLDERS' EQUITY:
Preferred stock: Series "A" $3.15 cumulative convertible 484 501 (17) (3.4)
(Shares issued: 9; and 10; respectively)
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Common Stockholders' Equity:
Common stock: par value $1.25 238,760 232,595 6,165 2.7
(Shares issued: 191,008; and 186,076; respectively)
Paid-in surplus 181,906 115,855 66,051 57.0
Retained earnings 1,233,264 1,081,195 152,069 14.1
Accumulated other comprehensive income 30,377 23,568 6,809 28.9
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Subtotal 1,684,307 1,453,213 231,094 15.9
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Common treasury stock, at cost (89,296) (52,868) (36,428) 68.9
(Shares: 4,296; and 1,654; respectively)
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
Total Common Stockholders' Equity 1,595,011 1,400,345 194,666 13.9
- --------------------------------------------------------------------- ------------ ------------ ------------ -------
TOTAL STOCKHOLDERS' EQUITY 1,595,495 1,400,846 194,649 13.9
- ---------------------------------------------------------------------------------- ------------ ------------ -------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 21,768,237 18,151,783 3,616,454 19.9
===================================================================== ============ ============ ============ =======
<FN>
(A) All FSCO financial data have been previously restated for the May 30, 1998 pooling-of-interests merger with FSB California.
Certain reclassifications of 1997 amounts have been made to conform to 1998 classifications.
</TABLE>
<PAGE>
<TABLE>
FIRST SECURITY CORPORATION
VOLUME / RATE ANALYSIS
(in thousands; fully taxable equivalent; unaudited) (A, B)
<CAPTION>
For the Three Months Ended December 31, 1998 and 1997
Average Balance Yield/Rate % Interest Inc/Exp Change Changes Due To:
1998 1997 1998 1997 1998 1997 1998-97 Volume Rate
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
INTEREST-EARNING ASSETS / INCOME:
114,804 67,649 5.27 5.65 Federal funds sold & securities purchased 1,513 955 558 666 (108)
3,072 600 8.72 (10.67)Interest-bearing deposits in other banks 67 (16) 83 (66) 149
139,293 163,330 6.44 5.82 Trading account securities 2,243 2,375 (132) (350) 218
4,807,969 4,161,781 6.50 6.81 Available for sale securities, amortized cost 78,160 70,877 7,283 11,005 (3,722)
Loans, net of unearned income &
13,110,251 11,021,881 8.85 9.40 deferred taxes on leases (C) 289,926 259,072 30,854 49,088 (18,234)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
18,175,389 15,415,241 8.18 8.65 TOTAL INTEREST-EARNING ASSETS / INCOME 371,909 333,263 38,646 60,343 (21,697)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSE:
Interest-Bearing Deposits:
352,251 282,080 1.55 1.65 Interest-bearing demand accounts 1,369 1,164 205 290 (85)
4,479,278 3,987,079 2.75 3.04 Savings & money market accounts 30,759 30,321 438 3,743 (3,305)
1,267,078 1,153,021 5.66 5.92 Time deposits of $100,000 or more 17,930 17,057 873 1,687 (814)
3,488,504 3,236,659 5.52 5.81 Other time deposits 48,125 47,024 1,101 3,659 (2,558)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
9,587,111 8,658,839 4.10 4.41 TOTAL INTEREST-BEARING DEPOSITS 98,183 95,566 2,617 9,379 (6,762)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
3,432,476 2,982,225 4.99 5.44 Federal funds purchased & securities sold 42,817 40,550 2,267 6,122 (3,855)
346,685 368,615 5.91 6.44 Other short-term borrowings 5,123 5,937 (814) (353) (461)
2,350,927 1,246,482 6.19 6.85 Long-term debt 36,355 21,335 15,020 18,904 (3,884)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
15,717,199 13,256,161 4.64 4.93 TOTAL INTEREST-BEARING LIABILITIES / EXPENSE 182,478 163,388 19,090 34,052 (14,962)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
8.18 8.65 Interest income FTE / earning assets
4.01 4.24 Interest expense / earning assets
------ ------ --------------------------------------------
4.17 4.41 Net interest income FTE / earning assets 189,431 169,875 19,556 26,291 (6,735)
Less fully taxable equivalent adjustment 2,716 4,298 (1,582)
------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
NET INTEREST INCOME 186,715 165,577 21,138
=========== =========== ====== ====== ============================================ ========== ========== ======== ======== ========
<CAPTION>
For the Twelve Months Ended December 31, 1998 and 1997
Average Balance Yield/Rate % Interest Inc/Exp Change Changes Due To:
1998 1997 1998 1997 1998 1997 1998-97 Volume Rate
<C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
INTEREST-EARNING ASSETS / INCOME:
98,731 78,620 5.61 5.40 Federal funds sold & securities purchased 5,538 4,249 1,289 1,087 202
1,684 1,547 10.51 4.46 Interest-bearing deposits in other banks 177 69 108 6 102
158,605 217,337 5.79 5.85 Trading account securities 9,184 12,724 (3,540) (3,438) (102)
4,589,682 3,696,348 6.58 6.73 Available for sale securities, amortized cost 302,064 248,631 53,433 60,089 (6,656)
Loans, net of unearned income &
12,354,887 10,240,456 9.02 9.36 deferred taxes on leases (C) 1,114,078 958,197 155,881 197,847 (41,966)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
17,203,589 14,234,308 8.32 8.60 TOTAL INTEREST-EARNING ASSETS / INCOME 1,431,041 1,223,870 207,171 255,591 (48,420)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
INTEREST-BEARING LIABILITIES / EXPENSE:
Interest-Bearing Deposits:
335,484 475,950 1.66 2.07 Interest-bearing demand accounts 5,560 9,849 (4,289) (2,907) (1,382)
4,292,234 3,570,722 2.90 3.12 Savings & money market accounts 124,560 111,367 13,193 22,503 (9,310)
1,328,028 975,454 5.78 5.76 Time deposits of $100,000 or more 76,757 56,223 20,534 20,322 212
3,492,086 3,081,834 5.64 5.69 Other time deposits 197,009 175,217 21,792 23,325 (1,533)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
9,447,832 8,103,960 4.27 4.35 TOTAL INTEREST-BEARING DEPOSITS 403,886 352,656 51,230 63,243 (12,013)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
3,442,992 2,649,889 5.29 5.33 Federal funds purchased & securities sold 182,050 141,207 40,843 42,263 (1,420)
383,482 319,857 5.96 6.84 Other short-term borrowings 22,852 21,889 963 4,354 (3,391)
1,680,421 1,040,147 6.44 6.89 Long-term debt 108,173 71,687 36,486 44,128 (7,642)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
14,954,727 12,113,853 4.79 4.85 TOTAL INTEREST-BEARING LIABILITIES / EXPENSE 716,961 587,439 129,522 153,988 (24,466)
- ----------- ----------- ------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
8.32 8.60 Interest income FTE / earning assets
4.17 4.13 Interest expense / earning assets
------ ------ --------------------------------------------
4.15 4.47 Net interest income FTE / earning assets 714,080 636,431 77,649 101,603 (23,954)
Less fully taxable equivalent adjustment 10,381 10,492 (111)
------ ------ -------------------------------------------- ---------- ---------- -------- -------- --------
NET INTEREST INCOME 703,699 625,939 77,760
=========== =========== ====== ====== ============================================ ========== ========== ======== ======== ========
<FN>
(A) All FSCO financial data have been previously restated for the May 30, 1998 pooling-of-interests merger with FSB California.
Certain reclassifications of 1997 amounts have been made to conform to 1998 classifications.
(B) Changes not due entirely to changes in volume or rate have been allocated to rate.
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 1998 and 1997.
(C) Loans include nonaccruing loans.
Interest on loans includes fees of $16,199 and $11,938 for the 1998 and 1997 quarters, respectively.
Interest on loans includes fees of $48,925 and $39,864 for the 1998 and 1997 year-to-date periods, respectively.
</TABLE>
