<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1994.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-8552
BANC ONE CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0738296
---- ----------
(State or other jurisdiction of incorporation or (IRS Employer I.D. Number)
organization)
100 East Broad Street, Columbus, Ohio 43271-0251
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
(614) 248-5944
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed since last
report)
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
-
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS;
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No N/A
APPLICABLE ONLY TO CORPORATE ISSUERS;
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, no par value, $5 stated value, shares outstanding at April 29,
1994. 381,835,796
<PAGE> 2
BANC ONE CORPORATION AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
<PAGE> 3
<TABLE>
<CAPTION>
Consolidated Balance Sheet
$(thousands, except per share amounts) (unaudited) March 31, December 31, March 31,
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Cash and due from banks $4,432,542 $4,757,475 $4,385,960
Short-term investments 994,975 931,959 1,496,437
Securities
Securities held for investment 5,251,194 16,591,970 15,468,530
Securities held for sale 815,941 1,152,986
Securities available for sale (at market value,
cost $14,932,977 at March 31, 1994) 14,855,908
Total securities (market value approximates
$20,222,886 at March 31, 1994) 20,107,102 17,407,911 16,621,516
Loans and leases 54,955,278 53,925,187 48,334,019
Reserve for loan and lease losses 922,099 918,153 943,137
Net loans and leases 54,033,179 53,007,034 47,390,882
Other assets:
Bank premises and equipment, net 1,405,466 1,387,218 1,337,169
Interest earned, not collected 647,450 624,185 581,159
Other real estate owned 115,982 135,893 159,618
Excess of cost over net assets of affiliates purchased 222,632 227,312 244,520
Other 1,467,342 1,439,574 1,451,381
Total other assets 3,858,872 3,814,182 3,773,847
Total assets $83,426,670 $79,918,561 $73,668,642
LIABILITIES
Deposits
Non-interest bearing $13,229,222 $13,674,976 $11,949,484
Interest bearing 46,918,781 47,268,205 47,410,880
Total deposits 60,148,003 60,943,181 59,360,364
Federal funds purchased and repurchase agreements 8,916,607 6,744,437 4,032,311
Other short-term borrowings 3,970,250 2,020,176 1,128,492
Long-term borrowings 1,740,912 1,701,662 1,349,679
Accrued interest payable 210,688 222,946 231,397
Other liabilities 1,239,951 1,252,521 1,158,431
Total liabilities 76,226,411 72,884,923 67,260,674
Stockholders' equity
Preferred stock, 35,000,000 shares authorized:
Class B convertible, no par value 7,476
Series C convertible, no par value, 4,998,000, 4,998,000 and
5,000,000 shares issued and outstanding, respectively 249,900 249,900 250,000
Common stockholders' equity:
Common stock, no par value, $5 stated value, 600,000,000 shares
authorized, 381,835,796, 380,687,187, (December 31, 1993 shares
reflect the 10% common stock dividend, effective February 10, 1994),
272,084,600 shares issued and outstanding, respectively 1,909,179 1,903,436 1,360,424
Capital in excess of aggregate stated value of common stock 3,762,153 3,833,611 2,982,317
Retained earnings 1,336,428 1,046,691 1,807,751
Net unrealized holding losses on securities available for sale (49,048)
Total stockholders' equity before treasury stock 7,208,612 7,033,638 6,407,968
Treasury stock (8,353)
Total stockholders' equity 7,200,259 7,033,638 6,407,968
Total liabilities and stockholders' equity $83,426,670 $79,918,561 $73,668,642
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 4
<TABLE>
Consolidated Statement of Income
<CAPTION>
for the three months ended March 31
$(thousands, except per share amounts) (unaudited) 1994 1993
<S> <C> <C>
Interest income
Interest and fees on loans and leases $1,246,873 $1,202,365
Interest and dividends on:
Taxable securities 189,341 228,800
Tax exempt securities 31,020 30,257
Other interest income 7,867 12,351
Total interest income 1,475,101 1,473,773
Interest expense
Interest on deposits:
Demand and savings deposits 148,511 153,383
Time deposits 179,136 210,195
Interest on borrowings 91,415 66,709
Total interest expense 419,062 430,287
Net interest income 1,056,039 1,043,486
Provision for loan and lease losses 77,287 105,551
Net interest income after provision for loan and lease losses 978,752 937,935
Non-interest income
Income from fiduciary activities 55,432 51,137
Service charges on deposit accounts 109,303 107,309
Loan processing and servicing income 117,152 96,091
Securities gains (losses) 3,443 7,430
Income from management of Collection pools, net 5,339 3,464
Other 93,691 76,498
Total non-interest income 384,360 341,929
Non-interest expense
Salaries and related costs 423,852 394,525
Net occupancy expense, exclusive of depreciation 39,191 38,197
Equipment expense 27,739 25,126
Taxes other than income and payroll 908 19,838
Depreciation and amortization 64,691 73,086
Outside services and processing 132,280 109,612
Marketing and development 36,500 37,341
Communication and transportation 56,595 52,110
Other 92,468 128,005
Total non-interest expense 874,224 877,840
Income before income taxes and cumulative effect of change in
accounting principle 488,888 402,024
Income tax provision
Income excluding securities transactions (174,810) (132,012)
Securities transactions (1,205) (2,526)
Provision for income taxes (176,015) (134,538)
Income before cumulative effect of change in accounting principle 312,873 267,486
Cumulative effect of change in method of accounting for income taxes 19,391
Net Income $312,873 $286,877
Net income per common share
Income before cumulative effect of change in accounting principle $.81 $.70
Cumulative effect of change in method of accounting for income taxes .05
Net income per common share $.81 $.75
Weighted average common shares outstanding (000) 382,643 375,813
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
BANC ONE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31
$(THOUSANDS) (UNAUDITED)
1994 1993
----------- -----------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 312,873 286,877
Adjustments:
Provision for loan and lease losses 77,287 105,551
Depreciation and amortization 87,840 94,523
Net decrease in trading account portfolio 27,771 97,558
Net (increase) decrease in warehoused mortgage loans 426,682 (6,823)
Net change in deferred loan fees and costs (5,172) (17,689)
Gain on securities transactions (3,443) (7,430)
(Gain) loss on sale of other assets (6,033) 448
Net (increase) decrease in other assets (50,046) 136,579
Net increase (decrease) in other liabilities 105,734 (6,743)
Net change in deferred income taxes 56,264 (5,668)
Cumulative effect of change in accounting principle (19,391)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,029,757 657,792
----------- -----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of securities available for sale (6,648,886)
Purchases of securities held for investment (249,553) (715,540)
Maturities of securities held for investment 866,524 1,349,191
Proceeds from maturities and sales of securities available for sale 3,063,692 501,574
Proceeds fom the sales of securities held for investment 131,662
Net (increase) decrease in loans, excluding sales and purchases (1,337,379) 117,991
Proceeds from the sales of loans 11,933 30,021
Purchases of loans and related premiums (206,753) (192,200)
Net (increase) decrease in short-term investments (55,416) 765,872
Additions to bank premises and equipment (73,479) (77,798)
Disposals of bank premises and equipment 6,066 8,273
All other investing activies - net (551)
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (4,623,802) 1,919,046
----------- -----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net increase (decrease) in demand deposit, money market
and savings accounts 161,253 (1,635,600)
Net decrease in certificates of deposits (850,547) (684,500)
Net increase (decrease) in short-term borrowings 4,122,244 (854,518)
Proceeds from issuance of long-term borrowings 50,131
Repayment of long-term borrowings (10,881) (7,783)
Cash dividends paid (228,607) (165,133)
Other, net increase (decrease) 25,519 (30,214)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES 3,269,112 (3,377,748)
----------- -----------
Increase (decrease) in cash and cash equivalents (324,933) (800,910)
Cash and cash equivalents at January 1 4,757,475 5,186,870
----------- -----------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 4,432,542 $ 4,385,960
=========== ===========
</TABLE>
<PAGE> 6
SUPPLEMENTAL DISCLOSURES FOR STATEMENT OF CASH FLOWS
- - ----------------------------------------------------
Supplemental disclosures of noncash investing and financing activities, and
additional disclosures, are as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
- - ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Transfer from loans to other real estate owned $ 12,580 $ 29,779
=========== ===========
Net Trade Date Accounting entries for securities transactions $ 138,568 $ 6,583
=========== ===========
Loan issued to facilitate the sale of OREO Properties $ 3,276
===========
ADDITIONAL DISCLOSURES:
- - -----------------------
Interest Paid $ 431,320 $ 457,597
=========== ===========
Income Taxes Paid $ 19,710 $ 8,151
=========== ===========
</TABLE>
<PAGE> 7
<TABLE>
Consolidated Statement of Changes in Stockholders' Equity
<CAPTION>
for the three months ended March 31
$(thousands, except per share amounts) (unaudited) 1994 1993
<S> <C> <C>
Balance, beginning of period $7,033,638 $6,241,586
Net income 312,873 286,877
Exercise of stock options, net of shares purchased (1,350) (38,194)
Shares issued in acquisitions 5,794
Pooled affiliate stock issuance and other (666) 8,421
Cash dividends:
Corporation:
Common ($.31 and $.25 per share, respectively) (118,350) (81,144)
Class B Preferred ($.75 per share) (216)
Series C Preferred ($.88 per share) (4,373) (4,375)
Pooled affiliates (4,987)
Sale of stock to employee benefit plan 30,094
Net unrealized holding losses on securities available for sale (49,048)
Purchase of treasury stock (8,353)
Balance, March 31 $7,200,259 $6,407,968
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 8
<TABLE>
Consolidated Statement of Reserve for Loan and Lease Losses
<CAPTION>
for the three months ended March 31
$(thousands) (unaudited) 1994 1993
<S> <C> <C>
Balance, beginning of period $918,153 $909,896
Acquired reserves and other 322 1,170
Provision for loan and lease losses 77,287 105,551
Losses charged to the reserve (123,411) (135,196)
Recoveries 49,748 61,716
Net losses charged to the reserve (73,663) (73,480)
Balance, March 31 $922,099 $943,137
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 9
Notes to the Financial Statements
1. The accompanying financial statements are unaudited. However, in the opinion
of management, they contain the adjustments (all of which are normal and
recurring in nature) necessary to present fairly the financial position and the
results of operations. The notes to the financial statements contained in the
annual report for December 31, 1993, should be read in conjunction with these
financial statements. The Corporation is defined as parent company only.
BANC ONE is defined as the Corporation and all significant majority-owned
subsidiaries.
2. The provision for income taxes is at a rate which management believes will
approximate the effective rate for the year.
3. At December 31, 1993, BANC ONE had four pending acquisitions, totaling
approximately $5 billion in assets. On March 7, 1994, the acquisition of
Parkdale Bank ( Parkdale ) of Beaumont, Texas, accounted for as a pooling of
interests, was completed in exchange for 282,120 shares of BANC ONE common
stock. The prior period financial statements, however, have not been restated
due to immateriality.
During February 1994, the Corporation signed a definitive agreement to acquire
American Holding Company, a $229 million bank holding company headquartered in
Highland Park, Illinois, in exchange for approximately .9 million shares of
BANC ONE common stock. The transaction is expected to be completed in the
fourth quarter 1994 and is subject to shareholder and regulatory approval.
During March 1994, the Corporation signed a letter of intent to acquire
1st*Bank, a $124 million bank holding company headquartered in Coppell, Texas,
in exchange for approximately .4 million shares of BANC ONE common stock. The
transaction is expected to be completed in the fourth quarter 1994 and is
subject to shareholder and regulatory approval.
As of March 31, 1994, BANC ONE had five pending acquisitions which had
combined assets of approximately $5.6 billion.
Reported amounts for 1993 have been restated to reflect the second quarter
1993 poolings of interests of First Community Bancorp, Inc. and
Key Centurion Bancshares, Inc.
4. In January 1994, the Board of Directors approved the purchase of up to 10
million shares of BANC ONE common stock for use in the acquisition of Premier
Bancorp, Inc., in Baton Rouge, Louisiana. As of March 31, 1994, the
Corporation had acquired and held 250,000 of its shares for this purpose.
BANC ONE has an option to purchase Premier Bancorp between June 30, 1995 and
March 31, 1997. Premier Bancorp had assets of approximately $4.2 billion at
December 31, 1993.
5. In January 1994, BANC ONE adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities (SFAS 115), which specifies the accounting for investments in
securities that have readily determinable fair values. Upon adoption, the
Corporation transferred approximately $11 billion of securities from the
held-for-investment and held-for-sale portfolios, to the available-for-sale
portfolio. Securities available for sale were adjusted to market value, as
required, and a net unrealized gain of $83 million, after tax, was recorded as
a separate component of common stockholders' equity. At March 31, 1994, the
net unrealized loss in this separate component of equity was $49 million.
<PAGE> 10
6. Approximately $57.3, $114.7 and $116.9 million have been reclassified from
other real estate owned to loans for December 31,1993, March 31, 1993 and
December 31, 1992, respectively, for comparison purposes. Certain other prior
period amounts (in addition to the pooling restatements noted above) have also
been reclassified.
<PAGE> 11
Notes to the Financial Statements, cont'd.
7. Market values and maturities of investment securities by type at January 1,
1994 are shown in the following table. The securities classifications and
accounting applied to these classifications, are significantly different from
those reported in the 1993 BANC ONE CORPORATION ANNUAL REPORT.
<TABLE>
<CAPTION>
SECURITIES HELD FOR INVESTMENT Maturities of Securities as of January 1, 1994(1)
-------------------------------------------------------------------
1999-
$ (millions) 1994 1995 1996 1997 1998 2003 2004+ Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
United States treasury and agencies
Book value $ 345 $ 213 $ 41 $ 213 $ 26 $ 36 $ 5 $ 879
Market value 348 216 42 214 26 37 5 888
Mortgage and asset backed securities;
Government:
Book value 444 364 487 297 271 192 95 2,150
Market value 449 372 504 314 283 203 95 2,220
Other:
Book value 462 144 112 65 6 3 792
Market value 465 149 118 68 7 3 810
Tax exempt
Book value 489 259 175 268 153 597 125 2,066
Market value 494 273 186 290 167 649 131 2,190
Other
Book value 26 12 4 5 6 11 68 132
Market value 24 13 4 5 6 10 79 141
Total book value of securities held for investment $1,766 $ 992 $ 819 $ 848 $ 462 $ 836 $ 296 $ 6,019
====== ====== ====== ====== ====== ====== ====== =======
Total market value of securities held for investment $1,780 $1,023 $ 854 $ 891 $ 489 $ 899 $ 313 $ 6,249
====== ====== ====== ====== ====== ====== ====== =======
SECURITIES AVAILABLE FOR SALE
United States treasury and agencies
Book value $1,042 $ 563 $1,197 $2,850 $ 74 $ 71 $ 55 $ 5,852
Market value 1,050 572 1,217 2,911 77 75 55 5,957
Mortgage and asset backed securities;
Government:
Book value 14 163 472 806 283 253 283 2,274
Market value 14 163 470 806 282 256 284 2,275
Other:
Book value 354 805 734 549 423 74 37 2,976
Market value 358 804 733 549 421 73 37 2,975
Tax exempt
Book value 37 3 40
Market value 36 3 39
Other
Book value 50 33 2 162 247
Market value 50 33 2 184 269
Total book value of securities available for sale $1,497 $1,531 $2,436 $4,207 $ 780 $ 398 $ 540 $11,389
====== ====== ====== ====== ====== ====== ====== =======
Total market value of securities available for sale $1,508 $1,539 $2,453 $4,268 $ 780 $ 404 $ 563 $11,515
====== ====== ====== ====== ====== ====== ====== =======
Total book value $3,263 $2,523 $3,255 $5,055 $1,242 $1,234 $ 836 $17,408
====== ====== ====== ====== ====== ====== ====== =======
Total market value $3,288 $2,562 $3,307 $5,159 $1,269 $1,303 $ 876 $17,764
====== ====== ====== ====== ====== ====== ====== =======
<FN>
(1) Reflects estimated maturity.
</TABLE>
<PAGE> 12
<TABLE>
Unrealized gains and losses on securities held:
<CAPTION>
Unrealized Gain (Loss)
as of January 1, 1994
-------------------------------------------
Net
Unrealized Unrealized Unrealized
$(millions) Gains Losses Gain
- - ------------------------------------------------------------------------------------------
SECURITIES HELD FOR INVESTMENT
<S> <C> <C> <C>
United States treasury and federal agencies $ 21 $ (12) $ 9
Mortgage and asset-backed securities:
Government 72 (2) 70
Other 19 (1) 18
Tax exempt 126 (2) 124
Other 12 (3) 9
------- ------- -------
Total held to maturity 250 (20) 230
------- ------- -------
SECURITIES AVAILABLE FOR SALE
United States treasury and federal agencies 107 (2) 105
Mortgage and asset-backed securities:
Government 6 (5) 1
Other 8 (9) (1)
Tax exempt (1) (1)
Other 22 22
------- ------- -------
TOTAL AVAILABLE FOR SALE 143 (17) 126
------- ------- -------
TOTAL $ 393 $ (37) $ 356
======= ======= =======
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
Average Balances, Income and Expenses, Yields and Rates(1)(2)
1994 1993
1st Quarter 4th Quarter
Average Income/ Yield/ Average Income/ Yield/
$(thousands) (unaudited) Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Short-term investments $986,879 $8,805 3.62% $852,003 $7,645 3.56%
Securities
Taxable 14,863,543 189,456 5.17 14,664,305 192,613 5.21
Tax exempt 2,091,196 46,220 8.96 1,900,852 43,514 9.0
Total securities 16,954,739 235,676 5.64 16,565,157 236,127 5.66
Loans and leases(4)
Commercial 13,874,118 268,905 7.86 13,639,278 270,964 7.88
Real estate 16,566,091 346,908 8.49 16,391,295 352,727 8.54
Consumer, net 16,528,573 382,008 9.37 15,482,530 340,012 8.71
Credit card 6,001,195 232,387 15.70 5,505,457 222,277 16.02
Leases, net 1,069,502 19,961 7.57 1,033,462 20,616 7.91
Reserve for loan
and lease losses (925,065) (914,834)
Net loans and leases 53,114,414 1,250,169 9.55 51,137,188 1,206,596 9.36
Total earning assets 71,056,032 1,494,650 8.53 68,554,348 1,450,368 8.39
Other assets 8,426,100 8,486,857
Total assets $79,482,132 $77,041,205
LIABILITIES
Deposits
Non-interest bearing demand $12,711,510 $12,920,586
Interest bearing demand 8,733,047 34,989 1.62 8,444,082 30,995 1.46
Savings 7,510,645 40,895 2.21 7,320,122 42,747 2.32
Money market savings accounts 11,484,080 72,627 2.56 11,213,403 72,822 2.58
Time deposits:
CDs less than $100,000 15,575,487 139,650 3.64 15,754,328 135,076 3.40
CDs $100,000 and over:
Domestic 3,749,931 33,048 3.57 3,562,011 35,051 3.90
Foreign 764,066 6,438 3.42 743,034 6,229 3.33
Total deposits 60,528,766 327,647 2.20 59,957,566 322,920 2.14
Borrowed funds:
Short-term 8,555,906 66,787 3.17 7,216,092 53,539 2.94
Long-term 1,707,597 24,628 5.85 1,705,130 25,646 5.97
Total borrowed funds 10,263,503 91,415 3.61 8,921,222 79,185 3.52
Total interest bearing liabilities 58,080,759 419,062 2.93 55,958,202 402,105 2.85
Other liabilities 1,502,995 1,455,176
Total liabilities 72,295,264 70,333,964
Preferred stock 249,900 249,969
Common stockholders' equity 6,936,968 6,457,272
Total liabilities, common equity
and preferred stock $79,482,132 $77,041,205
Net interest income(3) 1,075,588 6.14 1,048,263 6.07
Provision for loan and lease losses(3) (77,287) (.44) (107,031) (.62)
Net funds function(3) $998,301 5.70% $941,232 5.45%
<FN>
(1) Fully taxable equivalent basis.
(2) Yields and rates are annualized based on actual days in reporting period.
(3) As a percent of average earning assets.
(4) Nonaccrual loans are included in loan balances.
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
Average Balances, Income and Expenses, Yields and Rates(1)(2)
1993 1993
3rd Quarter 2nd Quarter
Average Income/ Yield/ Average Income/ Yield/
$(thousands) (unaudited) Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Short-term investments $1,219,381 $10,795 3.51% $1,218,692 $9,658 3.18%
Securities
Taxable 13,624,158 187,077 5.45 14,224,020 204,187 5.76
Tax exempt 1,768,401 42,593 9.56 1,779,959 43,534 9.81
Total securities 15,392,559 229,670 5.92 16,003,979 247,721 6.21
Loans and leases(4)
Commercial 13,423,556 276,297 8.17 13,550,542 278,231 8.24
Real estate 15,982,463 353,386 8.77 15,825,602 349,752 8.86
Consumer, net 14,703,707 329,609 8.89 13,908,944 328,228 9.47
Credit card 5,143,699 215,434 16.62 4,862,098 201,155 16.59
Leases, net 963,491 19,725 8.12 957,163 19,726 8.27
Reserve for loan
and lease losses (921,654) (947,632)
Net loans and leases 49,295,262 1,194,451 9.61 48,156,717 1,177,092 9.80
Total earning assets 65,907,202 1,434,916 8.64 65,379,388 1,434,471 8.80
Other assets 8,319,285 8,306,918
Total assets $74,226,487 $73,686,306
LIABILITIES
Deposits
Non-interest bearing demand $12,112,958 $11,974,880
Interest bearing demand 8,138,309 29,670 1.45 8,098,021 34,631 1.72
Savings 7,075,977 43,537 2.44 6,895,289 43,571 2.53
Money market savings accounts 11,294,172 73,771 2.59 11,440,867 74,305 2.61
Time deposits:
CDs less than $100,000 16,282,553 151,358 3.69 16,810,159 158,730 3.79
CDs $100,000 and over:
Domestic 3,108,229 27,248 3.48 3,329,855 30,962 3.73
Foreign 549,844 4,846 3.50 445,147 4,018 3.62
Total deposits 58,562,042 330,430 2.24 58,994,218 346,217 2.35
Borrowed funds:
Short-term 6,132,417 47,847 3.10 5,356,218 40,636 3.04
Long-term 1,586,065 24,994 6.25 1,557,042 22,532 5.80
Total borrowed funds 7,718,482 72,841 3.74 6,913,260 63,168 3.66
Total interest bearing liabilities 54,167,566 403,271 2.95 53,932,598 409,385 3.04
Other liabilities 1,311,601 1,307,665
Total liabilities 67,592,125 67,215,143
Preferred stock 250,000 254,691
Common stockholders' equity 6,384,362 6,216,472
Total liabilities, common equity
and preferred stock $74,226,487 $73,686,306
Net interest income(3) 1,031,645 6.21 1,025,086 6.29
Provision for loan and lease losses(3) (97,523) (.59) (58,402) (.36)
Net funds function(3) $934,122 5.62% $966,684 5.93%
<FN>
(1) Fully taxable equivalent basis.
(2) Yields and rates are annualized based on actual days in reporting period.
(3) As a percent of average earning assets.
(4) Nonaccrual loans are included in loan balances.
</TABLE>
<PAGE> 15
<TABLE>
Average Balances, Income and Expenses, Yields and Rates(1)(2)
<CAPTION>
1993
1st Quarter
Average Income/ Yield/
$(thousands) (unaudited) Balance Expense Rate
<S> <C> <C> <C>
ASSETS
Short-term investments $1,555,960 $13,607 3.55%
Securities
Taxable 15,288,035 230,634 6.12
Tax exempt 1,769,729 43,713 10.02
Total securities 17,057,764 274,347 6.52
Loans and leases(4)
Commercial 13,677,702 276,219 8.19
Real estate 15,147,950 339,388 9.09
Consumer, net 13,561,094 369,898 11.06
Credit card 4,771,721 200,903 17.08
Leases, net 965,519 20,493 8.61
Reserve for loan
and lease losses (930,843)
Net loans and leases 47,193,143 1,206,901 10.37
Total earning assets 65,806,867 1,494,855 9.21
Other assets 8,061,474
Total assets $73,868,341
LIABILITIES
Deposits
Non-interest bearing demand $11,446,727
Interest bearing demand 8,011,283 30,986 1.57
Savings 6,637,179 44,477 2.72
Money market savings accounts 11,707,943 77,920 2.70
Time deposits:
CDs less than $100,000 17,300,995 170,550 4.00
CDs $100,000 and over:
Domestic 3,591,931 35,874 4.05
Foreign 402,488 3,771 3.80
Total deposits 59,098,546 363,578 2.50
Borrowed funds:
Short-term 5,730,634 43,972 3.11
Long-term 1,357,179 22,737 6.79
Total borrowed funds 7,087,813 66,709 3.82
Total interest bearing liabilities 54,739,632 430,287 3.19
Other liabilities 1,379,391
Total liabilities 67,565,750
Preferred stock 259,018
Common stockholders' equity 6,043,573
Total liabilities, common equity
and preferred stock $73,868,341
Net interest income(3) 1,064,568 6.56
Provision for loan and lease losses(3) (105,551) (.65)
Net funds function(3) $959,017 5.91%
<FN>
(1) Fully taxable equivalent basis.
(2) Yields and rates are annualized based on actual days in reporting period.
(3) As a percent of average earning assets.
(4) Nonaccrual loans are included in loan balances.
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
Consolidated Quarterly Financial Data Quarters
1994 1993 Last 12
$(millions, except per share amounts) (unaudited) First Fourth Third Second First Months
<S> <C> <C> <C> <C> <C> <C>
Key ratios
Return on average assets(1) 1.60% 1.47% 1.52% 1.53% 1.58% 1.53%
Return on average common equity(1) 18.04 17.32 17.43 17.91 18.94 17.68
Return on average total equity(1) 17.66 16.93 17.04 17.48 18.46 17.28
Average common equity to assets 8.73 8.38 8.60 8.44 8.18 8.54
Average total equity to assets 9.04 8.71 8.94 8.78 8.53 8.87
Margin analysis(1),(2),(3)
Interest income 8.53 8.39 8.64 8.80 9.21 8.59
Interest expense 2.39 2.32 2.43 2.51 2.65 2.41
Net interest income 6.14 6.07 6.21 6.29 6.56 6.18
Provision for loan and lease losses .44 .62 .59 .36 .65 .50
Net funds function 5.70 5.45 5.62 5.93 5.91 5.68
Credit analysis
Net charge-offs to average loans and leases .55 .89 .80 .67 .62 .73%
Ending reserves to loans and leases 1.68% 1.70% 1.79% 1.85% 1.95%
Nonperforming assets:
Total $560.5 $603.5 $655.4 $738.5 $826.0
Percent of total loans and leases 1.02% 1.12% 1.28% 1.48% 1.71%
Loans deliquent over 90 days(4):
Total $186.2 $204.0 $214.7 $212.9 $200.1
Percent of total loans and leases .34% .38% .42% .43% .41%
Per share data
Net income(5) $.81 $.75 $.75 $.73 $.75 $3.04
Cash dividends(5) .31 .28 .28 .26 .25 1.13
Book value(5) 18.20 17.82 17.35 16.89 16.45
Common stock price(5):
High $35.47 $39.77 $42.19 $44.73 $42.27 $44.73
Low 31.88 32.27 34.55 36.73 36.36 31.88
Close $33.00 $35.57 $37.73 $40.91 $42.00
Common shares traded (000) 68,124 54,635 39,072 35,563 34,057 197,394
Preferred Series C stock price:
High $68.75 $74.63 $73.25 $81.75 $78.50 $81.75
Low 60.50 66.63 72.75 70.50 69.50 60.50
Close $61.00 $68.75 $73.25 $77.00 $78.50
Preferred Series C shares traded (000) 2,851 2,082 1,712 1,827 1,093 8,472
Period end balances
Loans and leases (net of unearned) $54,955.3 $53,925.2 $51,102.6 $ 49,853.8 $ 48,334.0
Earning assets 75,135.3 71,346.9 68,196.9 66,884.6 65,508.8
Total assets 83,426.7 79,918.6 76,461.6 75,466.4 73,668.6
Total deposits 60,148.0 60,943.2 59,143.7 59,253.9 59,360.4
Long-term debt 1,740.9 1,701.7 1,709.0 1,584.4 1,349.7
Reserve for loan and lease losses 922.1 918.2 917.1 919.8 943.1
Total stockholders' equity 7,200.3 7,033.6 6,759.9 6,588.7 6,408.0
Condensed income statement
Net interest income(2) 1,075.59 1,048.26 1,031.65 1,025.09 1,064.57 $4,180.59
Provision for loan and lease losses 77.29 107.03 97.53 58.41 105.55 340.26
Net funds function(2) 998.30 941.23 934.12 966.68 959.02 3,840.33
Non-interest income
Fiduciary income 55.43 54.24 52.82 53.59 51.14 216.08
Service charges on deposits 109.30 111.42 107.66 105.91 107.31 434.29
Loan processing and service income 117.15 124.67 118.04 112.98 96.09 472.84
Securities transactions 3.44 5.51 2.97 .11 7.43 12.03
Income from management of Collection pools, net 5.34 6.46 6.53 6.33 3.46 24.66
Other non-interest income 93.70 94.59 92.25 93.64 76.50 374.18
Total non-interest income 384.36 396.89 380.27 372.56 341.93 1,534.08
Non-interest expense
Salaries and benefits 423.85 403.98 412.86 406.97 394.53 1,647.66
</TABLE>
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Other non-interest expense 450.37 483.15 450.24 479.08 483.31 1,862.84
Total non-interest expense 874.22 887.13 863.10 886.05 877.84 3,510.50
Taxable equivalent adjustment 19.55 19.42 20.59 18.37 21.07 77.93
Income before income taxes 488.89 431.57 430.70 434.82 402.04 1,785.98
Income tax (provision) benefit (176.02) (145.32) (145.79) (152.88) (134.55) (620.01)
Income before tax accounting change 312.87 286.25 284.91 281.94 267.49 1,165.97
Change in method of accounting for income taxes 19.39
Net income $312.87 $286.25 $284.91 $281.94 $286.88 $1,165.97
Net income available to common stockholders $308.50 $281.88 $280.54 $277.57 $282.29 $1,148.49
<FN>
(1) Ratios presented on an annualized basis.
(2) Fully taxable equivalent basis.
(3) As a percent of average earning assets.
(4) Excluding nonperforming loans.
(5) Amounts have been restated for the 10% common stock dividend, effective
February 10, 1994 and the five-shares-for-four-shares stock split, effective
August 31, 1993.
</TABLE>
<PAGE> 18
Management's Discussion and Analysis
BANC ONE reported net income of $313 million for the three months ended March
31, 1994. This represents an increase of over 9% from the same period in 1993.
Prior period amounts have been restated to reflect the second quarter 1993
poolings of interests of First Community Bancorp, Inc. and Key Centurion
Bancshares, Inc. This discussion should be read in conjunction with the
financial statements, notes and tables included elsewhere in this report.
BANC ONE's return on average assets increased to 1.60% for the first quarter
of 1994 from 1.58% for the same period in 1993. BANC ONE's return on average
common equity decreased to 18.04% from the first quarter 1993 ratio of 18.94%.
This decrease is due to average common equity increasing faster than net income
available to common stockholders from the first quarter of 1993 to the first
quarter of 1994.
Net Interest Income
BANC ONE's net interest income on a fully taxable equivalent (FTE) basis
increased $11 million in the first quarter of 1994 from the comparable period
in 1993. Interest income on earning assets decreased slightly while average
balances increased $5.2 billion from a year earlier. Interest expense on
interest bearing liabilities decreased $11 million while average balances
increased $3.3 billion for the same period.
Average loan balances, primarily consumer and credit card, increased 12.3%,
resulting in a $43 million increase in interest income. This increase was
partially offset by a $39 million decrease in interest income on investment
securities as a result of the continued decline in higher yielding federal
agency and private label issued collateralized mortgage-backed securities
(CMOs). These changes in interest income include changes in revenues from
interest rate swaps which hedge or synthetically alter assets. The contribution
to interest income from swaps declined $2 million. Approximately $3.2 billion
of United States Treasury securities were purchased late in the first quarter
and can be expected to increase interest income but further depress yields in
the second quarter of 1994.
Interest expense decreased by $11 million for the three months ended
March 31, 1994 from the same period in 1993. Interest expense on deposits
decreased by $36 million, primarily due to a shift from longer term, higher
interest rate time deposits to lower interest rate savings and non-interest
bearing demand deposits. This decrease was partially offset by $25 million in
additional interest expense on borrowed funds, resulting from higher balances,
the increase in the federal funds rate early in the first quarter and the
issuance of $250 million of 6.625% Subordinated Notes by three of the
Corporation's affiliate banks in the second quarter 1993. Revenue associated
with swaps which hedge or synthetically alter liabilities was unchanged from
the first quarter of 1993. Late in the first quarter $2.2 billion in
short-term bank notes were issued and can be expected to increase interest
expense during the second quarter of 1994. Bank notes are used as an
alternative funding source to deposits and federal funds. Although there is a
higher interest rate associated with bank notes, they are more advantageous as
FDIC deposit insurance premiums are not paid on them, they generally mature in
one year and can be issued quickly.
Earning asset yields, including swaps, declined 68 basis points compared to
1993 in spite of the loan growth previously noted, while funding costs
declined only 26 basis points for the same period. This is a result of the
spread between the prime rate and the federal funds rate moving toward lower
historical levels and to the purchase of United States Treasury securities, as
previously mentioned. Income tax refund anticipation loans originated in the
first quarter of 1994 totaled approxi-
<PAGE> 19
mately $2.2 billion, compared to $2.4 billion in the first quarter of 1993.
During March and April, the prime rate increased by 75 basis points. The
resultant increased yields on prime based loans during the second quarter will
be partially offset by a decline in income from derivative products used to
hedge these instruments.
BANC ONE manages interest rate sensitivity primarily with the use of
off-balance sheet interest rate swaps. The use of swaps resulted in BANC ONE
being slightly liability-sensitive at March 31, 1994, countering the natural
tendency to be asset sensitive. Table 1 summarizes the notional amount (an
agreed upon amount on which calculations of interest payments to be exchanged
are based) of BANC ONE's interest rate swap portfolio by type. BANC ONE has
no credit exposure relative to the notional amount, such exposure being
generally limited to the net difference between the pay and receive amounts
on each transaction. These amounts are generally netted and paid quarterly.
BANC ONE obtains sufficient collateral from swap counterparties to secure
receipt of all amounts due. The swaps used consist of those where payments
based on fixed rates or variable rates are received in exchange for payment
of amounts based on variable or fixed rates, basis swaps where variable
interest payments based on different indices are exchanged and forward-starting
contracts where payments are exchanged beginning on some future date. BANC ONE
is not a dealer in derivative contracts. During the first quarter of 1994, BANC
ONE entered into additional interest rate swap agreements to reduce the level
of liability sensitivity and exposure to decreases in the spread between prime
and LIBOR rates, the effect of which is to better position the Company in a
rising rate environment.
Table 1
Interest Rate Swaps and Other Derivatives March 31, Dec. 31,
$(millions) 1994 1993
- - ---------------------------------------------------------------------------
Receive fixed (includes forward starting) $28,035 $29,237
Receive floating (includes pay fixed and caps) 8,598 1,619
Net receive fixed position $19,437 $27,618
Basis 7,879 5,556
Other $2,899 $2,598
The 1993 BANC ONE CORPORATION annual report provided certain fair value
information based on interest rates at December 31, 1993. Since that date,
interest rates have increased and, as a result, the estimated fair value of
fixed rate financial instruments has changed. The unrealized loss on long-term
debt decreased from $341 million at December 31, 1993 to $224 million at March
31, 1994. The $203 million net unrealized gain on derivatives at December 31,
1993 decreased to a net unrealized loss of $365 million at March 31, 1994.
BANC ONE's derivatives generally are used to hedge or synthetically alter
balance sheet amounts and, therefore, unrealized gains and losses are not
recognized in earnings. If the hedged or altered balance sheet financial
instrument amounts were marked to market, the resulting unrealized balance
sheet gains (losses) could be expected to compensate for unrealized derivatives
(losses) gains.
Asset Quality
BANC ONE's process for monitoring asset quality includes detailed, monthly
analyses of delinquencies, nonperforming assets and potential problem loans
from each affiliate bank. Management extensively monitors and improves credit
policies, including policies related to appraisals, assessing the financial
condition of borrowers, restrictions on out-of-area lending and avoidance of
loan concentrations. The loan portfolio consists of many small credits in
diverse businesses located throughout
<PAGE> 20
the markets served by BANC ONE affiliates. Only nine customers had borrowing
relationships greater than $50 million outstanding at March 31, 1994, with the
largest being $78 million.
Table 2
Credit Quality March 31, Dec. 31,
$(millions) 1994 1993
Nonperforming assets
Nonaccrual $438.3 $460.7
Renegotiated 6.2 6.9
OREO 116.0 135.9
Total nonperforming assets $560.5 $603.5
Loans delinquent over 90 days $186.2 $204.0
Doubtful loans 59.0 58.7
Ending reserve for loan and lease losses 922.1 918.2
Net charge-offs $73.7 $116.7
Key ratios
Reserve to ending loans 1.68% 1.70%
Nonperforming assets to ending loans 1.02 1.12
90 days delinquent to ending loans .34 .38
Net charge-offs to average loans .55% .89%
As noted in the table above, the level of nonperforming assets continues to
improve as a result of the recovering national economy and management's
continual monitoring and refining of credit policies, as well as centralized
management of problem assets. Accordingly, nonperforming assets decreased $266
million from a year ago and were 1.02% of ending loans, down from 1.12% at
December 31, 1993 and 1.71% at March 31, 1993. The decrease is primarily a
result of loans returning to accrual status and receipt of payments. Table 3
details the activity in nonaccrual loans and other real estate owned (OREO)
from December 31, 1993 to March 31, 1994.
Table 3
Nonperforming Assets Activity
$(millions) March 31, 1994
Nonaccrual loans, December 31, $460.7
Nonaccrual loans activity
Nonaccrual additions 81.3
Loans returned to accrual and payments received (82.6)
Reduction due to transfers to OREO (7.2)
Charge-offs (14.2)
Other, net .3
Nonaccrual loans $438.3
OREO, beginning of period $135.9
OREO activity
Repossession of collateral 12.6
Write-downs (2.6)
Sales and other (29.9)
OREO $116.0
The provision for loan and lease losses decreased to $77 million for the three
months ended March 31, 1994 from $106 million a year ago, and closely
approximated the level of charge-offs. The decrease can be attributed to
general improvement in all areas of asset quality. Annualized net charge-offs
were .55% of average loans compared to .89% in the fourth quarter. The reserve
for loan and lease losses of 1.68% of ending loans at March 31, 1994 versus
1.95% at March 31, 1993 provided reserve to nonperforming loan coverage of
207%, up from the first quarter 1993 coverage of 141%. The adequacy of the
reserve and
<PAGE> 21
provision for loan and lease losses is consistent with the composition of the
portfolio and recent credit quality history.
Non-interest Income, Non-interest
Expense and Income Taxes
Total non-interest income, excluding securities transactions, increased $46
million, or 13.9%, for the first quarter of 1994 compared to 1993. The
increase in income from fiduciary activities is primarily volume driven as BANC
ONE continues to place emphasis in this area. The $21 million increase in loan
processing and servicing income is primarily attributable to increased volumes
in mortgage loans serviced throughout 1993 and credit card and interchange
transactions, as well as a $4 million gain from a credit card securitization.
The increases were partially offset by a decrease in credit card servicing
income due to a reduction in securitized balances, as formerly securitized
loans returned to the balance sheet. Income from management of Collection pools
increased for the periods mentioned above due to several new servicing
contracts. Our venture capital company's realized gains on sales of investment
securities declined from 1993 levels. Increases in other non-interest income
are due to $3 million in income earned on the cash surrender value of
Corporate-owned life insurance and a $3 million gain on the settlement of a
lawsuit in the first quarter of 1994.
Salaries and related costs increased by $29 million, or 7.4%, primarily due
to an increase of 2,800 full-time equivalent employees, medical benefit costs
and pay rates. Equipment expense increased by $3 million, or 10.4%, due mainly
to higher rental and maintenance expenses to support the growing affiliate
network. Taxes other than income and payroll decreased by $19 million, or
95.4%, due to settlement of prior year franchise taxes. Depreciation and
amortization decreased by $8 million, or 11.5%, primarily due to the write-off
in the first quarter of 1993 of approximately $16 million of goodwill offset
by increases in depreciation expense on data processing and office equipment,
and increased amortization expense on software. Outside services and
processing increased by $23 million due to a new credit card program and
increased product processing fees. Communication and transportation increased
by $5 million, or 8.6%, due to increased telephone charges, courier service
and freight charges. Other non-interest expense decreased by $36 million,
or 27.8%, due primarily to a $16 million decline in OREO expense as a result
of general improvement in all areas of asset quality, along with decreases in
merger related expenses, supplies expense, insurance expense and decreased
litigation accruals from those experienced in the first quarter of 1993.
Due to the factors mentioned above, annualized net non-interest expense (total
non-interest expense less total non-interest income, excluding securities
transactions) as a percent of average assets decreased to 2.5% in the first
quarter of 1994 from 3.0% in the first quarter of 1993.
The increase in the federal statutory tax rate for corporations has
contributed to the increase in BANC ONE's effective tax rate from 33.5% in the
first quarter of 1993 to 36.0% in the first quarter of 1994. The effective
rate also increased as more income was earned in states with higher state
taxes. BANC ONE adopted Statement of Financial Accounting Standards (SFAS)
No. 109 on January 1, 1993, requiring certain technical changes in accounting
for income taxes. These changes resulted in the recognition of a $19 million
tax benefit in the first quarter of 1993.
Liquidity
At March 31, 1994, large liability dependence was 20.83%, an increase of 3.87%
from December 31, 1993. The increase was due primarily to
<PAGE> 22
the issuance of additional short-term borrowings to fund increased loan and
securities growth. Anticipated second quarter loan growth may continue to
increase large liability dependence. BANC ONE's policy is that large liability
dependence be no greater than 30%. BANC ONE manages the position at much lower
levels.
Table 4
Liquidity March 31, Dec 31,
$(millions) 1994 1993
Earning assets net of money market investments $74,140 $70,358
Large liabilities
Net national market liabilities 2,812 2,973
As a percent of net earning assets 3.79% 4.23%
Total net large liabilities $15,441 $11,932
As a percent of net earning assets 20.83% 16.96%
Net Income Per Share and
Stockholders' Equity
BANC ONE reported net income of $.81 per common share in the first quarter of
1994, compared to $.75 per share in the first quarter of 1993 (as restated for
the 10% common stock dividend, effective February 10, 1994 and the
five-shares-for-four-shares stock split, effective August 31, 1993). Results of
the first quarter of 1993 have been restated to reflect the second quarter 1993
poolings of interests of First Community Bancorp, Inc. and Key Centurion
Bancshares, Inc. Refer to Table 5 for information on changes in net income per
common share.
Table 5
Analysis of Net Income Per Common Share First
Quarter
Net income per common share, prior year $.75
Increase/(decrease) from changes in
Earning asset volume .32
Rates and other effects of net interest income (.29)
Lower provision for loan and lease losses .08
Other income, excluding securities transactions .12
Securities transaction (.01)
Other expense .01
Provision for federal income taxes (.11)
Change in method of accounting for income taxes (.05)
Subtotal .82
Changes in average common shares (.01)
Net income per common share $.81
Capital
At March 31, 1994, BANC ONE had total stockholders' equity of $7.2 billion, up
from $7.0 billion at December 31, 1993. This increase was attributable to
earnings net of common and preferred dividends. Additionally, a net unrealized
holding loss of approximately $49 million was recorded on securities available
for sale in accordance with Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity Securities.
Common stockholders' equity was $6.9 billion at March 31, 1994, up from $6.8
billion at December 31, 1993. The Corporation's ratio of common stockholders'
equity to total assets was 8.33% at March 31, 1994 a decrease from 8.49% at
December 31, 1993 as assets grew faster than equity.
<PAGE> 23
Derivative Financial Instruments
Maturities and weighted average rates of each significant derivative product by
type at March 31, 1994 follows. The derivatives used by BANC ONE are primarily
interest rate swaps. These rate swaps generally involve the exchange of fixed
and floating rate interest payments based on an underlying notional amount. A
key assumption in the information is that rates remain constant at March 31,
1994 levels. To the extent that rates change, both the maturity and variable
interest rate information will change.
<TABLE>
<CAPTION>
Maturities of March 31, 1994 Derivative Products (1)
---------------------------------------------------------------
Maturity (1)
$ (millions) 1994 1995 1996 1997
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receive fixed generic swaps
Notional value $ 297 $ 5,348 $ 518 $ 3
Weighted average receive rate 5.77 % 5.16 % 4.63 % 6.94 %
Weighted average pay rate 3.92 3.43 3.56 6.03
Receive fixed amortizing swaps
Notional value 5,595 8,821 938 90
Weighted average receive rate 5.59 % 5.07 % 6.48 % 7.18 %
Weighted average pay rate 3.91 3.76 4.04 3.64
Pay fixed swaps
Notional value 453 1,810 2,272 269
Weighted average receive rate 3.60 % 3.80 % 3.89 % 3.59 %
Weighted average pay rate 7.45 4.69 5.33 6.08
Basic swaps
Notional value 75 3,900 3,590
Weighted average receive rate 4.25 % 3.79 % 3.41 %
Weighted average pay rate 3.70 3.69 3.42
Forward starting swaps
Notional value 3,050 2,050
Weighted average receive rate 5.14 % 5.15 %
Weighted average pay rate 3.94 3.94
Other derivative products
Notional value 656 1,586 4,068 163
------- ------- ------- ------
Total notional value 7,001 20,690 13,746 4,115
======= ======= ======= ======
Total weighted average rates
on swaps:
Receive rate 5.46 % 4.98 % 4.40 % 3.51 %
Pay rate 4.17 3.78 3.94 3.61
Maturities of March 31, 1994 Derivative Products (1)
---------------------------------------------------------------
$ (millions) 1998 1999-2003 2004+ Total
- - ------------------------------------------------------------------------------------------------------------------------
Receive fixed generic swaps
Notional value 30 755 150 7,101
Weighted average receive rate 4.95 $ 6.97 % 5.82 % 5.35 %
Weighted average pay rate 3.31 4.66 5.15 3.63
Receive fixed amortizing swaps
Notional value 21 14 5 15,484
Weighted average receive rate 8.62 % 8.81 % 8.82 % 5.36 %
Weighted average pay rate 3.57 3.56 3.56 3.83
Pay fixed swaps
Notional value 109 13 4,926
Weighted average receive rate 3.50 % 4.47 % 3.81 %
Weighted average pay rate 5.30 8.22 5.34
Basic swaps
Notional value 314 7,879
Weighted average receive rate 3.56 % 3.61 %
Weighted average pay rate 3.49 % 3.56
Forward starting swaps
Notional value 350 5,450
Weighted average receive rate 5.81 % 5.19 %
Weighted average pay rate 4.25 3.96
Other derivative products
Notional value 29 61 8 6,571
------- ------- ------- ------
Total notional value 503 1,193 163 47,411
======= ======= ======= ======
Total weighted average rates
on swaps:
Receive rate 3.86 % 6.61 % 5.91 % 4.81 %
Pay rate 3.90 % 4.56 % 5.10 % 3.94 %
<FN>
(1) Other derivative products include interest rate collars, caps and floors,
futeres, options, swap options and currency swaps.
</TABLE>
<PAGE> 24
<TABLE>
Activity in derivative products for the first quarter of 1994 is summarized as
follows:
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Generic Amortizing (1)Other
Receive Receive Pay Forward Derivative
$(millions) Fixed Fixed Fixed Basis Starting Products Total
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 $ 6,683 $ 15,054 $ 1,619 $ 5,556 $ 7,500 $ 2,598 $ 39,010
Additions 768 30 4,000 2,324 450 4,135 11,707
Maturities/Amortization (350) (2,100) (193) (1) (162) (2,806)
Terminations (500) (500)
Forward Starting Becoming Effective 2,500 (2,500) 0
-------- --------- -------- -------- -------- -------- --------
BALANCE, MARCH 31, 1994 $ 7,101 $ 15,484 $ 4,926 $ 7,879 $ 5,450 $ 6,571 $ 47,411
======== ========= ======== ======== ======== ======== ========
</TABLE>
<TABLE>
Unrealized Gain (Loss) as of March 31, 1994
-------------------------------------------
<S> <C> <C> <C> <C>
<CAPTION>
Total
Notional Unrealized Unrealized Net Gain
Amount Gains Losses (Loss)
- - --------------------------------------------------------------------------------------------------
Generic Receive Fixed $ 7,101 $ 38 $ (69) $ (31)
Amortizing Receive Fixed 15,484 52 (245) (193)
Pay Fixed 4,926 17 (18) (1)
Basis 7,879 7 (84) (77)
Forward Starting 5,450 (151) (151)
Other Derivative Products 6,571 89 (1) 88
-------- -------- -------- --------
Total $ 47,411 $ 203 $ (568) $ (365)
======== ======== ======== ========
<FN>
1) Other derivative products include interest rate collars, caps and floors, futures, options, swap options and currency swaps.
</TABLE>
<PAGE> 25
BANC ONE CORPORATION AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS
In October 1993, a purported class-action lawsuit was
filed against Bank One, Columbus, N.A., H & R Block, Inc.
and other financial institutions, in the United States
District Court for the Northern District of Alabama,
Western Division, alleging that the Bank assessed usurious
and unconscionable interest rates in connection with its
income tax refund anticipation loan program with H & R
Block. The plaintiffs' motion to certify a class has been
denied and the case will proceed only on behalf of one
Bank One customer. An adverse decision in this case would
have a de minimus effect on BANC ONE's consolidated
financial position.
Item 2 - Inapplicable
Item 3 - Inapplicable
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The matters discussed in 4c and 4d were submitted
to a vote of security holders at the April 19,
1994 Annual Meeting of Shareholders.
b. Inapplicable
c. Election of Directors
<TABLE>
<CAPTION>
SHARES VOTED
-----------------------------------------------------
Against/ Abstentions/
Name For Withheld Broker Non-Votes
---------------------------------------------------------------------------------------
<S> <C> <C>
Charles E. Exley 297,316,772 1,492,770
E. Gordon Gee 297,052,960 1,756,582
John R. Hall 297,522,568 1,286,974
Laban P. Jackson, Jr. 297,451,809 1,357,733
John B. McCoy 297,503,368 1,306,740
John G. McCoy 297,268,300 1,541,242
Rene C. McPherson 297,271,562 1,537,980
Donald L. McWhorter 297,521,457 1,288,085
Thekla R. Shackelford 297,451,817 1,357,725
Alex Shumate 297,371,238 1,438,304
Frederick P. Stratton, Jr. 297,495,758 1,313,784
Romeo J. Ventres 296,968,986 1,840,556
Robert D. Walter 297,534,880 1,274,662
</TABLE>
<PAGE> 26
Item 4, cont. d. Approval of the 1994 Key Executive Management
Incentive Compensation Plan
SHARES VOTED
-----------------------------------------------------
For Against/Withheld Abstentions
-----------------------------------------------------
276,638,648 15,451,144 6,719,750
Item 5 - Inapplicable
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. In compliance with Part I Financial Information
the exhibits are incorporated by reference:
Exhibit 10 Material Contracts
a. BANC ONE CORPORATION
1994 Key Executive
Management Incentive
Compensation Plan
b. BANC ONE CORPORATION
1994 Key Management
Incentive Compensation
Plan
c. BANC ONE Dividend
Equivalent Unit Plan
Exhibit 11 Computation of Earnings per
Common Share
Exhibit 12 Computation of Earnings to
Fixed Charges Ratio
b. Report on Form 8K filed January 28, 1994
announcing the declaration of a 10% stock
dividend and the authorization to purchase up to
10 million shares of BANC ONE common stock for
use in the acquisition of Premier Bancorp, Inc.
Report on Form 8K filed February 17, 1994
announcing the termination of an Agreement and
Plan of Merger between BANC ONE and FirsTier
Financial.
<PAGE> 27
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.
BANC ONE CORPORATION
May 11, 1994 /S/ William C. Leiter
Date --------------------------------------
William C. Leiter
Controller and
Chief Accounting Officer
<PAGE> 28
INDEX TO EXHIBITS
-----------------
Exhibit Number
--------------
10 Material Contracts
a. BANC ONE CORPORATION 1994 Key Executive Management
Incentive Compensation Plan
b. BANC ONE CORPORATION 1994 Key Management Incentive
Compensation Plan
c. BANC ONE CORPORATION Dividend Equivalent Unit Plan
11 Statement Regarding Computation of Earnings per Common Share
12 Statement Regarding Computation of Earnings to Fixed Charges
Ratio
<PAGE> 1
+----------------++
[logo] | ||
===========================================================| 1994 KMIC ||==
EXECUTIVE COMPENSATION PROGRAMS | ||
| ||
+================++
1994 Key Management
Incentive Compensation Plan
Corporate Guidelines
(April, 1994)
================================================================================
<PAGE> 2
+----------------++
[logo] | ||
===========================================================| 1994 KMIC ||==
EXECUTIVE COMPENSATION PROGRAMS | ||
| ||
+================++
ESTABLISHMENT AND PURPOSE:
- - --------------------------
BANC ONE CORPORATION hereby establishes the "Key Management Incentive
Compensation Plan" (the Plan) for key employees of the CORPORATION, its State
Holding Companies, and its Affiliates.
The purpose of the Plan is to promote the interest of the CORPORATION and its
shareholders by strengthening its ability to attract and retain key management
talent and to motivate superior levels of performance.
PLAN ADMINISTRATION:
- - --------------------
The Plan is administered by the Personnel and Compensation Committee of the
Board of Directors of BANC ONE CORPORATION. Its findings and determinations
regarding this plan are official and final.
ELIGIBILITY AND PARTICIPATION:
- - ------------------------------
Participation in the Plan is limited to those officers and other key employees
who, by the nature and scope of their positions, are materially responsible for
the management, growth, and success of BANC ONE's businesses. Participation
may be revoked at any time by the Plan Administrator. An employee whose
participation is revoked will be notified, in writing, of such revocation as
soon as practicable following such action.
Participation in the Plan will be determined on an annual basis. The following
matrix should be used to determine the number of participants eligible in each
affiliate.
<TABLE>
<CAPTION>
MINIMUM ASSET SIZE ($millions)
100 200 300 400 500 900 2,000 4,000 5,000 Larger
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NUMBER OF PARTICIPANTS 1-3 2-5 3-5 3-7 4-8 5-10 8-15 10-25 15-35 *
<FN>
* Determined by CEO Review
</TABLE>
================================================================================
<PAGE> 3
ELIGIBILITY AND PARTICIPATION (CONT'D):
- - ---------------------------------------
SPECIFIC POSITIONS:
- - -------------------
The following guidelines should be used in determining Plan participants.
++===================================================================++
|| The following positions, if they exist ||
|| within the banking affiliate, may be ||
|| included in the participant number, ||
|| provided the total number of ||
|| participants does not exceed the ||
|| guideline established for the bank's ||
|| asset size as shown above: ||
|| ||
|| Chief Executive Officer ||
|| Chief Operating Officer ||
|| Chief Financial Officer ||
|| Chief Credit Officer ||
|| Head of Retail Banking ||
|| Head of Corporate Banking ||
|| General Counsel ||
|| Heads of major functions ||
|| ||
|| In non-banking affiliates, the following positions ||
|| should be included: ||
|| ||
|| Chief Executive Officer ||
|| Chief Financial Officer ||
|| Key direct reports ||
|| Heads of major functions ||
|| ||
|| Corporate staff units and state holding ||
|| companies should have the following ||
|| positions as participants: ||
|| ||
|| Major state-wide function heads ||
|| Major corporate-wide function heads ||
|| Key direct reports responsible for major ||
|| function segments ||
|| ||
++===================================================================++
Employees approved for participation will be notified of their selection within
a reasonable time after approval.
MID-YEAR PARTICIPATION MODIFICATIONS:
An individual who becomes eligible to participate in the Plan during the Plan
year may be recommended and approved for a partial year of participation. In
such case, the participant's award shall be prorated based on the number of
full months of participation. However, the BANC ONE Chief Executive Officer
(CEO), subject to Corporate Compensation Committee approval, may authorize an
unreduced award.
The participation of a KMIC participant whose incentive category level is
changed during the Plan Year will be pro-rated between the respective base pay
and target award levels of each assignment.
- 2 -
<PAGE> 4
+----------------++
[logo] | ||
===========================================================| 1994 KMIC ||==
EXECUTIVE COMPENSATION PROGRAMS | ||
| ||
+================++
TARGET AWARD LEVELS:
- - --------------------
Target Award levels are expressed in terms of a percentage of Base Pay. Base
Pay is the salary earned while participating in the Plan.
At the beginning of the Plan Year, Target Award levels will be established for
each participant. The Target Award opportunity will vary in relation to the
participant's duties and responsibilities. The 1994 Target Award level
guidelines are shown below.
<TABLE>
<CAPTION>
GRADE
POSITION 12 13 14 15 16 17 18 19 20 21+
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CEOS,
CORPORATE, 15-20% 20-25% 25-30% 25-30% 25-30% 30-35% 30-35% 35-40% 40% 40-50%
STATE-WIDE
OTHER
POSITIONS 10-15% 10-20% 15-25% 20-25% 20-25% 25-30% 25-30% 30-35% 30-35% N/A
<FN>
PLEASE NOTE: PARTICIPANTS WHO ARE NEW TO THEIR POSITIONS SHOULD PARTICIPATE AT THE LOWER END OF THE RANGE FOR THEIR GRADE, THUS
ALLOWING FOR GROWTH OF OPPORTUNITY AS THEY ESTABLISH AND PROVE THEMSELVES IN THEIR ROLE OVER TIME.
</TABLE>
EARNINGS PERFORMANCE THRESHOLDS:
- - --------------------------------
An overall Earnings performance threshold has been established by the Chairman
of BANC ONE CORPORATION. Likewise, earnings performance thresholds will be
established at the holding company and affiliate levels. If the threshold for
earnings for any of these organizational levels is NOT met, NO AWARDS WILL BE
PAID to anyone within that organization.
For example, if a state holding company threshold is not met, no awards will be
paid to any participants from the affiliates in that state holding company
regardless of individual affiliate performance. If the threshold for BANC ONE
CORPORATION is not met, no awards will be paid under this plan.
PERFORMANCE CATEGORY WEIGHTINGS:
- - --------------------------------
The actual award level will be determined using combined calculations from the
performance measures for each organizational level or measurement category
below, according to the weightings for each category shown for various
management levels.
================================================================================
- 3 -
April, 1994
<PAGE> 5
<TABLE>
<CAPTION>
1994 KMIC WEIGHTINGS
--------------------
BANC Holding Holding Affiliate Affiliate Affiliate Affiliate
Wtg ONE Co Co Bank Bank
Staff CEO Staff CEO Staff Division Division
Head(2) Staff(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E BANC ONE 50% 15%
A
R Holding Co 35% 50% 15% 5% 5%
N
I Affiliate 50% 35% 45% 20% 25%
N
G
S
Division 25% 25%
NIE/Revenue 20% 20% 20% 20% 20% 20% 20% 20%
Credit Quality (1) 30% 10% 10% 10% 10%
Discretionary 30% 20% 30% 20% 30% 20% 20%
TOTAL 100% 100% 100% 100% 100% 100% 100% 100%
<FN>
(1) If a weighting in this category is not applicable to a position, the
weighting is to be included in Discretionary.
(2) This category is applicable only to banks with assets greater than $1 billion.
</TABLE>
PERFORMANCE MEASURES:
- - ---------------------
The following performance measurements are used to determine scores in the
respective categories.
THESE OBJECTIVES MAY BE MODIFIED AT ANY TIME BY THE CHAIRMAN OF BANC ONE
CORPORATION RECOGNIZING THAT THERE MAY BE SIGNIFICANT UNANTICIPATED,
NON-RECURRING GAINS OR LOSSES IN INCOME WHICH SHOULD BE CONSIDERED, DEPENDING
UPON THE EXTENT TO WHICH THEY HAVE MATERIALLY INFLUENCED THE CORPORATION'S
ABILITY TO MEET THE PERFORMANCE GOALS.
EARNINGS PERFORMANCE MEASURES:
A portion of the total performance score is based upon the financial
performance of each affiliate and its holding company. This measurement is a
composite of Earnings Growth over 1993 and Return on Assets (ROA). The matrix
shown below shows the relationship between these two variables as they apply to
the holding company and the affiliate, respectively. No performance score for
the state or affiliate criteria will be awarded if Earnings Growth does not
reach at least 5% AND ROA reaches at least 1.15%.
- 4 -
<PAGE> 6
+----------------++
[logo] | ||
===========================================================| 1994 KMIC ||==
EXECUTIVE COMPENSATION PROGRAMS | ||
| ||
+================++
<TABLE>
<CAPTION>
1994 EARNINGS PERFORMANCE MATRIX
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5% 54% 58% 62% 66% 70% 78% 86% 94% 101% 104% 107% 110% 114% 117% 120% 123% 126% 130%
6% 60% 64% 68% 72% 76% 84% 92% 100% 103% 106% 110% 113% 116% 119% 122% 126% 129% 132%
7% 66% 70% 74% 78% 82% 90% 98% 102% 106% 109% 112% 115% 118% 122% 125% 128% 131% 134%
8% 72% 76% 80% 84% 88% 96% 100% 105% 108% 111% 114% 118% 121% 124% 127% 130% 134% 137%
9% 78% 82% 86% 90% 94% 101% 104% 107% 110% 114% 117% 120% 123% 126% 130% 133% 136% 139%
10% 84% 88% 92% 96% 100% 103% 106% 110% 113% 116% 119% 122% 126% 129% 132% 135% 138% 142%
11% 90% 94% 98% 101% 105% 108% 111% 114% 118% 121% 124% 127% 130% 134% 137% 140% 143% 146%
12% 96% 100% 102% 103% 110% 113% 116% 119% 122% 126% 129% 132% 135% 138% 142% 145% 148% 151%
13% 101% 102% 104% 106% 114% 118% 121% 124% 127% 130% 134% 137% 140% 143% 146% 150% 153% 156%
E
A 14% 103% 105% 106% 108% 119% 122% 126% 129% 132% 135% 138% 142% 145% 148% 151% 154% 158% 161%
R
N 15% 106% 107% 109% 110% 124% 127% 130% 134% 137% 140% 143% 146% 150% 153% 156% 159% 162% 166%
I 16% 108% 110% 111% 113% 129% 132% 135% 138% 142% 145% 148% 151% 154% 158% 161% 164% 167% 170%
N 17% 110% 112% 114% 115% 134% 137% 140% 143% 146% 150% 153% 156% 159% 162% 166% 169% 172% 175%
G
S 18% 113% 114% 116% 118% 138% 142% 145% 148% 151% 154% 158% 161% 164% 167% 170% 174% 177% 180%
19% 115% 117% 118% 120% 143% 146% 150% 153% 156% 159% 162% 166% 169% 172% 175% 178% 182% 185%
20% 118% 119% 121% 122% 148% 151% 154% 157% 164% 164% 167% 170% 173% 176% 180% 183% 186% 189%
G
R 21% 120% 123% 126% 150% 153% 156% 159% 162% 166% 169% 172% 175% 178% 182% 185% 188% 191% 194%
O 22% 123% 126% 150% 153% 156% 159% 162% 166% 169% 172% 175% 178% 182% 185% 188% 191% 194% 198%
W 23% 125% 150% 153% 156% 159% 162% 166% 169% 172% 175% 178% 182% 185% 188% 191% 194% 198% 201%
T 24% 150% 153% 156% 159% 162% 166% 169% 172% 175% 178% 182% 185% 188% 191% 194% 198% 201% 204%
H 25% 152% 155% 158% 161% 164% 168% 171% 174% 177% 180% 184% 187% 190% 193% 196% 200% 203% 206%
26% 155% 158% 161% 164% 167% 171% 174% 177% 180% 183% 187% 190% 193% 196% 199% 203% 206% 209%
27% 157% 160% 163% 166% 169% 173% 176% 179% 182% 185% 189% 192% 195% 198% 201% 205% 208% 211%
28% 160% 163% 166% 169% 172% 176% 179% 182% 185% 188% 192% 195% 198% 201% 204% 208% 211% 214%
29% 162% 165% 168% 171% 174% 178% 181% 184% 187% 190% 194% 197% 200% 203% 206% 210% 213% 216%
30% 165% 168% 171% 174% 177% 181% 184% 187% 190% 193% 197% 200% 203% 206% 209% 213% 216% 219%
31% 167% 170% 173% 176% 179% 183% 186% 189% 192% 195% 199% 202% 205% 208% 211% 215% 218% 221%
32% 170% 173% 176% 179% 182% 186% 189% 192% 195% 198% 202% 205% 208% 211% 214% 218% 221% 224%
33% 172% 175% 178% 181% 184% 188% 191% 194% 197% 200% 204% 207% 210% 213% 216% 220% 223% 226%
34% 175% 178% 181% 184% 187% 191% 194% 197% 200% 203% 207% 210% 213% 216% 219% 223% 226% 229%
35% 177% 180% 183% 186% 189% 193% 196% 199% 202% 205% 209% 212% 215% 218% 221% 225% 228% 231%
1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65 1.70 1.75 1.80 1.85 1.90 1.95 2.00
ROA
</TABLE>
The Earnings Growth axis of the matrix is not capped; that is, if Earnings
Growth exceeds 35%, the score would be extrapolated from the chart. For
non-CEO participants, a measurement of Division Earnings Performance may be
implemented when applicable.
- 5 -
APRIL, 1994
================================================================================
<PAGE> 7
NIE/REVENUE PERFORMANCE:
Non-interest expense (NIE) to Revenue weighting is 20%; however, the Holding
Company CEO may select, individually for the holding company and each
affiliate, how the 20% is allocated between NIE/Revenue Ratio and NIE/Revenue
Improvement:
<TABLE>
<CAPTION>
NIE/Revenue Ratio 58% 57% 56% 55% 54% 53% 52%
<S> <C> <C> <C> <C> <C> <C> <C>
Score 0% 50% 75% 100% 125% 150% 150%
NIE/Revenue Improvement 100bp 200bp 300bp 400bp 500bp
(bp)
Score 50% 75% 100% 125% 150%
<FN>
The weighting alternatives are limited to:
1. 20% on one component
2. 10% on each component
</TABLE>
CREDIT QUALITY PERFORMANCE:
The performance score for the Credit Quality criteria will be determined using
the following table. The Credit Quality performance score is based on 1)
achieving BANC ONE CORPORATION standards of 50 basis points or less for
commercial charge-offs and 100 basis points or less for retail charge-offs; or
2) showing improvement in the following four credit quality categories:
problem loans, non-performing loans, total delinquencies, and total
charge-offs.
<TABLE>
<CAPTION>
Retail Charge-offs (bp) 120.0 116.0 112.0 108.0 104.0 100.0 87.5 75.0 62.5 50.0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Score 0% 20% 40% 60% 80% 100% 112% 125% 137% 150%
Commercial Charge-offs (bp) 60.0 58.0 56.0 54.0 52.0 50.0 45.0 40.0 35.0 30.0
Score 0% 20% 40% 60% 80% 100% 112% 125% 137% 150%
</TABLE>
INDIVIDUAL PERFORMANCE:
The performance score for individual performance will be at the discretion of
the upstream CEO and should consider personal contributions and such issues as
audit, loan review, and CRA review.
PAYMENT OF AWARDS:
- - ------------------
At the end of each Plan Year, awards will be computed for each participant.
Award amounts may vary above or below the Target Award level based on the
assessment of performance results at each organizational level. A payout limit
expressed in terms of a flat percentage of Net Income may be determined for
each organizational level by the Corporate Compensation Committee each Plan
Year.
Payment of Awards will be made in cash, subject to applicable withholding, as
soon as practicable after year-end results are reviewed and individual awards
are approved.
- 6 -
<PAGE> 1
BANC ONE CORPORATION
1994 KEY EXECUTIVE MANAGEMENT INCENTIVE COMPENSATION PLAN
SECTION 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. BANC ONE CORPORATION (the CORPORATION) hereby
establishes the "Key Executive Management Incentive Compensation Plan" (the
Plan) for the Chairman and the President of the CORPORATION.
1.2 PURPOSE. The purpose of the Plan is to promote the interest of the
CORPORATION and its shareholders by strengthening its ability to attract and
retain executive key management talent and to motivate superior levels of
performance.
1.3 EFFECTIVE DATE. The Plan is effective as of January 1, 1994. The
Plan was established on December 23, 1993 by the Personnel and Compensation
Committee of the Board of Directors of the CORPORATION, subject to the approval
by the shareholders of the CORPORATION prior to the payment of any awards.
SECTION 2. PLAN ADMINISTRATION
2.1 PLAN ADMINISTRATION. The Plan is administered by the Personnel and
Compensation Committee of the Board of Directors of BANC ONE CORPORATION. Its
findings and determinations regarding this Plan are official and final.
SECTION 3. DEFINITIONS
3.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Award" means the cash amount payable from the
achievement of performance goals as stated in the Plan.
(b) "Committee" means the Committee appointed by the Board of
Directors of the CORPORATION to administer the Plan. This
Committee shall consist of two (2) or more outside
directors as defined by Section 162(m) of the Internal
Revenue Code of 1986 as amended from time to time.
(c) "Corporation" means BANC ONE CORPORATION, a bank holding
company under the Bank Holding Company Act of 1956,
headquartered in Columbus, Ohio.
I-1
<PAGE> 2
(d) "Disability" means disability as determined by the
Committee in good faith upon receipt of and in reliance on
sufficient competent medical advice from one or more
individuals, selected by the Committee, who are qualified
to give professional medical advice.
(e) "Plan Year" means the one year period beginning January 1
and ending on December 31 of each calendar year.
3.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY AND PARTICIPATION. Participation in the Plan is limited
to the employees holding the positions of Chairman and President of BANC ONE
CORPORATION. Participation may be revoked at any time by the Committee. An
employee whose participation is revoked will be notified, in writing, of such
revocation as soon as practicable following such action. An individual who
becomes eligible to participate in the Plan during the Plan Year may be
approved by the Committee for a partial year of participation. In such case,
the participant's award shall be prorated based on the number of full months of
participation.
SECTION 5. AWARD DETERMINATION
5.1 TARGET AWARD LEVEL. Target Award levels are expressed in terms of a
percentage of Base Pay. Base Pay is the salary earned while participating in
the Plan in the current Plan Year. The Target Award level for the Chairman is
60% of Base Pay. The Target Award for the President is 55% of Base Pay.
5.2 MAXIMUM AWARD LEVEL. The maximum amount payable under the Plan is
defined as a percentage of the Target Award. The 1994 Maximum Award level is
200% of the Target Award. This results in a Maximum Award of 120% of Base Pay
for the Chairman and 110% of Base Pay for the President.
I-2
<PAGE> 3
5.3 CORPORATE PERFORMANCE MEASURE. The Corporate Performance Thresholds
for the Plan Year shall be a minimum increase in earnings over the prior
calendar year and a minimum Return on Assets (ROA), as established by the
Committee. The established performance thresholds must be met by the
CORPORATION prior to any incentive awards being paid. A performance matrix
specifying the actual award payments for the Plan Year as a percentage of
Target Award Level will be established by the Committee for each Plan Year, and
will be based on the relationship between ROA and Earnings Growth. The matrix
will determine the award payment.
5.4 PAYMENT OF AWARDS. At the end of each Plan Year, awards will be
computed for each participant. Award amounts may vary above or below the
Target Award level based on the determination of Corporate performance results.
Payment of Awards will be made in cash, subject to applicable tax withholding,
as soon as practicable after the achievement of performance measures and other
material terms of the Plan is certified, and individual awards are approved,
by the Committee, provided, however that the Committee may in its sole
discretion reduce individual awards determined by the performance matrix.
5.5 MODIFICATION, AMENDMENT, AND TERMINATION OF THE PLAN. The Plan may
be modified, amended, or terminated at any time by the Board of Directors of
the CORPORATION. The existence of the Plan does not obligate or bind BANC ONE
CORPORATION to pay an award to any participant (or beneficiary) nor does any
participant (or beneficiary) attain any vested, non-forfeitable right to an
award until the award has been finalized and approved for payment by the
Committee.
SECTION 6. TERMINATION OF EMPLOYMENT
6.1 TERMINATION OF EMPLOYMENT. In the event a participant's employment
is terminated due to death or Disability, the participant's award will be
reduced to reflect the partial year of participation. This reduction will be
determined by multiplying the award by a fraction, the numerator of which is
the Participant's total months of participation in the current Plan Year
through the date of termination rounded up to whole months, and the denominator
of which is twelve (12). The participant's award will be paid as soon as
practicable following the end of the Plan Year and after the attainment of the
Performance Measures is certified by the Committee. In the event a
participant's employment is terminated for reasons other than death or
disability, all rights to an award for the Plan Year will be forfeited.
I-3
<PAGE> 4
6.2 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall
be in a form prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Committee during his lifetime. In the
absence of any such designation, or if for any reason such designation is
ineffective, in whole or in part, benefits remaining unpaid at the
Participant's death shall be paid to his estate.
SECTION 7. GENERAL PROVISIONS
7.1 TAX WITHHOLDING. Any and all payments made under the Plan shall be
subject to applicable federal, state, or local taxes required by the law to be
withheld.
7.2 BENEFIT PLANS TREATMENT OF AWARD AS COMPENSATION. Amounts paid
under this Plan will not be considered compensation for purposes of other BANC
ONE Qualified Benefit Plans unless specifically provided for in such plans.
The treatment of these amounts under any non-qualified benefit plans will be
determined according to the provisions of such plans.
7.3 DEFERRAL OF AWARD. If a participant has been designated as
eligible to participate in the BANC ONE CORPORATION Incentive Compensation
Deferral Plan, an award or portion thereof granted under the Plan may be
deferred pursuant to the terms of that plan, provided a timely deferral
election is made by the participant.
7.4 NONTRANSFERABILITY. Except as specifically provided herein or as
may otherwise be required by law, no undistributed bonus amount payable to the
participant may be sold, transferred, or assign or encumbered, in whole or in
part, by a participant, and any attempt to so alienate or subject any such
amount shall be void.
I-4
<PAGE> 1
BANC ONE CORPORATION
DIVIDEND EQUIVALENT UNIT PLAN
SECTION 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. BANC ONE CORPORATION (the CORPORATION) hereby
establishes the "Dividend Equivalent Unit Plan" (the Plan) for the Chairman and
the President of the CORPORATION.
1.2 PURPOSE. The purpose of the Plan is to promote the interest of the
CORPORATION and its shareholders by strengthening its ability to retain
executive key management talent who will not be granted restricted stock due to
the loss of the tax deduction of such stock under Section 162(m) of the
Internal Revenue Code of 1986 as amended from time to time.
1.3 EFFECTIVE DATE. The Plan is effective as of April 18, 1994, the
date the Plan was adopted by the Personnel and Compensation Committee of the
Board of Directors of the CORPORATION (the Committee). The Plan shall be in
effect only for the Dividend Equivalent Units granted by the Committee at its
meeting on April 18, 1994. No other Dividend Equivalent Units may be granted
under this Plan.
SECTION 2. PLAN ADMINISTRATION
2.1 PLAN ADMINISTRATION. The Plan is administered by the Personnel and
Compensation Committee of the Board of Directors of BANC ONE CORPORATION. Its
findings and determinations regarding this Plan are official and final.
SECTION 3. DEFINITIONS
3.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Dividend Equivalent Unit" means the right to receive
payments equal to the dividends paid to a holder of a share
of BANC ONE CORPORATION Common Stock over a five (5) year
period from the date of grant of such Dividend Equivalent
Units.
(b) "Dividend Equivalent Payment" means the amount of dividend
payable on one share of common stock of the CORPORATION on
each date on which regular dividend payments are made to
common shareholders of the CORPORATION.
I-1
<PAGE> 2
(c) "Committee" means the Committee appointed by the Board of
Directors of the CORPORATION to administer the Plan. This
Committee shall consist of two (2) or more outside
directors as defined by Section 16 of the Securities and
Exchange Act of 1934 as amended from time to time.
(d) "CORPORATION" means BANC ONE CORPORATION, a bank holding
company under the Bank Holding Company Act of 1956,
headquartered in Columbus, Ohio.
(e) "Disability" means disability as determined by the
Committee in good faith upon receipt of and in reliance on
sufficient competent medical advice from one or more
individuals, selected by the Committee, who are qualified
to give professional medical advice.
(f) "Participant" means an employee of the CORPORATION who has
been selected for participation in the Plan by the Committee.
(g) "Retirement" shall have the same meaning as defined under the
BANC ONE CORPORATION Retirement Plan.
3.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY AND PARTICIPATION. Participation in the Plan is limited
to the employees holding the position of Chairman or President of BANC ONE
CORPORATION. Participation may be revoked at any time by the Committee. An
employee whose participation is revoked will be notified, in writing, of such
revocation as soon as practicable following such action.
SECTION 5. DIVIDEND EQUIVALENT UNIT AWARD DETERMINATION AND
PAYMENT
5.1 DIVIDEND EQUIVALENT UNIT AWARD DETERMINATION. The number of
Dividend Equivalent Units to be granted to a Participant will be determined by
the Committee at its meeting on April 18, 1994.
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<PAGE> 3
5.2 ACCRUAL OF DIVIDEND EQUIVALENT PAYMENTS. Dividend Equivalent
Payments will be credited to a non-qualified deferred compensation account held
in the name of the Participant on the books of the CORPORATION. The Dividend
Equivalent Payment date will be the date dividends are paid to shareholders of
BANC ONE CORPORATION common stock.
5.3 MODIFICATION, AMENDMENT, AND TERMINATION OF THE PLAN. The Plan may
be modified, amended, or terminated at any time by the Board of Directors of
the CORPORATION.
5.4 INVESTMENT OF DIVIDEND EQUIVALENT CASH BALANCE. The Participant
will direct the Corporation to invest the cash balance from the accumulation of
Dividend Equivalent payments into one or more of the available investment
portfolios available under the BANC ONE CORPORATION Incentive Compensation
Deferral Plan.
SECTION 6. TERMINATION OF EMPLOYMENT
6.1 TERMINATION OF EMPLOYMENT. In the event a Participant's employment
is terminated due to death or Disability, the Participant will cease to be
eligible for Plan participation and the accumulated cash balance will be
distributed to the Participant, or in the case of death, to the Participant's
designated beneficiary as determined under Section 6.2, within thirty (30) days
after the date of death or Disability. In the event a Participant's employment
is terminated due to Retirement at age 65, the accumulated cash balance will be
distributed in full to the Participant on the January 31 following the date of
Retirement. In the event a Participant's employment is terminated for reasons
other than Death, Disability, or Retirement at age 65, the Participant shall
forfeit all rights to the accumulated Dividend Equivalent cash balance and any
future Dividend Equivalent Payments.
6.2 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall
be in a form prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Committee during his lifetime. In the
absence of any such designation, or if for any reason such designation is
ineffective, in whole or in part, benefits remaining unpaid at the
Participant's death shall be paid to his estate.
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<PAGE> 4
SECTION 7. GENERAL PROVISIONS
7.1 TAX WITHHOLDING. Any and all payments made under the Plan shall be
subject to applicable federal, state, or local taxes required by the law to be
withheld.
7.2 BENEFIT PLANS TREATMENT OF DIVIDEND EQUIVALENT PAYMENTS AS
COMPENSATION. Amounts paid under this Plan will not be considered compensation
for purposes of other BANC ONE Qualified Benefit Plans unless specifically
provided for in such plans. The treatment of these amounts under any
non-qualified benefit plans will be determined according to the provisions of
such plans.
7.3 NONTRANSFERABILITY. Except as specifically provided herein or as
may otherwise be required by law, no undistributed bonus amount payable to the
Participant may be sold, transferred, or assign or encumbered, in whole or in
part, by a Participant, and any attempt to so alienate or subject any such
amount shall be void.
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<PAGE> 1
<TABLE>
BANC ONE CORPORATION and Subsidiaries EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
$(thousands, except per share amount)
<CAPTION>
Three Month Ended
March 31
---------------------------
1994 1993
------------ ------------
<S> <C> <C>
PRIMARY
Earnings:
Net income $ 312,873 $ 286,877
Deduct: Dividends on preferred shares 4,373 4,591
------------ -----------
Net income available to common shareholders' $ 308,500 $ 282,286
============ ===========
SHARES:
Weighted average common shares outstanding 381,371 373,821
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,272 1,992
------------ -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
AS ADJUSTED 382,643 375,813
============ ===========
PRIMARY EARNINGS PER COMMON SHARE $ 0.81 0.75
============ ===========
FULLY DILUTED:
EARNINGS:
Net income $ 312,873 $ 286,877
============ ===========
SHARES
Weighted average common shares outstanding 381,371 373,821
Add: Dilutive effect of outstanding options,
as determined by the application of the
Treasury stock method 1,272 2,179
Conversion of preferred stock 8,765 9,989
----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
AS ADJUSTED 391,408 385,989
============ ===========
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.80 0.74
============ ===========
<FN>
(1) First quarter 1993 balances have been restated for the acquisitions of Key Centurion Bancshares, Inc., and First Community
Bancorp, Inc. completed in the second quarter of 1993.
</TABLE>
<PAGE> 1
<TABLE>
BANC ONE CORPORATION and Subsidiaries EXHIBIT 12
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (2)
$(thousands)
<CAPTION>
Three Months Ended
March 31 Years Ended December 31,
------------------ ------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- ---------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Calculation excluding interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
Bank One, Texas, NA (1) $ 488,888 $ 402,024 $ 1,699,119 $ 1,281,222 $ 879,775 $ 687,029 $ 361,474
Fixed charges 104,285 78,573 329,874 304,443 394,563 435,768 439,339
Less capitalized interest (249) (116) (652) (1,199) (1,732) (2,181) (2,338)
------- -------- ---------- --------- -------- -------- ---------
$ 592,924 $ 480,481 $ 2,028,341 $ 1,584,466 $ 1,272,606 $1,120,616 $ 798,475
======= ======== ========== ========= ========= ========= =======
Fixed charges
Interest expense, including interest factor
of capitalized leases and amortization of
deferred debt expense $ 91,664 $ 66,962 $ 282,555 $ 263,412 $ 356,234 $ 403,418 $ 411,975
Portion of rental payments under operating
losses deemed to be interest 12,621 11,611 47,319 41,031 38,329 32,350 27,364
------- ------ ------- ------- ------- ------- -------
Fixed charges $ 104,285 $ 78,573 $ 329,874 $ 304,443 $ 394,563 $ 435,768 $ 439,339
======= ====== ======= ======= ======= ======= =======
Ratio of earnings to fixed charges excluding
interest deposits 5.69 X 6.12 X 6.15 X 5.20 X 3.23 X 2.57 X 1.82 X
Calculation including interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
Bank One, Texas, NA (1) $ 488,888 $ 402,024 $ 1,699,119 $ 1,281,222 $ 879,775 $ 687,029 $ 361,474
Fixed charges 431,932 442,151 1,693,019 2,162,694 2,762,687 2,910,253 2,698,125
Less capitalized interest (249) (116) (652) (1,199) (1,732) (2,181) (2,338)
------- ------- --------- --------- --------- --------- ---------
$ 920,571 $ 844,059 $ 3,391,486 $ 3,442,717 $ 3,640,730 $ 3,595,101 $3,057,261
======= ======= ========= ========= ========= ========= =========
Fixed charges
As detailed above $ 104,285 $ 78,573 $ 329,874 $ 304,443 $ 394,563 $ 435,768 $ 439,339
Interest on deposits 327,647 363,578 1,363,145 1,858,251 2,368,124 2,474,485 2,258,786
------- ------- --------- --------- --------- --------- ---------
Fixed charges $ 431,932 $ 442,151 $ 1,693,019 $ 2,162,694 $ 2,762,687 $ 2,910,253 $ 2,698,125
======= ======= ========= ========= ========= ========== =========
Ratio of earnings to fixed charges including
interest on deposits 2.13 X 1.91 X 2.00 X 1.59 X 1.32 $ 1.24 $ 1.13 X
<FN>
(1) Results of Bank One, Texas, NA are consolidated beginning October 1, 1991
(2) First quarter 1993 balances have been restated for the acquisition of Key Centurion
Bancshares, Inc., and First Community Bancorp, Inc. completed in the second quarter of 1993.
</TABLE>
