<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 June 30, 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 August 5,
1994. 383,055,963
<PAGE> 2
BANC ONE CORPORATION AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
<PAGE> 3
<TABLE>
<CAPTION>
Consolidated Balance Sheet
$(thousands, except per share amounts) (unaudited) June 30, December 31, June 30,
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Cash and due from banks $4,922,639 $4,757,475 $4,542,814
Short-term investments 691,778 931,959 1,977,752
Securities
Securities held to maturity 4,929,291 16,591,970 14,584,999
Securities held for sale 815,941 1,387,874
Securities available for sale (at fair value,
cost $14,586,045 at June 30, 1994) 14,277,488
Total securities (fair value approximates
$19,268,728 at June 30, 1994) 19,206,779 17,407,911 15,972,873
Loans and leases 56,635,308 53,925,187 49,853,832
Reserve for loan and lease losses 905,353 918,153 919,818
Net loans and leases 55,729,955 53,007,034 48,934,014
Other assets:
Bank premises and equipment, net 1,425,887 1,387,218 1,347,114
Interest earned, not collected 666,255 624,185 620,396
Other real estate owned 83,889 135,893 150,304
Excess of cost over net assets of affiliates purchased 216,621 227,312 235,635
Other 1,600,432 1,439,574 1,685,471
Total other assets 3,993,084 3,814,182 4,038,920
Total assets $84,544,235 $79,918,561 $75,466,373
LIABILITIES
Deposits
Non-interest bearing $13,300,657 $13,674,976 $12,689,770
Interest bearing 48,827,920 47,268,205 46,564,147
Total deposits 62,128,577 60,943,181 59,253,917
Federal funds purchased and repurchase agreements 7,137,379 6,744,437 5,084,850
Other short-term borrowings 4,617,431 2,020,176 1,413,069
Long-term borrowings 1,741,221 1,701,662 1,584,352
Accrued interest payable 256,473 222,946 235,117
Other liabilities 1,396,180 1,252,521 1,306,363
Total liabilities 77,277,261 72,884,923 68,877,668
Stockholders' equity
Preferred stock, 35,000,000 shares authorized:
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, 383,634,239, 380,687,187, (December 31, 1993 and
June 30, 1993 shares reflect the 10% common stock dividend,
effective February 10, 1994), 341,065,620 shares issued, respectively 1,918,171 1,903,436 1,705,328
Capital in excess of aggregate stated value of common stock 3,777,651 3,833,611 2,642,869
Retained earnings 1,540,857 1,046,691 1,990,508
Net unrealized holding losses on securities available for sale (194,222)
Total stockholders' equity before treasury stock 7,292,357 7,033,638 6,588,705
Less: treasury stock (734,000 shares), at cost 25,383
Total stockholders' equity 7,266,974 7,033,638 6,588,705
Total liabilities and stockholders' equity $84,544,235 $79,918,561 $75,466,373
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Consolidated Statement of Income
$(thousands, except per share amounts) (unaudited) For the Three Months For the Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans and leases $1,231,249 $1,172,723 $2,478,122 $2,375,088
Interest and dividends on:
Taxable securities 237,544 204,861 426,885 433,661
Tax exempt securities 31,030 29,836 62,050 60,093
Other interest income 7,073 8,675 14,940 21,026
Total interest income 1,506,896 1,416,095 2,981,997 2,889,868
Interest expense
Interest on deposits:
Demand and savings deposits 161,593 152,507 310,104 305,890
Time deposits 195,749 193,710 374,885 403,905
Interest on borrowings 143,219 63,168 234,634 129,877
Total interest expense 500,561 409,385 919,623 839,672
Net interest income 1,006,335 1,006,710 2,062,374 2,050,196
Provision for loan and lease losses 47,288 58,402 124,575 163,953
Net interest income after provision
for loan and lease losses 959,047 948,308 1,937,799 1,886,243
Non-interest income
Income from fiduciary activities 55,724 53,592 111,156 104,729
Service charges on deposit accounts 111,163 105,906 220,466 213,215
Loan processing and servicing income 116,760 112,982 233,912 209,073
Securities gains 2,698 112 6,141 7,542
Income from management of Collection pools, net 4,607 6,331 9,946 9,795
Other 90,439 93,641 184,130 170,139
Total non-interest income 381,391 372,564 765,751 714,493
Non-interest expense
Salaries and related costs 407,112 406,974 830,964 801,499
Net occupancy expense, exclusive of depreciation 38,795 34,881 77,986 73,078
Equipment expense 27,238 26,313 54,977 51,439
Taxes other than income and payroll 18,658 20,250 19,566 40,088
Depreciation and amortization 67,174 65,756 131,865 138,842
Outside services and processing 125,227 136,444 257,507 246,056
Marketing and development 36,140 35,162 72,640 72,503
Communication and transportation 58,912 57,350 115,507 109,460
Other 87,478 102,919 179,946 230,924
Total non-interest expense 866,734 886,049 1,740,958 1,763,889
Income before income taxes and cumulative effect
of change in accounting principle 473,704 434,823 962,592 836,847
Income tax provision:
Income excluding securities transactions (156,822) (152,844) (331,632) (284,856)
Securities transactions (944) (38) (2,149) (2,564)
Provision for income taxes (157,766) (152,882) (333,781) (287,420)
Income before cumulative effect of change in
accounting principle 315,938 281,941 628,811 549,427
Cumulative effect of change in method of accounting
for income taxes 19,391
Net income $315,938 $281,941 $628,811 $568,818
Net income per common share
Income before cumulative effect of change in
accounting principle $.81 $.73 $1.62 $1.43
Cumulative effect of change in method of accounting
for income taxes .05
Net income per common share $.81 $.73 $1.62 $1.48
Weighted average common shares outstanding (000) 383,749 376,613 383,231 376,247
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 5
<TABLE>
Banc One Corporation
Consolidated Statement of Cash Flows
For the six months ended ended June 30, 1994 and 1993
$ (thousands) (unaudited)
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Cash provided by (used in) operating activities:
Net Income $ 628,811 $ 568,818
Adjustments:
Provision for loan and lease losses 124,575 163,953
Depreciation and amortization 191,493 180,373
Net decrease in trading account 100,748 55,896
Net decrease in warehoused mortgage loans 878,072 61,155
Net change in deferred loan fees and costs (9,282) (3,099)
Securities gains (6,141) (7,542)
Gain on sale of other assets (14,164) (11,519)
Net increase in other assets (107,641) (165,843)
Net increase (decrease) in other liabilities 74,144 (163,120)
Net change in deferred income taxes 54,848 32,892
Cummulative effect of change in accounting principle (19,391)
----------- -----------
Net cash provided by operating activities 1,915,463 692,573
----------- -----------
Cash provided by (used in) investing activities:
Purchases of securities available/held for sale (6,959,022) (350,000)
Purchases of securities held to maturity (433,076) (1,124,401)
Maturities of securities available/held for sale 1,041,659 247,371
Maturities of securities held to maturity 1,466,885 2,979,681
Proceeds from the sales of securities available/held for sale 2,841,030 373,492
Proceeds from the sales of securities held to maturity 81,616
Net increase in loans, excluding sales and purchases (3,275,832) (1,470,022)
Proceeds from the sales of loans and other assets 221,453 133,033
Purchases of loans and related premiums (400,512) (347,092)
Net decrease in short-term investments 279,781 284,558
Additions to bank premises and equipment (146,003) (143,318)
Net cash acquired in acquisitions 1,180,497
All other investing activities -- net 127 11,352
----------- -----------
Net cash provided by (used in) investing activities (4,183,013) 676,270
----------- -----------
Cash provided by (used in) financing activities:
Net decrease in demand deposit, money market
and savings accounts (1,273,110) (915,854)
Net increase (decrease) in time deposits 1,020,894 (1,510,478)
Net increase in short-term borrowings 2,982,721 482,598
Proceeds from issuance of long-term borrowings 51,520 248,317
Repayment of long-term borrowings (11,961) (21,427)
Cash dividends paid (351,817) (264,949)
Other, net increase (decrease) 14,467 (31,106)
----------- -----------
Net cash provided by (used in) financing activities 2,432,714 (2,012,899)
----------- -----------
Increase (decrease) in cash and cash equivalents 165,164 (644,056)
Cash and cash equivalents at January 1, 4,757,475 5,186,870
----------- -----------
Cash and cash equivalents at June 30, $ 4,922,639 $ 4,542,814
----------- -----------
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 6
<TABLE>
Supplemental Disclosures for Statement of Cash Flows
Supplemental disclosures of noncash investing and financing activities, and
additional disclosures for the six months ended June 30, 1994 and 1993, are as
follows:
<CAPTION>
$(thousands)(unaudited) 1994 1993
- - - -------------------------------------------------------------------------------- ----------- ---------
<S> <C> <C>
Transfer from Other Assets to securities $ 3,330 $ 824
----------- ---------
Transfer from loans to other real estate owned $ 21,679 $ 72,959
----------- ---------
Net increase in Trade Date Accounting entries for securities transactions $ 81,719 $ 267,596
----------- ---------
Loans issued to facilitate the sale of OREO Properties $ 20,600 $ 14,346
----------- ---------
Net Unrealized holding losses on securities available for sale (retained
earnings effect, net of taxes ($193,911)) $ 308,246 $
----------- ---------
Additional Disclosures:
Interest Paid $ 889,811 $ 863,226
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Income Taxes Paid $ 314,499 $ 250,654
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<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Consolidated Statement of Changes in Stockholders' Equity
For the Three Months For the Six Months
Ended June 30, Ended June 30,
$(thousands, except per share amounts) (unaudited) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Balance, beginning of period $7,200,259 $6,407,968 $7,033,638 $6,241,586
Net income 315,938 281,941 628,811 568,818
Exercise of stock options, net of shares purchased (2,493) (2,052) (3,843) (40,246)
Shares issued in acquisitions 24,421 30,215
Pooled affiliate stock issuance and other 588 719 (78) 2,768
Cash dividends:
Corporation:
Common ($.31 and $.26 per share for the three months
and $.62 and $.51 per share for the six months
ended June 30, 1994 and 1993) (118,837) (95,496) (237,187) (176,640)
Class B Preferred ($.75 per share) (216)
Series C Preferred ($.88 per share for the three months and $1.75
per share for the six months ended June 30, 1994 and 1993) (4,373) (4,375) (8,746) (8,750)
Pooled affiliates (4,987)
Sale of stock to employee benefit plans 13,675 43,769 6,372
Net unrealized holding losses on securities available for sale (145,174) (194,222)
Purchase of treasury stock (17,030) (25,383)
Balance, June 30 $7,266,974 $6,588,705 $7,266,974 $6,588,705
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Consolidated Statement of Reserve for Loan and Lease Losses
For the Three Months For the Six Months
Ended June 30, Ended June 30,
$(thousands) (unaudited) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Balance, beginning of period $922,099 $943,137 $918,153 $909,896
Acquired reserves 5,710 43 6,032 1,213
Provision for loan and lease losses 47,288 58,402 124,575 163,953
Losses charged to the reserve (118,866) (128,367) (242,277) (263,563)
Recoveries 49,122 46,603 98,870 108,319
Net losses charged to the reserve (69,744) (81,764) (143,407) (155,244)
Balance, June 30 $905,353 $919,818 $905,353 $919,818
<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 year-to-date provision for income taxes is at a rate which management
believes will approximate the effective rate for the year.
3. At March 31, 1994, BANC ONE had five pending acquisitions totaling
approximately $5.6 billion in assets. On May 2, 1994, the acquisition of
Capital Bancorp ("Capital") of Salt Lake City, Utah, accounted for as a pooling
of interests, was completed in exchange for .5 million shares of BANC ONE
common stock. On June 8, 1994, the acquisition of Mid States Bancshares, Inc.
("Mid States") of Moline, Illinois, accounted for as a pooling of interests,
was completed in exchange for .9 million shares of BANC ONE common stock. The
prior period financial statements for these acquisitions have not been restated
due to immateriality. On May 13, 1994, BANC ONE acquired the majority of Great
American Federal Savings Bank's Arizona deposits in a regulatory-assisted
transaction. The purchase price was approximately $49 million. This transaction
was accounted for as a purchase and the results of operations are included in
the consolidated statement of income from the date of acquisition. As of June
30, 1994, BANC ONE had three pending acquisitions, which had combined assets of
approximately $5.4 billion.
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 June 30, 1994, the Corporation
had acquired and held .7 million 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 at amortized
cost from the held to maturity and held for sale portfolios to the available
for sale portfolio. Securities available for sale were adjusted to fair value,
as required, and a net unrealized gain of $83 million, after tax, was recorded
as a separate component of common stockholders' equity. At June 30, 1994, the
net unrealized loss in this separate component of equity was $194 million.
6. Approximately $57.3, $88.9 and $116.9 million have been reclassified from
other real estate owned to loans for December 31, 1993, June 30, 1993 and
December 31, 1992, respectively, for comparison purposes. Certain other prior
period amounts have also been reclassified.
7. Mortgage loans held for sale were $405 million, $1.3 billion and $1.1
billion at June 30, 1994, December 31, 1993 and June 30, 1993, respectively.
Such loans are carried at the lower of cost or market determined on a loan by
loan basis.
<PAGE> 10
<TABLE>
<CAPTION>
Average Balances, Income and Expenses, Yields and Rates(1)(2)
1994
2nd Quarter 1st 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 $760,342 $7,993 4.22% $986,879 $8,805 3.62%
Securities
Taxable 17,348,845 237,683 5.50 14,863,543 189,456 5.17
Tax exempt 2,126,247 45,917 8.66 2,091,196 46,220 8.96
Total securities 19,475,092 283,600 5.84 16,954,739 235,676 5.64
Loans and leases(4)
Commercial 14,226,549 266,476 7.51 13,874,118 268,905 7.86
Real estate 16,705,067 353,377 8.48 16,566,091 346,908 8.49
Consumer, net 17,289,053 356,283 8.27 16,528,573 382,008 9.37
Credit card 6,112,573 239,086 15.69 6,001,195 232,387 15.70
Leases, net 1,097,535 20,387 7.45 1,069,502 19,961 7.57
Reserve for loan and lease losses (926,236) (925,065)
Net loans and leases 54,504,541 1,235,609 9.09 53,114,414 1,250,169 9.55
Total earning assets 74,739,975 1,527,202 8.20 71,056,032 1,494,650 8.53
Other assets 8,541,438 8,426,100
Total assets $83,281,413 $79,482,132
LIABILITIES
Deposits
Non-interest bearing demand $12,627,481 $12,711,510
Interest bearing demand 8,787,580 37,027 1.69 8,733,047 34,989 1.62
Savings 7,698,347 45,039 2.35 7,510,645 40,895 2.21
Money market savings accounts 11,657,102 79,527 2.74 11,484,080 72,627 2.56
Time deposits:
CDs less than $100,000 15,829,505 153,367 3.89 15,575,487 139,650 3.64
CDs $100,000 and over:
Domestic 3,307,999 31,887 3.87 3,749,931 33,048 3.57
Foreign 1,040,859 10,495 4.04 764,066 6,438 3.42
Total deposits 60,948,873 357,342 2.35 60,528,766 327,647 2.20
Borrowed funds:
Short-term 11,890,188 115,927 3.91 8,555,906 66,787 3.17
Long-term 1,740,739 27,292 6.29 1,707,597 24,628 5.85
Total borrowed funds 13,630,927 143,219 4.21 10,263,503 91,415 3.61
Total interest bearing liabilities 61,952,319 500,561 3.24 58,080,759 419,062 2.93
Other liabilities 1,515,810 1,502,995
Total liabilities 76,095,610 72,295,264
Preferred stock 249,900 249,900
Common stockholders' equity 6,935,903 6,936,968
Total liabilities, common equity
and preferred stock $83,281,413 $79,482,132
Net interest income(3) 1,026,641 5.51 1,075,588 6.14
Provision for loan and lease losses(3) (47,288) (.25) (77,287) (.44)
Net funds function(3) $979,353 5.26% $998,301 5.70%
<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> 11
<TABLE>
Average Balances, Income and Expenses, Yields and Rates(1)(2)
<CAPTION>
1993
4th Quarter 3rd 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 $852,003 $7,645 3.56% $ 1,219,381 $10,795 3.51%
Securities
Taxable 14,664,305 192,613 5.21 13,624,158 187,077 5.45
Tax exempt 1,900,852 43,514 9.08 1,768,401 42,593 9.56
Total securities 16,565,157 236,127 5.66 15,392,559 229,670 5.92
Loans and leases(4)
Commercial 13,639,278 270,964 7.88 13,423,556 276,297 8.17
Real estate 16,391,295 352,727 8.54 15,982,463 353,386 8.77
Consumer, net 15,482,530 340,012 8.71 14,703,707 329,609 8.89
Credit card 5,505,457 222,277 16.02 5,143,699 215,434 16.62
Leases, net 1,033,462 20,616 7.91 963,491 19,725 8.12
Reserve for loan and lease losses (914,834) (921,654)
Net loans and leases 51,137,188 1,206,596 9.36 49,295,262 1,194,451 9.61
Total earning assets 68,554,348 1,450,368 8.39 65,907,202 1,434,916 8.64
Other assets 8,486,857 8,319,285
Total assets $77,041,205 $74,226,487
LIABILITIES
Deposits
Non-interest bearing demand $12,920,586 $12,112,958
Interest bearing demand 8,444,082 30,995 1.46 8,138,309 29,670 1.45
Savings 7,320,122 42,747 2.32 7,075,977 43,537 2.44
Money market savings accounts 11,213,403 72,822 2.58 11,294,172 73,771 2.59
Time deposits:
CDs less than $100,000 15,754,328 135,076 3.40 16,282,553 151,358 3.69
CDs $100,000 and over:
Domestic 3,562,011 35,051 3.90 3,108,229 27,248 3.48
Foreign 743,034 6,229 3.33 549,844 4,846 3.50
Total deposits 59,957,566 322,920 2.14 58,562,042 330,430 2.24
Borrowed funds:
Short-term 7,216,092 53,539 2.94 6,132,417 47,847 3.10
Long-term 1,705,130 25,646 5.97 1,586,065 24,994 6.25
Total borrowed funds 8,921,222 79,185 3.52 7,718,482 72,841 3.74
Total interest bearing liabilities 55,958,202 402,105 2.85 54,167,566 403,271 2.95
Other liabilities 1,455,176 1,311,601
Total liabilities 70,333,964 67,592,125
Preferred stock 249,969 250,000
Common stockholders' equity 6,457,272 6,384,362
Total liabilities, common equity
and preferred stock $77,041,205 $74,226,487
Net interest income(3) 1,048,263 6.07 1,031,645 6.21
Provision for loan and lease losses(3) (107,031) (.62) (97,523) (.59)
Net funds function(3) $941,232 5.45 % $934,122 5.62 %
<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> 12
<TABLE>
Average Balances, Income and Expenses, Yields and Rates(1)(2)
<CAPTION>
1993
2nd Quarter
Yield/ Average Income/
$(thousands) (unaudited) Balance Expense Rate
<S> <C> <C> <C>
ASSETS
Short-term investments $1,218,692 $9,658 3.18%
Securities
Taxable 14,224,020 204,187 5.76
Tax exempt 1,779,959 43,534 9.81
Total securities 16,003,979 247,721 6.21
Loans and leases(4)
Commercial 13,550,542 278,231 8.24
Real estate 15,825,602 349,752 8.86
Consumer, net 13,908,944 328,228 9.47
Credit card 4,862,098 201,155 16.59
Leases, net 957,163 19,726 8.27
Reserve for loan and lease losses (947,632)
Net loans and leases 48,156,717 1,177,092 9.80
Total earning assets 65,379,388 1,434,471 8.80
Other assets 8,306,918
Total assets $73,686,306
LIABILITIES
Deposits
Non-interest bearing demand $11,974,880
Interest bearing demand 8,098,021 34,631 1.72
Savings 6,895,289 43,571 2.53
Money market savings accounts 11,440,867 74,305 2.61
Time deposits:
CDs less than $100,000 16,810,159 158,730 3.79
CDs $100,000 and over:
Domestic 3,329,855 30,962 3.73
Foreign 445,147 4,018 3.62
Total deposits 58,994,218 346,217 2.35
Borrowed funds:
Short-term 5,356,218 40,636 3.04
Long-term 1,557,042 22,532 5.80
Total borrowed funds 6,913,260 63,168 3.66
Total interest bearing liabilities 53,932,598 409,385 3.04
Other liabilities 1,307,665
Total liabilities 67,215,143
Preferred stock 254,691
Common stockholders' equity 6,216,472
Total liabilities, common equity
and preferred stock $73,686,306
Net interest income(3) 1,025,086 6.29
Provision for loan and lease losses(3) (58,402) (.36)
Net funds function(3) $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> 13
<TABLE>
Consolidated Quarterly Financial Data
<CAPTION>
Quarters
1994 1993
Last 12
$(million, except per share amounts) (unaudited) Second First Fourth Third Second Months
<S> <C> <C> <C> <C> <C> <C>
Key ratios
Return on average assets(1) 1.52% 1.60% 1.47% 1.52% 1.53% 1.53%
Return on average common equity(1) 18.02 18.04 17.32 17.43 17.91 17.70
Return on average total equity(1) 17.64 17.66 16.93 17.04 17.48 17.32
Average common equity to assets 8.33 8.73 8.38 8.60 8.44 8.51
Average total equity to assets 8.63 9.04 8.71 8.94 8.78 8.83
Margin analysis(1),(2),(3)
Interest income 8.20 8.53 8.39 8.64 8.80 8.44
Interest expense 2.69 2.39 2.32 2.43 2.51 2.46
Net interest income 5.51 6.14 6.07 6.21 6.29 5.98
Provision for loan and lease losses .25 .44 .62 .59 .36 .47
Net funds function 5.26 5.70 5.45 5.62 5.93 5.51
Credit analysis
Net charge-offs to average loans and leases .50 .55 .89 .80 .67 .69%
Ending reserves to loans and leases 1.60% 1.68% 1.70% 1.79% 1.85%
Nonperforming assets:
Total $485.9 $560.5 $603.5 $655.4 $738.5
Percent of total loans leases .86% 1.02% 1.12% 1.28% 1.48%
Loans deliquent over 90 days(4):
Total $209.4 $186.2 $204.0 $214.7 $212.9
Percent of total loans and leases .37% .34% .38% .42% .43%
Per share data
Net income(5) $ .81 $ .81 $ .75 $ .75 $ .73 $3.12
Cash dividends(5) .31 .31 .28 .28 .26 1.18
Book value(5) 18.29 18.20 17.82 17.35 16.89
Common stock price(5):
High $38.00 $35.47 $39.77 $42.19 $44.73 $42.19
Low 30.75 31.88 32.27 34.55 36.73 30.75
Close $34.25 $33.00 $35.57 $37.73 $40.91
Preferred Series C stock price:
High $68.25 $68.75 $74.63 $73.25 $81.75 $74.63
Low 57.50 60.50 66.63 72.75 70.50 57.50
Close $62.50 $61.00 $68.75 $73.25 $77.00
Shares traded (000):
Common 55,251 68,124 54,635 39,072 35,563 217,082
Preferred Series C 1,200 2,851 2,082 1,712 1,827 7,845
<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) Applicable 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> 14
<TABLE>
<CAPTION>
Consolidated Quarterly Financial Data Quarters
1994 1993 Last 12
$(millions) (unaudited) Second First Fourth Third Second Months
<S> <C> <C> <C> <C> <C> <C>
Period end balances
Loans and leases (net of unearned) $56,635.3 $54,955.3 $53,925.2 $51,102.6 $49,853.8
Earning assets 75,628.5 75,135.3 71,346.9 68,196.9 66,884.6
Total assets 84,544.2 83,426.7 79,918.6 76,461.6 75,466.4
Total deposits 62,128.6 60,148.0 60,943.2 59,143.7 59,253.9
Long-term debt 1,741.2 1,740.9 1,701.7 1,709.0 1,584.4
Reserve for loan and lease losses 905.4 922.1 918.2 917.1 919.8
Total stockholders' equity 7,267.0 7,200.3 7,033.6 6,759.9 6,588.7
Condensed income statement
Net interest income(1) 1,026.64 1,075.59 1,048.26 1,031.65 1,025.09 $4,182.14
Provision for loan and lease losses 47.29 77.29 107.03 97.53 58.41 329.14
Net funds function(1) 979.35 998.30 941.23 934.12 966.68 3,853.00
Non-interest income
Fiduciary income 55.72 55.43 54.24 52.82 53.59 218.21
Service charges on deposits 111.16 109.30 111.42 107.66 105.91 439.54
Loan processing and service income 116.76 117.15 124.67 118.04 112.98 476.62
Securities transactions 2.70 3.44 5.51 2.97 .11 14.62
Income from management of
Collection pools, net 4.61 5.34 6.46 6.53 6.33 22.94
Other non-interest income 90.44 93.70 94.59 92.25 93.64 370.98
Total non-interest income 381.39 384.36 396.89 380.27 372.56 1,542.91
Non-interest expense
Salaries and benefits 407.11 423.85 403.98 412.86 406.97 1,647.80
Other non-interest expense 459.62 450.37 483.15 450.24 479.08 1,843.38
Total non-interest expense 866.73 874.22 887.13 863.10 886.05 3,491.18
Taxable equivalent adjustment 20.31 19.55 19.42 20.59 18.37 79.87
Income before income taxes 473.70 488.89 431.57 430.70 434.82 1,824.86
Income tax provision (157.76) (176.02) (145.32) (145.79) (152.88) (624.90)
Net income $315.94 $312.87 $286.25 $284.91 $281.94 $1,199.96
Net income available to common
stockholders $311.57 $308.50 $281.88 $280.54 $277.57 $1,182.49
<FN>
(1) Fully taxable equivalent basis.
</TABLE>
<PAGE> 15
Management's Discussion and Analysis
BANC ONE reported net income of $316 million and $629 million for the three and
six months ended June 30, 1994, respectively. This represents an increase of
over 12% and 11% from the same periods in 1993. This discussion should be read
in conjunction with the financial statements, notes and tables included
elsewhere in this report.
BANC ONE's returns on average assets were 1.52% and 1.56% for the three and six
months ended June 30, 1994, compared to 1.53% and 1.55% for the same periods in
1993. BANC ONE's returns on average common equity were 18.02% and 18.03% for
the three and six months ended June 30, 1994, compared to 17.91% and 18.42% for
the same periods in 1993.
Net Interest Income
BANC ONE's net interest income on a fully taxable equivalent (FTE) basis
increased $1.6 million and $12.6 million for the three and six months ended
June 30, 1994 from the same periods in 1993. Interest income on earning assets
increased $92.7 million and $92.5 million for the comparable periods, while
average balances increased $9.4 billion and $7.3 billion. Interest expense on
interest bearing liabilities increased $91 million and $80 million for the
three and six months ended June 30, 1994, compared to 1993, while average
balances increased $8.0 billion and $5.7 billion for the same periods. The
above income and expense amounts were impacted by interest rate swaps and other
derivative activity as described in this section.
The continued growth in average loan balances, primarily consumer and credit
card, combined with the continued increase in the market interest rates,
resulted in increases of $58.5 million and $101.8 million in fully taxable
equivalent interest income on loans and leases for the three and six months
ended June 30, 1994. In addition, fully taxable equivalent interest income on
investment securities increased $35.9 million for the three month period ended
June 30, 1994, due to the purchase of $3.2 billion of United States Treasury
securities late in the first quarter.
Interest expense on deposits increased by $11.1 million in the second quarter
of 1994, compared to 1993, due primarily to increases in short-term interest
rates. For the six months ended June 30, 1994, interest expense on deposits
decreased $24.8 million compared to 1993, due to a shift from longer-term,
higher interest rate time deposits to lower interest rate savings and
non-interest bearing demand deposits. Additionally, interest expense on
borrowed funds increased for the three and six months ended June 30, 1994
compared to 1993, due to the issuance of $2.2 billion in bank notes in the
first quarter of 1994, increases in other borrowed funds balances on a
year-to-date average basis of $3.5 billion and the current higher interest rate
environment.
Earning asset yields declined 60 and 65 basis points for the three and six
months ended June 30, 1994 as compared to 1993. Funding costs increased 20
basis points for the three months ended June 30, 1994 but remained constant for
the six months ended June 30, 1994. These changes are a result of lower spreads
on new loan originations, due to increasingly competitive pricing, contractual
repricing lags of earning assets, the purchase of United States Treasury
securities and the issuance of bank notes in the first quarter. Should interest
rates continue to increase, a further decline in the net interest margin can be
expected as increased funding costs and a decline in contribution from
derivative products outpace the increase in yields on earning assets.
BANC ONE is a naturally asset-sensitive institution (i.e. asset repricings and
maturities tend to be shorter than liabilities). This natural sensitivity
reflects customer loan and deposit preferences. Historically, BANC ONE has
adjusted its position to a level of liability sensitivity through the use of
traditional securities as well as derivative instruments to offset these
<PAGE> 16
customer preferences. In a flat or declining rate environment it is usually
prudent to adjust the natural sensitivity profile to one which is liability
sensitive in an effort to protect future earnings. In a rising rate environment
it is usually prudent to adjust the sensitivity profile to one which is less
liability sensitive. Decisions regarding appropriate sensitivity levels are
made as part of BANC ONE's ongoing asset liability management process. BANC ONE
has entered into programs both in local markets and in capital markets to bring
sensitivity levels closer to neutral. BANC ONE expects to enter into
transactions to reduce its sensitivity in future periods.
BANC ONE manages its interest rate sensitivity using on balance sheet asset
and liability products and off balance sheet derivatives. Derivatives
increased interest income by $8.0 million and $60.1 million for the three and
six month periods ended June 30, 1994, as compared to $58.6 million and $112.9
million for the same periods in 1993. Derivatives decreased deposit and other
borrowing costs by $30 million and $77.3 million for the three and six month
periods ended June 30, 1994, as compared to decreases of $48.2 million and
$95.5 million for the same periods in 1993. This decrease in the contribution
to net interest income from derivatives is primarily the result of BANC ONE
being in a net receive fixed position on the derivative portfolio, which
results in payments based on increasingly higher rates in the current rate
environment while continuing to receive a fixed rate. Table 1 summarizes the
notional amount (an agreed upon amount on which calculations of payments to be
exchanged are based) of BANC ONE's derivative portfolio by type. BANC ONE has
no credit exposure on 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
and the counterparties to its interest rate swap contracts exchange collateral
to minimize credit risk. 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.
<TABLE>
Table 1
Interest Rate Swaps and Other Derivatives
<CAPTION>
June 30, March 31, Dec. 31,
$(millions) 1994 1994 1993
<S> <C> <C> <C>
Receive fixed (includes
forward starting) $26,059 $28,035 $29,237
Receive floating (includes
pay fixed and caps) 8,382 8,598 1,619
Net receive fixed position $17,677 $19,437 $27,618
Basis 8,128 7,879 5,556
Other $2,389 $2,899 $2,598
</TABLE>
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 was $61 million at June 30, 1994. There was an $814 million net unrealized
loss on derivatives at June 30, 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.
<PAGE> 17
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, assesses the financial
condition of borrowers, implements restrictions on out-of-area lending and
encourages avoidance of loan concentrations. The loan portfolio consists of
many small credits in diverse businesses located throughout the markets served
by BANC ONE affiliates. Only 11 customers had borrowings greater than $50
million outstanding at June 30, 1994, with the largest being $65 million.
<TABLE>
Table 2
<CAPTION>
Credit Quality June 30, Dec. 31, June 30,
$(millions) 1994 1993 1993
<S> <C> <C> <C>
Nonperforming assets
Nonaccrual $397.3 $460.7 $581.0
Renegotiated 4.7 6.9 7.2
OREO 83.9 135.9 150.3
Total nonperforming
assets $485.9 $603.5 $738.5
Loans delinquent
over 90 days $209.4 $204.0 $212.9
Doubtful loans 50.8 58.7 50.9
Ending reserve for loan
and lease losses 905.4 918.2 919.8
Net charge-offs $69.7 $116.7 $81.8
Key ratios
Reserve to ending loans 1.60% 1.70% 1.85%
Nonperforming assets
to ending loans .86 1.12 1.48
90 days delinquent to
ending loans .37 .38 .43
Net charge-offs to
average loans .50% .89% .67%
</TABLE>
The trend toward improved credit quality continued during the quarter ended
June 30, 1994 as a result of the recovering economy and management's continual
monitoring and refining of credit policies, as well as centralized management
of problem assets. At June 30, 1994, BANC ONE reported total nonperforming
assets of $486 million, a decrease of $253 million from a year ago.
Nonperforming assets were .86% of ending loans, down significantly from 1.48%
at June 30, 1993. The decrease is primarily a result of accelerated asset
disposition and receipt of
<TABLE>
Table 3
Nonperforming Assets Activity
<CAPTION>
Three Months Six Months
Ended Ended
$(millions) June 30, 1994 June 30, 1994
<S> <C> <C>
Balance at beginning of
quarter/year $438.3 $460.7
Nonaccrual loans activity
Nonaccrual additions 58.6 139.9
Loans returned to accrual
and payments received (82.5) (165.1)
Reduction due to transfers
to OREO (3.1) (10.3)
Charge-offs (15.1) (29.3)
Other, net 1.1 1.4
Nonaccrual loans $397.3 $397.3
</TABLE>
<PAGE> 18
<TABLE>
<S> <C> <C>
OREO, beginning of period $116.0 $135.9
OREO activity
Repossession of collateral 9.1 21.7
Write-downs (1.4) (4.0)
Sales and other (39.8) (69.7)
OREO $83.9 $83.9
</TABLE>
payments. Table 3 details the activity in nonaccrual loans and other real
estate owned (OREO) from December 31, 1993 to June 30, 1994.
The increase in loans delinquent greater than 90 days from December 31, 1993 to
June 30, 1994 is due primarily to the seasonal income tax Refund Anticipation
Loan program and wholesale loans, for which there are adequate reserves for
loan losses.
The reserve for loan and lease losses decreased as a percentage of ending loans
from 1.70% at December 31, 1993 to 1.60% at June 30, 1994. The reserve
continues to provide strong nonperforming loan coverage, increasing to 225% of
nonperforming loans at June 30, 1994, compared with 156% at June 30, 1993. The
provision for loan and lease losses was approximately $22 million less than net
charge-offs during the second quarter of 1994, reflecting generally strong
credit quality and an adequate reserve level versus identified risk. The
adequacy of the reserve and 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 by $6
million, or 1.7%, and $53 million, or 7.5%, for the three and six months ended
June 30, 1994 compared to 1993.
Income from fiduciary activities increased approximately $2 million for the
three month period and approximately $7 million for the six month period ended
June 30, 1994 due to increased volume of accounts. The increase in income from
service charges on deposit accounts is due to an overall increase in deposits.
Loan processing and service income increased approximately $25 million during
the six months ended June 30, 1994 compared to the same period in 1993.
Contributing to the increase was the retention of approximately $13 million
more in credit card interchange income due to the elimination of an interchange
sharing arrangement in a terminated affinity credit card program. Increased
volume in private label merchant processing and higher credit card sales
resulting in higher interchange income during 1994 also contributed to the
increase. The increases were partially offset by reduced contribution from
mortgage banking, which decreased $6 million during the six months ended June
30, 1994 versus 1993, principally due to lower origination volumes resulting
from higher, long-term interest rates. The increase in other non-interest
income is primarily due to a $4 million increase in rental income during 1994,
$3 million in income earned on the cash surrender value of Corporate-owned life
insurance, and a $3 million gain on the sale of assets during 1994.
Total non-interest expense decreased $19.3 million, or 2.18%, and $22.9
million, or 1.3%, for the three and six months ended June 30, 1994, compared to
1993. Salaries and related costs increased $29 million, or 3.7%, for the six
months ended June 30, 1994. This increase was primarily due to increased
headcount, medical benefit costs and pay rates. Taxes other than income and
payroll decreased $20 million, or 51.2%, for the six months ended June 30,
1994, due to settlement of prior year franchise taxes. Depreciation and
amortization decreased $7.0 million, or 5.0%, in the year-to-date period ended
June 30, 1994. This decrease was mostly attributable to a $16 million write-off
of goodwill in the first quarter 1993, which was offset by a $6 million
increase in depreciation expense during 1994 on data processing equipment
purchased to support branch automation and technological enhance-
<PAGE> 19
ments of existing equipment. Outside services and processing decreased $11
million, or 8.2%, for the three months ended June 30, 1994, which was
attributable to approximately $15 million in reduced consulting expenses
relating to the Triumph and Banamex credit card projects, which was
partially offset by a $4 million increase due to new credit card programs,
including the estimated cost of providing incentives for card usage. Outside
services and processing increased $11 million, or 4.7%, for the six months
ended June 30, 1994, mainly due to an $18 million increase in expenses relating
to new credit card programs, a $4 million increase in product processing costs,
an increase of approximately $6 million in interchange expenses and $9 million
relating to leased equipment and other miscellaneous costs. These increases
were offset by a decrease of approximately $28 million in consulting costs
related to the Triumph and Banamex credit card programs and merger-related
expenses. The decrease in other non-interest expense both quarter-to-date and
year-to-date was primarily due to a significant decline in OREO expense, which
decreased $8 and $24 million. Supplies and merger-related expenses decreased $5
and $8 million, respectively, for the six months ended June 30, 1994.
Additionally, insurance expense decreased $3 million and FDIC premium expense
decreased $3 million for the six months ended June 30, 1994.
Due to the factors mentioned above, annualized net non-interest expense (total
other expense less total other income excluding securities transactions) as a
percent of average assets decreased to 2.4% in the second quarter of 1994 from
2.8% in the second quarter of 1993. BANC ONE has announced plans to
consolidate certain deposit and loan operations and standardize back-office
functions. Implementation of this consolidation will occur over the next
several years. Certain one-time charges may be incurred such as severance pay,
retention bonuses and lease termination penalties, but the ongoing expense
savings are expected to be substantial.
The provision for income taxes decreased to 33.3% of pretax income in the
second quarter of 1994 in comparison with 35.2% in the second quarter of 1993.
The effective income tax rate for the six months ended June 30, 1994
approximates the anticipated effective rate for 1994.
Liquidity
At June 30, 1994, large liability dependence was 20.84%, an increase of 3.88%
from December 31, 1993. The increase was due primarily to additional
short-term borrowings in the first quarter to fund increased loan and
securities growth. Continued loan growth in the third quarter 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>
Table 4
<CAPTION>
Liquidity June 30, Dec. 31, June 30,
$(millions) 1994 1993 1993
<S> <C> <C> <C>
Earning assets net of money
market investments $74,937 $70,358 $64,818
Large liabilities
Net national market
liabilities $2,575 $2,973 $2,195
As a percent of net
earning assets 3.44% 4.23% 3.39%
Total net large liabilities $15,616 $11,932 $8,300
As a percent of net
earning assets 20.84% 16.96% 12.81%
</TABLE>
<PAGE> 20
Net Income Per Share
BANC ONE reported net income of $.81 and $1.62 per common share in the three
and six month periods ended June 30, 1994, compared to $.73 and $1.48 in the
same periods in 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).
<TABLE>
Table 5
Analysis of Net Income Per Common Share
<CAPTION>
Second Six
Quarter Months
<S> <C> <C>
Net income per common share, prior year $.73 $1.48
Increase/(decrease) from changes in
Earning asset volume .54 .44
Rates and other effects of net
interest income (.54) (.40)
Lower provision for loan and lease losses .03 .10
Non-interest income, excluding
securities transactions .01 .14
Securities transactions .01
Non-interest expense .05 .06
Provision for federal income taxes (.01) (.12)
Change in method of accounting for
income taxes (.05)
Subtotal .82 1.65
Changes in average common shares (.01) (.03)
Net income per common share $.81 $1.62
</TABLE>
Stockholders' Equity
At June 30, 1994, BANC ONE had total stockholders' equity of $7.3 billion, up
from $7.0 billion at December 31, 1993. This increase was due primarily to
earnings net of common and preferred dividends offset by an after tax
unrealized holding loss of approximately $194 million 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 $7.0 billion at June 30, 1994, up from $6.8
billion at December 31, 1993. The Corporation's ratio of common stockholders'
equity to total assets was 8.30% at June 30, 1994, which is a decrease from the
8.49% at December, 31, 1993 due to growth in earning assets funded by
borrowings.
<PAGE> 21
Derivative Financial Instruments
Maturities and weighted average rates of each significant type of product at
June 30, 1994 are shown below. 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 June 30,
1994 levels. To the extent that rates change, both the maturity and variable
interest rate information will change.
<TABLE>
<CAPTION>
Maturities of June 30, 1994 Derivative Products
------------------------------------------------
Maturity (1)
$ (millions) 1994 1995 1996 1997
- - - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receive Fixed Generic Swaps
Notional Value $ 222 $ 5,348 $ 518 $ 103
Weighted Average Receive Rate 5.94 % 5.16 % 4.63 % 6.72 %
Weighted Average Pay Rate 4.51 4.33 4.87 4.82
Weighted Average Life
Receive Fixed Amortizing Swaps
Notional Value 3,380 8,160 2,636 764
Weighted Average Receive Rate 5.76 % 5.09 % 5.40 % 5.16 %
Weighted Average Pay Rate 4.68 4.45 4.57 4.33
Weighted Average Life
Pay Fixed Swaps
Notional Value 261 1,817 2,266 270
Weighted Average Receive Rate 4.39 % 4.55 % 4.61 % 3.96 %
Weighted Average Pay Rate 7.19 4.70 5.33 6.08
Weighted Average Life
Basis Swaps
Notional Value 325 3,900 3,590
Weighted Average Receive Rate 4.06 % 4.27 % 3.65 %
Weighted Average Pay Rate 4.24 4.83 4.52
Weighted Average Life
Forward Starting Swaps
Notional Value 1,576 1,781 243
Weighted Average Receive Rate 5.27 % 5.39 % 5.23 %
Weighted Average Pay Rate 4.88 4.88 4.88
Weighted Average Life
Other Derivative Products (2)
Notional Value 624 1,595 3,581 163
------- ------- ------- -------
Total Notional Value $ 4,487 $18,821 $14,682 $ 5,133
======= ======= ======= =======
Total Weighted Average Rates on Swaps:
Receive Rate 5.68 % 5.05 % 4.80 % 4.04 %
Pay Rate 4.84 % 4.47 % 4.88 % 4.60 %
<CAPTION>
Maturities of June 30, 1994 Derivative Products
------------------------------------------------ June
30,
$ (millions) 1998 1999-2003 2004+ Total
- - - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receive Fixed Generic Swaps
Notional Value $ 30 $ 755 $ 150 $ 7,126
Weighted Average Receive Rate 4.95 % 6.97 % 5.82 % 5.37 %
Weighted Average Pay Rate 4.31 5.68 5.43 4.55
Weighted Average Life
Receive Fixed Amortizing Swaps
Notional Value 21 15 7 14,983
Weighted Average Receive Rate 8.62 % 8.81 % 8.82 % 5.31 %
Weighted Average Pay Rate 4.36 4.31 4.31 4.52
Weighted Average Life 1.09
Pay Fixed Swaps
Notional Value 84 12 4,710
Weighted Average Receive Rate 4.70 % 5.27 % 4.54 %
Weighted Average Pay Rate 5.28 8.22 5.24
Weighted Average Life 1.66
Basis Swaps
Notional Value 313 8,128
Weighted Average Receive Rate 3.87 % 3.97 %
Weighted Average Pay Rate 4.63 4.66
Weighted Average Life 2.68
Forward Starting Swaps
Notional Value 350 3,950
Weighted Average Receive Rate 5.81 % 5.37 %
Weighted Average Pay Rate 5.25 4.91
Weighted Average Life 2.17
Other Derivative Products (2)
Notional Value 29 61 8 6,061
------- ------- ------- -------
Total Notional Value $ 477 $ 1,193 $ 165 $44,958
======= ======= ======= =======
Total Weighted Average Rates on Swaps:
Receive Rate 4.32 % 6.62 % 5.95 % 4.96 %
Pay Rate 4.72 % 5.56 % 5.38 % 4.68 %
<FN>
(1) Assumes rates remain constant at June 30, 1994 levels. Changes in rates impact the maturities of the amortizing swaps.
(2) Other derivative products include interest rate collars, caps and floors, futures, options, swap options and currency swaps.
</TABLE>
<PAGE> 22
<TABLE>
Activity in derivative products for the first and second quarters of 1994 is
summarized as follows:
<CAPTION>
Generic Amortizing
Receive Receive Pay
$(millions) Fixed Fixed Fixed Basis
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 $ 6,683 $ 15,054 $ 1,619 $ 5,556
Additions 768 30 4,000 2,324
Maturities/Amortization (350) (2,100) (193) (1)
Terminations (500)
Forward Starting Becoming Effective 2,500
------------------------------------------------------
BALANCE, MARCH 31, 1994 $ 7,101 $ 15,484 $ 4,926 $ 7,879
------------------------------------------------------
Additions 100 250
Maturities/Amortization (75) (1,256) (216) (1)
Terminations (245)
Forward Starting Becoming Effective 1,000
------------------------------------------------------
BALANCE, JUNE 30, 1994 $ 7,126 $ 14,983 $ 4,710 $ 8,128
======================================================
Other
Forward Derivative
$(millions) Starting Products Total
- - - --------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 $ 7,500 $ 2,598 $ 39,010
Additions 450 4,135 11,707
Maturities/Amortization (162) (2,806)
Terminations (500)
Forward Starting Becoming Effective (2,500)
-------------------------------------
BALANCE, MARCH 31, 1994 $ 5,450 $ 6,571 $ 47,411
-------------------------------------
Additions 112 462
Maturities/Amortization (122) (1,670)
Terminations (500) (500) (1,245)
Forward Starting Becoming Effective (1,000)
-------------------------------------
BALANCE, JUNE 30, 1994 $ 3,950 $ 6,061 $ 44,958
=====================================
<FN>
(1) Other derivative products include interest rate collars, caps and floors, futures, options, swap options and currency swaps.
</TABLE>
<TABLE>
Unrealized Gain (Loss) as of June 30, 1994
<CAPTION>
Total Notional Unrealized Unrealized Net Unrealized
$(millions) Amount Gains Losses Gain (Loss)
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Generic Receive Fixed $ 7,126 $ 9 $ (112) $ (103)
Amortizing Receive Fixed 14,983 13 (465) (452)
Pay Fixed 4,710 61 (11) 50
Basis 8,128 0 (216) (216)
Forward Starting 3,950 5 (165) (160)
Other Derivative Products 6,061 106 (39) 67
---------------------------------------------------------------
Total $ 44,958 $ 194 $(1,008) $ (814)
===============================================================
<FN>
1) Other derivative products include interest rate collars, caps and floors, futures, options, swap options and currency swaps.
</TABLE>
<PAGE> 23
BANC ONE CORPORATION AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1 - Inapplicable
Item 2 - Inapplicable
Item 3 - Inapplicable
Item 4 - Inapplicable
Item 5 - Inapplicable
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. In compliance with Part I Financial Information the
following exhibits are incorporated by reference:
Exhibit 11 Statement Regarding Computation of
Earnings per Common Share
Exhibit 12 Statement Regarding Computation of
Ratio of Earnings to Fixed Charges
<PAGE> 24
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
8/12/94 /s/ William C. Leiter
- - - --------------------- ------------------------------------
Date William C. Leiter
Controller and
Chief Accounting Officer
<PAGE> 25
INDEX TO EXHIBITS
-----------------
Exhibit Number
--------------
11 Statement Regarding Computation of Earnings per Common Share
12 Statement Regarding Computation of Ratio of Earnings to Fixed
Charges
<PAGE> 1
<TABLE>
BANC ONE CORPORATION and Subsidaries EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
(000's, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRIMARY:
Earnings:
Net income $ 315,938 $ 281,941 $ 628,811 $ 568,818
Deduct: Dividends on preferred shares 4,373 4,375 8,746 8,966
----------- ----------- ----------- -----------
Net income available to common shareholders $ 311,565 $ 277,566 $ 620,065 $ 559,852
=========== =========== =========== ===========
Shares:
Weighted average common shares outstanding $ 382,527 $ 374,667 $ 381,992 $ 374,262
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,222 1,946 1,239 1,985
----------- ----------- ----------- -----------
Weighted average common shares outstanding,
as adjusted $ 383,749 $ 376,613 $ 383,231 $ 376,247
=========== =========== =========== ===========
PRIMARY EARNINGS PER COMMON SHARE $ 0.81 $ 0.74 $ 1.62 $ 1.49
=========== =========== =========== ===========
FULLY DILUTED:
Earnings:
Net income $ 315,938 $ 281,941 $ 628,811 $ 568,818
=========== =========== =========== ===========
Shares:
Weighted average common shares outstanding $ 382,527 $ 374,667 $ 381,992 $ 374,262
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,292 1,991 1,275 2,102
Add: Conversion of preferred stock 8,765 9,300 8,765 9,459
----------- ----------- ----------- -----------
Weighted average common shares outstanding,
as adjusted $ 392,584 $ 385,958 $ 392,032 $ 385,823
=========== =========== =========== ===========
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.80 $ 0.73 $ 1.60 $ 1.47
=========== =========== =========== ===========
</TABLE>
<PAGE> 1
<TABLE>
EXHIBIT 12
BANC ONE CORPORATION and Subsidiaries
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
$(thousands)
<CAPTION>
Six Months Ended Years Ended
June 30, December 31,
----------- ----------- -------------------------------
1994 1993 1993 1992
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Calculation excluding interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
of Bank One, Texas, NA (1) $ 962,592 $ 836,847 $ 1,699,119 $ 1,281,222
Fixed charges 260,071 153,124 329,874 304,443
Less: Capitalized interest (483) (275) (652) (1,199)
----------- ----------- ------------- -------------
$ 1,222,180 $ 989,696 $ 2,028,341 $ 1,584,466
=========== =========== ============= =============
Fixed charges:
Interest expense, including interest factor
of capitalized leases and amortization of
deferred debt expense $ 235,117 $ 130,392 $ 282,555 $ 263,412
Portion of rental payments under operating
leases deemed to be interest 24,954 22,732 47,319 41,031
----------- ----------- ------------- -------------
Fixed charges $ 260,071 $ 153,124 $ 329,874 $ 304,443
=========== =========== ============= =============
Ratio of earnings to fixed charges excluding
interest on deposits 4.70 x 6.46 x 6.15 x 5.20 x
Calculation including interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
of Bank One, Texas, NA (1) $ 962,592 $ 836,847 $ 1,699,119 $ 1,281,222
Fixed charges 945,060 862,919 1,693,019 2,162,694
Less: Capitalized interest (483) (275) (652) (1,199)
----------- ----------- ------------- -------------
$ 1,907,169 $ 1,699,491 $ 3,391,486 $ 3,442,717
=========== =========== ============= =============
Fixed charges:
As detailed above $ 260,071 $ 153,124 $ 329,874 $ 304,443
Interest on deposits 684,989 709,795 1,363,145 1,858,251
----------- ----------- ------------- -------------
Fixed charges $ 945,060 $ 862,919 $ 1,693,019 $ 2,162,694
=========== =========== ============= =============
Ratio of earnings to fixed charges including
interest on deposits 2.02 x 1.97 x 2.00 x 1.59 x
</TABLE>
<TABLE>
EXHIBIT 12
BANC ONE CORPORATION and Subsidiaries
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
$(thousands)
<CAPTION>
Years Ended
December 31,
-------------------------------------------------
1991 1990 1989
----------- ----------- -------------
<S> <C> <C> <C>
Calculation excluding interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
of Bank One, Texas, NA (1) $ 879,775 $ 687,029 $ 361,474
Fixed charges 394,563 435,768 439,339
Less: Capitalized interest (1,732) (2,181) (2,338)
----------- ----------- -------------
$ 1,272,606 $ 1,120,616 $ 798,475
=========== =========== =============
Fixed charges:
Interest expense, including interest factor
of capitalized leases and amortization of
deferred debt expense $ 356,234 $ 403,418 $ 411,975
Portion of rental payments under operating
leases deemed to be interest 38,329 32,350 27,364
----------- ----------- -------------
Fixed charges $ 394,563 $ 435,768 $ 439,339
=========== =========== =============
Ratio of earnings to fixed charges excluding
interest on deposits 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
of Bank One, Texas, NA (1) $ 879,775 $ 687,029 $ 361,474
Fixed charges 2,762,687 2,910,253 2,698,125
Less: Capitalized interest (1,732) (2,181) (2,338)
----------- ----------- -------------
$ 3,640,730 $ 3,595,101 $ 3,057,261
=========== =========== =============
Fixed charges:
As detailed above $ 394,563 $ 435,768 $ 439,339
Interest on deposits 2,368,124 2,474,485 2,258,786
----------- ----------- -------------
Fixed charges $ 2,762,687 $ 2,910,253 $ 2,698,125
=========== =========== =============
Ratio of earnings to fixed charges including
interest on deposits 1,32 x 1.24 x 1.13 x
<FN>
(1) Results of Bank One, Texas, NA are consolidated beginning October 1, 1991
</TABLE>
