<PAGE> 1
Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
/ / 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 (I.R.S. Employer Identification Number)
incorporation or organization)
100 East Broad Street, Columbus, Ohio 43271
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 248-5944
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
New York Stock Exchange
Common Stock Cincinnati Stock Exchange
without par value Midwest Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Series C Convertible Preferred Stock with no par value
(Title of Class)
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / /
As of February 28, 1995 the aggregate market value of the common voting stock
held by non-affiliates of the Registrant calculated by reference to the quoted
price of BANC ONE Common Stock as reported on the New York Stock Exchange was
$11,518,331,321. As of February 28, 1995 there were outstanding 393,789,105
shares of BANC ONE CORPORATION Common Stock, no par value, which stock is the
only class of Registrant's common stock. As of February 24, 1995 there were
82,256 common stockholders of record.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1994 Annual Report to Shareholders are incorporated by
reference. Portions of the Definitive Proxy Statement for the BANC ONE
CORPORATION Annual Meeting to be held April 18, 1995 are incorporated by
reference into Part III.
<PAGE> 2
BANC ONE CORPORATION
1994 FORM 10-K ANNUAL REPORT
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
PART I
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<S> <C> <C>
Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . 2
PART II
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Item 5 Market for the Registrant's Common Stock and Related Stockholder Matters . . . . . . . . . . . . . . 3
Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . 3
Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . 3
PART III
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Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . .
Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
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Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K - Index
to Financial Statements and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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PART I
ITEM 1 BUSINESS
BANC ONE CORPORATION ("Registrant" or "BANC ONE") became an Ohio chartered bank
holding company in 1989 and was a Delaware chartered holding company from 1968
to 1989. For a description of the Business of BANC ONE refer to the following
sections of the 1994 Annual Report to Shareholders, which are expressly
incorporated herein by reference:
1. "Corporate Profile" on the inside front cover.
2. "Market Presence by State" and "Other Affiliates" on page 76.
3. Note 2, "Affiliations, Pending Affiliations, and Divestitures," on page 29
COMPETITION
Active competition exists in all principal areas in which BANC ONE or one or
more of its subsidiaries is presently engaged, not only with respect to
commercial banks, but also with savings and loan associations, credit unions,
finance companies, mortgage companies, leasing companies, insurance companies,
money market mutual funds and brokerage houses together with other domestic and
foreign financial and non-financial institutions such as General Electric,
General Motors and Ford.
EMPLOYEES
As of December 31, 1994 BANC ONE and its consolidated subsidiaries had
approximately 48,800 full-time equivalent employees.
ITEM 2 PROPERTIES
BANC ONE leases its principal offices in Columbus, Ohio under several long-term
leases expiring at dates ranging from 1995 through 2022. As of December 31,
1994 BANC ONE's affiliate banks had 1,418 banking offices located in Arizona,
Colorado, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Texas, Utah,
West Virginia and Wisconsin. BANC ONE and its subsidiaries own or lease
various office space, computer centers and warehouses. For additional
information see the following portions of the 1994 Annual Report to
Shareholders, which are expressly incorporated herein by reference:
1. Note 15, "Leases" on page 42
2. Note 7, "Bank Premises and Equipment," on page 36
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ITEM 3 LEGAL PROCEEDINGS
In 1992, Bank One, Columbus, N.A. ("Columbus") was named a defendent in a
purported class action lawsuit in Pennsylvania challenging whether Columbus can
impose various types of fees, allowed by the state of Ohio, on cardholders
residing in Pennsylvania (the "Suit"). The Suit seeks unquantified
compensatory and triple damages and other equitable relief. The Suit is one of
many similar class action lawsuits brought against credit card issuing banks
throughout the United States. The dismissal of the Suit by the Court of Common
Pleas of Philadelphia County, Pennsylvania, which had been upheld by a panel of
the Pennsylvania Superior Court, was reversed by the entire Pennsylvania
Superior Court in December 1994. Columbus has appealed the decision to the
Pennsylvania Supreme Court. Legal counsel believes that the decision of the
Pennsylvania Superior Court is contrary to the decisions of most state and
federal courts outside Pennsylvania that have considered the issue, which have
held that national banks may use the rates and fees of the bank's home state in
contracts with cardholders from other states. Even if the Suit were ultimately
decided adversely to Columbus, management believes that such determination
would not be material to BANC ONE's consolidated financial position, liquidity
or results of operations. There can be no assurance that bank affiliates of
BANC ONE will not be named as defendents in future similar lawsuits.
Except as stated above, neither BANC ONE nor any of its subsidiaries is involved
in any material pending legal proceedings other than ordinary routine
litigation incident to the business. Similarly, no property owned by any
said entities is the subject of any material pending legal proceedings other
than ordinary routine litigation incident to the business.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter 1994 no matters were submitted to a vote by security
holders.
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PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
See "Financial Highlights" and "Stock Listing" on page 21, "Consolidated
Quarterly Financial Data" on pages 58 and 59, Notes 10, 11, 12 and 18 on
pages 38, 39 and 46, "Five Year Performance Summary" on page 51 and "Ten Year
Performance Summary" on pages 52 and 53 of the 1994 Annual Report to
Shareholders, which are expressly incorporated herein by reference.
ITEM 6 SELECTED FINANCIAL DATA
See "Five Year Performance Summary" and "Ten Year Performance Summary" on pages
51 through 53 and Note 2 of "Notes to Financial Statements" on page 29 of the
1994 Annual Report to Shareholders, which are expressly incorporated herein by
reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
See "Management's Discussion and Analysis" on pages 61 through 75, "Five Year
Summary-Average Balances, Income and Expense, Yields and Rates" on pages 54 and
55, "Rate-Volume Analysis" on page 60, "Reserve for Loan and Lease Losses" on
page 56, "Loan and Lease Analysis" on page 57 and "Consolidated Quarterly
Financial Data" on pages 58 and 59 of the 1994 Annual Report to Shareholders,
which are expressly incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See "Consolidated Financial Statements" on pages 22 through 50, "Consolidated
Quarterly Financial Data" on pages 58 and 60 of the 1994 Annual Report to
Shareholders, which are expressly incorporated herein by reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Registrant has had no disagreement on accounting and financial disclosure
matters and has not changed accountants during the two year period ending
December 31, 1994.
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PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors and executive officers of the Registrant include those persons
enumerated under "Election of Directors" in the Definitive Proxy Statement for
the BANC ONE Annual Meeting to be held April 18, 1995, those portions of which
are expressly incorporated herein by reference.
Executive officers as of March 1, 1995 are set forth below. Unless otherwise
designated, they are officers of BANC ONE CORPORATION. Others hold the
positions indicated in wholly owned subsidiaries. All of these executive
officers, with the exception of messengers Chancey, Neubert and Steinhart, have
been employed by BANC ONE in various capacities during the past 5 years.
<TABLE>
<CAPTION>
Year Joined
Name Age Title Banc One
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<S> <C> <C> <C>
Joseph D. Barnette, Jr. 55 Chairman/CEO--Banc One Indiana Corporation 1982
Steven A. Bennett 43 Senior Vice President 1989
William P. Boardman 53 Senior Executive Vice President 1984
Malcolm B. Chancey, Jr. 63 Chairman/CEO--Banc One Kentucky Corporation 1994
Frederick L. Cullen 47 Chief Financial Officer 1981
Roman J. Gerber 62 Executive Vice President 1966
Richard D. Headley 46 Chairman/CEO--Banc One Services Corporation 1975
Thomas E. Hoaglin 45 Chairman/CEO--Banc One Ohio Corporation 1973
Craig J. Kelly 48 Senior Vice President 1987
James C. LaVelle 55 Senior Vice President and Senior Credit Officer 1978
Richard J. Lehmann 50 Chairman/CEO--Banc One Arizona Corporation 1993
William C. Leiter 55 Senior Vice President and Controller 1981
Richard D. Lodge 47 Senior Vice President 1973
John B. McCoy 51 Chairman/CEO 1967
Donald L. McWhorter 59 President/COO 1983
George R. L. Meiling 52 Treasurer 1977
Jeffrey P. Neubert 52 Executive Vice President 1991
Ronald G. Steinhart 54 Chairman/CEO--Bank One, Texas, N.A. 1992
Charles W. Sulerzyski 37 President/CEO--Banc One Individual Investor
Services Corporation 1987
<FN>
Mr. Chancey has served as Chairman and Chief Executive Officer of Banc One
Kentucky Corporation since August 1994. From January 1993 until the
acquisition of Liberty National Bancorp. Inc. by BANC ONE in August 1995, Mr.
Chancey served as Chairman, President and Chief Executive Officer of Liberty
National Bancorp. Inc. and as Chairman and Chief Executive Officer of Liberty
National Bank and Trust Company of Kentucky. From February 1990 to December
1992, Mr. Chancey served as President of Liberty National Bancorp. Inc. and
Liberty National Bank and Trust Company of Kentucky.
Mr. Neubert has served as Executive Vice President of BANC ONE since 1991.
From 1974 to 1991, Mr. Neubert served in various positions with Citicorp.
Mr. Steinhart has served as Chairman and Chief Executive Officer of Bank One,
Texas, N.A. since January 1995. From December 1992 to January 1995, Mr.
Steinhart served as President and Chief Operating Officer of Bank One, Texas,
N.A. From February 1988 until the acquisition of Team Bancshares, Inc. by
BANC ONE in November 1992, Mr. Steinhart served as Chairman and Chief
Executive Officer of Team Bancshares, Inc., a bank holding company.
</TABLE>
4
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All market transactions in BANC ONE's securities by its Directors and Executive
Officers during 1994 were reported promptly and correctly under the Securities
and Exchange Commission's rules relating to the reporting of securities
transactions by directors and officers, with the exception of the reports noted
in "Certain Reports" in the Definitive Proxy Statement for the BANC ONE
Annual Meeting to be held April 18, 1995, these portions of which are expressly
incorporated herein by presence.
ITEM 11 EXECUTIVE COMPENSATION
See "Election of Directors", "Directors Fees and Compensation" and the
following sections of "Executive Compensation" (Summary Annual Compensation,
1989 Stock Incentive Plan, Savings Plan and Retirement Benefits on pages 9-13
and 14-16) in the Definitive Proxy Statement for the BANC ONE Annual Meeting
to be held April 18, 1995, those portions of which are expressly incorporated
herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning the beneficial ownership of BANC ONE Common Stock as of
January 1, 1995 by each person who is known by the Registrant to own
beneficially more than 5% of BANC ONE Common Stock is set forth in the first
paragraph under "Ownership of Shares" in the Definitive Proxy Statement for the
BANC ONE Annual Meeting to be held on April 18, 1995, those portions of which
are expressly incorporated by reference herein. Information concerning the
beneficial ownership of BANC ONE Common Stock as of January 1, 1995 by each
current director (other than Messrs. McPherson and Ventres) and each nominee
for director is set forth under "Election of Directors" in the Definitive Proxy
Statement for the BANC ONE Annual Meeting to be held on April 18, 1995, those
portions of which are expressly incorporated by reference herein.
Set forth below is information concerning the number of shares of BANC
ONE Common Stock(1) owned beneficially by (i) all BANC ONE directors and
executive officers (31 individuals) as a group as of January 1, 1995, (ii) by
the executive officers of BANC ONE named in the Summary Compensation Table,
except with repect to Messrs. John B. McCoy and Lehmann whose share ownership is
reported in the information on nominees for election as directors under
"Election of Directors" in the Definitive Proxy Statement for the BANC ONE
Annual Meeting to be held April 18, 1995, those portions of which are expressly
incorporated herein by reference, and (iii) by those incumbent directors of
BANC ONE (Messrs. McPherson and Ventres) who are not standing for re-election.
<TABLE>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------ -------------------- ----------
<S> <C> <C>
All Directors and Executive Officers as a group (31 individuals)............... 3,035,972(2) (3)
Donald I. McWhorter............................................................ 301,259(4) (3)
Thomas E. Hoaglin.............................................................. 92,827(5) (3)
Joseph D. Barnette, Jr......................................................... 251,115(6) (3)
Rene C. McPherson.............................................................. 19,804(7) (3)
Romeo J. Ventres............................................................... 32,123(7) (3)
<FN>
_______________
(1) No shares of BANC ONE Preferred Stock are beneficially owned by any BANC ONE director or
executive officer, except for the 600 shares of BANC ONE Preferred Stock owned by one executive officer
and constituting less than 1% of all the outstanding shares of BANC ONE Preferred Stock.
(2) Includes options, which were, or within 60 days became, exercisable to purchase 401,250 shares of
BANC ONE Common Stock, but does not include options to purchase 1,188,162 shares of BANC ONE
Common Stock which options are not presently exercisable. Includes 552,869 shares of BANC ONE
Common Stock awarded as resticted stock which may be voted by the recipients.
(3) Directors and executive officers of BANC ONE, individually and in the aggregate, beneficially own less
than 1% of the outstanding shares of BANC ONE Common Stock.
(4) Excludes options on 198,439 shares which were not exercisable on or within 60 days of January 1, 1995.
Includes restricted stock awards for 78,989 shares of BANC ONE Common Stock which may be voted
by Mr. McWhorter.
(5) Excludes options on 73,101 shares which were not exercisable on or within 60 days of January 1, 1995.
Includes restricted stock awards for 35,247 shares which may be voted by Mr. Hoaglin and exercisable
options on 7,487 shares of BANC ONE Common Stock.
(6) Exludes options on 72,069 shares which were not exercisable on or within 60 days of January 1, 1995.
Includes restricted stock awards for 28,098 shares which may be voted by Mr. Barnette and exercisable
options on 16,804 shares of BANC ONE Common Stock.
(7) Share amounts shown exclude unexercisable options on 1,000 shares of BANC ONE Common Stock granted
in 1994 to each of Messrs. McPherson and Ventres as Director Stock Options pursuant to the 1989 Stock
Incentive Plan. Shares amounts shown include exercisable options on 4,263 shares and 10,768 shares
of BANC ONE Common Stock granted to Messrs. McPherson and Ventres, respectively, as Director Stock
Options pursuant to the 1989 Stock Incentive Plan.
</TABLE>
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation" and
"Transactions with Management and Others" in the Definitive Proxy Statement for
the BANC ONE Annual Meeting to be held April 18, 1995, those
portions of which are expressly incorporated herein by reference.
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PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Annual Report
Data incorporated by reference from the to Shareholders
1994 Annual Report to Shareholders: Page
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<S> <C>
Financial Highlights and Corporate Profile Inside Front Cover
Report of Independent Accountants 21
Consolidated Balance Sheet, December 31, 1994 and 1993 22
Consolidated Statement of Income for the years ended
December 31, 1994, 1993 and 1992 23
Consolidated Statement of Changes in Stockholders' Equity
for the years ended December 31, 1994, 1993 and 1992 24
Consolidated Statement of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 25
Notes to Consolidated Financial Statements 26 - 50
Additional financial information 51 - 60
Management's Discussion and Analysis 61 - 75
Market Presence by State and Other Affiliates 76
</TABLE>
No schedules are included because they are not required, not applicable, or the
required information is contained elsewhere.
Report on Form 8K filed November 21, 1994 announcing $235 million in after tax
charges against earnings to cover the cost of virtually eliminating sensitivity
to rising short-term interest rates and of accelerating on going programs to
reduce costs and increase efficiency in both banking and non-banking
operations.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
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<S> <C>
3.1 Amended Articles of Incorporation of BANC ONE CORPORATION
(incorporated by reference from exhibit 3.1 of the Registrant's
Form 10-K for the year ended December 31, 1991).
3.2 Code of Regulations of BANC ONE CORPORATION (incorporated by
reference from Exhibit 3.2 of the Registrant's Form 10-K for
the year ended December 31, 1991).
10 Material Contracts
a. 1994 Key Management Incentive Compensation Plan.
b. BANC ONE CORPORATION Dividend Equivalent Unit Plan.
c. BANC ONE CORPORATION Executive Management Incentive
Compensation Plan.
d. BANC ONE CORPORATION's Incentive Compensation Deferral
Plan.
e. BANC ONE Executive Life Insurance Plan.
f. Liberty National Bank and Trust Company Excess Benefit
Plan.
f-1. Amendment #1 to the Liberty National Bank and Trust
Company Excess Benefit Plan.
f-2. Amendment #2 to the Liberty National Bank and Trust
Company Excess Benefit Plan.
g. Liberty National Bancorp, Inc. Amended and Restated
Management Incentive Compensation Plan.
g-1. Amendment #1 to the Liberty National Bancorp Inc.
Amended and Restated Management Incentive Compensation
Plan.
h. Liberty National Bancorp, Inc. 1986 Stock Option Plan.
h-1. Amendment to the 1986 Stock Option Plan.
i. Liberty National Bank and Trust Co. Compensation Deferral
Plan.
j. Liberty National Bancorp. Inc. Officer Compensation
Continuation Agreement.
k. Deferred Compensation Plan for Directors of BANC ONE
CORPORATION and BANC ONE Affiliates. (incorporated by
reference from Exhibit 10 of the Registrant's Form 10-K for the year
ended December 31, 1993.)
l. BANC ONE CORPORATION 1989 Stock Incentive Plan
1. Agreement for Restricted Stock
Award under the BANC ONE CORPORATION 1989 Stock
Incentive Plan (incorporated by reference from exhibit
10 of the Registrant's Form 10-K for the year ended
December 31, 1993.)
2. Stock Option Agreement for Non-Qualified Stock Options
under the BANC ONE CORPORATION 1989 Stock
Incentive Plan (incorporated by reference from exhibit
10 of the Registrant's Form 10-K for the year ended
December 31, 1993.)
3. Stock Option agreement for Incentive Stock Options
under the BANC ONE CORPORATION 1989 Stock
Incentive Plan (incorporated by reference from exhibit
10 of the Registrant's Form 10-K for the year ended
December 31, 1993.)
m. BANC ONE CORPORATION's Incentive Compensation Deferral Plan
(incorporated by reference from Exhibit 10 of the Form
10-K for the year ended December 31, 1993.)
n. BANC ONE Supplemental Executive Security Savings Plan
(incorporated by reference from Exhibit 10 of the Registrant's
Form 10-K for the year ended December 31, 1993.)
o. BANC ONE CORPORATION Supplemental Employees Retirement
Plan, As Amended and Restated Effective January 1, 1993
(incorporated by reference from Exhibit 10 of the Registrant's
Form 10-K for the year ended December 31, 1993.)
p. The Valley National Bank of Arizona Supplemental Excess
Benefit Retirement Plan (incorporated by reference from
exhibit 10 of the Registrant's Form 10-K for the year ended
December 31, 1993.)
q. American Fletcher Corporation Deferred Compensation Plan
(incorporated by reference from Exhibit 10 of the Form
10-K for the year ended December 31, 1993.)
r. Valley National Corporation 401(+)TM Executive Deferred
Compensation Plan (incorporated by reference from exhibit
10 of the Registrant's Form 10-K for the year ended
December 31, 1993.)
11 Statement regarding computation of earnings per common share.
12 Statement regarding computation of ratio of earnings to fixed
charges.
13a Portions of BANC ONE's Annual Report to Shareholders for the
calendar year ended December 31, 1994.
13b Table 9 and Subsequent events.
21 Subsidiaries of Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedules.
</TABLE>
7
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There are no agreements with respect to long-term debt of the Registrant to
authorize securities in an amount which exceeds 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis. The Registrant agrees
to furnish a copy of any agreement with respect to long-term debt of the
Registrant to the Securities and Exchange Commission upon request.
8
<PAGE> 1
EXHIBIT 10(a)
[Bank One Logo] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC)Plan
--------------------------------------------------------------------------------
1994 Key Management
Incentive Compensation Plan
and Administrative Guidelines
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[BANK ONE LOGO] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC) Plan
-------------------------------------------------------------------------------
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
-------------------------------------------------------------------------
<S> <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
</TABLE>
(See Specific Positions below)
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[BANK ONE LOGO] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC) Plan
--------------------------------------------------------------------------------
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.
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[BANK ONE LOGO] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC) Plan
--------------------------------------------------------------------------------
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.
AWARD DETERMINATION
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.
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
--------------------------------------------------------------------------------------------------------------
<S> <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%
STATE-WIDE
--------------------------------------------------------------------------------------------------------------
OTHER POSITIONS 10-15% 10-20% 15-25% 20-25% 20-25% 25-30% 25-30% 30-35% 30-35%
</TABLE>
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.
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.
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[BANK ONE LOGO] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC) Plan
--------------------------------------------------------------------------------
Actual Award Level:
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.
1994 KMIC WEIGHTING:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
BANC ONE BANC ONE Holding Holding Affiliate Affiliate Affiliate
Wtg CEO/Pres Staff Company Company Bank Bank Division
CEO/Pres Staff CEO/Pres Staff Head (2)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BANC ONE 100% 50% 15%
--------------- -----------------------------------------------------------------------------------
Holding Co 35% 50% 15% 5% 5%
--------------- 50% -----------------------------------------------------------------------------------
Aff/Bank 35% 45% 20%
--------------- -----------------------------------------------------------------------------------
Division 25%
--------------- -----------------------------------------------------------------------------------
--------------- -----------------------------------------------------------------------------------
NIE/Revenue 20% 20% 20% 20% 20% 20% 20%
--------------- -----------------------------------------------------------------------------------
--------------- -----------------------------------------------------------------------------------
Credit 10% 10% 10%
Quality (1) 30%
--------------- -----------------------------------------------------------------------------------
Discretionary 30% 20% 30% 20% 30% 20%
=============== ===================================================================================
TOTAL 100% 100% 100% 100% 100% 100% 100% 100%
--------------- -----------------------------------------------------------------------------------
</TABLE>
(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.
Earnings Performance Measures:
Earnings performance measures are established and provided for each
organizational level. Each participant's objectives reflect a combination of
key results at various organizational level (Corporate, State, and Affiliate)
and discretionary performance goals and are communicated to each participant
early in the year.
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.
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<PAGE> 6
[BANK ONE LOGO] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC) Plan
--------------------------------------------------------------------------------
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.
TERMINATION OF EMPLOYMENT:
In the event a participant's employment is terminated due to death or total and
permanent disability (as determined by the Corporate Compensation Committee),
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 months of participation 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, according to the Beneficiary Designation
Form on file.
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.
GENERAL PROVISIONS:
A) The Plan may be modified, amended, or terminated at any time by the
Board of Directors. The existence of the Plan does not obligate or bind
BANC ONE CORPORATION or its affiliates 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 Board of Directors.
B) 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.
C) 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.
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<PAGE> 7
[BANK ONE LOGO] Key Manager Incentive
Executive Compensation Plans Compensation (KMIC) Plan
--------------------------------------------------------------------------------
GENERAL PROVISIONS (CONT'D):
D) If a participant has been designated as eligible to participate in the
BANC ONE 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.
E) Except as specifically provided herein or as may otherwise be required
by law, no undistributed bonus amount payable to the participant in the
Plan 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.
-6-
<PAGE> 1
EXHIBIT 10(b)
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 17, 1995, 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 17, 1995. 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. The Dividend Equivalent Payment amount will
be reduced for any taxes due at the time of crediting the account.
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 for any reason, the Participant will cease to be eligible for Plan
participation and the accumulated cash balance will be distributed to the
Participant on the January 31 following the date of termination. In the event a
Participant's employment is terminated for reasons of Death or Disability, the
accumulated cash balance will be distributed within 30 days of the date of Death
or Disability.
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.
I-3
<PAGE> 4
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.
I-4
<PAGE> 1
EXHIBIT 10(c)
BANC ONE CORPORATION
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 "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, 1995. The Plan
was established on January 23, 1995 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 1995 Maximum Award level is
250% of the Target Award. This results in a Maximum Award of 150% of Base Pay
for the Chairman and 137.5% of Base Pay for the President. The maximum dollar
amount payable as an award is $1,500,000.
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 of 1.15 to 2.0 and Earnings Growth, of 0%
to 20%, excluding security gains and losses and restructuring charges. 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
EXHIBIT 10(d)
BANC ONE CORPORATION INCENTIVE COMPENSATION
DEFERRAL PLAN
PURPOSE
The purpose of the BANC ONE CORPORATION Incentive Compensation Deferral Plan
(the "Plan") is to provide a means by which eligible Participants of the BANC
ONE CORPORATION Key Management Incentive Compensation Plan or any specialized
incentive compensation plan designated by the Board of Directors or Plan
Administrator may defer such compensation earned under such plan.
Effective Date
This Plan was originally effective as of January 1, 1982. This amended and
restated version of the Plan is effective October 1, 1994.
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meaning stated herein,
unless the context clearly indicates otherwise
Section 1.1 - Appeals Committee
A committee consisting of three (3) or more officers of the Corporation who
shall be appointed by the Chief Executive Officer of the Corporation to hear
appeals of denied employee, Participant, or Beneficiary benefit claims under
the Plan, provided that with respect to denied claims of an executive officer
who has been identified by the Corporation as an "Insider", as defined by
applicable Securities and Exchange Commission (SEC) rules, such Appeals
Committee shall be the Personnel and Compensation Committee of the Board.
Section 1.2 - Base Salary
The employee's annual basic salary or wage rate with the Corporation or a
Related Corporation in effect at any given point in time, prior to the
application of any salary deferrals to qualified or non-qualified plans
sponsored by BANC ONE CORPORATION or a Related Corporation.
Section 1.3 - Beneficiary
A person or persons designated by a Participant in accordance with provisions
of Section 3.8, to receive any death benefit which may be payable under this
Plan upon the death of said Participant.
Section 1.4 - Board
The Board of Directors of BANC ONE CORPORATION or the Personnel and
Compensation Committee of said Board which shall have the authority of said
Board with respect to this Plan.
<PAGE> 2
Section 1.5 - Change of Control
Any change in control of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"); provided that,
without limitation, such a change of control shall be deemed to have occurred
if: (i) any "person" (as such term is defined in Sections 13(d) and 14(d)(2)
of the Exchange Act) other than the Corporation or an entity then directly or
indirectly controlling, controlled by or under common control with the
Corporation is, becomes or commences a tender offer to become the beneficial
owner, directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then-outstanding
securities; (ii) the Corporation merges or consolidates with another
corporation; or (iii) a sale, lease, exchange, or other disposition of all or
substantially all of the assets of the Corporation takes place.
Section 1.6 - Corporation
BANC ONE CORPORATION including all of its Related Corporations.
Section 1.7 - Incentive Compensation
The annual monetary award given to an employee under the Incentive Plan.
Section 1.8 - Incentive Plan
The BANC ONE CORPORATION Key Management Incentive Compensation Plan or any
specialized incentive compensation plan designated by the Board of Directors.
Section 1.9 - Participant
Any person who satisfies the eligibility and participation requirements of this
Plan and who elects or has previously elected to defer Incentive Compensation
under this Plan.
Section 1.10 - Plan Administrator
BANC ONE CORPORATION.
Section 1.11 - Plan Year
The twelve (12) month period commencing on January 1 and ending the following
December 31.
Section 1.12 - Related Corporation
A subsidiary or any entity which is a member of a common controlled group with
BANC ONE CORPORATION pursuant to Internal Revenue Code Sections 414(b), (c),
(m) or (o).
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<PAGE> 3
ARTICLE II
PARTICIPATION
Section 2.1 - Eligibility
Any officer of the Corporation (a) who is designated by the Plan Administrator
as a participant in the Incentive Plan, (b) who is awarded compensation under
the Incentive Plan on an annual basis only, and (c) whose Base Salary as of
December 31 of the preceding calendar year equals or exceeds One Hundred
Thousand Dollars ($100,000), shall be eligible to participate in the Plan. The
Plan Administrator shall notify officers as to their eligibility.
Section 2.2 - Conditions of Participation
An individual shall not become a Participant hereunder until he or she
furnishes within a reasonable time limit established by the Plan Administrator
such completed and executed elections, Beneficiary designations, consents and
other documents and information prescribed by the Plan Administrator. Each
person upon becoming a Participant shall be deemed conclusively, for all
purposes, to have assented to the terms and provisions of this Plan and shall
be bound thereby.
Section 2.3 - Election To Defer
(a) Deferral of Annual Incentive Compensation. A Participant may
elect, on or before December 31 of any calendar year, to defer payment of any
portion of his Incentive Compensation which he will receive during the calendar
year following such election. Notwithstanding the preceding sentence, if an
officer of the Corporation first becomes eligible to participate in the Plan
during the calendar year, such officer may elect to participate in the Plan and
to defer his Incentive Compensation which he has not yet received, but will
receive during the calendar year, if he makes such election within thirty (30)
days of becoming eligible to participate in the Plan. The minimum amount of
such Compensation which may be deferred under this subparagraph (a) is Five
Thousand Dollars ($5,000). Any such elections shall be made in such format
(including but not limited to approved forms or electronic data response) and
in the manner provided by the Plan Administrator. Any such election shall be
effective on and until the earlier of the following events: (1) December 31 of
the calendar year for which the election applies; or (2) the Participant ceases
to be an employee of the Corporation.
(b) Timeliness of Election. If a Participant who is eligible to
participate in this Plan fails to file (or fails to timely file) the forms(s)
or take any action required by the Plan Administrator to participate in this
Plan for each Plan year, such person shall not be permitted to participate in
this Plan until the next open enrollment period applicable for the next
calendar year.
Section 2.4 - Participant Directed Accounts
Incentive Compensation deferred at the election of a Participant shall be held
in the general funds of the Corporation and shall be credited to an account
established by the Corporation in the Participant's name to which deferrals
made in accordance with this Plan are credited. Each Participant who chooses
to participate in this Plan shall elect, on the form(s) and in the manner
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<PAGE> 4
prescribed by the Plan Administrator, to direct the investment of his account
in any of the alternative investment funds established by the Board from time
to time. Participants may change their investment decisions in the manner
permitted by the Plan Administrator which shall be no less frequently than
quarterly. The Plan Administrator may, in its discretion, disregard the
investment directions of participants at any time and from time to time. Any
Participant who is required to file reports of his beneficial ownership of BANC
ONE CORPORATION capital stock with the Securities and Exchange Commission
pursuant to Section 16(a) of the Securities and Exchange Act of 1934 shall only
be permitted to invest in BANC ONE CORPORATION capital stock by making an
irrevocable election, during the annual election period described in Section
2.3 hereof, to invest all or a portion of the next year's deferral amount in
such BANC ONE stock. No other transfers for such "Insiders" in or out of BANC
ONE stock will be permitted.
Participants with deferred vested account balances who have terminated
employment and who will be receiving a distribution of their entire account
balances as soon as administratively feasible (within thirty (30) days) on or
after January 1, 1995 pursuant to Section 3.1 hereof, shall not be eligible to
change their investment elections or otherwise access any electronic
information source with respect to their accounts with regard to this Section
2.4. Such Participants' account balances shall remain in the same funds and/or
stock they chose in accordance with such participants' most current investment
elections made prior to October 1, 1994.
Section 2.5 - Funding
The Plan shall be entirely unfunded and no provision shall at any time be made
with respect to segregating any assets of the Corporation for payment of any
benefits hereunder. No Participant, Participant's spouse or any other person
shall have any interest in any particular assets of the Corporation by reason
of the right to receive a benefit under the Plan, and any such Participant,
Participant's spouse, or other person shall have only the rights of a general
unsecured creditor of the Corporation with respect to any rights under the
Plan. Nothing contained in the Plan shall constitute a guaranty by the
Corporation or other entity or person that the assets of the Corporation will
be sufficient to pay any benefit hereunder.
Section 2.6 - Statement of Accounts
At least once annually, the Plan Administrator shall furnish each Participant
with a written statement of his account setting forth the net income or loss of
the account; any administrative expenses charged to the account; all payments
and distributions made from the account; and such further information as the
Plan Administrator deems appropriate.
ARTICLE III
DISTRIBUTIONS
Section 3.1 - Timing of Distributions
Amounts credited to a Participant under the Plan shall be distributed as soon
as administratively feasible (within thirty (30) days of the stated event) as
follows:
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<PAGE> 5
(a) On or after January 1st on or following the Participant's
retirement or termination of employment from the Corporation;
(b) Upon the death of the Participant, in accordance with Section
3.4; or
(c) After an acceleration of benefits under Section 3.6;
(d) After termination of this Plan in accordance with Section 5.1.
For those participants with deferred vested account balances who terminated
employment prior to reaching age fifty-five (55) and who have not yet received
a distribution of their entire account balance, such accounts shall be
distributed in a lump sum as soon as administratively feasible (within thirty
(30) days) on or after January 1, 1995.
Section 3.2 - Form of Distributions
Amounts credited to a Participant under the Plan shall be distributed in a lump
sum payment or in annual installments over a five- or ten-year period as the
Participant has elected on the form(s) and in the manner provided by the Plan
Administrator. Any such payment election shall continue in effect until the
Participant elects a different form of payment. All such elections must be
made prior to the date on which the Participant ceases to be an employee. The
Participant's election regarding form of payment only applies to those
Participants who terminate employment due to retirement or disability. If a
Participant terminates employment for any other reason or if a Participant
fails to make such an election with respect to the amounts credited to his
account, such amount shall be paid in a lump sum.
The first installment (or the lump sum payment if the Participant so
elects) shall be paid on the commencement date described above and subsequent
installments shall be paid within thirty (30) days after the first (1st)
business day of each succeeding calendar year until the entire amount credited
to the Participant's deferred account shall have been paid. During such time
as amounts credited to a Participant under the Plan continue to be held for the
Participant or the Participant's beneficiary, such amounts shall continue to
earn interest or cash dividends in accordance with the Participant's investment
elections and shall be charged administrative expenses as provided in Section
4.2.
Section 3.3 - Cash Payments; Determination of Amount
All distributions to Participants shall be made in the form of cash. Subject
to Section 3.2, the amount to be distributed shall be determined based on the
fair market value of the balance credited to the Participant's account as of
the close of business on last day of the calendar month immediately preceding
distribution.
Section 3.4 - Payments in the Event of a Participant's Death
In the event a Participant dies before payments from the Participant's account
have commenced or after such payments have commenced but before the entire
amount credited to the Participant's account has been paid, all amounts
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<PAGE> 6
credited to the Participant's account at the time of the Participant's death,
together with accumulated earnings thereon net of charges for administrative
expenses, shall be paid to the Beneficiary or Beneficiaries described in
Section 3.8, below, in a lump sum payment as soon as administratively feasible
after the Plan Administrator is notified of the Participant's death unless the
Participant has indicated on any Beneficiary designation forms an alternate
manner of payment which is permitted by the Plan Administrator.
Section 3.5 - Vesting
Each Participant is immediately one hundred percent (100%) vested in all
amounts credited to his account and any earnings thereon.
Section 3.6 - Acceleration Of Benefits For Unforeseeable Emergencies
The Plan Administrator may accelerate the payment of any amounts held in any
Participant's account in the case of unforeseeable emergencies. An
"unforeseeable emergency" is a severe financial hardship to the Participant or
beneficiary resulting from a sudden and unexpected illness or accident of the
Participant or dependent of the Participant, loss of Participant's property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The
circumstances which will constitute a "unforeseeable emergency" will depend
upon the facts of each case, but in any case, payment will not be made to the
extent that such hardship is or may be relieved: (a) Through reimbursement or
compensation by insurance or otherwise; (b) By liquidation of the Participant's
assets, to the extent the liquidation of such assets would not itself cause
severe financial hardships; or (c) By cessation of deferrals under the Plan.
"Unforeseeable emergency" will not include the need to send the Participant's
child to college or the desire to purchase a home. Any early distributions
made under this Section 3.6 will only be permitted to the extent reasonably
needed to satisfy the emergency needs.
Section 3.7 - Withholding and Deductions
All benefit payments made under the Plan to any Participant or Beneficiary
shall be subject to allocable withholding and to such other deductions as shall
at the time of such payment be required under any income tax or other law,
whether of the United States or any other jurisdiction, and, in the case of
payments to the Beneficiary of a Participant, the delivery to the Plan
Administrator of all necessary documents. To the extent that the Corporation
is required to withhold any current taxes at the time of deferral of Incentive
Compensation, the deferral amount shall be reduced by the required taxes.
Determinations by the Plan Administrator as to withholding shall be binding on
the Participant and applicable Beneficiary(ies).
Section 3.8 - Beneficiary Designation
Each Participant who has a deferred account hereunder may from time to time
designate a Beneficiary(ies) to receive the amounts credited to the
Participant's account in the event of the Participant's death prior to the time
such account is distributed to the Participant. Such designation shall be made
pursuant to the procedures established by the Plan Administrator and
-6-
<PAGE> 7
in a form satisfactory to the Plan Administrator. Each proper designation of
Beneficiary will revoke all previous Beneficiary designations. The revocation
of a Beneficiary designation, no matter how effected, shall not require the
consent of or notice to any designated Beneficiary.
If any Participant fails to designate a Beneficiary in the manner provided
above, or if any Participant is not survived by such Beneficiary(ies) the
Participant's account shall be paid as follows:
(1) If the Participant is married, to the Participant's spouse;
(2) If the Participant is unmarried, to the Participant's estate.
Section 3.9 - Rights to Benefits
Nothing contained in this Plan is intended to give or shall give any spouse,
former spouse, or Beneficiary of a Participant or any other person any right to
benefits under this Plan by virtue of Internal Revenue Code Sections 401(a)(11)
and 417 (relating to qualified pre-retirement survivor annuities) and qualified
joint and survivor annuities) or Internal Revenue Code Sections 401(a)(13)(B)
and 414(p) (relating to qualified domestic relations orders) as amended.
ARTICLE IV
ADMINISTRATION
Section 4.1 - Administrative Powers and Duties
BANC ONE CORPORATION shall be responsible for the general operation and
administration of the Plan and for carrying out the provisions thereof. The
Chief Executive Officer of BANC ONE CORPORATION may, in his discretion, appoint
an employee or employees or an administrative committee in writing to
administer the provisions of this Plan. The decision of the Plan Administrator
with respect to any questions arising as to the administration or
interpretation of this Plan, including the discontinuance of any or all of the
provisions thereof, shall be final, conclusive, and binding. If the Plan is
administered by a committee, such committee may act by a majority of its
members by a vote at a meeting or in writing without a meeting signed by all
the members of the committee.
Section 4.2 - Expenses
Any cost or expense of administering the Plan shall be paid by BANC ONE
CORPORATION. Notwithstanding the above, the Plan Administrator may charge each
Participant's account with the amount of reasonable administrative expenses it
determines, in its sole discretion, for the cost of administering this Plan.
Any such charges shall reduce the earnings credited to the Participant's
account and shall be applied in a uniform and nondiscriminatory manner.
Section 4.3 - Records
The Plan Administrator shall keep such records of such information, as shall
be proper, necessary or desirable to effectuate the purposes of the Plan,
including without in any manner limiting the generality of the foregoing,
-7-
<PAGE> 8
records and information with respect to deferral elections, Participant
accounts, dates of employment and termination and determinations made
hereunder. To the extent that the Plan Administrator shall prescribe forms for
use by the Participants and their Beneficiaries in communicating with the Plan
Administrator and shall establish periods during which communications may be
received, the Plan Administrator shall be protected in disregarding any notice
or communication for which a form shall so have been prescribed and which shall
not be made in such form and any notice or communication for the receipt of
which a period shall so have been established and which shall not be received
during such period. The Corporation, the Plan Administrator and the Appeals
Committee shall respectively also be protected in acting upon any notice or
other communication purporting to be signed by any person and reasonably
believed to be genuine and accurate, including the Participant's current
mailing address.
Section 4.4 - Determinations
All determinations hereunder made by the Plan Administrator or the Appeals
Committee shall be made in the sole and absolute discretion of the Plan
Administrator or Appeals Committee, as the case may be.
Section 4.5 - Claims Procedure
The Plan Administrator shall have discretion regarding benefit determinations.
If required by the Plan Administrator, any person entitled to benefits
hereunder must file a claim with the Plan Administrator upon forms furnished by
the Plan Administrator. Notwithstanding any other provision of this Plan,
payment of benefits need not be made until receipt of the claim and the
expiration of the time periods specified in this Section 4.5 for rendering a
decision on the claim. In the event a claim is denied, benefits need not be
made or commence until a final decision is reached by the Appeals Committee,
subject to the provisions of Section 4.6.
The Plan Administrator shall notify the claimant of its decision within ninety
(90) days after receipt of the claim. However, if special circumstances
require, the Plan Administrator may defer action on a claim for benefits for an
additional period not to exceed ninety (90) days, and in that case it shall
notify the claimant of the special circumstances involved and the time by which
it expects to render a decision.
If the Plan Administrator determines that any benefits claimed should be
denied, it shall give notice to the claimant setting forth the specific reason
or reasons for the denial and provide a specific reference to the Plan
provisions on which the denial is based. The Plan Administrator shall also
describe any additional information necessary for the claimant to perfect the
claim and explain why the information is necessary. Such claimant shall be
entitled to full and fair review by the Appeals Committee of the denial.
Section 4.6 - Appeal and Review Procedure
If a claim has been denied by the Plan Administrator, the claimant shall have
sixty (60) days after receipt of the denial in which to file a notice of appeal
with the Plan Administrator. A final determination by the Plan
-8-
<PAGE> 9
Administrator shall be rendered within sixty (60) days after receipt of the
claimant's notice of appeal. Under special circumstances such determination
may be delayed for an additional period not to exceed sixty (60) days, in which
case the claimant shall be notified of the delay prior to the close of the
initial sixty (60) day period. The Appeals Committee's final decision shall
set forth the reasons and the references to the Plan provisions on which it is
based.
Section 4.7 - Facility of Payment
Whenever a person entitled under the Plan to receive any payment of a benefit,
or installment thereof, is under a legal disability or incapacity or is in any
way unable to manage his financial affairs, the Plan Administrator may, in its
discretion, direct payments on behalf of such person to be made to the
incapacitated person's legal representative, custodian, relative, or other such
individual(s) as is (are) known by the Plan Administrator to be assisting such
person. Such decision by the Plan Administrator shall be made after
consultation with those persons, if any, which may include legal counsel and/or
medical personnel, which the Plan Administrator in its sole discretion
determines are necessary in order to make such decision. Any payment of a
benefit or installment thereof in accordance with the provisions of this
Section 4.7 shall be a complete discharge of any liability relating to the
making of or entitlement to such payment under the provisions of the Plan.
Section 4.8 - Action by the Corporation
Any action by the Corporation under this Plan may be by resolution of its Board
of Directors, or by any person or persons, duly authorized by resolution of
said Board to take such action.
Section 4.9 - Exemption from Liability/Indemnification
The members of the Appeals Committee and the persons acting on behalf of the
Plan Administrator, shall be free from all liability, joint or several, for
their acts, omissions, and conduct, and for the acts, omissions and conduct of
their duly appointed agents, in the administration of the Plan, except for
those acts or omissions and conduct resulting from willful misconduct or lack
of good faith.
The Corporation shall indemnify each member of the Appeals Committee, the
persons acting on behalf of the Plan Administrator and any other employee,
officer or director of the Corporation against any claims, loss, damage,
expense and liability, by insurance or otherwise, reasonably incurred by the
individual in connection with any action or failure to act by reason of
membership on the Appeals Committee or performance of an authorized duty or
responsibility for or on behalf of the Corporation pursuant to the Plan unless
the same is judicially determined to be the result of the individual's gross
negligence or willful misconduct. Such indemnification by the Corporation
shall be made only to the extent such expense or liability is not payable to or
on behalf of such person under any liability insurance coverage. The foregoing
right to indemnification shall be in addition to any other rights to which any
such person may be entitled as a matter of law.
-9-
<PAGE> 10
Section 4.10 - Nonassignability
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, assign, sell, pledge, encumber or charge the same shall
be void.
The Plan shall not in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person entitled to benefits
hereunder.
ARTICLE V
AMENDMENT OR TERMINATION
Section 5.1 - Amendment or Termination
BANC ONE CORPORATION reserves the right in its sole discretion to amend or
terminate this Plan at any time. In the event of a termination, BANC ONE
CORPORATION in its sole discretion may pay Plan benefits to those Participants
participating in the Plan on the date of such termination, to the extent such
benefits would be otherwise payable as defined in Section 3.1 determined on the
basis that each Participant's presumed termination date was the date the Plan
was terminated.
Section 5.2 - Transfer Between Related Companies
In the event that a Participant's employment is transferred from one Related
Corporation to another, the transfer shall not adversely affect the
administration of amounts then credited to the Plan account(s) of such
Participant on or as of the date of transfer.
Section 5.3 - Change of Control
The Plan shall not be automatically terminated upon change of control or by a
transfer or sale of assets of the Corporation or by the merger or consolidation
of the Corporation into or with any other Corporation or other entity when the
Corporation is not the surviving or continuing Corporation, but the Plan shall
be continued after such sale, merger or consolidation only if and to the extent
that the transferee, purchaser or successor entity, shall be obligated to pay
Plan benefits to those Participants participating in the Plan on the date of
such termination, to the extent such Plan benefits would be otherwise payable
as defined in Section 3.1, determined on the basis that each Participant's
presumed termination date was the date the Plan was terminated.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 - Offset to Benefits
Notwithstanding any provisions of the Plan to the contrary, the Corporation
may, in its sole and absolute discretion, enforce the right to offset against
any amounts to be paid to a Participant under the Plan against any debt of the
Participant which has been reduced to judgment in favor of the Corporation.
-10-
<PAGE> 11
Section 6.2 - Construction
In the construction of the Plan, the masculine shall include the feminine and
the singular the plural where such meanings would be appropriate.
Section 6.3 - Controlling Law
The laws of the State of Ohio shall be controlling in all matters relating to
the Plan and shall be controlling state law in all matters relating to the Plan
and shall apply to the extent that it is not preempted by the laws of the
United States of America.
Section 6.4 - Effect of Invalid Provisions
If any provision of this Plan is held invalid or unenforceable for any reason,
such invalidity or unenforceability shall not effect any provisions hereof, and
the remaining provisions of this Plan shall be construed and enforced as if
such provisions had not been included.
Section 6.5 - ERISA Status
This Plan shall constitute a plan which is unfunded and which maintained
primarily for the purpose of providing deferred compensation benefits for a
select group of management or highly compensated employees within the meaning
of Section 202, 301, and 401 of ERISA and the ERISA reporting and disclosure
regulation.
IN WITNESS WHEREOF, BANC ONE CORPORATION has caused this Plan to be adopted and
effective as of October 1, 1994.
BANC ONE CORPORATION
Attest: By:
------------------------ ------------------------
Roman J. Gerber
Executive Vice President
and Secretary
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<PAGE> 1
EXHIBIT 10(e)
BANC ONE
EXECUTIVE LIFE INSURANCE PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
This Plan is established for the benefit of selected key Employees and
shall be known as the "BANC ONE Executive Life Insurance Plan." The purpose of
the Plan is to provide Company-financed split dollar life insurance benefits in
order to recruit and to retain selected key Employees for the Company.
ARTICLE II
DEFINITIONS
The following words and phrases as used in the Plan have the following
meanings:
2.1 "Agreement" means a Split Dollar Insurance Agreement in the form
approved by the Company.
2.2 "Board" (or "Board of Directors") means the present and any
succeeding Board of Directors of the Company or the Personnel and Compensation
Committee of said Board which shall have the authority of said Board with
respect to the Plan.
2.3 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.4 "Company" means BANC ONE CORPORATION, an Ohio corporation, which
has it principal place of business in Columbus, Ohio, and any organization that
is a successor thereto.
2.5 "Employee" means an employee of the Company or a Related Company
(a) who is designated in writing by the Plan Administrator to participate in the
Plan and (b) on whose life the
<PAGE> 2
Company is able to purchase a Policy on terms and at a cost that are acceptable
to the Company in its sole discretion.
2.6 "Participant" means either an Employee or, if the Employee so
elects and the Company consents, the trustee or trustees of a trust established
by the Employee.
2.7 "Plan" means the "BANC ONE Executive Life Insurance Plan" as set
forth herein and as amended from time to time.
2.8 "Plan Administrator" means the Chief Executive Officer of the
Company or such other person(s) as he shall designate in writing.
2.9 "Plan Year" means the calendar year; provided that records with
respect to each individual policy under the Plan shall be maintained on the
basis of the applicable policy year.
2.10 "Policy" means a life insurance policy issued by an insurance
company designated by the Company on the life of the Employee or a joint life
insurance policy on the life of the Employee and another individual designated
by the Employee and approved by the Company.
2.11 "Related Company" means any employer that is a corporation
included with BANC ONE CORPORATION in a "controlled group of corporations," as
defined in Code section 414(b), or an unincorporated business included with BANC
ONE CORPORATION in a group of trades or businesses under "common control," as
defined by regulations prescribed by the Secretary of the Treasury under Code
section 414(c).
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Agreements. In order to participate in the Plan, a Participant
shall enter into an Agreement with the Company and execute an assignment of the
Policy as collateral (the "Collateral Assignment") in favor of the Company on
such terms as shall be determined by the Company in its sole discretion. The
Agreement and the Collateral Assignment are hereby
2
<PAGE> 3
incorporated into and made a part of the Plan. The Participant's participation
shall be conditioned on the Employee's effective waiver of certain Company
provided welfare benefits.
3.2 Policy. Each Agreement shall provide for the purchase of a Policy
from an insurance company. Both the identity of the insurance company and the
terms of the Policy shall be determined by the Company in its sole discretion.
3.3 Benefits. All benefits paid under the Plan in respect of a
Participant shall be determined by the terms of the applicable Agreement.
3.4 Multiple Agreements. The Company and a Participant may enter into
more than one Agreement pursuant to the Plan.
ARTICLE IV
ADMINISTRATION
4.1 In General. The Plan shall be administered by the Plan
Administrator, who shall be the Plan's named fiduciary.
4.2 Expenses. The expenses incident to the operation of the Plan,
including the compensating of attorneys, advisors, actuaries, and such other
persons providing technical and clerical assistance as may be required, shall be
paid by the Company.
4.3 Powers of the Plan Administrator. In addition to any implied powers
and duties that may be needed to carry out the provisions of the Plan, the
Agreement and the Collateral Assignment, the Plan Administrator shall have the
following specific powers and duties in his sole discretion:
(a) To make and enforce such rules and regulations as he shall
deem necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan and to decide any and all matters
arising hereunder, including the right to remedy possible ambiguities,
inconsistencies, or omissions; provided that all
3
<PAGE> 4
such interpretations and decisions shall be applied in a uniform and
nondiscriminatory manner to all persons similarly situated;
(c) To compute the amount of benefits that shall be payable to
any Participant in accordance with the provisions of the Plan;
(d) To appoint other persons to carry out such ministerial
responsibilities under the Plan as he may determine; and
(e) To employ one or more persons to render advice with
respect to any of his responsibilities under the Plan.
4.4 Finality. To the extent permitted by applicable law, determinations
by the Plan Administrator and any interpretation, rule or decision adopted by
the Plan Administrator under the Plan, the Agreement, or the Collateral
Assignment or in carrying out or administering the Plan shall be final and
binding for all purposes and upon all interested persons, their heirs and
personal representatives.
4.5 Benefit Claims Procedure. A claim for a benefit under the Plan by
any person shall be filed in the manner and governed by the procedures set forth
in the Agreement.
ARTICLE V
AMENDMENTS
5.1 Amendment and Termination. The Company by action of its Board may
modify, amend, suspend or terminate the Plan at any time.
5.2 Merger or Consolidation. In the event of a merger or a
consolidation by BANC ONE CORPORATION with another corporation, or the
acquisition of substantially all of the assets or outstanding stock of BANC ONE
CORPORATION by another corporation, then and in such event the obligations and
responsibilities of BANC ONE CORPORATION under this Agreement shall be assumed
by any such successor or acquiring corporation, and all of the rights,
privileges and benefits of the Participant under this Agreement shall continue.
4
<PAGE> 5
ARTICLE VI
MISCELLANEOUS
6.1 Incapacity. If the Company determines that any person entitled to
benefits hereunder is unable to care for his affairs because of illness or
accident, any payment due (unless a duly qualified guardian or other legal
representative has been appointed) may be paid for the benefit of such person to
his spouse, parent, brother, sister or other party deemed by the Plan
Administrator to have incurred expenses for such person.
6.3 Required Information. Any person eligible to receive benefits
hereunder shall furnish to the Plan Administrator any information or proof
requested by the Plan Administrator and reasonably required for the proper
administration of the Plan. Failure on the part of any person to comply with any
such request within a reasonable period of time shall be sufficient grounds for
delay in the payment of any benefits due under the Plan until such information
or proof is received by the Plan Administrator. If any person claiming benefits
under the Plan makes a false statement that is material to such person's claim
for benefits, the Company may offset against future payments any amount paid to
such person to which such person was not entitled under the provisions of the
Plan.
6.4 Policy Claims. Any claim for benefits under a Policy shall be
subject to and governed by the terms of the Policy.
6.5 No Right To Employment. Nothing in this Plan or any Agreement shall
be deemed to constitute a contract of employment or to give any Employee the
right to be retained in the service of the Company or a Related Company or to
interfere with the right of the Company or a Related Company to discharge any
Employee at any time without regard to the effect that such discharge may have
upon the Employee under the Plan.
6.6 Withholding Taxes. The Plan Administrator may make any appropriate
arrangements to deduct from all amounts paid under the Plan any taxes required
to be withheld by any government or government agency. The Employee shall pay
all taxes on amounts paid under the Plan to the extent that no taxes are
withheld, irrespective of whether withholding is required.
5
<PAGE> 6
6.7 Gender and Number. In order to shorten and to improve the
understandability of the Plan document by eliminating usage of such phrases as
"his or her" and "Related Company or Related Companies," any masculine
terminology herein shall also include the feminine and neuter, and the
definition of any term herein in the singular shall also include the plural,
except when otherwise indicated by the context.
6.8 Headings. Any headings used in this instrument are for convenience
of reference only and are to be ignored in the construction of any provision
hereof.
6.9 Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
such illegal or invalid provision had never been inserted herein.
6.10 Governing Law. The Plan shall be construed, administered and
regulated in accordance with the laws of the State of Ohio, except to the extent
that such laws are preempted by Federal law.
6.11 Effective Date. The Plan shall be effective as of November 1,
1994.
BANC ONE CORPORATION
Date:
------------------------
By:
--------------------------------
[Corporate Seal]
Attest:
By:
--------------------------
Secretary
------
6
<PAGE> 1
EXHIBIT 10(f)
LIBERTY NATIONAL BANK AND TRUST COMPANY
EXCESS BENEFIT PLAN
PURPOSE
The purpose of the Excess Benefit Plan of Liberty National Bank and
Trust Company is to provide specified retirement benefits to select members of
management and highly-compensated employees to replace those benefits under the
Company's Qualified Plan lost by reason of the limitations on benefits and
contributions imposed by Section 415 of the Code.
<PAGE> 2
LIBERTY NATIONAL BANK AND TRUST COMPANY
EXCESS BENEFIT PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I TITLE AND EFFECTIVE DATE 1
ARTICLE II DEFINITIONS AND CONSTRUCTION OF
THE PLAN DOCUMENT 2
ARTICLE III ELIGIBILITY AND MEMBERSHIP 4
ARTICLE IV BENEFITS 5
ARTICLE V CONDITIONS PRECEDENT TO BENEFITS 6
ARTICLE VI BENEFICIARY 7
ARTICLE VII NATURE OF COMPANY'S OBLIGATION 8
ARTICLE VIII PARTICIPANT RIGHT TO ASSETS 9
ARTICLE IX EMPLOYMENT RIGHTS 10
ARTICLE X TERMINATION, AMENDMENT, MODIFICATION,
OR SUPPLEMENTATION OF PLAN 11
ARTICLE XI RESTRICTIONS ON ALIENATION OF BENEFITS 12
ARTICLE XII ADMINISTRATION OF THE PLAN 13
ARTICLE XIII CLAIMS PROCEDURE 15
ARTICLE XIV MISCELLANEOUS 16
</TABLE>
<PAGE> 3
ARTICLE I
TITLE AND EFFECTIVE DATE
------------------------
1.01 TITLE. This Plan shall be known as the Liberty National Bank and Trust
Company Excess Benefit Plan (hereinafter referred to as the "Plan").
1.02 EFFECTIVE DATE. The effective date of this Plan should be January 1,
1984.
<PAGE> 4
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
-------------------------------------------------
For purposes hereof, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the indicated meanings:
2.01 BENEFICIARY. "Beneficiary" shall mean the person or persons or the
estate of an Executive entitled to receive any benefits under this Plan.
2.02 BOARD. "Board" shall mean the Board of Directors of Liberty National
Bank and Trust Company.
2.03 Claims Administrator. "Claims Administrator," for purposes of the
claims procedure of this Plan, shall mean the Company acting through one of its
duly authorized officers who is a member of the Committee.
2.04 COMMITTEE. "Committee" shall mean the Executive Committee of Liberty
national Bank and Trust Company, which Committee shall manage and administer
the Plan.
2.05 COMPANY. "Company" shall mean Liberty National Bank and Trust
Company, any division, any subsidiary or affiliate or any successor company.
2.06 EXECUTIVE. "Executive" shall mean any person who is in the regular
full-time employment of the Company or one of its subsidiaries, as determined
by the personnel rules and practices of the Company or the subsidiary, and is a
member of the Company's Qualified Plan.
2.07 LIFE ANNUITY. "Life Annuity" shall mean the normal form of payment
under the Company's Qualified Plan of a life annuity with ten years guaranteed
payments.
2.08 PARTICIPANT. "Participant" means an Executive who is eligible to
participate in accordance with Article III of the Plan, and whose benefits have
not been distributed.
2.09 PLAN. "Plan" shall mean the Liberty National Bank and Trust Company
Excess Benefit Plan, as set forth herein or in any amendment hereto.
<PAGE> 5
2.10 PLAN ACCEPTANCE. "Plan Acceptance" shall mean the form of written
acceptance, attached as Exhibit 1, which is executed by an Employee selected to
become a member as a condition to membership in the Plan and witnessed by the
Secretary of the Committee.
2.11 QUALIFIED PLAN. "Qualified Plan" shall mean The Liberty Retirement
Plan, as amended from time to time.
2.12 Wherever the context so requires, masculine pronouns shall include the
feminine and singular words shall include the plural.
2.13 Titles and Articles of this Plan are included for ease of reference
only and are not to be used for the purpose of construing any portion or
provision of this Plan document.
<PAGE> 6
ARTICLE III
ELIGIBILITY
-----------
3.01 Eligibility for participation in the Plan shall be determined by
the Committee, in its sole discretion, on an individual basis, but no
Participant shall be selected for participation in the Plan unless he qualifies
as a member of a select group of management or a highly-compensated employee
of the Company.
3.02 A Participant, after having been selected for participation by
the Committee, shall, as a condition to participation, complete and return to
the Committee a duly executed Plan Acceptance.
<PAGE> 7
ARTICLE IV
BENEFITS
--------
4.01 The amount of the benefit payable under the Plan shall be
calculated as follows: (1) calculate the benefit which would be payable to or
on behalf of a Participant under the Qualified Plan if Section 13 of the
Qualified Plan providing for the limitation of annual benefits in accordance
with Section 415 of the Internal Revenue Code of 1954, as amended, were
inapplicable, assuming amounts deferred under the Compensation Deferral Plan,
as amended from time to time, by a Participant were included in Average Monthly
Earnings, as defined in the Qualified Plan, for purposes of calculating the
benefit under the Qualified Plan, (2) subtract from this amount the benefit
actually payable to or on behalf of a participant under the Qualified Plan,
assuming the benefit were paid as a Life Annuity. The amount of the benefit
under (1) and (2) above shall be computed using the same form of payment. The
remaining amount is the benefit payable under this Plan.
4.02 The benefit payable to or on behalf of a participant as
determined under Section 4.01 shall be paid in any form permitted, as
determined by the Committee, in its sole discretion, under Article IV of the
Qualified Plan, as amended from time to time, based upon the actuarial factors
as determined by the Committee, in its sole discretion.
4.03 Benefits due under the Plan shall be paid at such other time or
times as the Committee, in its sold discretion, may determine.
4.04 Benefits under this Plan shall be determined as of the same date
as benefits are determined under the Qualified Plan.
<PAGE> 8
ARTICLE V
CONDITIONS PRECEDENT TO BENEFITS
--------------------------------
5.01 A Participant's right to receive a benefit under this Plan shall
exist only if the Participant is entitled to receive a benefit under the
Company's Qualified Plan.
<PAGE> 9
ARTICLE VI
BENEFICIARY
-----------
6.01 A Participant shall designate his Beneficiary to receive benefits
under the Plan by completing the appropriate space in the Plan Acceptance. If
more than one Beneficiary is named, the shares and/or precedence of each
Beneficiary shall be indicated. A Participant shall have the right to change
the Beneficiary by submitting to the Committee a change of Beneficiary in the
form attached as Exhibit 2 hereof. However, no change of beneficiary shall be
effective until acknowledged in writing by the Company.
6.02 If the Company has any doubt as to the proper Beneficiary to
receive payments hereunder, the Company shall have the right to withhold such
payments until the matter is finally adjudicated.
6.03 Any payment made by the Company, in good faith and in accordance
with this Plan, shall fully discharge the Company from all further obligations
with respect to that payment.
6.04 In making any payments to or for the benefit of any minor or
incompetent Beneficiary, the Committee, in its sole and absolute discretion may
make a distribution to a legal or natural guardian or other relative of a minor
or court appointed committee of such incompetent. Or, it may make a payment to
any adult with whom the minor or incompetent temporarily or permanently
resides. The receipt by a guardian, committee, relative or other person shall
be a complete discharge to the Company. Neither the Committee nor the company
shall have any responsibility to see to the proper application of any payments
so made.
<PAGE> 10
ARTICLE VII
NATURE OF COMPANY'S OBLIGATION
------------------------------
7.01 The Company's obligations under this Plan shall be an unfunded
and unsecured promise to pay. The company shall not be obligated under any
circumstances to fund its financial obligations under this Plan.
7.02 Any assets which the Company may acquire to help cover its
financial liabilities are and remain general assets of the Company subject to
the claims of its creditors. The Company does not give, and the Plan does not
give any beneficial ownership interest in any asset of the Company to a
participant of his Beneficiary. All rights of ownership in any assets are and
remain in the Company.
7.03 The Company's liability for payment of benefits shall be
determined only under the provisions of this Plan, as them may be amended from
time to time, and each Plan Acceptance entered into between the Company and
Executive.
<PAGE> 11
ARTICLE VIII
PARTICIPANT RIGHT TO ASSETS
---------------------------
8.01 The rights of a Participant, any Beneficiary or the Participant
or any other person claiming through Participant under this Plan, shall be
solely those of an unsecured general creditor of the Company. A Participant,
the Beneficiary of the Participant, or any other person claiming through the
Participant, shall have the right to receive those payments specified under
this Plan only from the Company. These parties have no right to look to any
specific or special property separate from the Company to satisfy a claim for
benefit payments.
8.02 A Participant agrees that he, his Beneficiary, or any other
person claiming through him shall have no right, claim, security interest, or
any beneficial ownership interest whatsoever in any general asset that the
Company may acquire or use to help support its financial obligations under this
Plan.
8.03 Any general asset used or acquired by the Company in connection
with the liabilities it has assumed under this Plan, shall not be deemed to be
held under any trust for the benefit of the participant or his Beneficiary.
Nor shall any such general asset be considered security for the performance of
the obligations of the Company. Any such asset shall remain a general,
unpledged, and unrestricted asset of the Company.
8.04 A Participant also understands and agrees that his participation
in the acquisition of any general asset for the Company shall not constitute a
representation to the Participant, his Beneficiary, or any person claiming
through him that any of them has a special or beneficial interest in any
general asset.
<PAGE> 12
ARTICLE IX
EMPLOYMENT RIGHTS
-----------------
9.01 Neither the Plan nor the Plan Acceptance, either singly or
collectively, obligate the Company or any subsidiary of the Company in any way
to continue the employment of a Participant with the Company or prohibit the
Company from termination a Participant's employment. Nor does this Plan or the
Plan Acceptance prohibit or restrict the right of a Participant to terminate
employment with the Company.
<PAGE> 13
ARTICLE X
TERMINATION, AMENDMENT, MODIFICATION OR SUPPLEMENTATION OF PLAN
---------------------------------------------------------------
10.01 The Company's Board retains the sole and unilateral right to
terminate, amend, modify or supplement this Plan, in whole or in part, at any
time. This right includes the right to make retroactive amendments. However,
no Company action under this right shall reduce the benefits of any Participant
or his Beneficiary who is already receiving benefits under this Plan.
<PAGE> 14
ARTICLE XI
RESTRICTIONS ON ALIENATION OF BENEFITS
--------------------------------------
11.01 No right or benefit under the Plan or a Plan Acceptance shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber
or charge the same shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities, or torts
of the person entitled to such benefit. If any Executive or Beneficiary under
the Plan should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge any right to a benefit under this Plan, then
such right or benefit, in the discretion of the Committee, shall cease. In
these circumstances, the Committee may hold or apply the benefit or any part
there of it for the benefit of the Executive or Beneficiary, the Executive's
spouse, children or other dependents, or any of them, in such manner and in
such portion as the Committee may deem proper.
<PAGE> 15
ARTICLE XII
ADMINISTRATION OF THE PLAN
--------------------------
12.01 The general administration of this Plan, as well as construction
and interpretation thereof, shall be vested in the Committee, the number and
members of which shall be designated and appointed from time to time by, and
shall serve at the pleasure of the Board of Directors of the Company. Any such
member of the Committee may resign by notice in writing filed with the
Secretary of the Committee. Vacancies shall be filled promptly by the Board of
Directors of the Company.
12.02 The Board of directors of the Company may designate one of the
members of the Committee as Chairman and may appoint a Secretary who need not
be a member of the Committee and may be a member of the Plan. The Secretary
shall keep minutes of the Committee's proceedings and all data, records and
documents relating to the Committee's administration of the Plan. The
Committee may appoint from its number such subcommittees with such powers as
the Committee shall determine and may authorize one or more members of the
Committee or any agent to execute or deliver any instrument or make any payment
on behalf or the Committee.
12.03 All resolutions or other actions taken by the Committee shall be
by vote of a majority of those present at a meeting at which a majority of the
members are present, or in writing by all members at the time in office if they
act without a meeting.
12.04 Subject to the Plan, the Committee shall from time to time
establish rules, forms and procedures for the administration of the Plan.
Except as herein otherwise expressly provided, the committee shall have the
exclusive right to interpret the Plan and to decide any and all matters arising
thereunder or in connection with the administration of the Plan, and it shall
endeavor to act, whether by general rules or by particular decisions, so as not
to discriminate in favor of or against any person. The decisions, actions and
records of the Committee shall be conclusive and binding upon the company and
all persons having or claiming to have any right of interest in or under the
Plan.
<PAGE> 16
12.05 The members of the Committee and the officers and directors of
the Company shall be entitled to rely on all certificates and reports made by
any duly appointed accountants, and on all opinions given by any duly appointed
legal counsel, which legal counsel may be counsel for the Company.
12.06 No member of the committee shall be liable for any act or
omission of any other member of the Committee, nor for any act or omission on
his own part. The Company shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his
membership on the Committee. Expenses against which a member of the Committee
shall be indemnified hereunder shall include, without limitation, the amount of
any settlement or judgement, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a proceeding
brought or settlement thereof. The foregoing right f indemnification shall be
in addition to any other rights to which any such member of the Committee may
be entitled as a matter of law or otherwise.
12.07 In addition to the power hereinabove specified, the Committee
shall have the power to compute and certify under the Plan the amount and kind
of benefits from time to time payable to Employees and their Beneficiaries and
to authorize all disbursements for such purposes.
12.08 To enable the Committee to perform its functions, the Company
shall supply full and timely information to the Committee on all matters
relating to the compensation of all Members, their retirement, death or other
termination of employment, and such other pertinent facts as the Committee may
require.
<PAGE> 17
ARTICLE XIII
CLAIMS PROCEDURE
----------------
13.01 Benefits shall be paid in accordance with the provisions of this
agreement. The Executive, or a designated recipient or any other person
claiming through the Executive shall make a written request for benefits under
this agreement. this written claim shall be mailed or delivered to the Claims
Administrator. such claim shall be reviewed by the Claims Administrator.
13.02 If the claim is denied, in full or in part, the claims
Administrator shall provide a written notice within ninety (90) days setting
forth the specific reasons for denial, and any additional material or
information necessary to perfect the claim, and an explanation of why such
material or information is necessary, and appropriate information and
explanation of the steps to be taken if a review of the denial is desired.
13.03 If the claim is denied and a review is desired, the Executive
(or beneficiary) shall notify the Claims Administrator in writing within sixty
(60) days [a claim shall be deemed denied if the Claims Administrator does not
take any action within the aforesaid ninety (90) day period] after receipt of
the written notice of denial. In requesting a review, the Executive or his
beneficiary may request a review of the Plan Document or other pertinent
documents with regard to the employee benefit plan created under this
agreement, may submit any written issues and comments, may request an extension
of time for such written submission of issues and comments, and may request
that a hearing be held, but the decision to hold a hearing shall be within the
sole discretion of the Committee.
13.04 The decision on the review of the denial claim shall be rendered
by the Committee within sixty (60) days after the receipt of the request for
review (if a hearing is held) or within sixty (60) days after the hearing if
one is held. The decision shall be written and shall state the specific
reasons for the decision including reference to specific provisions of this
Plan on which the decision is based.
<PAGE> 18
ARTICLE XIV
MISCELLANEOUS
-------------
14.01 Any notice which shall be or may be given under the Plan or a
Plan Acceptance shall be in writing and shall be mailed by United States mail,
postage prepaid. If notice is to be given to the Company, such notice shall be
addressed to the Company at 416 West Jefferson Street, Louisville, KY 40202,
marked for the attention of the Liberty National Bank and Trust Company Excess
Benefit Plan; or, if notice to an Executive, addressed to the address shown on
such Executive's Plan Acceptance.
14.02 Any party may, from time to time, change the address to which
notices shall be mailed by giving written notice of such new address.
14.03 The Plan shall be binding upon the company, its assigns, and any
successor company which shall succeed to substantially all of its assets and
business through merger, acquisition or consolidation, and upon an Executive,
his Beneficiary, assigns, heirs, executors and administrators.
14.04 This Plan shall be governed by the laws of the Commonwealth of
Kentucky.
<PAGE> 19
LIBERTY NATIONAL BANK AND TRUST COMPANY
EXCESS BENEFIT PLAN
PLAN ACCEPTANCE
I acknowledge that, as an Executive of the Company, I have been offered
an opportunity to participate in the Excess Benefit Plan (the "Plan") described
in the attached documents, and that I have elected to participate in the Plan.
I further acknowledge that neither the Company nor any of its
subsidiaries, affiliated companies, employees or agents has any responsibility
whatsoever for any changes which I may make in other personal plans or
programs as a result of my decision regarding the Plan and they are fully
released to such extent.
I hereby designate as my Primary Beneficiary under the Plan:
and I hereby designate as my Secondary Beneficiary under the Plan:
I understand that Beneficiary means the Primary Beneficiary if the Primary
Beneficiary survives me by at least 30 days, and means the Secondary
Beneficiary if Primary Beneficiary does not survive me by at least 30 days, and
means my estate if neither Primary Beneficiary nor Secondary Beneficiary
survives me by at least 30 days. I have the right to change my designation of
Primary Beneficiary and/or Secondary Beneficiary from time to time in the
manner as required by the Company, and I agree that no change in Beneficiary
shall be effective until acknowledged in writing by the Company.
Notices to me (Executive) shall be sent as follows:
Name:
Street Address or
Post Office Box No.
City and State Zip Code:
<PAGE> 20
IN WITNESS WHEREOF, the Company and I have executed this acceptance as of the
______ day of ____________, 19___.
EXECUTIVE:
(Signature)
(Type or Print Name under Signature)
WITNESS:
LIBERTY NATIONAL BANK AND TRUST COMPANY
By:
Secretary of the Executive Committee
<PAGE> 21
CHANGE OF BENEFICIARY FORM FOR
LIBERTY NATIONAL BANK AND TRUST COMPANY
EXCESS BENEFIT PLAN
As a Member of the Excess Benefit Plan (the "Plan") of the Company, I
hereby designate as Primary Beneficiary and Secondary Beneficiary under the
Plan and my Plan Acceptance the following:
Primary Beneficiary:
Secondary Beneficiary:
All previous beneficiary designations made by me in my Plan Acceptance
are revoked and any benefits due to be paid by the Company shall be paid to the
above designated beneficiary (ies) in accordance with the terms of the Plan and
my Plan Acceptance as though the above designated beneficiary (ies) have been
originally named in my Plan Acceptance.
I acknowledge that this beneficiary designation will not be effective
until acknowledged in writing by the Company in the space provided below.
EXECUTIVE:
Signature
Beneficiary Designation
herein acknowledged and
approved this ________
day of ______________,
19___.
LIBERTY NATIONAL BANK AND TRUST COMPANY
By:
Officer
<PAGE> 22
APPLICATION FOR CLAIM FOR PLAN BENEFITS
The undersigned hereby makes application for payment of benefits for
_______________, an Executive under the Plan. the Executive terminated
employment as a result of
Retirement
Total Disability
Death
Subject to approval of the committee, the claimant requests
distribution of the Executive's benefit in the following manner:
.
I understand that the Committee has the sole right and authority to
authorize a distribution in a manner other than that designated in the
Company's Qualified Plan.
*Claimant
*In the event the Executive is deceased, the Claimant shall be the Executive's
beneficiary, and in all other cases, the Claimant is the Executive.
NOTICE OF ACTION ON CLAIM
-------------------------
The Committee received the above application on , 19, for payment
of benefits on behalf of the Executive. The following number(s) which are
checked explain the disposition of the application.
1. The Committee approved the following method of distribution of the
Executive's Benefit:
2. The claim has been denied in full or in part for the following
reason(s):
3. Additional material or information necessary for the Claimant to
perfect the claim and the reason why such material or information is necessary
is as follows:
.
<PAGE> 23
CLAIM REVIEW PROCEDURE
----------------------
(Continued)
The Claimant has a reasonable opportunity to appeal a denial of a claim
to the Committee for a full and fair review. A Claimant or his duly authorized
representative:
(1) May request a review upon written application to the Plan;
(2) May review pertinent documents;
(3) May submit issues and comments in writing.
The request for a review of a denied claim must be submitted to the
Committee within 90 days after receipt by the Claimant of written notification
of denial of a claim.
DECISION ON REVIEW
------------------
(a) A decision by the committee shall be made promptly and not later
than 60 days after the Plan's receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but no later than 120 days
after receipt of a request for review.
(b) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the Claimant and specific references to the pertinent Plan
provisions on which the decision is based.
<PAGE> 1
EXHIBIT 10(f)(1)
LIBERTY NATIONAL BANK AND TRUST COMPANY OF LOUISVILLE
AMENDMENT NO. 1
TO
EXCESS BENEFIT PLAN
This is Amendment No. 1 to the Excess Benefit Plan of Liberty National
Bank and Trust Company of Louisville (the "Company") which was
adopted as of January 1, 1984. This Amendment No. 1 shall be
effective as of January 1, 1989.
Recital
-------
The Company adopted the Excess Benefit Plan (the "Plan") for the
purpose of providing specified retirement benefits to select members of
management and highly-compensated employees to replace those benefits lost
under the Company's Qualified Plan by reason of the limitations on benefits and
contributions imposed by Section 415 of the Internal Revenue Code (the "Code").
The Company now wishes to extend the purposes of the Plan, to also replace
those benefits lost by participating employees in the Excess Benefit Plan due
to amendments in the Qualified Plan required after the Tax Reform Act of 1986.
Amendments
----------
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
shall have the meanings given them in the Plan.
2. QUALIFIED PLAN. Section 2.11 of the Plan is hereby amended so that as
amended it shall read in its entirety as follows:
"2.11 QUALIFIED PLAN. "Qualified Plan" shall mean the Liberty 1989
Retirement Plan, as amended from time to time. The "1983 Qualified Plan"
shall be the Qualified Plan as it existed prior to the amendment and
restatement thereof on January 1, 1989."
3. BENEFITS. Section 4.01 of the Plan is hereby amended so that as amended
it shall read in its entirety as follows:
"4.01 The amount of the benefit payable per month under the Plan shall
be the amount remaining after Step 2 below:
<PAGE> 2
Step 1: Calculate the benefit which would be payable to or on behalf
of a Participant under the 1983 Qualified Plan, with the following adjustments:
(i) without application of any of the limitations in the 1983 Qualified Plan on
annual benefits in accordance with Section 415 of the Code; (ii) assuming
amounts deferred by a Participant under the Compensation Deferral Plan adopted
in 1984 and pursuant to the Company's Section 125 Plan, both as amended from
time to time, were included in his Average Monthly Earnings; and (iii) adjusted
in accordance with the terms of the 1983 Qualified Plan for Late Retirement,
Early Retirement, or payment in the event of disability.
Step 2: Subtract from the amount calculated in Step 1 the benefit
actually payable to or on behalf of a Participant under the Qualified Plan,
assuming the benefit were paid as a Life Annuity.
4. ELIGIBILITY. A Participant shall be eligible for participation in the
Plan as amended by this Amendment No. 1 thereto only if the Committee, in
its sole discretion, on an individual basis, selects that individual to
participate pursuant to this Amendment. A Participant, after having been
selected for participation by the Committee in the Plan as amended by
Amendment No. 1, shall complete and return to the Committee a duly
executed Amended Plan Acceptance.
* * * * * *
<PAGE> 3
LIBERTY NATIONAL BANK AND TRUST COMPANY
EXCESS BENEFIT PLAN
AMENDED PLAN ACCEPTANCE
I acknowledge that, as an Executive of the Company, I have been offered
an opportunity to participate in the Excess Benefit Plan as amended by
Amendment No. 1 (the "Plan", a copy of which I have received, and that I have
elected to participate in the Plan as amended.
I further acknowledge that neither the Company nor any of its
subsidiaries, affiliated companies, employees or agents has any responsibility
whatsoever for any changes which I may make in other personal plans or programs
as a result of my decision regarding the Plan and they are fully released to
such extent.
I hereby designate as my Primary Beneficiary under the Plan:
and I hereby designate as my Secondary Beneficiary under the Plan:
I understand that Beneficiary means that the Primary Beneficiary if the Primary
Beneficiary survives me by at least 30 days, and means the Secondary
Beneficiary if Primary Beneficiary does not survive me by at least 30 days, and
means my estate if neither Primary Beneficiary nor Secondary Beneficiary
survives me by at least 30 days. I have the right to change my designation of
Primary Beneficiary and/or Secondary Beneficiary from time to time in the
manner as required by the Company, and I agree that no change in Beneficiary
shall be effective until acknowledged in writing by the Company.
Notices to me (Executive) shall be sent as follows:
Name __________________________________________
Street Address or
Post Office Box No.____________________________
City and State __________ Zip Code ____________
<PAGE> 4
IN WITNESS WHEREOF, the Company, and I have executed this Amended Plan
Acceptance as of the _____ day of _______________, 19____.
EXECUTIVE:
_____________________________________
Signature
_____________________________________
(Type or Print Name under Signature)
WITNESS:
LIBERTY NATIONAL BANK AND TRUST
COMPANY OF LOUISVILLE
By: ________________________________________
Secretary of Executive Committee
<PAGE> 1
EXHIBIT 10(f)(2)
LIBERTY NATIONAL BANK AND TRUST COMPANY OF LOUISVILLE
AMENDMENT NO. 2
TO
EXCESS BENEFIT PLAN
This is Amendment No. 2 to the Excess Benefit Plan of Liberty National
Bank and Trust Company of Louisville ( the "Company") which was adopted as of
January 1, 1984. This Amendment No. 2 shall be effective as of April 16, 1993.
Recital
-------
The Company adopted the Excess Benefit Plan ( the "Plan") for the
purpose of providing specified retirement benefits to select members of
management and highly compensated employees to replace those benefits lost
under the Company's Qualified Plan by reason of the limitations on benefits and
contributions imposed by Section 415 of the Internal Revenue Code ( the
"Code"). When the Company's Qualified Plan was amended and restated effective
January 1, 1989 to take into account certain changes in the law, the Plan was
amended to provide Participants with a benefit to replace the benefit they lost
or may lose under the Company's Qualified Plan due to the change in the Plan's
Benefit Formula in the 1989 restatement. The Company now wishes to amend the
Plan to provide that new Participants will receive a benefit soley to replace
those benefits lost under the company's Qualified Plan as amended and restated
as of January 1, 1989 due to the limitations on benefits and contributions
imposed by Section 415 of the Code and the limit on compensation imposed by
Code Section 401 (a) (17) of the Code.
Amendments
----------
1. BENEFITS. Section 4.01 of the Plan is hereby amended so that as amended
it shall read in its entirety as follows:
4.01
A. For employees who became Participants in the Plan prior to April 16,
1993, the amount of benefit payable per month under the Plan shall be the
amount remaining after Step 3 below:
Step 1: Calculate the benefit which would be payable to or on behalf
of a Participant under the 1983 Qualified Plan, with the following adjustments:
(i) Without application of any limitations in the 1983 Qualified
Plan on annual benefits in accordance with Section 415 of the Code;
(ii) Without regard to application of any of the limitations in
the 1989 Qualified Plan on compensation that may be taken into account in
determining a Participant's Average Monthly Earning's in accordance with
Section 401 (a) (17) of the Code.
(iii) Assuming amounts deferred by a Participant under the
Compensation Deferral Plan adopted in 1984 and salary redirection pursuant to
the Company's Section
<PAGE> 2
125 Plan, both as amended from time to time, were included in his Average
Monthly Earnings; and
(iv) Adjusted in accordance with the terms of the 1983 Qualified Plan
for Late Retirement, Early Retirement, or payment in the event of disability.
Step 2: Calculate the benefit which would be payable to or on behalf of
a Participant under the 1989 Qualified Plan, with the adjustments listed in
Step 1 above (replacing any references to the 1983 Qualified Plan with
references to the 1989 Qualified Plan).
Step 3: Subtract from the greater of the amount calculated in Step 1 or
the amount calculated in Step 2 the benefit actually payable to or on behalf of
a Participant under the Qualified Plan, assuming the benefit were paid as a
Life Annuity.
B. For employees who become Participants in the Plan on or after April
16, 1993, the amount of benefit payable per month under the Plan shall be the
amount remaining after Step 2 below:
Step 1: Calculate the benefit which would be payable to or on behalf of
a Participant under the 1989 Qualified Plan, with the following adjustments:
(i) Without application of any of the limitations in the 1989 Qualified
Plan on annual benefits in accordance with Section 415 of the Code;
(ii) Without regard to application of any of the limitations in the
1989 Qualified Plan on compensation that may be taken into account in
determining a Participant's Average Monthly Earnings in accordance with Section
401(a)(17) of the Code;
(iii) Assuming amount deferred by a Participant under the Compensation
Deferral Plan adopted in 1984 and salary redirection pursuant to the Company's
Section 125 Plan, both as amended from tine to time, were included in his
Average Monthly Earnings; and
(iv) Adjusted in accordance with the terms of the 1989 Qualified Plan
for late Retirement, Early Retirement, or payment in the event of disability.
Step 2: Subtract from the amount calculated in Step 1 the benefit
actually payable to or on behalf of a Participant under the Qualified Plan,
assuming the benefit were paid as a Life Annuity.
2. ELIGIBILITY. A Participant shall be eligible for participation in
the Plan as amended by this Amendment No. 2 thereto only if the Committee, in
its sold discretion, on an individual basis, selects that individual to
participate pursuant to this Amendment. A Participant, after having been
selected for participation by the Committee in the Plan as amended
<PAGE> 3
by Amendment No. 2, shall complete and return to the Committee a duly executed
Amended Plan Acceptance.
IN WITNESS WHEREOF, this Amendment No. 2 has been adopted by the
Company this 16th day of April, 1993.
By
Title:
Date:
<PAGE> 1
EXHIBIT 10(g)
LIBERTY NATIONAL BANCORP, INC.
AMENDED AND RESTATED
MANAGEMENT INCENTIVE COMPENSATION PLAN
JANUARY 1992
<PAGE> 2
LIBERTY NATIONAL BANCORP, INC.
MANAGEMENT INCENTIVE COMPENSATION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
------- ----
<S> <C> <C>
ARTICLE I OBJECTIVES ............................................ 1
ARTICLE II DEFINITIONS............................................ 2
ARTICLE III ADMINISTRATION OF THE PLAN............................. 4
ARTICLE IV PARTICIPANT ELIGIBILITY................................ 6
ARTICLE V PAYMENT TO PARTICIPANTS................................ 7
ARTICLE VI DETERMINATION OF ANNUAL AWARD FUND..................... 8
TABLE I Target Annual Award Fund............................... 8
ARTICLE VII ALLOCATION OF ANNUAL INCENTIVE AWARD FUND.............. 9
TABLE II Annual Incentive Compensation Award.................... 10
ARTICLE VIII DETERMINATION OF LONGER-TERM AWARD FUND................ 13
TABLE III Overlapping Three-Year Award Cycles.................... 13
TABLE IV Longer-Term Plan Award Schedules....................... 14
ARTICLE IX MISCELLANEOUS PROVISIONS............................... 16
ATTACHMENT A Notice of Participation......................... 17
ATTACHMENT B Designation of Beneficiary...................... 18
ATTACHMENT C Deferral Form................................... 19
</TABLE>
- (i) -
<PAGE> 3
ARTICLE I
OBJECTIVES
Section 1.01 This plan is designed and adopted to achieve the
following objectives:
(a) Increase the profitability and growth of Liberty in a manner
which is consistent with other goals of Liberty, its
stockholders and its employees.
(b) Provide executive compensation which is competitive with other
banks, and to provide the potential for payment of meaningful
cash awards.
(c) Attract and retain personnel of outstanding ability and to
encourage excellence in the performance of individual
responsibilities.
(d) Motivate and reward those members of management who contribute
to the success of Liberty.
(e) Distinguish among the performance contributions of some
individuals by providing financial recognition for individual
performance, as well as group performance.
(f) Allow the flexibility which permits revision and strengthening
from time to time to reflect changing organizational goals and
objectives.
- 1 -
<PAGE> 4
ARTICLE II
DEFINITIONS
Section 2.01 As used herein, the following words and phrases shall
have the meanings below unless the context clearly indicates otherwise:
(a) "Annual Incentive Plan" or "Annual Plan" shall mean the Annual
Management Incentive Compensation Plan set forth in this
document and all amendments thereto.
(b) "Award Cycle" or "Award Period" means three (3) consecutive
fiscal years for purposes of the Longer-Term Incentive Plan and
one (1) fiscal year for purposes of the Annual Incentive Plan.
(c) "Board" means the Board of Directors of Liberty National
Bancorp, Inc.
(d) "Disability" means the total and permanent disability of a
participant as defined by any Long-Term Disability Plans in
effect for Liberty and as thereafter may be amended.
(e) "Earnings Per Share" shall mean, effective for all fiscal years
considered for Award Cycles ending on or after December 31,
1991, fully diluted Earnings Per Share based on Income Before
Securities Transactions.
(f) "Effective Date" means the date upon which the Plan shall
become effective.
(g) "Examining Committee" means the Examining Committee of Liberty
National Bancorp, Inc.
(h) "Executive Committee" means the Executive Committee of Liberty
National Bancorp, Inc.
(i) "Fiscal Year" means the accounting period adopted by Liberty
for Federal Income Tax purposes.
(j) "Income Before Securities Transactions" (IBST) shall mean net
after tax income before securities transactions and related
income tax effect.
(K) "Liberty" shall mean Liberty National Bancorp, Inc.,
Louisville, Kentucky.
(l) "Longer-Term Incentive Plan" or "Longer-Term Plan" shall mean
the Longer-Term Management Incentive Compensation Plan set
forth in this document and all amendments thereto.
- 2 -
<PAGE> 5
(m) "Plan" shall mean Liberty's Management Incentive Compensation
Plan.
(n) "Return on Average Assets" (ROAA) shall be average assets for
the Award Cycle divided by Net Income for the Award Cycle.
(o) "Salary" or "Salaries" shall mean the base salary in effect for
each participant on the first day of the Award Cycle.
- 3 -
<PAGE> 6
ARTICLE III
ADMINISTRATION OF THE PLAN
Section 3.01 The Executive Committee shall administer the Plan.
The Executive Committee may appoint a secretary who may, but need not be, a
member of the Committee and may employ such other agents as may reasonably be
required to administer the Plan.
Section 3.02 The Executive Committee shall adopt such rules and
regulations of general application as are beneficial for the administration of
the Plan.
Section 3.03 The Examining Committee shall make all discretionary
decisions involving a participant of the Plan who is also a member of the
Executive Committee.
Section 3.04 A majority of either of the above named committees
shall constitute a quorum of that committee. The acts of a majority of the
members present at any meeting at which there is a quorum shall be valid acts of
the committee. Acts reduced to and approved in writing by a majority of a
committee shall also be valid acts.
Section 3.05 The Executive Committee shall have the right to
interpret the Plan, to determine the Effective Date, and to approve all
employees who are to participate in the Plan.
Section 3.06 The Executive Committee shall send a written notice of
such Plan to each selected participant. No person shall have the right to be
included in the Plan until receiving said notice.
Section 3.07 All costs and expenses involved in the administration
of this Plan shall be borne by Liberty.
Section 3.08 The Executive Committee shall cause to be maintained
an account for each participant who elects to defer payment of all or part of
his or her incentive compensation. Such account shall be credited with deferred
incentive compensation and a monthly interest credit and shall be debited for
any payment to the participant or the participant's beneficiary. The monthly
interest credit shall be equal to the monthly interest paid on a Money Market
Investment Account.
Section 3.09 The term "account" shall not mean, under any
circumstances, that a participant, his beneficiary or his estate shall have
title to any specific assets of Liberty.
Section 3.10 All incentive compensation payable under the Plan
shall be paid from the general assets of Liberty. To the extent that any person
acquires a right to receive payments under the Plan, such right shall be no
greater than the right of any unsecured creditor of Liberty.
- 4 -
<PAGE> 7
Section 3.11 Any determination or action of the Executive
Committee, Examining Committee or the Board shall be final, conclusive and
binding on all participants and their beneficiaries, heirs, personal
representatives, executors and administrators.
Section 3.12 The Board of Directors, in its sole discretion, may
amend, modify or terminate the Plan at any time, provided that the Board shall
also annually review the performance standards determined by the Executive
Committee and may further amend such schedules if it desires.
- 5 -
<PAGE> 8
ARTICLE IV
PARTICIPANT ELIGIBILITY
Section 4.01 The following groups shall participate in the Plan:
(a) Group I shall consist of the members of the Executive Committee
and certain other members selected by the Examining Committee
from time to time.
(b) Group II shall consist of members of the Administrative
Committee of Liberty National Bank and Trust Company of
Louisville and certain senior executives of affiliate banks who
are selected for participation by the Executive Committee.
(c) Group III shall consist of other members of management who are
selected for participation by the Executive Committee.
Section 4.02 Voluntary or involuntary termination of full-time
employment of a participant prior to the end of an Award Period will result in
such participant forfeiting any incentive compensation for the Period during
which termination occurs and for all subsequent Periods (except as provided in
Section 4.03 herein).
Section 4.03 If a participant dies, retires, becomes disabled, or
is granted a leave of absence during an Award Period, the Executive Committee
may, at its discretion or under such rules as it may have prescribed, award
partial incentive compensation based on the level of achievement in relation to
goals established for the entire Award Period.
Section 4.04 Directors who are also employees of Liberty shall be
eligible to participate in the Plan. However, a director who is compensated on
the basis of a fee or retainer, as distinguished from a salary, shall not be
eligible.
Section 4.05 New employees of Liberty and persons promoted during
the Award Period who were not eligible to participate in the Plan at the
beginning of the Award Period, but have become a member of Group I, Group II or
Group III shall participate in the Plan on a pro-rata basis so long as such
eligibility came into existence no later than six (6) months after the beginning
of said Award Period. If a person becomes eligible at a date later than six (6)
months into an Award Period, such person shall not be a participant under this
Plan until the first day of the next succeeding Award Period.
- 6 -
<PAGE> 9
ARTICLE V
PAYMENT TO PARTICIPANTS
Section 5.01 Incentive compensation awarded under the Plan shall be
paid to the participants no later than three months after the close of the last
year of the Award Period.
Section 5.02 A participant may elect to defer payment of all or
part (but not less than $1,000) of his or her incentive compensation until after
termination of employment with Liberty or another date so long as the
participant requests such deferred payment in writing prior to the beginning of
each Award Period during which the compensation is to be earned.
Section 5.03 Payment of deferred incentive compensation shall be in
ten (10) equal annual installments. The first payment shall be made within
twelve (12) months following the fiscal year of termination of employment or on
such other date as the participant may have elected.
Section 5.04 A participant may request, subject to approval by the
Executive Committee, that his or her deferred payments be made in a lump sum or
in annual installments over a period of less than ten (10) years. Such request
must be made in writing prior to the Award Period in which the award is earned.
Lump sum payments shall be paid within twelve (12) months following the close of
the Award Period during which the participant terminates.
Section 5.05 If a lump sum payment is elected for deferred amounts,
such payment shall be the account value comprised of deferred amounts plus
monthly interest credits. If annual installments are elected as the payment
method for deferred amounts, the amount of each installment shall be determined
by dividing the account value at the time of the first installment by the number
of installments to be paid. Quarterly interest credits earned on the unpaid
balance shall be paid at the time of the last installment.
Section 5.06 In the event of death prior to full payment of all
deferred amounts, a participant's beneficiary shall be paid all amounts deferred
and credited to his or her account. A participant may file with the Executive
Committee a designation of beneficiary on a form provided by the Executive
Committee. Such designation may be revoked or changed by the participant so
long as such change is filed with the Committee. If no beneficiary has been
designated or survives the participant, any earned but unpaid deferred amounts
shall be paid to the participant's surviving spouse, or if there is no surviving
spouse, then in equal proportions to the participant's surviving children. If
the participant is not survived by a spouse or children, then the deferred
amounts shall be paid to the estate of the participant.
- 7 -
<PAGE> 10
ARTICLE VI
DETERMINATION OF ANNUAL AWARD FUND
Section 6.01 The annual Incentive Plan fund for each group shall be
generated by a percent of the aggregate salaries for the individuals in each
group. The target award fund shall be computed as shown in Table I below:
TABLE I
TARGET ANNUAL AWARD FUND
<TABLE>
<CAPTION>
TARGET AWARD
AGGREGATE EXPRESSED AS A TARGET ANNUAL
GROUP SALARIES % OF SALARIES AWARD FUND
----- --------- -------------- -------------
<S> <C> <C> <C> <C>
Group I $ X 16% = $
----------- -----------
Group II $ X 12% = $
----------- -----------
Group III $ X 8% = $
----------- -----------
</TABLE>
Section 6.02 The actual amount of the Annual Incentive Plan award
fund shall be calculated according to a schedule comparing annual increase in
Earnings Per Share (EPS) for the Award Period to a predetermined performance
standard. When the annual increase in Earnings Per Share is above or below the
target performance standard, the actual award fund is adjusted upward or
downward from the target award.
Section 6.03 There shall be a minimum acceptable annual increase in
EPS beneath which no incentive awards are paid and a maximum increase above
which there is no additional award paid to avoid excessive payout in the event
of windfall profits. Said minimum and maximum shall be reviewed annually and
amended when necessary in the sole discretion of the Executive Committee.
- 8 -
<PAGE> 11
ARTICLE VII
ALLOCATION OF ANNUAL INCENTIVE AWARD FUND
Section 7.01 The total annual Plan award fund shall be divided into
a group award and an individual award as follows:
COMPOSITION OF AWARD
<TABLE>
<CAPTION>
Criteria Group I Group II Group III
-------- ------- -------- ---------
<S> <C> <C> <C>
Corporate Financial Performance 100% 75% 50%
(FUND A)
Individual Performance 0% 25% 50%
(FUND B)
</TABLE>
(a) Group I participants shall receive an award based solely on
annual increase in EPS (FUND A).
(b) Group II and Group III participants shall receive an award
based on annual increase in EPS (FUND A) and an evaluation of
the participant's individual performance (FUND B).
(1) The corporate measure of performance shall be based on
annual increase in EPS (FUND A) and shall be a percent
of Salary according to a predetermined schedule.
(2) The individual measure of performance shall be a
discretionary award (FUND B) up to a certain percent
of Salary according to a predetermined schedule. All
or part of the discretionary fund shall be distributed
according to evaluations of individual performance.
The evaluations shall be conducted by the Executive
Committee and shall be based upon meeting three to
five financial and nonfinancial objectives determined
and agreed to by the Executive Committee and the
participant at the beginning of the Award Period.
Section 7.02 The amount of the incentive award Fund to be paid and
the allocation to participants shall be according to the schedule shown below in
Table II.
- 9 -
<PAGE> 12
TABLE II
ANNUAL INCENTIVE COMPENSATION AWARD
GROUP I
<TABLE>
<S> <C>
Corporate Target Award Fund (A = 100%) = 16%
Individual Target Award Fund (B = 0%) = 0%
--
TOTAL TARGET AWARD = 16%
</TABLE>
PERFORMANCE
STANDARD
<TABLE>
<CAPTION>
INCREASE IN AWARD FUND INDIVIDUAL
EPS OVER AS A % OF AWARD AS A % OF
PREVIOUS YEAR TARGET AWARD BASE SALARY
------------- ------------ ---------------
Fund B Fund A
------ ------
<S> <C> <C>
14% or greater 150% 24.0%
13.00 - 13.99% 125% 20.0%
---------------------------------------------------------------
12.00 - 12.99% TARGET 100% 16.0%
---------------------------------------------------------------
11.00 - 11.99% 80% 12.8%
10.50 - 10.99% 60% 9.6%
10.00 - 10.49% 40% 6.4%
9.50 - 9.99% 20% 3.2%
</TABLE>
- 10 -
<PAGE> 13
ANNUAL INCENTIVE COMPENSATION AWARD
GROUP II
<TABLE>
<S> <C>
Corporate Target Award Fund (A = 75%) = 9%
Individual Target Award Fund (B = 25%) = 3%
--
TOTAL TARGET AWARD FUND = 12%
</TABLE>
PERFORMANCE SCHEDULE OF AWARDS
STANDARD EXPRESSED AS A PERCENT OF SALARY
<TABLE>
<CAPTION>
GROUP
AWARD FUND
INCREASE IN AS A % OF
EPS OVER TARGET
PREVIOUS YEAR AWARD FUND FUND A FUND B* TOTAL*
------------- ---------- ------ ------- ------
<S> <C> <C> <C> <C>
14% or greater 150% 13.50% 4.50% 18.00%
13.00 - 13.99% 125% 11.25% 3.75% 15.00%
-------------------------------------------------------------------------------
12.00 - 12.99% TARGET 100% 9.00% 3.00% 12.00%
-------------------------------------------------------------------------------
11.00 - 11.99% 80% 7.20% 2.40% 9.60%
10.50 - 10.99% 60% 5.40% 1.80% 7.20%
10.00 - 10.49% 40% 3.60% 1.20% 4.80%
9.50 - 9.99% 20% 1.80% .60% 2.40%
</TABLE>
*Individual awards (Fund B) can range from 0% to an amount equal to 150% of the
target award. This allows for recognition of individual contributions. For
example, increase of EPS of 12.00% generates a Fund B award pool equal to 3.00%
of participant's salaries. An individual can receive from 0% - 4.50%, but the
group total is limited to 3.00% of covered salaries. Therefore, if one person
receives a Fund B award in excess of 3.00%, another person must receive less
than 3.00%.
- 11 -
<PAGE> 14
ANNUAL INCENTIVE COMPENSATION AWARD
GROUP III
<TABLE>
<S> <C>
Corporate Target Award Fund (A = 50%) = 4%
Individual Target Award Fund (B = 50%) = 4%
-
TOTAL TARGET AWARD FUND = 8%
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE SCHEDULE OF AWARDS
STANDARD EXPRESSED AS A PERCENT OF SALARY
GROUP
AWARD FUND
INCREASE IN AS A % OF
EPS OVER TARGET
PREVIOUS YEAR AWARD FUND FUND A FUND B* TOTAL*
------------- ---------- ------ ------- ------
<S> <C> <C> <C> <C>
14% or greater 150% 6.00% 6.00% 12.00%
13.00 - 13.99% 125% 5.00% 5.00% 10.00%
--------------------------------------------------------------------------
12.00 - 12.99% TARGET 100% 4.00% 4.00% 8.00%
--------------------------------------------------------------------------
11.00 - 11.99% 80% 3.20% 3.20% 6.40%
10.50 - 10.99% 60% 2.40% 2.40% 4.80%
10.00 - 10.49% 40% 1.60% 1.60% 3.20%
9.50 - 9.99% 20% .80% .80% 1.60%
</TABLE>
*Individual awards (Fund B) can range from 0% to an amount equal to 150% of the
target award. This allows for recognition of individual contributions. For
example, increase of EPS of 12.00% generates a Fund B award pool equal to 4.00%
of participant's salaries. An individual can receive from 0% - 6.0%, but the
group total is limited to 4.00% of covered salaries. Therefore, if one person
receives a Fund B award in excess of 4.00%, another person must receive less
than 4.00%.
- 12 -
<PAGE> 15
ARTICLE VIII
DETERMINATION OF LONGER-TERM AWARD FUND
Section 8.01 The Longer-Term Incentive Plan shall grant contingent
awards payable according to a predetermined formula.
Section 8.02 The length of each Award Cycle is three (3) years and
overlapping cycles may be in effect during a perfor- mance period as depicted in
Table III below.
TABLE III
OVERLAPPING THREE-YEAR AWARD CYCLES
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C>
I_______________________________I
I_____________________________I
I____________________________I
</TABLE>
(a) An Award Cycle shall begin on the first day of the first fiscal
year in the three-year cycle and shall end with the last day of
the third fiscal year in the Award Cycle.
(b) Awards based on each three-year cycle are payable as follows:
<TABLE>
<CAPTION>
Payments for
Award Cycle Timing of Payments
------------ ------------------
<S> <C>
1989 - 1991 1992
1990 - 1992 1993
1991 - 1993 1994
</TABLE>
Section 8.03 At the beginning of each Award Cycle, the Executive
Committee shall determine target performance standards. Actual performance will
be measured against targets to determine the Longer-Term Plan award fund.
- 13 -
<PAGE> 16
Section 8.04 Longer-Term Incentive Awards will reflect measures of
performance as follows:
(a) 25% of the award will be based on the annual average increase
in Earnings Per Share (EPS) for the Award Cycle.
(b) 37.5% of the award will be based on the annual average Return
on Equity (ROE) for the Award Cycle.
(c) 37.5% of the award will be based on Return on Average Assets
(ROAA) for the Award Cycle.
Section 8.05 The amount of the Longer-Term Plan award fund to be
paid and the allocation to participants shall be according to the schedule shown
in Table IV. The Executive Committee shall annually review and amend this
schedule if necessary in its sole discretion.
TABLE IV
LONGER-TERM PLAN AWARD SCHEDULES
Award Based on Average Increase in Earnings Per Share
<TABLE>
<CAPTION>
3 Year Average
Increase In Percent of Total Award Expressed as a
Earnings Per Longer-Term Percent of Salary
Share Target Award Group I Group II Group III
-------------- ---------------- ------- -------- ---------
<S> <C> <C> <C> <C>
14% or greater 37.50% 6.0% 4.50% 3.00%
13.00-13.99% 31.25 5.0 3.75 2.50
-------------------------------------------------------------------------------
12.00-12.99% TARGET 25.00 4.0 3.00 2.00
-------------------------------------------------------------------------------
11.50-11.99% 20.00 3.2 2.40 1.60
11.00-11.49% 15.00 2.4 1.80 1.20
10.50-10.99% 10.00 1.6 1.20 .80
10.00-10.49% 5.00 .8 .60 .40
</TABLE>
- 14 -
<PAGE> 17
Based on Average Return on Equity
<TABLE>
<CAPTION>
3 Year Average Percent of Total Award Expressed as a
Return on Longer-Term Percent of Salary
Equity Target Award Group I Group II Group III
-------------- ---------------- ------- -------- ---------
<S> <C> <C> <C> <C>
16.66% or greater 56.25% 9.0% 6.75% 4.50%
15.66 - 16.65% 46.87 7.5 5.62 3.75
-------------------------------------------------------------------------------
14.66 - 15.65% TARGET 37.50 6.0 4.50 3.00
-------------------------------------------------------------------------------
14.16 - 14.65% 30.00 4.8 3.60 2.40
13.66 - 14.15% 22.50 3.6 2.70 1.80
13.41 - 13.65% 15.00 2.4 1.80 1.20
13.16 - 13.40% 7.50 1.2 .90 .60
</TABLE>
Award Based on Return on Average Assets
<TABLE>
<CAPTION>
3 Year Average Percent of Total Award Expressed as a
Return on Longer-Term Percent of Salary
Equity Target Award Group I Group II Group III
-------------- ---------------- ------- -------- ---------
<S> <C> <C> <C> <C>
1.08 or greater 56.25% 9.0% 6.75% 4.50%
-------------------------------------------------------------------------------
1.04 - 1.07 46.87 7.5 5.62 3.75
-------------------------------------------------------------------------------
1.00 - 1.03 TARGET 37.50 6.0 4.50 3.00
.97 - .99 30.00 4.8 3.60 2.40
.94 - .96 22.50 3.6 2.70 1.80
.92 - .93 15.00 2.4 1.80 1.20
.90 - .91 7.50 1.2 .90 .60
</TABLE>
- 15 -
<PAGE> 18
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 If the financial performance of the Company for any
plan year taken into account for determination of an award is found to be
incorrect by the Company's independent certified public accountants and was more
than the correct amount, there shall be no recourse by the Company against any
person or estate. However, the Company shall have the right to correct such
error by reducing by the excess amount any subsequent payments yet to be made
under the Plan.
Section 9.02 Incentive awards shall be treated as an expense in the
Fiscal Year in which awards are earned by participants as opposed to subsequent
Fiscal Year(s) during which the awards are paid.
Section 9.03 The Company shall not merge into or consolidate with
another entity or sell all or substantially all of its assets to another entity
unless such other entity shall become obligated to perform the terms and
conditions hereof relating to any awards already earned but not yet paid to the
participant or on his behalf.
- 16 -
<PAGE> 19
ATTACHMENT A
NOTICE OF PARTICIPATION
___________________________________ is eligible for participation in the 19__
Plan Year for Liberty National Bancorp, Inc. Amended and Restated Management
Incentive Compensation Plan, such participant being subject to all of the terms
and conditions of said Plan.
Executive Committee of
the Board of Directors
BY:________________________________
Dated:________________________
- 17 -
<PAGE> 20
ATTACHMENT B
DESIGNATION OF BENEFICIARY
I, ____________________________ a participant in Liberty National Bancorp, Inc.
Amended and Restated Management Incentive Compensation Plan, name ______
_______________________________ as my beneficiary under said Plan in the event
of my death prior to receiving all benefits payable to me under said Plan.
___________________________________
Employee's Signature
Dated:________________________
- 18 -
<PAGE> 21
ATTACHMENT C
LIBERTY NATIONAL BANCORP, INC.
INCENTIVE AWARD DEFERRAL ELECTION
WHEREAS, Liberty National Bancorp, Inc. (hereinafter known as
"Liberty") has established a formal Management Incentive Compensation Plan
(hereinafter known as the "Plan") for certain eligible employees; and
WHEREAS, the Plan permits those employees to elect to defer receipt of
payments thereunder for a period of time; and
WHEREAS, as an eligible employee under said Plan, I now desire to elect
to defer an incentive award in accordance with the terms of the Plan;
NOW, THEREFORE, I, ______________________________, do elect to defer
receipt of any incentive award payment to which I may become entitled under said
Plan with respect to services I shall perform for Liberty during the Fiscal Year
beginning January 1, 19__, subject to the following understandings and
restrictions:
1. The incentive award covered by this election shall be paid in
_______ (1-10) equal annual payments. If only one equal annual payment is
elected, it shall be deemed a lump-sum payment.
2. A lump-sum payment under this election, or the first equal annual
payment of deferred amounts, whichever applies, shall be deferred until
(check one)
a. ____ no later than twelve (12) months after the end of the Award
Period during which I terminate my employment with Liberty,
for whatever reason such termination shall occur.
b. ____ no later than twelve (12) months after the end of the Award
Period during which I become sixty-five (65) years of age.
c. ____ some other date, namely _________________________.
3. If an employee has elected payment under paragraph 2(b) or 2(c)
and said employee dies before reaching the date designated for the payment of
deferred amounts, he or she shall be deemed to have elected payment under
paragraph 2(a).
- 19 -
<PAGE> 22
4. This election shall remain in effect until rescinded in writing by
me. Any such rescission of this deferral for the Fiscal Year stated above must
be made prior to the time payment would have been made had I not elected
deferral of the incentive award.
5. All other terms of this Deferral Election shall be governed by the
Liberty National Bancorp, Inc. Management Incentive Compensation Plan, and any
amendments thereto, which is in effect at the time of this election. All of the
terms and conditions of said Plan are incorporated by reference hereto.
IN WITNESS WHEREOF, I affix my signature to this election this ____ day
of ________________________, 19__.
___________________________________
Employee Name
Executive Committee
by_________________________________
- 20 -
<PAGE> 1
EXHIBIT 10(g)(1)
AMENDMENT NO. 1
TO THE
LIBERTY NATIONAL BANCORP, INC.
AMENDED AND RESTATED
MANAGEMENT INCENTIVE COMPENSATION PLAN
This is Amendment No. 1 to the Liberty National Bancorp, Inc. Amended
and Restated Management Incentive Compensation Plan (the "Plan"), which
Amendment shall be effective as of December 31, 1993.
Recital
-------
Liberty National Bancorp, Inc. ("Liberty") wishes to phase out the plan
in contemplation of a merger with Banc One Corporation (BANC ONE).
Amendment
---------
NOW, THEREFORE, the Plan is hereby amended as follows, provided that
this Amendment shall be null and void if Liberty and BANC ONE do not merge in
1994:
1. Section 8.01 of the Plan is hereby amended by adding the following
sentence to the end of thereof:
No Longer-Term Award Cycle shall begin in 1994 or in any later year.
2. A new Section 6.04 is hereby added to the Plan to read in its
entirety as follows:
Notwithstanding any other provision of this Plan, no Annual Awards
shall be payable under this Plan for any period that begins
after December 31, 1994.
3. Section 2.01(e) of the Plan is hereby amended by adding the following
sentence to the end thereof:
For purposes of determining Earnings Per share for the 1994, expenses
and charge-offs, net of tax benefits thereof, directly related to
Liberty's merger with BANC ONE shall be disregarded.
<PAGE> 2
4. Section 8.04 of the Plan is hereby amended by adding the following
sentence to the end of thereof:
For purposes of determining Return on Equity and Return on Average
Assets for 1994, expenses and charge-offs, net of tax benefits
thereof, directly related to Liberty's merger with BANC ONE shall be
disregarded.
5. The Plan shall terminate as of December 31, 1995 provided that awards
already earned through that date shall remain payable to the extent not
already paid.
IN WITNESS WHEREOF, this Amendment No. 1 is hereby adopted as of the date first
stated above.
LIBERTY NATIONAL BANCORP, INC.
By:__________________________________
Title:_______________________________
Date:________________________________
2
<PAGE> 1
EXHIBIT 10(h)
LIBERTY NATIONAL BANCORP, INC.
1986 STOCK OPTION PLAN
(As Amended and Restated as of January 10, 1990)
I. PURPOSE
The purposes of this Liberty National Bancorp, Inc. 1986 Stock Option
Plan (the "Plan") are to promote the long term success of Liberty National
Bancorp, Inc. (the "Corporation") and to attract, retain, and motivate key
employees while creating a long term mutuality of interest between such key
employees and the Corporation's shareholders.
II. ADMINISTRATION
The Plan shall be administered by the Examining Committee (the
"Committee") of the Board of Directors of the Corporation (the "Board"). All
powers and functions of the Committee may at any time and from time to time be
exercised by the Board; provided, however, that decisions under the Plan
relating to employees who are members of the Board, shall be made solely by the
Committee. Members of the Committee shall be chosen from members of the Board
who are "disinterested persons," as defined by Rule 16b-3 under the Securities
Exchange Act, as amended (the "Exchange Act"). The Committee shall have full
authority to establish regulations for the administration of the Plan and to
make any other determination it deems necessary to administer the Plan.
<PAGE> 2
III. ELIGIBILITY FOR AWARD
The Committee shall designate key employees of the Corporation or any
direct or indirect subsidiary of the Corporation to receive options under the
Plan.
IV. ALLOTMENT OF SHARES
Shares of common stock of the Corporation to be issued under the Plan
shall be made available at the discretion of the Board, either from authorized
but unissued shares or from issued shares reacquired by the Corporation. The
aggregate number of shares of the Corporation's common stock that may be issued
under the Plan shall be increased automatically upon increases in the number of
shares outstanding to equal 6.00% of the shares of common stock outstanding from
time to time, provided that the number of shares covered by "Incentive Stock
Options," as contemplated by and defined in Section 422A of the Internal Revenue
Code of 1986 (the "Code"), granted under the Plan shall not exceed 670,000
shares, subject to adjustment pursuant to Section VIII of the Plan. Where
options are for any reason cancelled, or expire or terminate unexercised, the
shares covered by such options shall again be available for grant of options
within the limits provided by the preceding sentence. Options may be allotted
to such eligible employees, and in such amounts as the Committee, in its sole
discretion, may from time to time determine; provided, however, in the case of
Incentive Stock Options (i) such individual, at the time the option is granted,
does not own common stock possessing more than 10% of the total combined voting
power of all classes of
- 2 -
<PAGE> 3
stock of the Corporation; (ii) for options granted after December 31, 1986, the
aggregate Fair Market Value (as defined in Section VII hereof), determined at
the time the option is granted, of the stock with respect to which Incentive
Stock Options are exercisable for the first time by any eligible employee during
any calendar year (under this Plan and any other stock option plan of the
Corporation and its subsidiaries) shall not exceed $100,000; and (iii) for
options granted before January 1, 1987, the aggregate Fair Market Value of the
common stock for which any eligible employee may be granted Incentive Stock
Options in any calendar year shall not exceed $100,000 plus any Unused Limit
Carryover to such year. "Unused Limit Carryover" as to any calendar year shall
have the meaning assigned to such term by Section 422A(c)(4) of the Internal
Revenue Code of 1954, as amended (the "1954 Code").
V. GRANTING OF OPTIONS AND STOCK APPRECIATION RIGHTS
All options granted under the Plan shall be in such form as the
Committee may from time to time approve. It is intended that some of the
options granted under this Plan will be Incentive Stock Options and that other
options granted under the Plan will be "Nonqualified Stock Options" governed by
Section 83 of the Code. All options granted under the Plan shall be subject to
the following terms and conditions:
(a) Option Price. The option price per share with respect
to each option shall be determined by the Committee. The option price shall not
be less than 100% of the Fair Market Value of the Corporation's common stock at
the date the option is
- 3 -
<PAGE> 4
granted.
(b) Period of Option. The period of each option shall be
fixed by the Committee. The option period shall in no case be in excess of ten
years.
(c) Payment. The option price shall be payable (i) in
cash; (ii) by tender to the Corporation of shares of the Corporation's common
stock (including "Restricted Stock", as defined in Rule 144 under the Securities
Act of 1933, which shall be valued as if it were not subject to restrictions on
transfer or possibilities of forfeiture) owned by the Optionee; or (iii) by any
combination thereof. If permitted by the Committee, at its sole discretion, an
Optionee may satisfy the option price for an option by electing to have the
Corporation retain that number of shares subject to such option having an
aggregate Fair Market Value equal to the aggregate option price of the option,
subject to any limitations imposed by Section 16 of the Exchange Act and any
rule promulgated thereunder. If shares of Restricted Stock are tendered as
consideration for the exercise of an option, a number of shares issued upon the
exercise of such option, equal to the number of shares of Restricted Stock
tendered as consideration thereof, shall be subject to the same restrictions as
the Restricted Stock so tendered and any additional restrictions that may be
imposed by the Committee. No shares shall be issued until full payment has been
made. A holder of an option shall have none of the rights of a stockholder
until the shares are issued.
- 4 -
<PAGE> 5
(d) Exercise of Options. The shares covered by an option
may be purchased in such installments and on such exercise dates as the
Committee may determine. Any shares not purchased on the applicable exercise
date may be purchased thereafter at any time prior to expiration of the option.
In no event shall any option be exercisable after the expiration of ten years
from the date upon which the option was granted. No Incentive Stock Option
granted before January 1, 1987, may be exercised by an Optionee while there are
outstanding (within the meaning of Section 422(c)(7) of the 1954 Code) any
Incentive Stock Options previously granted to that Optionee by the Corporation;
Incentive Stock Options granted after December 31, 1986, may be exercised in any
sequence. Each option shall become exercisable according to terms set by the
Committee, except as specified in Section VI (Acceleration of Exercisability on
Change of Control). The Committee may direct that an option become exercisable
in installments, which need not be annual installments, over a period which may
be less than the terms of the option. At such time as an installment shall
become exercisable, it may be exercised at any time thereafter in whole or in
part until the expiration or termination of the option. The Committee may, in
its sole discretion, prescribe shorter or longer time periods and additional
requirements with respect to exercise of an option.
(e) Nontransferability of Options. An option granted
under the Plan may not be transferred except by will or the laws of descent and
distribution and, during the lifetime of the
- 5 -
<PAGE> 6
employee to whom granted, may be exercised only by such employee.
(f) Termination of Employment. Upon the termination of an
option holder's employment (for any reason other than retirement, disability,
death or termination for deliberate, willful or gross misconduct), option
privileges shall be limited to the shares which were immediately purchasable at
the date of such termination and such option privileges shall expire unless
exercised within three months after the date of such termination. If an option
holder's employment is terminated for deliberate, willful or gross misconduct,
as determined by the Corporation, all rights under the option shall expire upon
receipt of the notice of such termination.
(g) Retirement, Pre-retirement Disability or
Pre-retirement Death of an Option Holder. In the event of an option holder's
retirement, pre-retirement disability (within the meaning of Section 105(d)(4)
of the Code) or pre-retirement death, option privileges shall apply to all
options granted prior to such event without regard to whether such options were
otherwise exercisable. Option privileges shall expire unless exercised (by
legal representatives or beneficiaries in the event of death) (i) for
Nonqualified Stock Options, within 24 months after an option holder's death,
termination of employment due to disability or retirement, and (ii) for
Incentive Stock Options, within one year after an option holder's death or
termination of employment due to disability or within three months after
termination of employment due to retirement. Notwithstanding the preceding
sentence, the Committee, at its sole discretion, may authorize the
- 6 -
<PAGE> 7
grant of Nonqualified and Incentive Stock Options to a select group of senior
executive officers (or "Group I" officers as designated by the Committee) that
are, and may amend Nonqualified Stock Options already granted to such officers
to be, exercisable for up to a maximum of five years after death, termination of
employment due to disability, or retirement.
(h) Tax Withholding. Any Optionee of a Nonqualified Stock
Option shall make arrangements satisfactory to the Committee to pay to the
Corporation, either (i) at the time of exercise, or (ii) if the Optionee does
not make the Section 83 election although subject to a risk of forfeiture with
respect to stock received at exercise of an option, no later than the date as of
which the difference between the Fair Market Value of the common stock subject
to an option and the option price first becomes includable in the gross income
of the Optionee for income tax purposes, any federal, state or local taxes
required to be withheld with respect to such shares. If permitted by the
Committee, at its sole discretion, an Optionee may elect to satisfy the tax
withholding obligation by having the Corporation retain that number of shares of
common stock having an aggregate Fair Market Value equal to the amount required
to be withheld, subject to the following conditions: (i) the Optionee must elect
both to exercise the option and to have the Corporation retain shares to satisfy
tax withholding during the period beginning on the third business day and
ending on the twelfth business day following the date of public release of the
Corporation's quarterly summary of sales and
- 7 -
<PAGE> 8
earnings; and (ii) the Optionee, if subject to the short swing profit rules of
Section 16 of the Exchange Act must properly make an election under Section
83(b) of the Code on the date of exercise of the option.
(i) Stock Appreciation Rights. The Committee, in its
discretion, may grant to any eligible employee a stock appreciation right
("SAR") in tandem with an option, provided that the SAR shall be in lieu of any
simultaneous or subsequent exercise of such option. An SAR shall entitle the
Optionee to receive from the Corporation a cash payment equal to the difference
between (i) the Fair Market Value of the common stock with respect to which the
Option and SAR are granted and unexercised and (ii) the aggregate option price
of such shares. Any election by an Optionee who is subject to the short-swing
profit rules of Section 16 of the Exchange Act to exercise all or a portion of
an SAR for cash shall be made during the period beginning on the third business
day and ending on the twelfth business day following the date of public release
of the Corporation's quarterly summary of sales and earnings. The grant of SARs
under the Plan shall otherwise be subject to all of the terms and conditions
applicable to the grant of options under the Plan.
VI. ACCELERATION OF EXERCISABILITY ON CHANGE IN CONTROL
Upon a Change in Control of the Corporation, all options theretofore
granted and not previously exercisable shall become fully exercisable to the
same extent and in the same manner as if they had become exercisable by passage
of time in accordance with
- 8 -
<PAGE> 9
the provisions of the Plan relating to periods of exercisability and to
termination of employment.
For purposes of the Plan, a "Change in Control" of the Corporation
shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act; provided that, without limitation, such a change in control shall
be deemed to have occurred if: (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding stock; (B) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute a majority
thereof, unless the election, or the nomination for election by the
Corporation's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; or (C) the business of the Corporation for which the
Optionee's services are principally performed is disposed of by the Corporation
pursuant to a partial or complete liquidation of the Corporation, a sale of
assets of the Corporation, or otherwise.
A Change in Control shall also be deemed to occur if (A) the
Corporation enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control of the Cor-
- 9 -
<PAGE> 10
poration, (B) any person (including the Corporation) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Corporation, or (C) the Board adopts a
resolution to the effect that a potential Change in Control of the Corporation
for purposes of this Plan has occurred.
VII. FAIR MARKET VALUE
"Fair Market Value" shall mean the value of a share of common stock on
a particular date, determined as follows: (i) if the common stock is not listed
on such date on any national securities exchange, the last sales price (or, if
none on that date, on the most recent date on which there was a last sales price
quotation), as reported by the National Association of Securities Dealers
Automated Quotation System, the National Quotation Bureau, Incorporated, or
other similar service selected by the Committee; (ii) if the common stock is
neither listed on such date on a national securities exchange nor traded in the
over-the-counter market, the fair market value of a share on such date as
determined in good faith by the Committee; or (iii) if the common stock is
listed on such date on one or more national securities exchanges, the last
reported sale price of a share on such date as recorded on the composite tape
system or, if such system does not cover the common stock, the last reported
sale price of a share on such date on the principal national securities
exchange on which the common stock is listed or, if no sale of common stock took
place on such date, the last reported sale price of a share on the most recent
- 10 -
<PAGE> 11
day on which a sale of a share took place as recorded by such system or on such
exchange, as the case may be.
VIII. ADJUSTMENT IN THE EVENT OF RECAPITALIZATION OF THE CORPORATION
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the corporate structure of the Corporation, the Committee shall
make such adjustments, if any, subject to the approval of the Board, as are
appropriate in the number and kind of shares authorized by the Plan, in the
number and kind of shares covered by the options granted and in the option
price.
IX. AMENDMENTS AND DISCONTINUANCE
The Board may discontinue the Plan at any time and may from time to
time amend or revise the terms of the Plan without shareholder approval to the
extent permitted or required by federal income tax or other applicable statutes
or regulations; provided, however, that the Board may not revoke or alter, in a
manner unfavorable to the holders, any options then outstanding.
X. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan became effective on February 6, 1986, and it has been amended
and restated as of February 11, 1987, January 11, 1989 and January 10, 1990. No
option shall be granted pursuant to this Plan later than February 5, 1996, but
options theretofore granted may extend beyond that date in accordance with their
terms and the provisions of this Plan.
- 11 -
<PAGE> 1
EXHIBIT 10(h)(1)
Document 1
MEMORANDUM
----------
DATE: February 26, 1993
TO: Participants in Stock Option Plan
FROM: Carl E. Weigel
Administrator of the 1986 Stock Option Plan
RE: Amendment to Stock Option Plan
CC: Bruce Raque
John Barron
Kathryn Arterberry
Debbie Reiss (BT&H)
--------------------------------------------------------------------------------
On February 16, 1993 the Examining Committee amended The 1986 Stock Option Plan
as follows.
Section V(h) of the Stock Option Plan is hereby amended to read in its
entirety as follows:
(h) Tax Withholding. Any Optionee of a Nonqualified Stock
Option shall make arrangements satisfactory to the Committee to pay to
the Corporation at the time of exercise any federal, state or local
taxes required to be withheld with respect to such shares.
Please attach this memorandum to your copy of the 1986 Stock Option Plan.
Please give me a call at extension 2510 if you have any questions in regard to
this amendment.
/CEW216AM
3
<PAGE> 1
EXHIBIT 10(i)
AMENDMENT NO. 3
TO THE
LIBERTY NATIONAL BANK AND TRUST COMPANY
COMPENSATION DEFERRAL PLAN
This is Amendment No. 3 to the Liberty National Bank and Trust Company
Compensation Deferral Plan effective as of June 1, 1984 (the "Plan").
Recital
WHEREAS, pursuant to Section 13.05 of the Plan, Liberty National Bank
and Trust Company (the "Company") has retained the right to amend the Plan at
any time and the Company wishes to amend the Plan to (i) provide that an
Executive who is not already a Participant in the Plan may become a Participant
by completing a Deferral Agreement within 30 days after the Executive has been
selected for participation by the Committee; and (ii) to clarify the terms of
the Plan regarding Participant elections as to the deemed investment of Account
Balances and deferrals under the Plan.
Amendment
The Plan is hereby amended, effective as of April 16, 1993, as follows:
1. Section 2.08 of the Plan is hereby amended so that as amended
it shall read in its entirety as follows:
2.08 Election Date. the "Election Date" is the
date established by this Plan as the date before which an
Executive must submit a valid Deferral Agreement to the
Committee. The Election Date is each December 31 for Deferral
Agreements effective for the fiscal Year beginning the
following January 1, except that for Executives who are not
already participants in the Plan, the Election Date is the
date the Executive submits an executed Deferral Agreement to
the Committee, provided that Deferral Agreement is submitted
within 30 days after the date the Executive is selected by the
Committee for participation.
2. Section 5.02 of the Plan is hereby amended so that as amended
it shall read in its entirety as follows:
<PAGE> 2
5.02 The amount in a Participant's Bookkeeping
Account shall be deemed to have been invested and reinvested
as if in one or more of Funds A, B, C, or D of the Liberty
1992 Restated Thrift Plan in such proportions as indicated in
the participant's Deferral Agreement. The Deferral Agreement
shall permit a Participant to separately designate the deemed
investment of his existing Bookkeeping Account and new
deferrals. Participants may complete a new Deferral Agreement
to change the way new deferrals (but not existing Account
Balances) are being invested effective as of the first day of
any calendar quarter, provided the participant provides that
Deferral Agreement to the Committee at least 15 days before
the beginning of the calendar quarter for which the change in
the deemed investment of future deferrals is to be effective.
Nothing in this Section 5.02 shall permit a Participant to
change the amount of compensation being deferred or the deemed
investment of his existing Account Balance at a time other
than the time permitted by Section 4.06 of the Plan. A
Participant may also elect on his Deferral Agreement to have
deferrals under this Plan be invested pursuant to a
participant's investment elections under the Liberty 1992
Restated Thrift Plan.
IN WITNESS WHEREOF, this Amendment No. 3 has been adopted by the
Company this 14th day of April, 1993.
By:
____________________________________
Title:
_________________________________
Date:
_________________________________
- 2 -
<PAGE> 3
AMENDMENT NO. 2
TO THE
LIBERTY NATIONAL BANK AND TRUST COMPANY
COMPENSATION DEFERRAL PLAN
WHEREAS, the Board of Directors of Liberty National Bank and Trust
Company of Louisville ("Liberty") adopted the Liberty National Bank and Trust
Company Compensation Deferral Plan (the "Plan") effective June 1, 1984;
WHEREAS, Liberty reserved the right to amend the Plan by action of its
Board of Directors; and
WHEREAS, the Board of Directors wishes to amend the Plan to eliminate
hardship withdrawals so that the Plan will satisfy the requirements of Rule
16a-1(c)(3) promulgated under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, BE IT RESOLVED that, effective as of May 1, 1991, the
Plan is amended to delete Article VII in its entirety.
<PAGE> 4
AMENDMENT NO. 1
TO THE
LIBERTY NATIONAL BANK AND TRUST COMPANY
COMPENSATION DEFERRAL PLAN
This is Amendment No. 1 to the "Liberty National Bank & Trust Company
Compensation Deferral Plan."
1. The Plan is amended effective as of ________________________,
as follows:
I
The reference in Section 4.03 to "Bonus - 100%" is deleted in its
entirety.
II
Section 6.02 is deleted in its entirety.
III
Section 6.03 is amended in its entirety and shall read as follows:
"6.03 A Participant may designate a manner of
distribution of any benefits under the Plan as provided
hereinafter. Participant's designation shall be in writing
and shall be filed with the Committee on or before the
Election Date that next precedes the Fiscal Year with respect
to which the deferral under Article IV is to be effective. A
separate Bookkeeping Account shall be maintained with respect
to each form of distribution selected by the Executive. If
the participant does not designate a manner of distribution,
the distribution shall be a lump sum. The alternative forms
of distribution are as follows:
<PAGE> 5
(a) A lump sum distribution in
cash;
(b) Periodic installments (either
monthly or annually) for a period not to exceed ten (10)
years; or
(c) Any combination of the above."
IV
Section 6.04 is amended in its entirety and shall read as follows:
"6.04 In the case of Termination of Service,
distributions shall be made in a lump sum within thirty (30)
days of the date of the participant's Termination of Service."
V
Section 6.05 is deleted in its entirety.
VI
Section 13.07 is deleted in its entirety.
- 2 -
<PAGE> 6
LIBERTY NATIONAL BANK AND TRUST COMPANY
COMPENSATION DEFERRAL PLAN
<PAGE> 7
LIBERTY NATIONAL BANK AND TRUST COMPANY
COMPENSATION DEFERRAL PLAN
The purpose of the Liberty National Bank and Trust Company
Compensation Deferral Plan is to permit select members of management and
highly-compensated employees to defer current compensation which could not be
redirected into the Company's Qualified Plan, and to otherwise defer
compensation.
<PAGE> 8
LIBERTY NATIONAL BANK AND TRUST COMPANY
COMPENSATION DEFERRAL PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
----
<S> <C> <C>
I TITLE AND EFFECTIVE DATE 1
II DEFINITIONS AND CONSTRUCTION OF PLAN DOCUMENT 2
III ELIGIBILITY 4
IV DEFERRAL OF COMPENSATION 5
V DEFERRAL ACCOUNT AND CREDITING 6
VI DISTRIBUTION 7
VII HARDSHIP DISTRIBUTIONS 9
VIII BENEFICIARY 10
IX ADMINISTRATION OF PLAN 11
X CLAIMS PROCEDURE 13
XI NATURE OF COMPANY'S OBLIGATION 14
XII PARTICIPANT RIGHT TO ASSETS 15
XIII MISCELLANEOUS 16
</TABLE>
<PAGE> 9
ARTICLE I
TITLE AND EFFECTIVE DATE
1.01 Title. This Plan shall be known as the Liberty
National Bank and Trust Company Compensation Deferral Plan (hereinafter
referred as the "Plan").
1.02 Effective Date. The effective date of this Plan shall
be June 1, 1984.
- 1 -
<PAGE> 10
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
2.01 Beneficiary. "Beneficiary" shall mean the person
or persons or the estate of an Executive entitled to receive any benefits under
this Plan.
2.02 Board. "Board" shall mean the Board of Directors of
Liberty National Bank and Trust Company.
2.03 Bookkeeping Account. A "Bookkeeping Account" will
be established only as a bookkeeping record for each participant who elects to
defer compensation under this Plan.
2.04 Committee. "Committee" means the Executive
Committee of Liberty National Bank and Trust Company, which Committee shall
manage and administer the Plan.
2.05 Company. "Company" shall mean Liberty
National Bank and Trust Company, any division, subsidiary or affiliate, or any
successor company.
2.06 Deferral Agreement. "Deferral Agreement" means
the written form which is submitted to the named Fiduciary before the relevant
Election Date which indicates whether the Executive or Participant wishes to
defer a portion of total compensation and indicates the percentage of salary
and bonus (or both) to be deferred. Any written document which provides
substantially the same information is also a "Deferral Agreement." However, no
Deferral Agreement shall be effective until acknowledged by the Company.
2.07 Deferred Compensation. "Deferred Compensation"
means the portion of a participant's salary or bonus compensation for any
fiscal year, or part thereof, that has been deferred pursuant to the Plan.
2.08 Election Date. The "Election Date" is the date
established by this Plan as the date before which an Executive must submit a
valid Deferral Agreement to the Committee. For the balance of the Fiscal year
1984, the Election Date is June 1, 1984. For all Fiscal Years after 1984, the
Election Date is December 15. For new Executives, the Election Date is a date
no later than thirty (30) days after hiring commences.
2.09 Executive. "Executive" shall mean any person
who is in the regular full-time employment of the Company or one of its
subsidiaries, as determined by the personnel rules and practices of the Company
or the subsidiary, and is a member of the Company's Qualified Plan.
- 2 -
<PAGE> 11
2.10 Fiscal Year. "Fiscal year" means the fiscal year
of the Company as established from time to time for Federal income tax
purposes.
2.11 Named Fiduciary. "Named Fiduciary," for
purposes of the claims procedure of this Plan, shall mean the Company acting
through one of its duly authorized officers who is a member of the Committee.
2.12 Participant. "Participant" means an Executive, a
portion of whose salary or bonus compensation for any Fiscal year has been
deferred pursuant to the plan and whose account balance has not been
distributed.
2.13 Plan. "Plan" means the Liberty National Bank and
Trust Company Compensation Deferral Plan, as described in this instrument, as
amended from time to time.
2.14 Plan Year. The "Plan Year" is the same as the
Company's Fiscal Year.
2.15 Qualified Plan. "Qualified Plan" shall mean the
Liberty Restated Thrift Plan, as amended from time to time.
2.16 Retirement. "Retirement" means a Participant's
retirement at the Normal Retirement Date, Early Retirement Date, Disability
Retirement Date, or Death, as defined in the Company's Qualified Plan under
Article V entitled "DISTRIBUTIONS," as amended from time to time.
2.17 Termination of Service. "Termination of Service" or
similar expression means the termination of the Participant's employment as a
regular employee of the Company and any division, subsidiary or affiliate
thereof, other than Retirement.
2.18 Total Compensation. "Total Compensation" shall
mean, for any Participant, the base pay, salary or wages, (including shift
differential, overtime and Salary Redirection, as defined in the Qualified
Plan, but excluding any payments and accruals under any bonus, additional
compensation or incentive compensation plan) paid to him by the company during
a Plan Year for which such determination is required hereunder.
2.19 Wherever the context so requires, masculine pronouns
include the feminine and singular words shall include the plural.
2.20 Titles of the Articles of this Plan are included for
ease of reference only and are not to be used for the purpose of construing any
portion or provision of this Plan document.
- 3 -
<PAGE> 12
ARTICLE III
ELIGIBILITY
3.01 Eligibility for participation in this Plan shall be
determined by the Committee, in its sole discretion, on an individual basis,
but no Executive shall be selected for participation in this Plan unless he
qualifies as a member of a select group of management or a highly-compensated
employee of the Company.
3.02 An Executive, after having been selected for
participation by the Committee, shall, as a condition to participation,
complete and return to the Committee a duly executed Deferral Agreement.
- 4 -
<PAGE> 13
ARTICLE IV
DEFERRAL OF COMPENSATION
4.01 Each Participant in the Plan will have a percentage
of his Total Compensation, to be received by him during each Fiscal Year,
deferred in accordance with the terms and conditions of this Plan. The
percentage of such Total Compensation to be so deferred shall not exceed 10% of
Total Compensation. The specific amount shall be determined each Plan Year by
the Committee after a review of contributions made to the Company's Qualified
Plan on behalf of the Participant.
4.02 As to any amounts so deferred under Section 4.01, the
Company shall add an additional amount to the Participant's deferral equal to
the additional contribution, if any, the Company would have made to the
Qualified Plan if the entire amount of the participant's deferral under Section
4.01 had gone into the Qualified Plan.
4.03 Each Participant may, with permission of the
Committee, defer a percentage of Total Compensation to be received by him in a
Fiscal year in excess of that deferred under Section 4.01 in accordance with
the terms and conditions of this Plan. The aggregate percentages of Total
Compensation which may be deferred under Sections 4.01 and 4.03 shall not
exceed the following:
Salary - 50%
Bonus - 100%
4.04 Any additional amounts deferred by a participant
under Section 4.03 shall not receive any additional Company matching
contribution by reason of Section 4.02. However, for all other purposes of
this Plan, additional deferrals made by a participant under Section 4.03 shall
be treated the same as those made under Section 4.01.
4.05 A Participant desiring to exercise this election must
submit his written Deferral Agreement for the forthcoming Fiscal Year to the
Named Fiduciary on or before the Election Date.
4.06 A Participant who has not submitted a valid Deferral
Agreement to the Named Fiduciary before the relevant Election Date may not
defer any compensation for the Fiscal Year in question under this Plan.
- 5 -
<PAGE> 14
ARTICLE V
DEFERRAL ACCOUNT AND CREDITING
5.01 Compensation deferred by a participant under a
written Deferral Agreement and matching Company contributions shall be credited
in a dollar amount to a separate Bookkeeping Account for that Participant.
Compensation deferred under subsequent written election agreements by a
participant shall be added to his Bookkeeping Account.
5.02 The amount in the Participant's Bookkeeping Account
shall be deemed to have been invested and reinvested as if in either Fund A,
Fund B, Fund C or Fund D or the Liberty Restated Thrift Plan in such
proportions as indicated in a Participant's Deferral Agreement. The allocation
of a deferral under a new Deferral Agreement shall not change the allocation of
deferrals made under prior Deferral Agreements. Compensation deferred shall be
deemed to be so invested on the date the amounts deferred are credited to the
Bookkeeping Account.
5.03 Compensation deferred under a written Deferral
Agreement of a participant and matching Company contributions, plus an amount
equal to the participant's deemed net earnings and losses of Funds A, B, C and
D shall be credited to the Bookkeeping Account in accordance with Article IV of
the Qualified Plan.
5.04 A participant's Bookkeeping Account balance shall be
distributed in the manner at such times and under such conditions as specified
in Articles VI and VII.
- 6 -
<PAGE> 15
ARTICLE VI
DISTRIBUTION
6.01 Distribution of the value of a Participant's
Bookkeeping Account balance shall be made according to the terms of this Plan
upon the Retirement or Termination of Service of a Participant.
6.02 A Participant may request a distribution of the value
of the Bookkeeping Account at any time prior to Retirement for reasons other
than an unforeseen hardship, as provided in Article VII, by giving a written
notice to the named Fiduciary. The distribution shall be made in a lump-sum
within ninety (90) days of the date that written notice is given to the Named
Fiduciary. However, exercise of this right by the Participant from any future
participation under this Plan.
6.03 At Retirement, a Participant or Beneficiary may
request a manner of distribution of any benefits under the Plan as provided
hereinafter. The request by the participant or the Beneficiary shall be in
writing and shall be filed with the Committee at least thirty (30) days before
distribution is to be made. The Committee shall have the sole authority to
approve or disapprove such election and may substitute another alternative
election, if it so desires. The alternative forms of distribution are as
follows:
(a) A lump sum distribution in cash or in kind;
(b) Periodic installments (either monthly or
annually) for a period not to exceed ten (10)
years, as selected by the Participant or
Beneficiary; or
(c) Any combination of the above.
6.04 In the case of Termination of Service, distribution
shall be made in a lump sum within ninety (90) days of the date of the
participant's Termination of Service.
6.05 A distribution at Retirement shall commence and be
paid at the same time or times as the Committee, in its sole discretion, shall
determine.
- 7 -
<PAGE> 16
6.06 The Participant shall have a nonforfeitable right to
receive distribution of the value of his Bookkeeping Account according to the
terms of this Plan, unless the Participant shall be Terminated from Service by
the Company for reason of a conviction for fraud, embezzlement or any other
criminal act which results in a felony conviction. In such circumstances, the
participant shall forfeit all rights to the value of his Bookkeeping Account,
except for the Participant's own deferrals and the deemed net earnings and
losses thereto.
6.07 The Company may delay distribution of the value of a
participant's Bookkeeping Account required under the terms of this Plan if any
proceedings are pending which might result in a forfeiture of the value of a
Participant's Bookkeeping Account under Section 6.06 above, except for
distributions of the participant's own deferrals and the deemed net earnings
and losses thereto.
6.08 All distributions of a Participant's Bookkeeping
Account shall be made in cash only.
- 8 -
<PAGE> 17
ARTICLE VII
HARDSHIP DISTRIBUTIONS
7.01 At the request of a Participant before or after the
Participant's Retirement or before a Termination of Service, or at the request
of any of the Participant's beneficiaries after the Participant's death, the
Plan Committee may, in its sole discretion, accelerate and pay all or part of
the value of a Participant's Bookkeeping Account due under this Plan.
Accelerated distributions at the request of the Participant or a Participant's
Beneficiaries may be allowed only in the event of a financial emergency beyond
the Participant's or beneficiary's control and only if disallowance of a
distribution would create a severe hardship for the participant or Beneficiary.
An accelerated distribution must be limited to only that amount necessary to
satisfy the financial emergency.
- 9 -
<PAGE> 18
ARTICLE VIII
BENEFICIARY
8.01 A Participant shall designate his Beneficiary to
receive benefits under the Plan by completing the appropriate space in the
Deferral Agreement. If more than one Beneficiary is named, the shares and/or
precedence of each Beneficiary shall be indicated. A Participant shall have
the right to change the Beneficiary by submitting to the committee a change of
Beneficiary in the form attached as Exhibit 2 hereof. However, no change of
beneficiary shall be effective until acknowledged in writing by the Company.
8.02 If the Company has any doubt as to the proper
Beneficiary to receive payments hereunder, the Company shall have the right to
withhold such payments until the matter is finally adjudicated.
8.03 Any payment made by the Company, in good faith and in
accordance with this Plan, shall fully discharge the Company from all further
obligations with respect to that payment.
8.04 In making any payments to or for the benefit of any
minor or incompetent Beneficiary, the Committee, in its sole, and absolute
discretion may make a distribution to a legal or natural guardian or other
relative of a minor or court appointed committee of such incompetent. Or, it
may make a payment to any adult with whom the minor or incompetent temporarily
or permanently resides. The receipt by a guardian, committee, relative or
other person shall be a complete discharge to the Company. Neither the
Committee nor the Company shall have any responsibility to see to the proper
application of any payments so made.
- 10 -
<PAGE> 19
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.01 The general administration of this Plan, as well as
construction and interpretation thereof, shall be vested in the Committee, the
number and members of which shall be designated and appointed from time to time
by, and shall serve at the pleasure of the Board of Directors of the Company.
Any such member of the Committee may resign by notice in writing filed with the
Secretary of the Committee. Vacancies shall be filled promptly by the Board of
Directors of the Company.
9.02 The Board of Directors of the Company may designate
one of the members of the Committee as Chairman and may appoint a Secretary who
need not be a member of the Committee and may be a Participant in the Plan.
The Secretary shall keep minutes of the Committee's proceedings and all data,
records and documents relating to the Committee's administration of the Plan.
The Committee may appoint from its number such subcommittees with such powers
as the Committee shall determine and may authorize one or more members of the
Committee or any agent to execute or deliver any instrument or make any payment
on behalf of the Committee.
9.03 All resolutions or other actions taken by the
Committee shall be by vote of a majority of those present at a meeting at which
a majority of the members are present, or in writing by all the members at the
time in office if they act without a meeting.
9.04 Subject to the plan, the Committee shall from time to
time establish rules, forms and procedures for the administration of the Plan.
Except as herein otherwise expressly provided, the Committee shall have the
exclusive right to interpret the Plan and to decide any and all matters arising
thereunder or in connection with the administration of the Plan, and it shall
endeavor to act, whether by general rules or by particular decisions, so as not
to discriminate in favor of or against any person. The decisions, actions and
records of the Committee shall be conclusive and binding upon the Company and
all personnel having or claiming to have any right or interest under the Plan.
- 11 -
<PAGE> 20
9.05 The members of the Committee and the officers and
directors of the Company shall be entitled to rely on all certificates and
reports made by any duly appointed accountants, and on all opinions given by
any duly appointed legal counsel, which legal counsel may be counsel for the
Company.
9.06 No member of the Committee shall be liable for any
act or omission of any other member of the Committee, nor for any act or
omission on his own part. The company shall indemnify and save harmless each
member of the Committee against any and all expenses and liabilities arising
out of his membership on the Committee. Expenses against which a member of the
Committee shall be indemnified hereunder shall include, without limitation, the
amount of any settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a proceeding
brought or settlement thereof. The foregoing right of indemnification shall be
in addition to any other rights to which any such member of the Committee may
be entitled as a matter of law.
9.07 In addition to the power hereinabove specified, the
Committee shall have the power to compute and certify under the Plan the amount
and kind of benefits from time to time payable to Employees and their
Beneficiaries and to authorize all disbursements for such purposes.
9.08 To enable the Committee to perform its functions, the
Company shall supply full and timely information to the Committee on all
matters relating to the compensation of all members, their retirement, death or
other termination of employment, and such other pertinent facts as the
Committee may require.
- 12 -
<PAGE> 21
ARTICLE X
CLAIMS PROCEDURE
10.01 Benefits shall be paid in accordance with the
provisions of this agreement. The Participant, or a designated recipient or
any other person claiming through the Participant shall make a written request
for benefits under this agreement. This written claim shall be mailed or
delivered to the Named Fiduciary. Such claim shall be reviewed by the Named
Fiduciary.
10.02 If the claim is denied, in full or in part, the Named
Fiduciary shall provide a written notice within ninety (90) days setting forth
the specific reasons for denial, and any additional material or information
necessary to perfect the claim, an explanation of why such material of
information is necessary, and appropriate information and explanation of the
steps to be taken if a review of the denial is desired.
10.03 If the claim is denied and a review is desired, the
Participant (or beneficiary) shall notify the named Fiduciary in writing within
sixty (60) days [a claim shall be deemed denied if the named Fiduciary does not
take any action within the aforesaid ninety (90) day period] after receipt of
the written notice of denial. In requesting a review, the participant or his
beneficiary may request a review of the plan Document or other pertinent
documents with regard to the employee benefit plan created under this
agreement, may submit any written issues and comments, may request an extension
of time for such written submission of issues and comments, and may request
that a hearing be held, but the decision to hold a hearing shall be within the
sole discretion of the Committee.
10.04 The decision on the review of the denial claim shall
be rendered by the Committee within sixty (60) days after the receipt of the
request for review (if a hearing is held) or within sixty (60) days after the
hearing if one is held. The decision shall be written and shall state the
specific reasons for the decision including reference to specific provisions of
this Plan on which the decision is based.
- 13 -
<PAGE> 22
ARTICLE XI
NATURE OF THE COMPANY'S OBLIGATION
11.01 The Company's obligations under this Plan shall be an
unfunded and unsecured promise to pay. The company shall not be obligated
under any circumstances to fund its financial obligations under this Plan.
11.02 Any assets which the Company may acquire to help
cover its financial liabilities are and remain general assets of the Company
subject to the claims of its creditors. Neither the Company nor this Plan
gives the participant any beneficial ownership interest in any asset of the
Company. All rights of ownership in any such assets are and remain in the
Company.
11.03 The Company's liability for payment of benefits shall
be determined only under the provisions of this Plan, as they may be amended
from time to time, and each Deferral Agreement entered into between the Company
and an Executive.
- 14 -
<PAGE> 23
ARTICLE XII
PARTICIPANT'S RIGHT TO ASSETS
12.01 The rights of the Participant, any beneficiary of the
Participant, or any other person claiming through the Participant under this
Plan, shall be solely those of an unsecured general creditor of the Company.
The Participant, the beneficiary of the Participant, or any other person
claiming through the Participant, shall have the right to receive those
payments specified under this Plan only from the Company, and have no right to
look to any specific or special property separate from the Company to satisfy a
claim for benefits due under this Plan.
12.02 The Participant agrees that he, his beneficiary, or
any other person claiming through him shall have no rights or beneficial
ownership interest whatsoever in any general asset that the Company may acquire
or use to help support its financial obligations under this Plan.
12.03 Any such general asset used or acquired by the
Company in connection with the liabilities it has assumed under this Plan,
shall not be deemed to be held under any trust for the benefit of the
participant or his beneficiaries. Nor shall any such general asset be
considered security for the performance of the obligations of the Company. Any
such asset shall remain a general, unpledged, and unrestricted asset of the
Company subject to the claims of its general creditors.
12.04 The Participant also understands and agrees that his
participation in the acquisition of any such general asset for the Company
shall not constitute a representation to the Participant, his beneficiary or
any person claiming through the Participant that any of them has a special or
beneficial interest in such general asset.
- 15 -
<PAGE> 24
ARTICLE XIII
MISCELLANEOUS
13.01 Any notice which shall be or may be given under the
Plan or a Deferral Agreement shall be in writing and shall be mailed by United
States mail, postage prepaid. If notice is to be given to the Company, such
notice shall be addressed to the Company at 416 West Jefferson Street,
Louisville, KY 40202, marked for the attention of the Liberty National Bank
and Trust Company, Compensation Deferral Plan, or, if notice to an Executive,
addressed to the address shown on such Executive's Deferral Agreement.
13.02 Any party may, from time to time, change the address
to which notices shall be mailed by giving written notice of such new address.
13.03 The Plan shall be binding upon the Company, its
assigns, and any successor company which shall succeed to substantially all of
its assets and business through merger, acquisition or consolidation, and upon
an Executive, his Beneficiary, assigns, heirs, executors and administrators.
13.04 The Company may, in its sole discretion, permit the
Executive to take a leave of absence for a period not to exceed one year.
During such leave, the Executive will still be considered to be in the
continuous employment of the Company for purposes of this Plan.
13.05 The Company's Board retains the sole and unilateral
right to terminate, amend, modify, or supplement this Plan, in whole or part,
at any time. This right includes the right to make retroactive amendments.
However, no Company action under this right shall reduce the benefits of any
participant or his Beneficiary who is already receiving benefits under this
Plan.
13.06 Except insofar as prohibited by applicable law, no
sale, transfer, alienation, assignment, pledge, collateralization or attachment
of any benefits under this Plan shall be valid or recognized by the Company.
Neither the participant, his spouse, or designated beneficiary shall have any
power to hypothecate, mortgage, commute, modify, or otherwise encumber in
advance of any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owned by the Participant or his beneficiary, or be
transferable by operation of law in the event of bankruptcy, insolvency or
otherwise.
- 16 -
<PAGE> 25
13.07 The Company reserves the right to accelerate the
payment of any benefits payable under this Plan at any time without the consent
of the Participant, his estate, his beneficiary or any other person claiming
through the Participant.
13.08 This Plan shall not be deemed to constitute a
contract of employment between the parties hereto, nor shall any provisions
hereof restrict the right of the Company to discharge the Participant, or
restrict the right of the Participant to terminate his employment.
13.09 This Plan shall be governed by the laws of the
Commonwealth of Kentucky.
- 17 -
<PAGE> 1
EXHIBIT 10(j)
093\rm/cab\5078
Orig, w/1989 amend
OFFICER COMPENSATION CONTINUATION AGREEMENT
-------------------------------------------
This Agreement ("Agreement") dated as of the __th day of ____, 1986 is
made by and between Liberty National Bancorp, Inc., a Kentucky corporation (the
"Company"), and _________________. (the "Executive"), who is presently
_____________________________ of the Company and _______________________ of
Liberty Bank in consideration of the mutual covenants herein contained and in
further consideration of services performed and to be performed by the
Executive for the Company. Liberty National Bank and Trust Company of
Louisville ("Liberty Bank") joins in this Agreement further to accomplish the
terms and objectives of this Agreement.
Recitals
--------
A. The Company considers the establishment and maintenance of sound
and vital management of the Company and its subsidiaries to be essential to
protecting and enhancing the best interests of the Company and its
shareholders.
B. The Company recognizes that, as is the case with many bank holding
companies and industrial corporations, the possibility of a change of control
may exist. Such possibility, and the uncertainty and questions which it may
raise among management may result in the departure or distraction of key
members of management to the detriment of the Company's shareholders.
C. The Company's Board of Directors (the "Board") has determined that
appropriate steps should be taken to encourage key members of management of the
Company's management, such as the Executive, to remain in the employ of the
Company and perform their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change
of control of the Company.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
herein contained, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following words
and terms shall have the following meanings:
(i) CAUSE. Termination by the Company of the Executive's employment
for "Cause" shall mean termination upon (A) the willful and
continued failure by the Executive substantially to perform the
Executive's duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties;
<PAGE> 2
or (B) the willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the Company. For purposes
of this definition, no act, or failure to act, on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the
Executive's action or omission was in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board, the Executive was guilty of conduct set forth above in clauses
(A) or (B) and specifying the particulars thereof in detail.
(ii) CHANGE OF CONTROL. A "Change of Control" of the Company shall
mean a change of control of the Company which is of a nature that
would be required to be reported in response to Item 5(f) of Schedule
14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act"); PROVIDED THAT, without limitation,
such a change of control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 40% or more of
the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Company's Board cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(iii) DATE OF TERMINATION. "Date of Termination" shall mean (A) if
the Executive's employment is terminated for Good Reason, as defined
below, the date specified in the Notice of Termination, as defined
in this Section 1(v) below; and (B) if the Executive's employment is
terminated for any other reason, the date on which a Notice of
Termination is given; PROVIDED THAT, if within thirty (30) days after
any Notice of Termination is given the
-2-
<PAGE> 3
party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
(iv) GOOD REASON. "Good Reason" shall mean:
(A) without the Executive's express written consent, the assignment
to the Executive of any duties inconsistent with the Executive's
positions, duties, responsibilities and status with the Company
immediately prior to a Change of Control of the Company; a change in
the Executive's reporting responsibilities, titles or offices as in
effect immediately prior to a Change of Control of the Company; or any
removal of the Executive from or any failure to re-elect the Executive
to any of such positions, except in connection with the termination of
the Executive's employment for Cause, Retirement, or as a result of
the Executive's death or by the Executive other than for Good Reason;
(B) a reduction by the Company in the Executive's base salary as in
effect on the date hereof or as the same may be increased from time to
time;
(C) the relocation of the Company's principal executive offices
to a location outside the Louisville area; or the Company's requiring
the Executive to be based anywhere other than the Company's principal
executive offices, except for required travel on the Company's
business to an extent substantially consistent with the Executive's
present business travel obligations;
(D) the failure by the Company to continue in effect any presently
existing benefit or compensation plan, pension plan, life insurance
plan, health and accident plan or disability plan, including, but not
limited to, The Liberty Restated Thrift Plan, Liberty Employee
Stock Ownership Plan, Liberty Retirement Plan, Liberty Management
Incentive Compensation Plan, and/or Liberty 1986 Stock Option Plan, in
which the Executive is participating at the time of a Change of
Control of the Company (or plans providing the Executive with
substantially similar benefits); or the taking of any action by the
Company which would adversely affect the Executive's participation in
or materially reduce the Executive's benefits
-3-
<PAGE> 4
under any of the plans described above or deprive the Executive of any
material fringe benefits;
(E) the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is then entitled
on the basis of years of service with the Company in accordance with
the Company's executive vacation policies in effect on the date
hereof;
(F) the failure by the Company to obtain the assumption of all
obligations under this Agreement by any successor as contemplated in
Section 5 hereof;
(G) the inability of the Executive to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not
less than 12 months by reason of permanent and total disability.
Permanent and total disability is defined with reference to Section
105(d)(4) of the Internal Revenue Code of 1954, as amended; or
(H) any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of this Section 1(v) below; and for purposes of this
Agreement, no such purported termination shall be effective.
(v) Notice of Termination. Any termination by the Company or by the
Executive, pursuant to this Agreement, shall be communicated by
written notice of such termination to the other parties hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice, from the Company or from the Executive, which shall indicate
the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(vi) Retirement. Termination by the Company or the Executive of the
Executive's employment based on "Retirement" shall mean
voluntary termination in accordance with the Company's retirement
policy, including early retirement, generally applicable to its
salaried employees or in accordance with any retirement arrangement
established with the Executive's consent with respect to the
Executive.
2. TERM. The original term (the "Original Term") of this Agreement
shall commmence on July 16, 1986, and shall continue
-4-
<PAGE> 5
until the later (i) three years following a Change of Control of the Company
which occurs prior to July 1, 1989, or (ii) July 1, 1989; PROVIDED, HOWEVER,
that, after the Original Term, this Agreement shall automatically be extended
for successive periods (singularly, a "Renewal Period") (with the beginning of
each Renewal Period constituting a "Renewal Date"), unless the Company shall
have given the Executive written notice of termination at least 90-days' before
the expiration of the Original Term or the then-existing Renewal Period, as the
case may be. Each Renewal Period shall commmence on its respective Renewal Date
and shall continue until the later of (a) three years following a Change in
Control of the Company which occurs after the period's respective Renewal Date
but prior to the third anniversary of the Renewal Date, or (b) the third
anniversary of the period's respective Renewal Date.
3. TERMINATION FOLLOWING CHANGE OF CONTROL. If any of the
events constituting a Change of Control of the Company shall have occurred, the
Executive shall be entitled to the benefits provided in Section 4 hereof upon
the concurrent or subsequent termination of the Executive's employment, UNLESS
such termination is (a) because of the Executive's death or Retirement; (b) by
the Company for Cause; or (c) by the Executive other than for Good Reason. No
severance benefits shall be due and payable to the Executive under this
Agreement, and this Agreement shall be of no further force or effect, should
the Company terminate the Executive's employment prior to a Change of Control
of the Company.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(i) If the Executive's employment shall be
terminated for Cause, the Company shall pay the Executive as severance
compensation the unpaid balance of the Executive's full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given, and the Company shall have no further obligations to the Executive under
this Agreement.
(ii) If subsequent to or concurrent with the
occurrence of a Change of Control of the Company, the Executive's employment by
the Company shall be terminated other than pursuant to death, Retirement, or
for Cause, or if the Executive shall terminate his employment for Good Reason,
then the Company shall pay to the Executive as severance compensation in a lump
sum (discounted to present value using the interest rate applicable to a three
year certificate of deposit at Liberty Bank) or otherwise as the Executive may,
by written notice, specify on the fifth day following the Date of Termination:
(A) the unpaid balance of the Executive's full base
salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given; and
-5-
<PAGE> 6
(B) an amount equal to the Executive's full base salary
for 36 months at the rate in effect as of the Date of Termination.
In addition to the severance benefits set forth in (A) and (B) of this
Section 4(ii), the Company shall:
(C) pay all relocation expenses, including without
limitation, costs resulting from a relocation contemplated by
Section 1 (iv)(C);
(D) pay all legal fees and expenses incurred by the
Executive resulting from termination (including all such fees and
expenses, if any, incurred in contesting any such termination or in
seeking to obtain or enforce any right or benefit provided by this
Agreement);
(E) maintain in full force and effect, for the continued
benefit of the Executive for three years after the Date of
Termination, all employee benefit plans and programs or
arrangements in which the Executive was entitled to participate
immediately prior Date of Termination, including, but not limited to,
the Liberty Restated Thrift Plan, Liberty Employee Stock Ownership
Plan, Liberty Retirement Plan, Liberty Management Incentive
Compensation Plan, and 1986 Liberty Stock Option Plan; provided,
however, that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. If
the Executive's participation in any such plan or program is barred,
the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive is entitled to
receive under such plans and programs. At the end of the period of
coverage, the Executive shall have the option to have assigned to him
at no cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company relating specifically
to the Executive; and
(F) cause all stock options and stock appreciation rights
and/or the rights held by the Executive, pursuant to the Liberty 1986
Stock Option Plan or otherwise, immediately prior to the termination,
if not otherwise presently exercisable, to become presently
exercisable.
(iii) If the Executive's employment shall be
terminated, either by the Company or by the Executive, due to the Executive's
permanent and total disability as defined in Section 1(iv)(6), the Company
shall pay the Executive as severance compensation the same benefits as set
forth in Section 4(ii)(A-F).
(iv) The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking
-6-
<PAGE> 7
other employment or otherwise, nor shall the amount of any payment provided for
in this Section 4 be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(v) Notwithstanding any of the foregoing, if the
Executive is within three years of mandatory retirement on the Date of
Termination, then (A) the Company shall reduce the amount payable to the
Executive under Section 4(ii)(B) to reflect only the number of months between
the Date of Termination and the date the Executive is or would otherwise be
subject to mandatory retirement (the "Retirement Date"), and (B) the Company
shall have no obligations to the Executive under Section 4(ii)(E) after the
Retirement Date.
5. SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company or Liberty Bank,
by agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company or Liberty Bank would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled hereunder if the Executive terminated the Executive's employment for
Good Reason, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee or, if there
be no such designee, to the Executive's estate.
6. REDUCTION OF AMOUNTS PAYABLE. In no event shall any amount
payable under any provision of this Agreement equal or exceed an amount which
would cause the Company to forfeit, pursuant
-7-
<PAGE> 8
to Section 280G(a) of the Internal Revenue Code of 1986, as amended, its
deduction for any or all such amounts payable. Pursuant to this Section 6, the
Company's Examining Committee has the power to reduce severance benefits
payable under this Agreement, if such benefits alone or in conjunction with
termination benefits provided under the Liberty Retirement Plan, Liberty
Restated Thrift Plan, Liberty Management Incentive Compensation Plan, Liberty
1986 Stock Option Plan or any other plan or agreement between the Executive and
the Company, would cause the Company to forfeit otherwise deductible payments;
provided, however that no benefits payable under this Agreement shall be
reduced pursuant to this Section 6 to less than $1.00 below the amount of
benefits which the Company can properly deduct under Section 280G(a) of the
Internal Revenue Code of 1986, as amended.
7. NOTICE. Any notice or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed sufficiently
given for all purposes if mailed by certified mail, postage prepaid and return
receipt requested, addressed to the intended recipient at
(a) the addresses set forth below:
(i) If to the Company or Liberty Bank:
Liberty National Bancorp, Inc.
416 West Jefferson Street
Louisville, Kentucky 40202
All notices to the Company or Liberty Bank shall be directed to the attention
of the Chief Executive Officer of the Company with a copy to the Secretary of
the Company and to the Secretary of Liberty Bank.
(ii) If to the Executive:
_____________________
_____________________
_____________________
(b) Such other address as either party shall specify by
written notice to the other parties of this Agreement.
8. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimi-
-8-
<PAGE> 9
lar provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Kentucky.
9. VALIDITY. The invalidity of unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement, as
of the day and year first above written.
LIBERTY NATIONAL BANCORP, INC.
_____________________________ By _____________________________________
Executive Max L. Shapira
______________________ Chairman, Examining Committee
LIBERTY NATIONAL BANK AND TRUST
COMPANY OF LOUISVILLE
By _____________________________________
Nancy L. Ray Chairman, Examining
Committee
<PAGE> 1
BANC ONE CORPORATION and Subsidaries EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
(000's, except per share amounts)
<TABLE>
<CAPTION>
For the year ended December 31,
--------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
PRIMARY:
EARNINGS:
Net income $ 1,005,109 $ 1,191,494 $ 922,227
Deduct: Dividends on preferred shares 17,492 17,714 18,986
----------- ----------- -----------
Net income available to common shareholders $ 987,617 $ 1,173,780 $ 903,241
=========== =========== ===========
SHARES:
Weighted average common shares outstanding $ 406,041 $ 399,414 $ 394,960
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,339 1,814 2,711
----------- ----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
AS ADJUSTED $ 407,380 $ 401,228 $ 397,671
=========== =========== ===========
PRIMARY EARNINGS PER COMMON SHARE $ 2.42 $ 2.93 $ 2.27
=========== =========== ===========
FULLY DILUTED:
EARNINGS:
Net income $ 1,005,109 $ 1,191,494 $ 922,227
=========== =========== ===========
SHARES:
Weighted average common shares outstanding $ 406,041 $ 399,414 $ 394,960
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,339 1,875 2,881
Add: Conversion of preferred stock 8,765 9,110 10,838
----------- ----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
AS ADJUSTED $ 416,145 $ 410,399 $ 408,679
=========== =========== ===========
FULLY DILUTED EARNINGS PER COMMON SHARE $ 2.42 $ 2.90 $ 2.26
=========== =========== ===========
</TABLE>
<PAGE> 1
BANC ONE CORPORATION and Subsidiaries
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(2)
$(thousands)
EXHIBIT 12
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <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) $1,518,852 $1,770,712 $1,341,249 $ 928,947 $ 727,310
Fixed charges 633,569 348,327 321,402 419,274 467,263
Less: Capitalized interest (1,000) (652) (1,199) (1,732) (2,181)
---------- ---------- ---------- ---------- ----------
Earnings $2,151,421 $2,118,387 $1,661,452 $1,346,489 $1,192,392
========== ========== ========== ========== ==========
FIXED CHARGES:
Interest expense, including interest factor
of capitalized leases and amortization of
deferred debt expense $ 575,734 $ 298,857 $ 278,615 $ 379,708 $ 433,953
Portion of rental payments under operating
leases deemed to be interest 57,835 49,470 42,787 39,566 33,310
---------- ---------- ---------- ---------- ----------
Fixed charges $ 633,569 $ 348,327 $ 321,402 $ 419,274 $ 467,263
========== ========== ========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES EXCLUDING
INTEREST ON DEPOSITS 3.40 x 6.08 x 5.17 x 3.21 x 2.55 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) $1,518,852 $1,770,712 $1,341,249 $ 928,947 $ 727,310
Fixed charges 2,307,832 1,826,018 2,318,274 2,955,918 3,115,412
Less: Capitalized interest (1,000) (652) (1,199) (1,732) (2,181)
---------- ---------- ---------- ---------- ----------
Earnings $3,825,684 $3,596,078 $3,658,324 $3,883,133 $3,840,541
========== ========== ========== ========== ==========
FIXED CHARGES:
As detailed above $ 633,569 $ 348,327 $ 321,402 $ 419,274 $ 467,263
Interest on deposits 1,674,263 1,477,691 1,996,872 2,536,644 2,648,149
---------- ---------- ---------- ---------- ----------
Fixed charges $2,307,832 $1,826,018 $2,318,274 $2,955,918 $3,115,412
========== ========== ========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES INCLUDING
INTEREST ON DEPOSITS 1.66 x 1.97 x 1.58 x 1.31 x 1.23 x
</TABLE>
(1) Results of Bank One, Texas, NA are consolidated beginning October 1, 1991
(2) All prior period amounts have been restated for the pooling of interest of
Liberty National Bancorp, inc.
4
<PAGE> 1
EXHIBIT 13(a)
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERCENT
1994 1993 CHANGE
------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER COMMON SHARE
Net income $ 2.42 $ 2.93 (17.4)%
Cash dividends declared 1.24 1.07 15.9
Book value 18.43 17.72 4.0
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR $(millions)
---------------------
<S> <C> <C> <C>
Total revenue $ 7,857 $ 7,611 3.2%
Net income 1,005 1,191 (15.6)
AT YEAR-END
Assets $ 88,923 $ 84,835 4.8%
Deposits 68,090 65,022 4.7
Total loans and leases 61,993 57,520 7.8
Total equity $ 7,565 $ 7,433 1.8
Common shares outstanding (000) 396,986 405,432
Common stockholders of record 82,253 71,384
Employees (full-time equivalent) 48,800 46,600
Banking offices 1,418 1,434
</TABLE>
With the exception of cash dividends and common stockholders
of record, amounts have been restated to reflect the effect
of the acquisition of Liberty National Bancorp, Inc.
accounted for as a pooling of interests.
<PAGE> 2
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
FINANCIAL REVIEW
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS............................................................... 21
CONSOLIDATED BALANCE SHEET...................................................................... 22
CONSOLIDATED STATEMENT OF INCOME................................................................ 23
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY....................................... 24
CONSOLIDATED STATEMENT OF CASH FLOWS............................................................ 25
NOTES TO THE FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies..................................... 26
Note 2 Affiliations, Pending Affiliations and Divestitures............................ 29
Note 3 Operations Consolidation....................................................... 30
Note 4 Securities and Investment Products............................................. 31
Note 5 Loans and Leases............................................................... 34
Note 6 Reserve for Loan and Lease Losses.............................................. 36
Note 7 Bank Premises and Equipment.................................................... 36
Note 8 Deposits....................................................................... 36
Note 9 Short-Term Borrowings.......................................................... 37
Note 10 Long-Term Borrowings........................................................... 38
Note 11 Stock Dividends and Convertible Preferred Stock................................ 38
Note 12 Dividend and Capital Restrictions.............................................. 39
Note 13 Income Taxes................................................................... 39
Note 14 Disclosures About Fair Value of Financial Instruments.......................... 40
Note 15 Leases......................................................................... 42
Note 16 Pledged Securities and Contingent Liabilities.................................. 43
Note 17 Employee Benefit Plans......................................................... 43
Note 18 Stock Options.................................................................. 46
Note 19 Related Party Transactions..................................................... 46
Note 20 Parent Company Financial Statements............................................ 47
Note 21 Supplemental Disclosures for Statements of Cash Flows.......................... 50
Note 22 Industry Segment Reporting..................................................... 50
FIVE YEAR PERFORMANCE SUMMARY................................................................... 51
TEN YEAR PERFORMANCE SUMMARY.................................................................... 52
FIVE YEAR SUMMARY - AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES...................... 54
RESERVE FOR LOAN AND LEASE LOSSES............................................................... 56
LOAN AND LEASE ANALYSIS......................................................................... 57
CONSOLIDATED QUARTERLY FINANCIAL DATA........................................................... 58
RATE - VOLUME ANALYSIS.......................................................................... 60
MANAGEMENT'S DISCUSSION AND ANALYSIS
I. Overview of Operations................................................................. 62
II. Net Interest Income/Net Interest Margin................................................ 63
Earning Assets..................................................................... 63
Interest Bearing Liabilities....................................................... 63
Interest Rate Sensitivity.......................................................... 64
Interest Rate Fluctuations......................................................... 64
Off-Balance Sheet Investment Products.............................................. 64
III. Non-Interest Income, Non-Interest Expense and Operations Consolidation and Other
Charges................................................................................ 65
IV. Loan Quality........................................................................... 66
V. Asset Liability Management............................................................. 68
VI. Capital................................................................................ 72
VII. Fourth Quarter Review.................................................................. 73
VIII. Comparison of 1993 versus 1992......................................................... 73
</TABLE>
20
<PAGE> 3
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and the Board of Directors
BANC ONE CORPORATION
We have audited the accompanying consolidated balance sheets
of BANC ONE CORPORATION and Subsidiaries as of December 31,
1994 and 1993, and the related statements of income, changes
in stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1994. These financial
statements are the responsibility of management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of BANC ONE CORPORATION and Subsidiaries at
December 31, 1994 and 1993 and the results of operations and
cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted
accounting principles.
As disclosed in Note 1 to the financial statements, effective
January 1, 1994 BANC ONE CORPORATION changed its method of
accounting for certain investment securities. As discussed in
Note 13 and Note 17 to the financial statements, effective
January 1, 1993 BANC ONE CORPORATION changed its method of
accounting for income taxes and postretirement benefits other
than pensions.
Columbus, Ohio
February 21, 1995
21
<PAGE> 4
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
$(THOUSANDS, EXCEPT SHARE DATA) 1994 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks........................................ $ 5,073,417 $ 5,009,889
Short-term investments (including Eurodollar placements and
foreign negotiable certificates of deposit of $1,000,982 and
$4,492 at December 31, 1994 and 1993, respectively).......... 3,539,596 1,049,715
SECURITIES:
Securities held to maturity.................................. 4,834,384 17,403,888
Securities held for sale..................................... 815,941
Securities available for sale (cost of $10,496,000 at
December 31, 1994)......................................... 10,318,030
------------- -----------
TOTAL SECURITIES (FAIR VALUE OF $15,108,000 AND
$18,591,000 AT DECEMBER 31, 1994 AND 1993,
RESPECTIVELY)......................................... 15,152,414 18,219,829
LOANS AND LEASES (net of unearned income of $802,703 and
$702,475 at December 31, 1994 and 1993, respectively)........ 61,992,912 57,520,375
Reserve for loan and lease losses............................ 897,180 967,254
------------- -----------
NET LOANS AND LEASES..................................... 61,095,732 56,553,121
Other assets:
Bank premises and equipment, net............................. 1,517,647 1,459,611
Interest earned, not collected............................... 566,840 657,030
Other real estate owned...................................... 84,355 153,260
Excess of cost over net assets of affiliates purchased....... 262,895 266,723
Other........................................................ 1,629,690 1,465,478
------------- -----------
Total other assets....................................... 4,061,427 4,002,102
------------- -----------
TOTAL ASSETS............................................. $ 88,922,586 $84,834,656
============= ===========
LIABILITIES:
DEPOSITS:
Non-interest bearing......................................... $ 14,405,707 $14,493,954
Interest bearing............................................. 53,684,347 50,528,446
------------- -----------
TOTAL DEPOSITS............................................. 68,090,054 65,022,400
Federal funds purchased and repurchase agreements.............. 5,186,527 6,965,626
Other short-term borrowings.................................... 4,435,242 2,091,574
Long-term borrowings........................................... 1,866,448 1,805,272
Accrued interest payable....................................... 351,293 239,101
Other liabilities.............................................. 1,428,162 1,277,513
------------- -----------
TOTAL LIABILITIES.......................................... 81,357,726 77,401,486
------------- -----------
Commitments and contingencies (Notes 5, 15 and 16)
STOCKHOLDERS' EQUITY:
Preferred stock, 35,000,000 shares authorized:
Series C convertible, no par value, 4,997,999 and 4,998,000
shares issued and outstanding, at December 31, 1994 and
1993, respectively......................................... 249,900 249,900
Common stockholders' equity:
Common stock, no par value, $5 stated value, 600,000,000
shares authorized, 408,985,564 and 405,431,665 shares
issued at December 31, 1994 and 1993, respectively......... 2,044,928 2,027,158
Capital in excess of aggregate stated value of common
stock...................................................... 3,796,746 3,836,443
Retained earnings............................................ 1,921,256 1,319,669
Net unrealized holding losses on securities available for
sale, net of tax........................................... (111,517)
------------- -----------
TOTAL STOCKHOLDERS' EQUITY BEFORE TREASURY STOCK........... 7,901,313 7,433,170
Less: Treasury stock (11,999,500 shares), at cost........ (336,453)
------------- -----------
TOTAL STOCKHOLDERS' EQUITY................................. 7,564,860 7,433,170
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................. $ 88,922,586 $84,834,656
============= ===========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
22
<PAGE> 5
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME
for the three years ended December 31, 1994
<TABLE>
<CAPTION>
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1992
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases..................................... $ 5,375,209 $5,038,807 $4,945,539
Interest and dividends on:
Taxable securities...................................................... 875,846 844,791 1,029,518
Tax exempt securities................................................... 136,841 132,590 145,696
Other interest income, including interest on Eurodollar placements and
foreign negotiable certificates of deposits of $6,802, $2,415 and
$17,161 in 1994, 1993, and 1992, respectively........................... 49,590 40,438 121,636
------------ ---------- ----------
TOTAL INTEREST INCOME................................................... 6,437,486 6,056,626 6,242,389
INTEREST EXPENSE:
Interest on deposits:
Demand and savings deposits............................................. 720,526 643,038 788,035
Time deposits........................................................... 953,737 834,653 1,208,837
Interest on borrowings.................................................... 574,578 298,060 276,954
------------ ---------- ----------
TOTAL INTEREST EXPENSE.................................................. 2,248,841 1,775,751 2,273,826
------------ ---------- ----------
NET INTEREST INCOME..................................................... 4,188,645 4,280,875 3,968,563
Provision for loan and lease losses......................................... 242,269 388,261 630,731
------------ ---------- ----------
Net interest income after provision for loan and lease losses........... 3,946,376 3,892,614 3,337,832
NON-INTEREST INCOME:
Income from fiduciary activities.......................................... 225,621 225,497 218,085
Service charges on deposit accounts....................................... 483,884 450,998 430,723
Loan processing and servicing income...................................... 484,012 464,728 444,823
Securities gains (losses)................................................. (261,052) 17,114 26,999
Other..................................................................... 487,157 395,707 377,638
------------ ---------- ----------
TOTAL NON-INTEREST INCOME............................................... 1,419,622 1,554,044 1,498,268
NON-INTEREST EXPENSE:
Salaries and related costs................................................ 1,753,672 1,687,778 1,578,179
Net occupancy expense, exclusive of depreciation.......................... 182,223 159,837 181,732
Equipment expense......................................................... 119,270 113,315 102,762
Taxes other than income and payroll....................................... 56,628 82,083 75,348
Depreciation and amortization............................................. 356,762 274,520 226,568
Outside services and processing........................................... 528,591 507,659 483,666
Marketing and development................................................. 154,040 152,182 123,123
Communication and transportation.......................................... 245,455 232,596 203,054
Other..................................................................... 450,505 465,976 520,419
------------ ---------- ----------
TOTAL NON-INTEREST EXPENSE.............................................. 3,847,146 3,675,946 3,494,851
------------ ---------- ----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE................................................... 1,518,852 1,770,712 1,341,249
Income tax (provision) benefit:
Income excluding securities transactions.................................. (610,970) (592,619) (409,843)
Securities transactions................................................... 97,227 (5,990) (9,179)
------------ ---------- ----------
Provision for income taxes.............................................. (513,743) (598,609) (419,022)
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE........... 1,005,109 1,172,103 922,227
Cumulative effect of change in method of accounting for income taxes........ 19,391
------------ ---------- ----------
NET INCOME................................................................ $ 1,005,109 $1,191,494 $ 922,227
=========== ========== ==========
NET INCOME PER COMMON SHARE:
Income before cumulative effect of change in accounting principle....... $ 2.42 $ 2.88 $ 2.27
Cumulative effect of change in method of accounting for income taxes.... .05
------------ ---------- ----------
NET INCOME PER COMMON SHARE................................................. $ 2.42 $ 2.93 $ 2.27
=========== ========== ==========
Weighted average common shares outstanding (000)............................ 407,380 401,228 397,671
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 6
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the three years ended December 31, 1994
<TABLE>
<CAPTION>
CAPITAL IN
EXCESS OF
AGGREGATE
STATED VALUE
$(THOUSANDS, EXCEPT PER PREFERRED COMMON OF COMMON RETAINED
SHARE AMOUNTS) STOCK STOCK STOCK EARNINGS
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991.................................. $ 269,414 $1,422,033 $2,965,491 $ 1,223,019
Net income................................................. 922,227
Cash dividends:
Corporation:
Common ($.89 per share)................................. (257,101)
Class B Preferred ($3.00 per share)..................... (1,486)
Series C Preferred ($3.50 per share).................... (17,500)
Pooled affiliates........................................ (40,699)
Shares issued in acquisitions.............................. 6,270 6,371 20,049
Conversion of preferred into common........................ (9,714) 4,979 4,735
Exercise of stock options, net of shares purchased......... 2,847 (22,486)
Pooled affiliate stock issuance, sales of stock to employee
benefit plans and other.................................. 15,375 79,248 1,741
--------- ---------- ----------- ------------
BALANCE, DECEMBER 31, 1992.................................. 259,700 1,451,504 3,033,359 1,850,250
Net income................................................. 1,191,494
Cash dividends:
Corporation:
Common ($1.07 per share)................................ (388,245)
Class B Preferred ($.75 per share)...................... (216)
Series C Preferred ($3.50 per share).................... (17,498)
Pooled affiliates........................................ (25,505)
Shares issued in acquisitions.............................. 24,539 12,269 59,409
Conversion of preferred into common........................ (9,800) 5,029 4,771
Exercise of stock options, net of shares purchased......... (2,876) (44,758)
Pooled affiliate stock issuance, sales of stock to employee
benefit plans and other.................................. 34,973 (9,244) 4,015
Common stock split five-for-four, effective August 31,
1993..................................................... 340,949 (340,949)
10% common stock dividend at fair market value............. 173,040 1,180,995 (1,354,035)
--------- ---------- ----------- ------------
BALANCE, DECEMBER 31, 1993.................................. 249,900 2,027,158 3,836,443 1,319,669
Accounting change adjustment for unrealized gains on
securities available for sale at January 1, 1994.........
Net income................................................. 1,005,109
Cash dividends:
Corporation:
Common ($1.24 per share)................................ (487,218)
Series C Preferred ($3.50 per share).................... (17,492)
Pooled affiliates........................................ (10,040)
Shares issued in acquisitions.............................. 8,342 11,166 14,316
Exercise of stock options, net of shares purchased......... 193 (5,852)
Pooled affiliate stock issuance, sales of stock to employee
benefit plans and other.................................. 9,235 (45,011) 96,912
Purchase of treasury shares................................
Change in unrealized holding losses on securities available
for sale, net of tax.....................................
--------- ---------- ----------- ------------
BALANCE, DECEMBER 31, 1994.................................. $ 249,900 $2,044,928 $3,796,746 $ 1,921,256
========= ========== =========== ===========
<CAPTION>
NET UNREALIZED
HOLDING
LOSSES TOTAL
ON SECURITIES TREASURY STOCK-
$(THOUSANDS, EXCEPT PER AVAILABLE STOCK HOLDERS'
SHARE AMOUNTS) FOR SALE AT COST EQUITY
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1991.................................. $ 5,879,957
Net income................................................. 922,227
Cash dividends:
Corporation:
Common ($.89 per share)................................. (257,101)
Class B Preferred ($3.00 per share)..................... (1,486)
Series C Preferred ($3.50 per share).................... (17,500)
Pooled affiliates........................................ (40,699)
Shares issued in acquisitions.............................. 32,690
Conversion of preferred into common........................
Exercise of stock options, net of shares purchased......... (19,639)
Pooled affiliate stock issuance, sales of stock to employee
benefit plans and other.................................. 96,364
---------- ------------ ------------
BALANCE, DECEMBER 31, 1992.................................. 6,594,813
Net income................................................. 1,191,494
Cash dividends:
Corporation:
Common ($1.07 per share)................................ (388,245)
Class B Preferred ($.75 per share)...................... (216)
Series C Preferred ($3.50 per share).................... (17,498)
Pooled affiliates........................................ (25,505)
Shares issued in acquisitions.............................. 96,217
Conversion of preferred into common........................
Exercise of stock options, net of shares purchased......... (47,634)
Pooled affiliate stock issuance, sales of stock to employee
benefit plans and other.................................. 29,744
Common stock split five-for-four, effective August 31,
1993.....................................................
10% common stock dividend at fair market value.............
---------- ------------ ------------
BALANCE, DECEMBER 31, 1993.................................. 7,433,170
Accounting change adjustment for unrealized gains on
securities available for sale at January 1, 1994......... $ 84,105 84,105
Net income................................................. 1,005,109
Cash dividends:
Corporation:
Common ($1.24 per share)................................ (487,218)
Series C Preferred ($3.50 per share).................... (17,492)
Pooled affiliates........................................ (10,040)
Shares issued in acquisitions.............................. 33,824
Exercise of stock options, net of shares purchased......... (5,659)
Pooled affiliate stock issuance, sales of stock to employee
benefit plans and other.................................. 61,136
Purchase of treasury shares................................ $ (336,453) (336,453)
Change in unrealized holding losses on securities available
for sale, net of tax..................................... (195,622) (195,622)
---------- ------------ ------------
BALANCE, DECEMBER 31, 1994.................................. $ (111,517) $ (336,453) $ 7,564,860
========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 7
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three years ended December 31, 1994
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME...................................... $ 1,005,109 $ 1,191,494 $ 922,227
Adjustments:
Provision for loan and lease losses......... 242,269 388,261 630,731
Depreciation and amortization............... 454,612 353,492 288,803
Net (increase) decrease in trading
account portfolio........................ 92,549 (7,777) 48,876
Net (increase) decrease in warehoused
mortgage loans........................... 869,482 (429,375) (406,884)
Net change in deferred loan fees and
costs.................................... (17,807) (8,835) (3,075)
Securities (gains) losses................... 261,052 (17,114) (26,999)
Gain on sale of loans and other assets...... (71,898) (26,058) (45,429)
Net (increase) decrease in other assets..... (142,026) 12,243 (104,581)
Net (decrease) increase in other
liabilities.............................. 2,355 (130,746) 59,059
Net (increase) decrease in deferred income
taxes.................................... 173,090 48,180 (39,899)
Cumulative effect of change in accounting
principle................................ (19,391)
------------ ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES... 2,868,787 1,354,374 1,322,829
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available/held for
sale.......................................... (11,739,005) (350,000)
Purchases of securities held to maturity........ (1,090,779) (6,402,608) (11,010,024)
Maturities of securities available/held for
sale.......................................... 2,142,467 476,242
Maturities of securities held to maturity....... 2,501,689 6,439,257 7,109,441
Proceeds from sales of securities available/held
for sale...................................... 10,900,079 716,764
Proceeds from sales of securities held to
maturity...................................... 101,844 1,419,083
Net increase in loans, excluding sales and
purchases..................................... (8,258,459) (4,552,207) (2,218,880)
Proceeds from the sales of loans and other
assets........................................ 3,622,306 307,288 965,588
Purchases of loans and related premiums......... (641,556) (768,264) (747,056)
Net (increase) decrease in short-term
investments................................... (2,450,281) 1,478,925 2,492,992
Additions to bank premises and equipment........ (325,291) (293,288) (279,723)
Net cash acquired in acquisitions............... 1,180,497 36,148 247,327
All other investing activities, net............. 2,762 14,431 (61,912)
------------ ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES....... (4,155,571) (2,795,468) (2,083,164)
------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in demand deposit, money
market and savings accounts................... (1,410,963) 664,712 4,931,270
Net (decrease) increase in time deposits........ 2,917,080 (2,257,479) (5,116,527)
Net increase in short-term borrowings........... 557,093 2,629,422 1,037,961
Proceeds from the issuance of long-term
borrowings.................................... 94,536 475,798 509,136
Repayment of long-term borrowings............... (33,360) (67,332) (95,513)
Cash dividends paid............................. (496,708) (399,936) (291,462)
Purchase of treasury shares..................... (336,453)
All other financing activities, net............. 59,087 (33,889) 37,672
------------ ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES... 1,350,312 1,011,296 1,012,537
------------ ----------- -----------
Increase (decrease) in cash and cash
equivalents................................... 63,528 (429,798) 252,202
Cash and cash equivalents at January 1, ........ 5,009,889 5,439,687 5,187,485
------------ ----------- -----------
CASH AND CASH EQUIVALENTS AT DECEMBER 31, ...... $ 5,073,417 $ 5,009,889 $ 5,439,687
============ =========== ===========
</TABLE>
See Note 21 for supplemental disclosures.
The accompanying notes are an integral part of the financial
statements.
25
<PAGE> 8
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
followed in the preparation of the financial statements:
Basis of Presentation
The accompanying financial statements have been restated for
an affiliation as described in Note 2, which has been
accounted for as a pooling of interests. For purposes of
comparability, certain prior period amounts have been
reclassified to conform with current year presentation.
Principles of Consolidation
"The Corporation" is defined as parent company only. "BANC
ONE" is defined as the Corporation and all significant
majority-owned subsidiaries. The consolidated financial
statements include the accounts of the Corporation and all
significant majority-owned subsidiaries (affiliates). See Note
2 for information relative to affiliations, pending
affiliations and divestitures. Material intercompany
transactions have been eliminated.
Securities
On January 1, 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. Securities that
management has both the positive intent and ability to hold to
maturity continue to be classified as securities held to
maturity and are carried at cost, adjusted for amortization of
premium or accretion of discount using the interest method.
Securities that may be sold prior to maturity for
asset/liability management purposes, or that may be sold in
response to changes in interest rates, changes in prepayment
risk, to increase regulatory capital or other similar factors,
are classified as securities available for sale and carried at
fair value with any adjustments to fair value, after tax,
reported as a separate component of stockholders' equity.
Securities purchased for trading purposes are held in the
trading portfolio at market value, with market adjustments
included in non-interest income.
Prior to January 1, 1994, securities that were being held
for indefinite periods of time including securities that
management intended to use as part of its asset/liability
strategy, or that may have been sold in response to changes in
interest rates, changes in prepayment risk, to increase
regulatory capital or other similar factors, were classified
as securities held for sale and were carried at the lower of
cost or aggregate market value with any writedowns recorded in
the income statement.
Interest and dividends on securities, including the
amortization of premiums and the accretion of discounts, are
reported in interest and dividends on securities using the
interest method. Gains and losses on securities are recorded
on the trade date and are calculated based on the security
with the highest cost unless specific securities are
identified.
Loans
Loans are reported at the principal amount outstanding, net of
unearned income. Loans identified as held for sale are carried
at the lower of cost or market determined on an aggregate
basis.
Income earned is recognized principally on the accrual
method of accounting. Under this method, finance charges are
recognized in decreasing amounts each period which provides a
level rate of return on the outstanding principal balance.
Unearned income, which includes deferred fees net of deferred
direct incremental loan origination costs, is amortized to
interest income generally over the contractual life of the
loan using the interest method or the straight line method if
not materially different. Loan origination fees and costs on
demand loans are deferred and amortized into interest income
on a straight line basis over a period which is consistent
with the understanding between BANC ONE and the borrower or,
if no understanding exists, over the estimated loan term. Loan
origination fees and costs on credit card and other revolving
loans are deferred and amortized into interest or other income
using a straight line method typically over one year.
Commercial loans are placed on nonaccrual at the time the
loan is 90 days delinquent unless the credit is well secured
and in process of collection. Commercial loans are typically
charged-off
26
<PAGE> 9
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
at the time the loan becomes 180 days delinquent. Residential
real estate loans are typically placed on nonaccrual at the
time the loan is 120 days delinquent. Credit card loans and
other unsecured personal credit lines are typically
charged-off no later than 180 days delinquent. Other consumer
loans are typically charged-off at 120 days delinquent. In all
cases, loans must be placed on nonaccrual or charged off at an
earlier date if collection of principal or interest is
considered doubtful.
All interest accrued but not collected for loans that are
placed on nonaccrual or charged-off is reversed to interest
income. The interest on these loans is accounted for on the
cash basis or cost recovery method, until qualifying for
return to accrual. Loans are returned to accrual status when
all the principal and interest amounts contractually due are
reasonably assured of repayment within a reasonable time frame
and when the borrower has demonstrated payment performance of
cash or cash equivalents for a minimum of six months.
A loan is considered restructured when BANC ONE allows
certain concessions to a financially troubled debtor that
would not normally be considered.
Leases
The leasing operations of the affiliates consist of the
leasing of various types of equipment under leases principally
classified as direct financing leases and ranging in maturity
from two to 15 years. Interest, net of initial direct costs,
is deferred and reported as income in decreasing amounts over
the term of the lease so as to provide a constant yield on the
outstanding principal balance.
Leases are charged-off at the earlier of 120 days
delinquent or when collection of principal or interest is in
doubt.
Provision for Loan and Lease Losses
The provision for loan and lease losses charged to expense is
based upon each affiliate's past loan and lease loss
experience and an evaluation of potential losses in the
current loan and lease portfolios. In management's opinion,
the provision is sufficient to maintain the reserve for loan
and lease losses at a level that adequately provides for
potential losses.
As of January 1, 1995, BANC ONE will adopt Statements of
Financial Accounting Standards Nos. 114 and 118 "Accounting by
Creditors for Impairment of a Loan" and "Accounting by
Creditors for Impairment of a Loan-Income Recognition and
Disclosures," respectively. BANC ONE does not expect a
material effect from the adoption of these Statements.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less
accumulated depreciation. Depreciation is provided principally
on the straight line method over the estimated useful lives of
the assets. Upon the sale or other disposal of the assets, the
cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is recognized.
Maintenance and repairs are charged to expense as incurred,
while renewals and betterments are capitalized. Software costs
for internally developed systems are expensed as incurred.
Software costs related to externally developed systems are
capitalized and include systems intended for internal and
external use.
Other Real Estate Owned
Other real estate owned primarily represents properties
acquired by the Corporation's affiliates through customer loan
defaults. The real estate is stated at an amount equal to the
lesser of the loan balance prior to foreclosure, plus certain
costs incurred for improvements to the property, or fair value
less estimated selling costs of the property.
Purchase Method of Accounting
Net assets of organizations acquired in purchase transactions
are recorded at fair value at date of acquisition. The excess
of cost over net assets of affiliates purchased is being
amortized using the straight line and accelerated methods over
terms ranging from five to 40 years. Core deposits and other
identifiable intangible assets are typically amortized on an
accelerated basis. Accumulated amortization for BANC ONE was
$295 million at December 31, 1994 and $210 million at December
31, 1993 and annual amortization expense was approximately $85
million, $41 million, and $28 million in 1994, 1993 and 1992,
respectively.
27
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Off-Balance Sheet Investment Products
BANC ONE enters into a variety of off-balance sheet investment
products as part of its interest rate risk management strategy
and in its customer service and trading activities. The most
frequently used off-balance sheet investment products are
various types of interest rate swaps. However, interest rate
floors, futures, options, swap options, caps, forward rate
agreements and currency swaps are also utilized. Off-balance
sheet investment products are typically classified as
synthetic alterations, anticipatory hedges, or matched book
agreements. The criteria that must be satisfied for each of
these methods is as follows: Synthetic Alteration -- (1) The
asset or liability to be converted exposes the institution to
interest rate risk; (2) The off-balance sheet investment
product is designated and effective as a synthetic alteration
of a balance sheet item. Anticipatory Hedge -- (1) The asset
or liability to be hedged exposes BANC ONE, as a whole, to
interest rate risk; (2) The off-balance sheet investment
product acts to reduce the interest rate risk by moving the
institution closer to being insensitive to interest rate
changes; (3) The off-balance sheet investment product is
designated and effective as a hedge of a balance sheet item;
(4) The significant characteristics and expected terms of the
anticipated transaction must be identified; (5) It must be
probable that the anticipated transaction will occur. Matched
Book -- There must be separate agreements that have offsetting
payment streams and the same maturity, repricing dates and
notional amounts.
In order for off-balance sheet investment products with
forward start dates to be accounted for as synthetic
alterations, they must satisfy the appropriate criteria above
as well as the following additional criteria: (1) The start
date of the off-balance sheet investment product must not
extend beyond that point in time at which BANC ONE believes
its modeling systems produce reliable interest rate
sensitivity information; (2) The related balance sheet item
must, from trade date to final maturity, have sufficient
balances for alteration. If the initial assignment is changed,
or should sufficient balances not be available, the excess
portion of the off-balance sheet investment product must be
marked to market.
Accrual accounting is applied for off-balance sheet
investment products classified as described above and income
and expense are recorded in the same category as the related
balance sheet item. The related balance sheet item is
generally a pool of similar products. For matched book
transactions, income and expense are recorded in non-interest
income. Fees related to these off-balance sheet investment
products are amortized on the interest method over the life of
the off-balance sheet investment products. If the balance of
the related balance sheet item falls below that of the related
off-balance sheet investment product, the excess portion of
the off-balance sheet investment product is marked to market
and the resulting gain or loss included in income. If an off-
balance sheet investment product is terminated, the gain or
loss is deferred and amortized over the remaining original
life of the off-balance sheet investment product.
Off-balance sheet investment products that do not satisfy
the criteria above, including those used in trading
activities, are carried at market value. Any changes in market
value are recognized in non-interest income.
Investment in Majority-Owned Affiliates (Parent Company Only)
The Corporation's investment in affiliates represents the
total equity of majority-owned consolidated subsidiaries,
using the equity method of accounting for investments.
Statement of Cash Flows
For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks.
Net Income Per Common Share
Net income per common share is calculated by dividing net
income available to common stockholders (net income less
preferred dividends) by the average number of common shares
outstanding (total shares issued less treasury shares) plus
any dilutive common stock equivalents for the period.
28
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--------------------------------------------------------------------------------
NOTE 2: AFFILIATIONS, PENDING AFFILIATIONS AND DIVESTITURES
During the year ended December 31, 1994, the Corporation was a
party to business combinations with various entities as
detailed below.
On August 15, 1994 the Corporation acquired all of the
outstanding shares of Liberty National Bancorp, Inc. (Liberty)
of Louisville, Kentucky, in exchange for 24.8 million shares
of BANC ONE common stock. Liberty had total assets of $5.3
billion at August 15, 1994.
This acquisition has been accounted for as a pooling of
interests and, accordingly, the accompanying financial
statements have been restated. The following table shows the
combined results of operations for BANC ONE and Liberty for
the periods prior to combination except 1994 amounts for
Liberty are as of June 30, 1994:
<TABLE>
<CAPTION>
$ (THOUSANDS) BANC ONE LIBERTY COMBINED
---------------------------------------------------------------------------------
<S> <C> <C> <C>
1994 Total revenue...................... $7,658,623 $198,485 $7,857,108
Net income......................... 976,400 28,709 1,005,109
1993 Total revenue...................... 7,226,790 383,880 7,610,670
Net income......................... 1,139,980 51,514 1,191,494
1992 Total revenue...................... 7,358,393 382,264 7,740,657
Net income......................... 876,588 45,639 922,227
</TABLE>
On March 7, 1994, the Corporation acquired all of the
outstanding common shares of Parkdale Bank (Parkdale) of
Beaumont, Texas, in exchange for 282,120 shares of BANC ONE
common stock. Parkdale had total assets of $61 million at
December 31, 1993.
On May 2, 1994, the Corporation acquired all of the
outstanding common shares of Capital Bancorp (Capital) of Salt
Lake City, Utah, in exchange for 477,418 shares of BANC ONE
common stock. Capital had total assets of $117 million at
December 31, 1993.
On June 8, 1994, the Corporation acquired all of the
outstanding common shares of MidStates Bancshares, Inc.
(MidStates) of Moline, Illinois, in exchange for 908,821
shares of BANC ONE common stock. MidStates had total assets of
$192 million at December 31, 1993.
The acquisitions of Parkdale, Capital and MidStates have
been accounted for as poolings of interests; however, the
financial statements prior to the respective acquisition dates
have not been restated because in aggregate the transactions
were not material to BANC ONE.
On May 13, 1994, the Corporation acquired $1.2 billion of
Great American Federal Savings Bank's Arizona deposits in a
regulatory-assisted transaction. The purchase price was $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.
The Corporation has a definitive agreement to acquire
1st*Bank, a $144 million bank holding company headquartered in
Coppell, Texas, which is pending.
The Corporation has an option to purchase Premier Bancorp,
Inc., of Baton Rouge, Louisiana (Premier), for a purchase
price of 125% of the common stock book value (subject to
certain adjustments) of Premier, between June 30, 1995 and
March 31, 1997. In 1994, the Board of Directors approved the
purchase of up to 18 million shares of BANC ONE common stock
for use in the acquisition of Premier. As of December 31,
1994, the Corporation had acquired and held 12 million of its
shares for this purpose. Premier had assets of approximately
$5.4 billion at December 31, 1994. The option to purchase
Premier can, under certain circumstances, be cancelled by
Premier in exchange for a payment to the Corporation equal to
30% of Premier's book value at the cancellation date.
On September 8, 1994, the Corporation signed a definitive
agreement for the sale of its four Michigan banks to Citizens
Banking Corporation of Flint, Michigan. The four Michigan
banks combined had assets of $614 million as of December 31,
1994. The sale is expected to close in the first quarter of
1995 and is expected to result in a gain in excess of $40
million that will be recognized upon closing. On December 2,
1994, the Corporation completed the sale of its Fresno,
California bank and recorded a gain of $3 million.
29
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 3: OPERATIONS CONSOLIDATION
At December 31, 1994, BANC ONE's accrued liability related to
operations consolidation activity was $69 million, consisting
of severance and related charges (Severance Liability) of $36
million and charges in connection with closing facilities
(Facilities Liability) of $38 million. The charges, including
severance and related costs of $1 million paid during the
year, have been reported in the income statement within the
appropriate expense category, e.g., severance and related
costs are reported in salary and related costs.
The Severance Liability is comprised of plans to reduce
1,598 positions and pay $10 million in consolidating certain
deposit operations, reduce 1,606 positions and pay $8 million
in consolidating certain loan operations, and reduce 2,022
positions and pay $18 million in consolidating certain back
office functions. Substantially all of the Severance Liability
will be paid in 1995. The Facilities Liability consists of the
noncash write-off of recorded assets of $13 million and other
expenses related to closing facilities that will require
expenditures of $18 million and $7 million during 1995 and
1996, respectively.
30
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 4: SECURITIES AND INVESTMENT PRODUCTS
Securities
Following are the fair values, maturities and weighted average
yields of securities:
<TABLE>
<CAPTION>
MATURITIES OF SECURITIES AT DECEMBER 31, 1994(1)
------------------------------------------------------------------------
SECURITIES 2000-
$(MILLIONS) 1995 1996 1997 1998 1999 2004 2005+
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
United States treasury and agencies
Amortized cost......................... $ 205 $ 42 $ 140 $ 49 $ 28 $ 10 $ 72
Fair value............................. 199 41 136 47 27 10 72
Weighted average yield................. 7.79% 5.97% 6.36% 5.71% 6.95% 7.43% 7.21%
Mortgage and asset-backed securities:
Government
Amortized cost...................... 179 175 248 180 224 397 2
Fair value.......................... 177 172 242 173 218 394 2
Weighted average yield.............. 6.35% 6.82% 7.44% 7.14% 8.05% 8.18% 9.13%
Other
Amortized cost...................... 186 124 92 26 1 63
Fair value.......................... 184 121 90 26 1 63
Weighted average yield.............. 6.53% 7.05% 7.59% 7.74% 8.80% 6.57%
Tax exempt
Amortized cost......................... 509 252 303 219 186 651 62
Fair value............................. 511 253 309 220 184 626 64
Weighted average yield(2).............. 5.90% 6.08% 6.68% 6.17% 5.65% 5.75% 5.56%
Other
Amortized cost......................... 6 10 14 26 57 32 64
Fair value............................. 6 11 13 26 57 32 83
Weighted average yield................. 7.00% 8.89% 8.61% 10.86% 11.53% 10.33% 2.55%
Total amortized cost...................... $1,085 $ 603 $ 797 $ 500 $ 496 $1,153 $ 200
====== ====== ====== ====== ====== ====== ======
Total fair value.......................... $1,077 $ 598 $ 790 $ 492 $ 487 $1,125 $ 221
====== ====== ====== ====== ====== ====== ======
SECURITIES AVAILABLE FOR SALE
United States treasury and agencies
Amortized cost......................... $3,183 $ 41 $ 13 $ 16 $ 187 $ 200 $ 60
Fair value............................. 3,183 41 12 15 186 200 56
Weighted average yield................. 6.09% 4.86% 5.01% 5.84% 5.78% 6.24% 7.27%
Mortgage and asset-backed securities:
Government
Amortized cost...................... 2 190 372 699 995 1,024 30
Fair value.......................... 2 189 368 675 964 979 29
Weighted average yield.............. 5.67% 6.51% 6.69% 6.77% 6.83% 6.89% 5.24%
Other
Amortized cost...................... 79 1,100 515 753 409 243 45
Fair value.......................... 80 1,075 506 738 405 223 45
Weighted average yield.............. 6.61% 5.60% 5.99% 6.52% 6.93% 6.55% 6.13%
Tax exempt and other
Amortized cost......................... 66 1 1 55 217
Fair value............................. 66 1 1 55 224
Weighted average yield(2).............. 7.60% 6.48% 3.88% 6.93% 5.90%
Total amortized cost...................... $3,330 $1,331 $ 901 $1,469 $1,591 $1,522 $ 352
====== ====== ====== ====== ====== ====== ======
Total fair value.......................... $3,331 $1,305 $ 887 $1,429 $1,555 $1,457 $ 354
====== ====== ====== ====== ====== ====== ======
Grand total amortized cost................ $4,415 $1,934 $1,698 $1,969 $2,087 $2,675 $ 552
====== ====== ====== ====== ====== ====== ======
Grand total fair value.................... $4,408 $1,903 $1,677 $1,921 $2,042 $2,582 $ 575
====== ====== ====== ====== ====== ====== ======
Weighted average yield.................... 6.21% 5.96% 6.61% 6.67% 6.91% 6.76% 5.79%
====== ====== ====== ====== ====== ====== ======
<CAPTION>
ENDING BALANCES AT
DECEMBER 31,
SECURITIES --------------------------------
$(MILLIONS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
SECURITIES HELD TO MATURITY
United States treasury and agencies
Amortized cost......................... $ 546 $ 7,127 $ 7,752
Fair value............................. 532 7,243 7,788
Weighted average yield................. 6.97%
Mortgage and asset-backed securities:
Government
Amortized cost...................... 1,405 3,789 3,863
Fair value.......................... 1,378 3,817 3,889
Weighted average yield.............. 7.49%
Other
Amortized cost...................... 492 3,760 3,098
Fair value.......................... 485 3,780 3,116
Weighted average yield.............. 6.93%
Tax exempt
Amortized cost......................... 2,182 2,361 2,030
Fair value............................. 2,167 2,492 2,148
Weighted average yield(2).............. 5.98%
Other
Amortized cost......................... 209 367 375
Fair value............................. 228 398 419
Weighted average yield................. 8.06%
Total amortized cost...................... $ 4,834 $17,404 $17,118
======= ======= =======
Total fair value.......................... $ 4,790 $17,730 $17,360
======= ======= =======
SECURITIES AVAILABLE FOR SALE
United States treasury and agencies
Amortized cost......................... $ 3,700
Fair value............................. 3,693
Weighted average yield................. 6.08%
Mortgage and asset-backed securities:
Government
Amortized cost...................... 3,312 $ 789 $ 1,322
Fair value.......................... 3,206 834 1,384
Weighted average yield.............. 6.79%
Other
Amortized cost...................... 3,144 7 337
Fair value.......................... 3,072 7 339
Weighted average yield.............. 6.16%
Tax exempt and other
Amortized cost......................... 340 20
Fair value............................. 347 20
Weighted average yield(2).............. 6.39%
Total amortized cost...................... $10,496 $ 816 $ 1,659
======= ======= =======
Total fair value.......................... $10,318 $ 861 $ 1,723
======= ======= =======
Grand total amortized cost................ $15,330 $18,220 $18,777
=======
Grand total fair value.................... $15,108 $18,591 $19,083
======= ======= =======
Weighted average yield.................... 6.46%
=======
</TABLE>
(1) Reflects estimated maturity.
(2) Weighted average yields on tax-exempt securities are not reflected on a
tax equivalent basis.
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
The following are net realized gains and losses on securities
sold or called and unrealized gains and losses on securities
held:
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) DURING 1994
---------------------------------------------------------------------------
NET
REALIZED
AMORTIZED REALIZED REALIZED GAIN
$(MILLIONS) COST PROCEEDS GAINS LOSSES (LOSS)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Securities held to maturity:
United States treasury and agencies.... $ 35 $ 36 $ 1 $ 1
Mortgage and asset-backed securities:
Government..........................
Other............................... 2 2
Tax exempt............................. 55 56 2 $ (1) 1
Other.................................. 8 8 3 (3)
Securities available for sale:
United States treasury and federal
agencies.............................. 10,556 10,271 140 (425) (285)
Mortgage and asset-backed securities:
Government.......................... 104 103 (1) (1)
Other............................... 563 562 1 (2) (1)
Tax exempt and other................... 64 88 27 (3) 24
--------- --------- -------- -------- --------
Total..................................... $ 11,387 $ 11,126 $ 174 $ (435) $ (261)
========= ========= ======== ======== ========
<CAPTION>
UNREALIZED GAIN (LOSS)
------------------------------------------
NET
UNREALIZED
UNREALIZED UNREALIZED GAIN
$(MILLIONS) GAINS LOSSES (LOSS)
---------------------------------------------------------------------------------------
<S> <<C> <C> <C>
Securities held to maturity:
United States treasury and agencies.... $ 2 $ (16) $ (14)
Mortgage and asset-backed securities:
Government.......................... 9 (36) (27)
Other............................... (7) (7)
Tax exempt............................. 51 (66) (15)
Other.................................. 20 (1) 19
Securities available for sale:
United States treasury and federal
agencies.............................. 5 (12) (7)
Mortgage and asset-backed securities:
Government.......................... (106) (106)
Other............................... 26 (98) (72)
Tax exempt and other................... 8 (1) 7
-------- -------- --------
Total..................................... $ 121 $ (343) $ (222)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) DURING 1993
---------------------------------------------------------------------------
NET
AMORTIZED REALIZED REALIZED REALIZED
$(MILLIONS) COST PROCEEDS GAINS LOSSES GAIN
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Securities held to maturity:
United States treasury and agencies.... $ 82 $ 85 $ 3 $ 3
Mortgage and asset-backed securities:
Government.......................... 5 5
Other...............................
Tax exempt............................. 99 100 2 $ (1) 1
Other.................................. 99 110 12 (1) 11
Securities held for sale.................. 715 717 4 (2) 2
--------- --------- -------- -------- -------
Total..................................... $ 1,000 $ 1,017 $ 21 $ (4) $ 17
========= ========= ======== ======== =======
<CAPTION>
UNREALIZED GAIN (LOSS)
-------------------------------------------
NET
UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) GAINS LOSSES GAIN
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Securities held to maturity:
United States treasury and agencies.... $ 130 $ (14) $ 116
Mortgage and asset-backed securities:
Government.......................... 36 (8) 28
Other............................... 27 (7) 20
Tax exempt............................. 136 (5) 131
Other.................................. 35 (4) 31
Securities held for sale.................. 45 45
-------- -------- -------
Total..................................... $ 409 $ (38) $ 371
======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) DURING 1992
---------------------------------------------------------------------------
NET
AMORTIZED REALIZED REALIZED REALIZED
$(MILLIONS) COST PROCEEDS GAINS LOSSES GAIN
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Securities held to maturity:
United States treasury and agencies.... $ 903 $ 920 $ 17 $ 17
Mortgage and asset-backed securities:
Government.......................... 64 65 1 1
Other............................... 156 157 2 $ (1) 1
Tax exempt............................. 166 167 2 (1) 1
Other.................................. 161 168 10 (3) 7
Securities held for sale..................
--------- --------- -------- ------- --------
Total..................................... $ 1,450 $ 1,477 $ 32 $ (5) $ 27
========= ========= ======== ======= ========
<CAPTION>
UNREALIZED GAIN (LOSS)
-------------------------------------------
NET
UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) GAINS LOSSES GAIN
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Securities held to maturity:
United States treasury and agencies.... $ 102 $ (66) $ 36
Mortgage and asset-backed securities:
Government.......................... 39 (13) 26
Other............................... 26 (8) 18
Tax exempt............................. 126 (8) 118
Other.................................. 44 44
Securities held for sale.................. 67 (3) 64
-------- -------- --------
Total..................................... $ 404 $ (98) $ 306
======== ======== ========
</TABLE>
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--------------------------------------------------------------------------------
Off-Balance Sheet Investment Products
Information is provided below for each significant type of
off-balance sheet investment product. The off-balance sheet
investment products BANC ONE utilizes are primarily interest
rate swaps. Interest rate swap agreements generally involve
the exchange of interest payments without the exchange of the
underlying notional amount on which the interest payments are
calculated. BANC ONE has entered into interest rate swap
agreements that synthetically alter assets and liabilities as
part of its program to manage the impact of fluctuating
interest rates.
The notional amount of generic swaps does not change for
the life of the contract. The notional amount of amortizing
swaps changes based on changes in contractually defined
interest rate indices. Generally, as rates fall the notional
amounts of amortizing swaps decline more rapidly and as rates
increase notional amounts decline more slowly. A key
assumption in the maturity information below is that future
variable rates move as indicated by the forward interest rate
curve in existence at December 31, 1994. To the extent that
rates move in a fashion other than indicated by the forward
interest rate curve the maturity information will change.
Basis swaps are contracts under which BANC ONE receives
amounts based on the London inter-bank offered rate (LIBOR),
typically subject to certain defined caps, and pays amounts
based on Prime. Accrual of interest on forward starting swaps
commences at a predetermined future date.
Purchased caps require the payment of an up-front fee for
the right to receive interest payments on the contract
notional amount when a floating rate (typically LIBOR) rises
above a strike rate during the life of the contract. The
impact on net interest income is the excess of the floating
rate over the strike rate less the periodic amortization of
the premium paid.
The notional amounts shown below represent agreed upon
amounts on which calculations of interest payments to be
exchanged are based. Notional amounts do not represent direct
credit exposures. BANC ONE's direct credit exposure is limited
to the net difference between the calculated pay and receive
amounts on each transaction, which is generally netted and
paid quarterly, and the ability of the counterparty to perform
its payment obligation under the agreement. BANC ONE has very
stringent policies governing off-balance sheet investment
product activities and collateral is typically exchanged with
the counterparties to further minimize credit risk. The
methods used to determine counterparties and credit lines are
formally reviewed and approved annually.
There were $49 million and $(14) million of net deferred
items primarily representing premiums paid/(received) at
December 31, 1994 and 1993, respectively. There were no past
due payments, nor were there any reserves for credit losses on
off-balance sheet investment products, as of these dates.
Trading and dealer activities in aggregate are not material to
BANC ONE and are not separately disclosed. The following are
the estimated maturities and weighted average fixed rates of
off-balance sheet investment products by type.
<TABLE>
<CAPTION>
MATURITIES OF OFF-BALANCE SHEET INVESTMENT PRODUCTS AT DECEMBER 31, ENDING BALANCES AT
1994(2)(3) DECEMBER 31,
------------------------------------------------------------------------ -------------------
2000-
$(MILLIONS) 1995 1996 1997 1998 1999 2004 2005+ 1994 1993
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Receive fixed generic swaps
Notional Value............... $5,355 $ 645 $ 100 $ 745 $ 150 $ 6,995 $ 6,682
Weighted average receive
rate....................... 5.17% 4.80% 6.71% 6.97% 5.82% 5.37%
Receive fixed amortizing swaps
Notional Value............... 805 3,425 8,211 $2,974 $ 4 23 15,442 15,019
Weighted average receive
rate....................... 6.24% 5.54% 5.00% 5.25% 8.81% 8.82% 5.24%
Pay fixed swaps
Notional Value............... 2,753 2,509 221 54 5 6 5,548 1,527
Weighted average pay rate.... 5.36% 5.60% 6.28% 5.49% 8.83% 8.16% 5.51%
Purchased Caps
Notional Value............... 1,459 4,714 1 1 1 3 7 6,186
Basis swaps
Notional Value............... 362 3,843 3,590 307 8,102 5,556
Forward Starting Swaps(4)
Notional Value............... 500 500 7,500
Weighted average receive
rate....................... 5.60% 5.60%
Other(1)
Notional Value............... 571 1,485 553 95 63 71 8 2,846 2,781
</TABLE>
(1) Other off-balance sheet investment products include customer transactions of
$577 million, floors, futures, options, swap options, caps, forward rate
agreements, and currency swaps.
(2) Based on future variable rates from the forward interest rate curve at
December 31, 1994.
(3) Variable rates are not included in the table above however, are based
primarily on three month LIBOR.
(4) All $500 million are received fixed amortizing swaps which become effective
in January 1995.
33
<PAGE> 16
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Unrealized gains and losses in off-balance sheet investment
products at December 31, 1994 and 1993 are summarized as
follows:
<TABLE>
<CAPTION>
UNREALIZED GAIN (LOSS) AS OF DECEMBER 31,
1994
-----------------------------------------
NET
NOTIONAL UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) AMOUNT GAINS LOSSES GAIN (LOSS)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Generic receive fixed................ $ 6,995 $ 1 $ (154) $ (153)
Amortizing receive fixed............. 15,442 1 (989) (988)
Less: Pay fixed...................... (5,548) 91 (5) 86
Purchased caps.................. (6,186) 83 (2) 81
-------- ------- --------- --------
Net receive fixed.................... 10,703 176 (1,150) (974)
Basis................................ 8,102 (342) (342)
Forward starting..................... 500 (34) (34)
Other................................ 2,846 55 (11) 44
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED GAIN (LOSS) AS OF DECEMBER 31,
1993
-----------------------------------------
NET
NOTIONAL UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) AMOUNT GAINS LOSSES GAIN (LOSS)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Generic receive fixed................ $ 6,682 $ 135 $ (7) $ 128
Amortizing receive fixed............. 15,019 159 (16) 143
Less: Pay fixed...................... (1,527) 1 (33) (32)
-------- ------- --------- --------
Net receive fixed.................... 20,174 295 (56) 239
Basis................................ 5,556 10 (14) (4)
Forward starting..................... 7,500 2 (57) (55)
Other................................ 2,781 45 (8) 37
</TABLE>
--------------------------------------------------------------------------------
NOTE 5: LOANS AND LEASES
The composition of the loan and lease portfolio at December
31, 1994 and 1993 is summarized as follows:
<TABLE>
<CAPTION>
$ (THOUSANDS) 1994 1993
-------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural................ $ 16,619,186 $15,208,355
Real estate:
Commercial.......................................... 5,571,296 4,886,427
Construction........................................ 2,195,003 1,708,933
Residential......................................... 11,273,689 11,185,421
Consumer (net of unearned income of $423,024 and
$362,709 at December 31, 1994 and 1993,
respectively)....................................... 19,070,286 17,311,474
Credit card........................................... 5,924,383 6,112,545
Leases (net of unearned income of $379,679 and
$339,766 at December 31, 1994 and 1993,
respectively)....................................... 1,339,069 1,107,220
------------ -----------
Total loans and leases................................ $ 61,992,912 $57,520,375
============ ===========
</TABLE>
BANC ONE owned and serviced certain low quality loans
under agreements with the Federal Deposit Insurance
Corporation (FDIC). Commercial, financial and agricultural
loans include $22 million at December 31, 1993, related to
such arrangements. BANC ONE receives various forms of
financial assistance from the FDIC under the arrangements.
Such assistance totaled $11 million, $25 million and $41
million for the years ended December 31, 1994, 1993 and 1992,
respectively.
Mortgage loans held for sale were $356 million and $1.2
billion at December 31, 1994 and 1993, respectively. Such
loans are carried at the lower of cost or market determined on
an aggregate basis. Mortgage loans were adjusted on this basis
resulting in a loss of $1 million at December 31, 1994.
In the normal course of business, BANC ONE issues
commitments to extend credit, standby letters of credit, and
commercial and other letters of credit to meet the financing
needs of its customers. These instruments involve, to varying
degrees, elements of credit and interest rate
34
<PAGE> 17
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
risk in excess of the amount recognized in the balance sheet.
The contract amounts of these instruments are shown below.
<TABLE>
<CAPTION>
CONTRACT AMOUNT
DECEMBER 31,
-------------------
$(MILLIONS) 1994 1993
---------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit.......................... $60,185 $39,693
Standby letters of credit............................. 3,003 2,707
Commercial and other letters of credit................ 260 225
</TABLE>
Commitments to extend credit are agreements to lend to a
customer provided there is no violation of any condition
established in the contract. Non-credit card commitments
generally have fixed expiration dates, may require payment of
a fee and contain termination and other clauses that provide
for relief from funding in the event that there is a
significant deterioration in the credit quality of the
customer. Since many of the commitments are expected to or
typically expire without being drawn upon, the total
commitment amount does not necessarily represent future cash
requirements. At December 31, 1994, BANC ONE had $60.2 billion
of loan commitments outstanding, including approximately $42.6
billion of credit card commitments and $7.6 billion of other
loan commitments expiring within one year. The same amounts
for 1993 were $39.7 billion, $23.7 billion and $7.6 billion,
respectively. The exposure to credit loss in the event of
nonperformance by the other party to these commitments is
represented by the contractual amount. BANC ONE applies the
same credit policies in making commitments as it does for on-
balance sheet instruments, mainly by evaluating each
customer's creditworthiness on a case by case basis. The
amount of collateral obtained, if deemed necessary by BANC ONE
upon extension of credit, is based on management's credit
evaluation of the borrower. Collateral varies, but may include
residential real estate, accounts receivable, inventories,
investments, property, plant and equipment, and
income-producing commercial properties.
Letters of credit are conditional commitments issued by
BANC ONE guaranteeing payment on drafts drawn in accordance
with the terms of the documents. Commercial letters of credit
are used to facilitate trade or commerce with the drafts being
drawn when the underlying transaction is consummated. Standby
letters of credit guarantee the performance of a customer to a
third party. These guarantees are primarily issued to support
public and private borrowing arrangements, including
commercial paper, bond financing, and similar transactions.
The credit risk involved in issuing letters of credit is
essentially the same as that involved in making loan
commitments to customers. BANC ONE uses the same credit
policies in providing these conditional obligations as it does
for on-balance sheet instruments. Collateral for those
commitments when deemed necessary varies, but may include
accounts receivable, inventories, investments and real estate.
Except for short-term guarantees that expire within one year,
most guarantees extend for more than five years and expire in
decreasing amounts through the year 2009.
BANC ONE has entered into several securitizations of
loans. The risk associated with these transactions is limited
to the on balance sheet spread account receivable
(approximately $78 million). The remaining market and credit
risks are transferred to the investors and the third party
institutions providing credit enhancement. BANC ONE also has
loans sold with recourse totaling $222 million at December 31,
1994.
At December 31, 1994 and 1993, respectively, BANC ONE had
$4 billion and $3.4 billion of loans to real estate operators,
managers and developers which represented 16.23% and 15.44% of
commercial, financial and agricultural, commercial real
estate, and construction loans. There were no other
significant concentrations.
BANC ONE's real estate loans and loan commitments are
primarily for properties located throughout the Midwest and
Southwest. Repayment of these loans is dependent in part upon
the economic conditions in those regions. BANC ONE evaluates
each customer's creditworthiness on an individual basis. BANC
ONE typically requires collateral on real estate loans
consisting primarily of residential and income-producing
properties.
BANC ONE's credit card loans, consumer loans and related
loan commitments are located throughout the United States.
Repayment of these loans is dependent in part upon regional
and national economic factors. BANC ONE has approximately 5.2
million Visa and Mastercard accounts with an average
outstanding balance of $883 and 5.1 million private label
accounts with an average outstanding balance of $218. The
average unfunded commitments for all credit card accounts is
$4,122 per account. BANC ONE does not require collateral on
credit card loans because of the low
35
<PAGE> 18
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
average balance of each loan. The average balance per consumer
loan is $7,584. Collateral typically required for consumer
loans includes automobiles and other equipment.
--------------------------------------------------------------------------------
NOTE 6: RESERVE FOR LOAN AND LEASE LOSSES
Activity in the reserve for loan and lease losses for 1994,
1993 and 1992 is summarized as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of period................. $ 967,254 $ 952,174 $ 908,403
Reserves associated with loans acquired and
other...................................... 4,526 16,289 6,819
Provision for loan and lease losses.......... 242,269 388,261 630,731
Charge-offs.................................. (521,169) (590,558) (761,491)
Recoveries................................... 204,300 201,088 167,712
---------- ---------- ----------
Net charge-offs.............................. (316,869) (389,470) (593,779)
---------- ---------- ----------
Balance, end of period....................... $ 897,180 $ 967,254 $ 952,174
========== ========== ==========
</TABLE>
--------------------------------------------------------------------------------
NOTE 7: BANK PREMISES AND EQUIPMENT
The major categories of banking premises and equipment and
accumulated depreciation at December 31, 1994 and 1993 are
summarized as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
-----------------------------------------------------------------------------------
<S> <C> <C>
Land.................................................. $ 213,461 $ 203,603
Building.............................................. 1,008,394 939,945
Equipment............................................. 1,391,738 1,255,827
Leasehold improvements................................ 251,286 252,359
----------- ----------
2,864,879 2,651,734
Less accumulated depreciation and amortization........ 1,347,232 1,192,123
----------- ----------
Bank premises and equipment, net...................... $ 1,517,647 $1,459,611
=========== ==========
</TABLE>
--------------------------------------------------------------------------------
NOTE 8: DEPOSITS
The major categories of deposits at December 31, 1994 and 1993
are as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
-------------------------------------------------------------------------------------
<S> <C> <C>
Non-interest bearing.................................. $ 14,405,707 $14,493,954
Interest bearing:
Demand.............................................. 9,296,774 9,465,164
Savings............................................. 7,033,573 7,766,409
Money market accounts............................... 12,336,737 11,944,947
Time deposits less than $100,000.................... 18,906,855 17,075,905
Time deposits greater than $100,000................. 6,110,408 4,276,021
------------ -----------
Total interest bearing deposits....................... 53,684,347 50,528,446
------------ -----------
Total deposits........................................ $ 68,090,054 $65,022,400
============ ===========
</TABLE>
36
<PAGE> 19
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 9: SHORT-TERM BORROWINGS
Information pertaining to BANC ONE's short-term borrowings for
1994, 1993 and 1992 is summarized below:
<TABLE>
<CAPTION>
FEDERAL
COMMERCIAL FUNDS REPURCHASE
$(THOUSANDS) PAPER PURCHASED AGREEMENTS OTHER
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994:
Ending balance................ $1,272,660 $2,114,015 $3,072,512 $3,162,582
Highest month-end balance..... 1,272,660 3,522,126 6,199,725 3,962,375
Average daily balance......... 1,047,795 2,836,104 4,359,420 2,568,300
Weighted average interest
rate:
As of year-end.............. 5.61% 6.01% 4.62% 5.02%
Paid during year............ 4.61 4.46 3.55 4.42
1993:
Ending balance................ $1,119,760 $3,185,538 $3,780,088 $ 971,814
Highest month-end balance..... 1,374,047 3,185,538 3,780,088 971,814
Average daily balance......... 1,087,393 2,157,458 2,905,051 330,345
Weighted average interest
rate:
As of year-end.............. 3.21% 3.11% 2.84% 2.84%
Paid during year............ 3.48 3.32 2.68 2.86
1992:
Ending balance................ $ 995,690 $1,815,865 $3,142,192 $ 436,884
Highest month-end balance..... 1,065,506 1,912,819 3,864,188 717,138
Average daily balance......... 854,389 1,676,356 2,615,380 412,472
Weighted average interest
rate:
As of year-end.............. 3.52% 3.00% 2.78% 2.97%
Paid during year............ 4.08 3.91 3.12 3.42
</TABLE>
Federal funds purchased and repurchase agreements
represent primarily overnight borrowings. The commercial paper
of the Corporation and certain affiliates is supported by
multiple lines of credit of the Corporation, renewable
annually with unaffiliated banks. These facilities total $1.6
billion and carry annual commitment fees of .10%. During 1994,
BANC ONE established a $6 billion Bank Note Facility. Other
includes Demand Notes Payable, U.S. Treasury and $2.4 billion
of Bank Notes at December 31, 1994.
37
<PAGE> 20
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 10: LONG-TERM BORROWINGS
Long-term borrowings are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
STATED EFFECTIVE MATURITY ---------------------------
$(THOUSANDS) RATE RATE(1) DATE 1994 1993
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Corporation: Subordinated
Notes(5)............. 7.25% 7.38% 2002 $ 345,781 $ 345,224
Subordinated
Notes(5)............. 8.74% 8.74% 2003 169,866 169,851
Subordinated
Notes(5)............. 10.00% 10.25% 2010 197,285 197,208
Subordinated
Notes(5)............. 9.88% 9.89% 2009 195,712 195,410
Affiliates: Subordinated
Notes(2)............. Various Various Various 599,244 598,793
Fixed rate Swiss
franc bonds(3)....... 5.50% 11.52% 1995 50,482 50,507
Notes(4)............. Various Various Various 227,565 179,842
Capital Leases and
Other................ Various Various Various 80,513 68,437
----------- -----------
Total................ $ 1,866,448 $ 1,805,272
----------- -----------
</TABLE>
(1) The effective rate includes amortization of a premium or
discount. Interest rate swap agreements entered into by
BANC ONE altered the stated interest rate for the 7.25%
and 9.875% Subordinated Notes to a variable interest
rate. The effective rates represent the impact of these
swap agreements at December 31, 1994. The effective rate
for the fixed rate Swiss franc bonds includes the impact
of a Swiss franc/U.S. dollar currency swap, entered into
by the affiliate, which effectively converts the issue
to U.S. dollar financing.
(2) These Notes have stated rates ranging from 6.0% to
7.375%. Interest rate swap agreements entered into by
BANC ONE altered the stated interest rate for certain of
these Notes. The effective rates, including the impact of
the swaps, for the year ended December 31, 1994 range
from 6.77% to 7.66%. The notes mature between 2002
and 2005, and are not subject to early redemption.
(3) The affiliate may redeem all, but not part, of the
outstanding bonds at par.
(4) Notes have stated or variable rates ranging from 5.58% to
11.75%, effective rates ranging from 5.58% to 11.75% and
mature between 1995 and 2016. Notes of $80 million are
subject to early redemption at the option of the
affiliate beginning in 1996. Commencing in 2002,
mandatory annual payments in the amount of $4 million are
required to be made to a sinking fund to repay these
notes. Notes of $23 million are redeemable at the option
of the affiliate beginning in 1996 at prices decreasing
from 102% in 1996 to 100% in 1998 and thereafter. The
agreement imposes certain limitations relating to funded
debt, liens and the sale or issuance of capital stock of
significant bank subsidiaries of the affiliate. Notes of
$24 million are collateralized by certain mortgage loans
and by Federal Home Loan Bank capital stock owned by an
affiliate.
(5) The notes are not subject to redemption and impose
certain limitations relating to funded debt, liens and
the sale or issuance of capital stock of significant
bank subsidiaries.
The aggregate minimum annual repayments of long-term
borrowings for the years 1995 through 1999 and thereafter are
as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) CORPORATION AFFILIATES
---------------------------------------------------------------------------------
<S> <C> <C>
1995.................................................. $ 172,362
1996.................................................. 8,149
1997.................................................. 14,212
1998.................................................. 8,293
1999.................................................. 26,508
Thereafter............................................ $908,644 728,280
-------- ---------
$908,644 $ 957,804
======== =========
</TABLE>
--------------------------------------------------------------------------------
NOTE 11: STOCK DIVIDENDS AND CONVERTIBLE PREFERRED STOCK
On July 20, 1993, the Corporation declared a
five-shares-for-four-shares common stock split, effective
August 31, 1993. On January 25, 1994 and January 22, 1992, the
Corporation declared 10% common stock dividends to
stockholders of record on February 10, 1994 and February 14,
1992. Accordingly, all common share data include the effect of
the stock split and stock dividends.
On April 21, 1993, the Corporation called all of the
outstanding shares of the Class B preferred stock for
redemption. All but a minor amount of Class B preferred shares
were converted to common stock.
38
<PAGE> 21
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Each of the Series C preferred shares can be converted
into 1.75362 shares of the Corporation's common stock and
provides for cumulative quarterly dividends at an annual rate
of $3.50 per share. The Series C preferred shares have a
stated liquidation value of $50 per share plus an amount per
share equal to all dividends cumulating or accrued and unpaid
thereon to the date of such liquidation. The Series C
preferred shares are redeemable beginning April 15, 1995 at an
initial call price of $52.10 per share, declining to $50.00
per share in 2001.
--------------------------------------------------------------------------------
NOTE 12: DIVIDEND AND CAPITAL RESTRICTIONS (ALSO SEE NOTE
10)
Payment of dividends by the bank affiliates and certain other
non-bank affiliates is subject to various national and/or
state regulatory restrictions. The amount of dividends
available from the non-bank affiliates that are subject to
dividend restrictions is regulated by the governing agency to
which they report.
At December 31, 1994, total stockholders' equity of the
banking affiliates approximated $7.2 billion, of which $1.4
billion was available for payment of dividends without
approval by the applicable regulatory authority.
BANC ONE is required to maintain minimum amounts of
capital to total "risk weighted" assets, as defined by bank
regulations. BANC ONE is required to have minimum Tier 1 and
total capital ratios of 4.00% and 8.00%, respectively. BANC
ONE's actual ratios at December 31, 1994 were 9.93% and
13.33%, respectively. BANC ONE's leverage ratio at December
31, 1994 was 8.28%.
--------------------------------------------------------------------------------
NOTE 13: INCOME TAXES
The Corporation and its affiliates file a consolidated federal
income tax return and income tax expense is apportioned among
all affiliates based upon their taxable income or loss and tax
credits.
The effective income tax rate is below the statutory rate
due to the following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Statutory tax rate............................... $531,598 35.0% $619,750 35.0% $456,025 34.0%
Increase (reduction) in tax rate resulting from:
State income taxes, net of federal income tax
benefit...................................... 49,155 3.2 41,440 2.3 18,556 1.4
Tax exempt interest............................ (59,273) (3.9) (65,229) (3.7) (69,455) (5.2)
Other, net..................................... (7,737) (0.5) 2,648 0.2 13,896 1.0
-------- ---- -------- ---- -------- ----
Actual tax rate.................................. $513,743 33.8% $598,609 33.8% $419,022 31.2%
======== ==== ======== ==== ======== ====
</TABLE>
BANC ONE adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," effective January 1,
1993. The statement requires the use of the asset and
liability approach for the financial accounting and reporting
of income taxes.
Components of the provision for income taxes follow:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total deferred federal tax............................. $ 146,287 $ 21,385 $ (13,595)
Federal amount currently payable....................... 290,722 513,291 404,038
Total deferred state tax............................... 26,803 7,164 2,020
State amount currently payable......................... 49,931 56,769 26,559
--------- --------- ---------
Total provision for income taxes....................... $ 513,743 $ 598,609 $ 419,022
========= ========= =========
</TABLE>
39
<PAGE> 22
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Deferred tax assets and liabilities at December 31, 1994 and
1993 consisted of the following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Loan loss reserve...................................................... $ 338,917 $ 361,830
Accrued liabilities.................................................... 86,533 71,695
Unrealized holding loss on securities available for sale............... 66,366
Other.................................................................. 7,785 50,632
--------- ---------
499,601 484,157
--------- ---------
Deferred tax liabilities:
Leased assets and depreciation......................................... (520,279) (393,504)
Other.................................................................. (58,670) (63,276)
--------- ---------
(578,949) (456,780)
--------- ---------
Net deferred tax (liability) asset....................................... $ (79,348) $ 27,377
========= =========
</TABLE>
Deferred income taxes are determined separately for each
separate taxable entity of the Corporation in each tax
jurisdiction. For each separate tax paying component, all
deferred tax assets and liabilities are netted and presented
in a single amount, which is included in other assets or other
liabilities on the balance sheet, as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Other assets:
Federal deferred tax assets............................................ $ 42,381
State deferred tax assets.............................................. $ 5,388 11,330
--------- ---------
5,388 53,711
--------- ---------
Other liabilities:
Federal deferred tax liabilities....................................... (49,280) (5,448)
State deferred tax liabilities......................................... (35,456) (20,886)
--------- ---------
(84,736) (26,334)
--------- ---------
Net deferred tax (liability) asset....................................... $ (79,348) $ 27,377
========= =========
</TABLE>
--------------------------------------------------------------------------------
NOTE 14: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
INSTRUMENTS
The table below summarizes the information required by
Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments" (SFAS
107).
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------
1994 1993
------------------- -------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
$(MILLIONS) AMOUNT VALUE AMOUNT VALUE
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Cash and short-term investments........... $ 8,613 $ 8,613 $ 6,060 $ 6,060
Securities -- held to maturity............ 4,834 4,790 17,404 17,730
Securities -- available/held for
sale(1)................................. 10,291 10,291 816 861
Loans, net(2)............................. 57,841 58,753 53,899 55,255
FINANCIAL LIABILITIES:
Deposits.................................. 68,090 67,615 65,022 65,145
Short-term borrowings..................... 9,622 9,622 9,057 9,057
Long-term borrowings...................... 1,866 1,869 1,805 2,055
OFF-BALANCE SHEET INVESTMENT PRODUCTS.......... 64 (1,242) (14) 203
</TABLE>
(1) The carrying amount and fair value of securities available
for sale at December 31, 1994 does not include the related
off-balance sheet investment products in the amount of $27
million.
(2) Excludes net leases with a carrying amount of $3,255
million and $2,654 million at December 31, 1994 and 1993,
respectively.
Fair value amounts represent estimates of value at a
point in time. Significant estimates regarding economic
conditions, loss experience, risk characteristics associated
with particular financial instruments and other factors were
used for the purposes of this disclosure. These estimates are
subjective in nature and involve matters of judgment.
Therefore, they cannot be
40
<PAGE> 23
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
determined with precision. Changes in the assumptions could
have a material impact on the amounts estimated.
While these estimated fair value amounts are designed to
represent estimates of the amounts at which these instruments
could be exchanged in a current transaction between willing
parties, many of BANC ONE's financial instruments lack an
available trading market as characterized by willing parties
engaged in an exchange transaction. In addition, it is BANC
ONE's intent to hold most of its financial instruments to
maturity and therefore it is not probable that the fair values
shown will be realized in a current transaction.
The estimated fair values disclosed do not reflect the
value of assets and liabilities that are not considered
financial instruments. In addition, the value of long-term
relationships with depositors (core deposit intangibles) and
other customers (e.g. credit card intangibles) are not
reflected. The value of these items is significant.
Because of the wide range of valuation techniques and the
numerous estimates which must be made, it may be difficult to
make reasonable comparisons of BANC ONE's fair value
information to that of other financial institutions. It is
important that the many uncertainties discussed above be
considered when using the estimated fair value disclosures and
to realize that because of these uncertainties, the aggregate
fair value amount should in no way be construed as
representative of the underlying value of BANC ONE.
The following describes the methodology and assumptions
used to estimate fair value of financial instruments required
by SFAS 107.
CASH AND SHORT-TERM INVESTMENTS. Cash and short-term
investments are by definition short-term and do not present
any unanticipated credit issues. Therefore, the carrying
amount is a reasonable estimate of fair value.
SECURITIES. The estimated fair values of securities by
type are provided in Note 4 to the financial statements. These
are based on quoted market prices, when available. If a quoted
market price is not available, fair value is estimated using
quoted market prices for similar securities.
LOANS. In order to determine the fair market values for
loans, the loan portfolio was segmented based on loan type,
credit quality and repricing characteristics. For certain
variable rate loans with no significant credit concerns and
frequent repricings, estimated fair values are based on
current carrying values. The fair values of other loans are
estimated using discounted cash flow analyses. The discount
rates used in these analyses are generally based on BANC ONE's
funding cost plus a spread. The spread incorporates the impact
of credit quality, servicing costs and the cost of embedded
options such as prepayments and caps. Maturity estimates are
based on historical experience with prepayments and current
economic and lending conditions. The estimated fair value of
credit card receivables is based on the present value of cash
flows arising from receivables outstanding and does not
include the value associated with the relationships BANC ONE
has with its credit card customers. It therefore reflects
neither the value associated with new receivables created by
customers nor the value associated with the fee income from
credit card relationships. These values are significant.
DEPOSITS. Under SFAS 107, the fair value of deposits with
no stated maturity is equal to the amount payable on demand.
Therefore, the fair value estimates for these products do not
reflect the benefits that BANC ONE receives from the low-cost,
long-term funding they provide. These benefits are
significant. The estimated fair value of fixed rate time
deposits are based on discounted cash flow analyses. The
discount rates used in these analyses are based on market
rates of alternative funding sources currently available for
similar remaining maturities, adjusted for servicing and
deposit insurance costs.
41
<PAGE> 24
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
SHORT-TERM BORROWINGS. Short-term borrowings reprice
frequently and, therefore, the carrying amount is a reasonable
estimate of fair value.
LONG-TERM BORROWINGS. For publicly traded debt, estimated
fair values are based on quoted market prices. Where such
prices are not available, fair value is estimated using quoted
market prices for similar instruments or by discounted cash
flow analysis.
OFF-BALANCE SHEET INVESTMENT PRODUCTS. Carrying values
for off-balance sheet investment products represent deferred
amounts arising from these financial instruments. Where
possible, the fair values are based upon quoted market prices.
Where such prices do not exist, these values are based on
dealer quotes and generally represent an estimate of the
amount that BANC ONE would receive or pay to terminate the
agreement at the reporting date, taking into account current
interest rates and the current creditworthiness of the
counterparties.
COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT
AND LETTERS OF CREDIT. Pricing of these financial instruments
is based on the credit quality and relationship, fees,
interest rates, probability of funding, compensating balance
and other covenants or requirements. Non-credit card
commitments generally have fixed expiration dates, are
variable rate and contain termination and other clauses which
provide for relief from funding in the event that there is a
significant deterioration in the credit quality of the
customer. Many loan commitments are expected to, and typically
do, expire without being drawn upon. Approximately 83.4% of
BANC ONE's commitments to lend expire within one year, of
which 84.7% relate to commitments to lend on credit cards. The
rates and terms of BANC ONE's commitments to lend, standby
letters of credit and letters of credit are competitive with
others in the various markets in which BANC ONE operates. The
carrying amounts are reasonable estimates of the fair value of
these financial instruments. Carrying amounts which are
comprised of the unamortized fee income and, where necessary,
reserves for any expected credit losses from these financial
instruments, are immaterial.
--------------------------------------------------------------------------------
NOTE 15: LEASES
BANC ONE utilizes certain bank premises and equipment under
long-term leases expiring at various dates. In certain cases,
these leases contain renewal options and generally provide
that BANC ONE will pay for insurance, taxes and maintenance.
As of December 31, 1994, the future minimum rental
payments required under noncancelable operating leases with
initial terms in excess of one year are as follows:
<TABLE>
<CAPTION>
OPERATING
$(THOUSANDS) LEASES
-----------------------------------------------------------------------------------
<S> <C>
Year ending December 31
1995................................................................... $ 90,190
1996................................................................... 77,839
1997................................................................... 65,717
1998................................................................... 58,511
1999................................................................... 51,987
Later years.............................................................. 340,701
--------
Total minimum lease payments............................................. $684,945
========
</TABLE>
Rental expense under operating leases approximated $175
million in 1994, $149 million in 1993 and $128 million in
1992.
42
<PAGE> 25
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 16: PLEDGED SECURITIES AND CONTINGENT LIABILITIES
As of December 31, 1994, investment securities having a book
value of $8.4 billion were pledged as collateral for
repurchase agreements sold, off-balance sheet investment
products and for governmental and trust department deposits.
The Corporation's bank affiliates are required to
maintain average balances with the Federal Reserve Bank. The
average required reserve balance was $1.1 billion for both
1994 and 1993.
In 1992, Bank One, Columbus, N.A. ("Columbus") was named
a defendant in a purported class action lawsuit in
Pennsylvania challenging whether Columbus can impose various
types of fees, allowed by the state of Ohio, on cardholders
residing in Pennsylvania (the "Suit"). The Suit seeks
unquantified compensatory and triple damages and other
equitable relief. The Suit is one of many similar class action
lawsuits brought against credit card issuing banks throughout
the United States. The dismissal of the Suit by the Court of
Common Pleas of Philadelphia County, Pennsylvania, which had
been upheld by a panel of the Pennsylvania Superior Court, was
reversed by the entire Pennsylvania Superior Court in December
1994. Columbus has appealed the decision to the Pennsylvania
Supreme Court. Legal counsel believes that the decision is
contrary to the decisions of most state and federal courts
outside Pennsylvania which have considered the issue and have
held that national banks may use the rates and fees of the
bank's home state in contracts with cardholders from other
states. There can be no assurance that bank affiliates of BANC
ONE will not be named as defendants in future similar
lawsuits.
The Corporation and certain of its affiliates have been
named as defendants in various other legal proceedings.
Management believes that liabilities arising from the Suit and
these other proceedings, if any, will not have a material
adverse effect on the consolidated financial position,
liquidity or results of operations of BANC ONE.
--------------------------------------------------------------------------------
NOTE 17: EMPLOYEE BENEFIT PLANS
BANC ONE has various non-contributory pension plans covering
substantially all employees. The retirement benefits are based
on length of service and the employee's highest five years of
compensation during the last 10 years of service. BANC ONE's
funding policy is to contribute amounts necessary to meet the
funding requirements set forth in the Employee Retirement
Income Security Act of 1974.
The following table sets forth the plans' funded status.
Accrued pension cost at December 31, 1994 and 1993 includes
$16 million and $11 million, respectively, for BANC ONE's
non-qualified, unfunded supplemental pension plans.
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
----------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation, including vested benefits of
$368,934 and $423,680 in 1994 and 1993, respectively....... $(389,005) $(458,078)
========= =========
Projected benefit obligation for service rendered to date.... $(611,527) $(652,004)
Plan assets at fair value.................................... 498,563 490,085
--------- ---------
Projected benefit obligation in excess of plan assets........ (112,964) (161,919)
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions......... 53,416 74,494
Unrecognized prior service cost.............................. 3,281 10,272
Unrecognized net transition asset............................ (16,649) (19,274)
--------- ---------
Accrued pension cost......................................... $ (72,916) $ (96,427)
========= =========
</TABLE>
43
<PAGE> 26
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
The plan assets primarily consist of U.S. Treasury and
Federal Agency securities, mutual funds and cash equivalents.
Plan assets include 843,093 shares of the Corporation's common
stock at December 31, 1994 and 875,875 shares at December 31,
1993. The fair value of the Corporation's stock was $21
million and $31 million at December 31, 1994 and 1993
respectively. During 1994 and 1993, 28,736 and 726,393 shares
of the Corporation's common stock were sold primarily to
comply with generally accepted fiduciary responsibilities that
allow no more than a certain level of employer securities in
comparison to other investments. Dividends received in 1994
and 1993 on the Corporation's common stock totaled $1 million
and $2 million.
Net periodic pension cost for BANC ONE for 1994, 1993 and
1992 included the following components:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost -- benefits
earned during the
period................. $ 45,921 $ 43,553 $ 35,281
Interest cost on
projected benefit
obligation............. 43,284 41,724 34,762
Actual (return) loss on
plan assets............ 29,024 (30,965) (31,890)
Net amortization and
deferral............... (82,897) (13,294) (9,669)
--------- --------- ---------
Net periodic pension
cost................... $ 35,332 $ 41,018 $ 28,484
========= ========= =========
Actuarial assumptions:
Weighted average
discount rate for
projected benefit
obligation.......... 7.90% TO 8.50% 7.00% to 8.75% 8.00% to 9.00%
Weighted average rate
of compensation
increase............ 4.50% TO 6.25% 4.50% to 6.00% 4.00% to 7.00%
Expected long-term rate
of return on plan
assets.............. 9.50% TO 9.75% 7.00% to 9.75% 8.00% to 9.75%
</TABLE>
44
<PAGE> 27
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Postretirement Benefits Other Than Pension
BANC ONE currently sponsors a defined benefit postretirement
plan that covers salaried employees. The plan provides
medical, dental and life insurance benefits. Benefits are
available to retired employees with more than 10 years of
service who retire under the normal or early retirement
provisions of the BANC ONE Retirement Plan. The medical and
dental benefits are contributory, while the life insurance is
non-contributory.
On January 1, 1993, BANC ONE adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits other than Pensions." The Standard
requires, among other things, that employers use the accrual
method of accounting for the cost of providing such benefits.
Previously, BANC ONE accounted for such benefits on a cash
basis. BANC ONE amortizes the unrecognized transition
obligation over a 20-year period. Accordingly, there was no
cumulative effect of adopting this standard. BANC ONE prefunds
retiree medical benefits to the extent such benefits are
deductible for federal income tax purposes; however, these
assets are not restricted as to use for such benefits and
therefore do not meet the definition of plan assets.
The following table sets forth the status of BANC ONE's
postretirement benefit obligation at December 31,
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................ $ (49,883) $ (57,765)
Fully eligible active plan participants............. (24,940) (28,088)
Other active plan participants...................... (26,682) (32,882)
--------- ---------
Accumulated postretirement benefit obligation in
excess of plan assets............................... (101,505) (118,735)
Unrecognized net gain................................. (33,094) (10,924)
Unrecognized transition obligation.................... 101,309 107,938
--------- ---------
Accrued postretirement benefit cost................... $ (33,290) $ (21,721)
========= =========
</TABLE>
Net periodic cost for postretirement health care and life
insurance benefits during 1994 and 1993 include the following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993
----------------------------------------------------------------------------------
<S> <C> <C>
Service cost -- benefits earned during the period.......... $ 3,591 $ 3,840
Interest cost on accumulated postretirement benefit
obligation............................................... 8,602 9,582
Amortization of unrecognized transition obligation......... 5,629 5,670
------- -------
Net periodic postretirement benefit cost................... $17,822 $19,092
======= =======
</TABLE>
Postretirement benefit expense was $7.3 million in 1992.
The weighted average discount rates used in determining
the accumulated postretirement benefit obligation at December
31, 1994 and 1993 were 8.75% and 7.50%, respectively.
For measurement purposes, a 10% annual rate of increase
in the cost of covered health care benefits was assumed for
1995; the rate was assumed to decrease gradually to 5.0% in
the year 2000 and thereafter. A one-percentage point increase
in the health care cost trend rate in each year would increase
the accumulated postretirement benefit obligation as of
December 31, 1994 by $11 million, or 10.4%, and would increase
the aggregate of the service cost and interest cost components
of net periodic postretirement benefit cost for 1994 by $1
million, or 9.4%.
BANC ONE sponsors various 401(K) plans which include
substantially all of its employees. BANC ONE is required to
make contributions to the plans in varying amounts. For 1994,
1993 and 1992, the expense related to these plans was $12
million, $32 million and $29 million, respectively.
45
<PAGE> 28
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 18: STOCK OPTIONS
On April 18, 1989, the Corporation adopted the 1989 Stock
Incentive Plan, and amended April 21, 1992, (which is in
addition to a stock option plan approved by its shareholders
on April 24, 1984, and amended December 16, 1986), which
provides incentive and non-qualified options and stock awards
to certain key employees for up to 6,300,000 common shares of
the Corporation. Since inception of the 1989 Stock Incentive
Plan, 1,592,559 shares have been granted as stock awards. The
awards vest over a period of years and expense is recognized
over the vesting period. At December 31, 1994 and 1993, shares
available for future grant under the 1989 Stock Incentive Plan
were 1,994,503 and 4,045,657, respectively. Options are not
exercisable for at least one year from the date of grant and
are thereafter exercisable for such periods as the Board of
Directors, or a committee thereof, specify (which may not
exceed 10 years for incentive stock options or 20 years for
non-qualified stock options), provided that the optionee has
remained in the employment of the Corporation or its
affiliates. The Board or the committee may accelerate the
exercise period for an option upon the optionee's disability,
retirement, or death. All options expire at the end of the
exercise period. BANC ONE makes no recognition in the balance
sheet of the options until such options are exercised and no
amounts applicable thereto are reflected in net income. All
options were granted at 100% of fair market value.
Options of acquired entities are converted to BANC ONE
options at the time of acquisition. These shares are included
in the amounts shown below.
Outstanding stock options have been considered as common
stock equivalents in the computation of earnings per share.
Stock option activity in BANC ONE's various stock option
plans for 1994 and 1993 is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------ -------------------------
NUMBER OF NUMBER OF
SHARES OPTION PRICE SHARES OPTION PRICE
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year...... 5,299,923 $ 4.48-41.82 5,430,006 $ 3.03-32.82
Granted............................. 2,000,001 28.00-34.13 880,612 36.36-41.82
Exercised........................... (428,824) 4.48-31.46 (824,718) 3.03-24.95
Cancelled........................... (247,195) 13.22-41.82 (185,977) 9.39-40.45
--------- ----------
Outstanding at end of year............ 6,623,905 6.21-41.82 5,299,923 4.48-41.82
========= =========
Exercisable at end of year............ 1,981,978 6.21-41.82 1,871,351 4.48-40.45
========= =========
</TABLE>
--------------------------------------------------------------------------------
NOTE 19: RELATED PARTY TRANSACTIONS
Certain executive officers, directors and their related
interests are loan customers of BANC ONE. The Securities and
Exchange Commission (SEC) has determined with respect to the
Corporation and four significant subsidiaries (as defined by
the SEC) that disclosure of borrowings by directors and
executive officers and certain of their related interests
should be made, if the loans are greater than 5% of
stockholders' equity, in the aggregate. No disclosure was
required at December 31, 1994 or 1993.
46
<PAGE> 29
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 20: PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DECEMBER 31,
BALANCE SHEET ---------------------------
$(THOUSANDS) 1994 1993
---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks...................................... $ 76,210 $ 2,109
Short-term investments....................................... 470,761 308,042
Investment in majority owned affiliates:
Banking.................................................... 7,344,770 6,968,093
Non-banking................................................ 399,135 334,895
Advances due from affiliates:
Banking.................................................... 197,000 203,000
Non-banking................................................ 997,319 1,830,425
Amounts due from unaffiliated entities....................... 65,000 65,085
Securities held to maturity.................................. 47,046
Securities available for sale, at fair value................. 20,123
Securities held for sale..................................... 20,000
Excess of cost over net assets of affiliates purchased (net
of accumulated amortization of $24,191 and $22,839,
respectively).............................................. 9,907 35,468
Other assets................................................. 195,110 149,853
----------- ----------
TOTAL ASSETS............................................... $ 9,775,335 $9,964,016
=========== ==========
LIABILITIES:
Commercial paper and other short-term borrowings............. $ 1,145,200 $ 993,376
Notes payable to affiliates:
Banking.................................................... 16,280 470,400
Non-banking................................................ 29,694 31,825
Long-term borrowings......................................... 908,644 907,693
Other liabilities............................................ 110,657 127,552
----------- ----------
TOTAL LIABILITIES.......................................... 2,210,475 2,530,846
----------- ----------
TOTAL STOCKHOLDERS' EQUITY................................. 7,564,860 7,433,170
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................. $ 9,775,335 $9,964,016
=========== ==========
</TABLE>
47
<PAGE> 30
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF INCOME
for the three years ended December 31,
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME:
Dividends from affiliates:
Banking............................................ $ 614,617 $ 662,868 $ 478,655
Non-banking........................................ 12,086 19,049 14,678
Management and other fees from affiliates............ 114,124 102,662 59,685
Interest............................................. 99,650 89,217 65,920
Securities gains (losses)............................ 11,343 152 (227)
Other................................................ 21,808 12,224 6,194
----------- ---------- ---------
TOTAL INCOME....................................... 873,628 886,172 624,905
----------- ---------- ---------
EXPENSE:
Interest............................................. 129,302 104,391 74,839
Salaries and related costs........................... 67,351 57,255 34,740
Professional fees and services....................... 60,260 61,319 14,534
Marketing and development............................ 37,866 43,418 30,841
Other................................................ 22,407 30,637 38,986
----------- ---------- ---------
TOTAL EXPENSE...................................... 317,186 297,020 193,940
----------- ---------- ---------
Income before income taxes and equity in undistributed
earnings of consolidated affiliates.................. 556,442 589,152 430,965
Income tax (expense) benefit:
Income excluding securities transactions........... 35,599 29,373 22,934
Securities transactions............................ (3,970) (53) 77
----------- ---------- ---------
Income before equity in undistributed earnings of
consolidated affiliates.............................. 588,071 618,472 453,976
Equity in undistributed earnings of consolidated
affiliates........................................... 417,038 573,022 468,251
----------- ---------- ---------
NET INCOME......................................... $ 1,005,109 $1,191,494 $ 922,227
=========== =========== =========
NET INCOME PER COMMON SHARE
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE............................... $ 2.42 $ 2.88 $ 2.27
Cumulative effect of change in method of accounting
for income taxes................................. .05
----------- ---------- ---------
NET INCOME PER COMMON SHARE............................ $ 2.42 $ 2.93 $ 2.27
=========== =========== =========
Weighted average common shares outstanding (000)....... 407,380 401,228 397,671
=========== =========== =========
</TABLE>
48
<PAGE> 31
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
for the three years ended December 31,
$(THOUSANDS) 1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME......................................... $ 1,005,109 $1,191,494 $ 922,227
Adjustments:
Equity in undistributed earnings of
consolidated affiliates..................... (417,038) (573,022) (468,251)
Noncash dividends received..................... (10,160) (170,001) (37,321)
Depreciation and amortization.................. 11,818 10,786 8,973
Securities (gains) losses...................... (11,343) (152) 227
Net change in trading account portfolio........ 936 (19,777)
Net change in other assets..................... (42,127) (16,503) 25,047
Net change in other liabilities................ (12,730) 49,436 12,957
----------- ---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES... 524,465 472,261 463,859
----------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in short-term
investments...................................... (142,719) 250,820 74,594
Purchases of investment securities................. (14,884) (22,367)
Proceeds from sales and maturities of investment
securities....................................... 37,766 35,890 10,745
Net (increase) decrease in loans................... 768,948 (826,216) (804,123)
Additions to premises and equipment................ (23,378) (4,585) (23,561)
Net increase in investment in majority-owned
affiliates....................................... (19,321) (27,000) (75,750)
All other investing activities, net................ 494 519 (496)
----------- ---------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES................................ 621,790 (585,456) (840,958)
----------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in commercial paper................... 151,722 92,751 335,475
Net (increase) decrease in short term notes
payable.......................................... (437,681) 463,780 (3,530)
Proceeds from the issuance of long-term
borrowings....................................... 344,667
Repayments of long-term borrowings................. (7,500)
Proceeds from stock offerings...................... 7,072
Cash dividends paid................................ (504,710) (405,959) (276,087)
Purchase of treasury shares........................ (336,453)
Exercise of stock options, net of shares
purchased........................................ (5,659) (47,634) (19,639)
All other financing activities, net................ 60,627 11,187 (2,925)
----------- ---------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES................................ (1,072,154) 114,125 377,533
----------- ---------- ---------
Increase in cash and cash equivalents....... 74,101 930 434
CASH AND CASH EQUIVALENTS AT JANUARY 1,.............. 2,109 1,179 745
----------- ---------- ---------
Cash and cash equivalents at December 31,............ $ 76,210 $ 2,109 $ 1,179
=========== =========== =========
</TABLE>
49
<PAGE> 32
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
NOTE 21: SUPPLEMENTAL DISCLOSURES FOR STATEMENTS OF CASH
FLOWS
Supplemental disclosures of noncash investing and financing
activities, and additional disclosures, are as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock issued in purchase acquisitions........... $ 9,518
==========
Consolidated:
Transfer from loans to other real estate owned....... $ 68,806 $ 140,963 $ 263,169
========== ========== ==========
Loans issued to facilitate the sale of OREO
properties......................................... $ 26,287 $ 37,353
========== ==========
Net increase in trade date accounting entries for
securities transactions............................ $ 139,346 $ 156,803 $ 50,229
========== ========== ==========
Additional disclosures:
Consolidated:
Interest paid...................................... $2,140,363 $1,815,831 $2,414,640
========== ========== ==========
Income taxes paid.................................. $ 412,727 $ 534,543 $ 401,104
========== ========== ==========
Dividends declared but not paid at year end........ $ 123,925 $ 105,884 $ 74,578
========== ========== ==========
</TABLE>
--------------------------------------------------------------------------------
NOTE 22: INDUSTRY SEGMENT REPORTING
BANC ONE operates principally in a single business segment
offering general commercial banking services.
50
<PAGE> 33
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
FIVE YEAR PERFORMANCE SUMMARY
(unaudited)
<TABLE>
--------------------------------------------------------------------------
<CAPTION>
YEARLY AVERAGE
BALANCES YEAR-END BALANCES
BALANCE -------------------- --------------------------
SHEET TOTAL COMMON LONG-TERM TOTAL
$(MILLIONS) YEAR ASSETS EQUITY BORROWINGS ASSETS
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 $ 87,090 $7,400 $ 1,866 $ 88,923
1993 79,445 6,677 1,805 84,835
1992 77,074 5,967 1,397 81,305
1991 64,033 5,087 983 78,179
1990 56,057 4,426 848 60,324
</TABLE>
<TABLE>
--------------------------------------------------------------------------
<CAPTION>
DATA PER
COMMON NET
SHARE YEAR INCOME
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 $ 2.42
1993 2.93
1992 2.27
1991 1.82
1990 1.56
</TABLE>
<TABLE>
--------------------------------------------------------------------------
<CAPTION>
INCOME TOTAL NET
$(MILLIONS) YEAR REVENUE INCOME
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 $7,857.1 $1,005.1
1993 7,610.7 1,191.5
1992 7,740.7 922.2
1991 7,223.9 703.4
1990 6,526.9 568.9
</TABLE>
<TABLE>
--------------------------------------------------------------------------
<CAPTION>
RETURN ON
OPERATING AVERAGE
RATIO YEAR ASSETS
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 1.15%
1993 1.50
1992 1.20
1991 1.10
1990 1.01
</TABLE>
<TABLE>
--------------------------------------------------------------------------
<CAPTION>
AVERAGE
RETURN ON COMMON
AVERAGE EQUITY TO
EQUITY COMMON AVERAGE
RATIOS YEAR EQUITY ASSETS
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 13.35% 8.50%
1993 17.58 8.40
1992 15.14 7.74
1991 13.53 7.95
1990 12.79 7.90
</TABLE>
51
<PAGE> 34
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
TEN YEAR PERFORMANCE SUMMARY
(unaudited)
NOT RESTATED FOR ACQUISITIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARLY AVERAGE BALANCES YEAR-END BALANCES
BALANCE ------------------------------------- ------------------------------------------------------
SHEET TOTAL COMMON EARNING LOANS AND LONG-TERM TOTAL
$(MILLIONS) YEAR ASSETS EQUITY ASSETS LEASES DEPOSITS BORROWINGS ASSETS
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $87,090 $7,400 $78,312 $61,993 $68,090 $1,866 $88,923
1993 74,716 6,301 66,326 53,846 60,943 1,702 79,919
1992 58,249 4,685 52,114 38,722 48,465 1,198 61,417
1991 33,861 3,103 30,184 30,197 37,057 703 46,293
1990 27,654 2,590 24,568 20,363 22,316 581 30,336
1989 25,518 2,145 22,945 17,909 20,952 372 26,552
1988 23,484 1,906 21,054 17,325 19,502 379 25,274
1987 17,538 1,372 15,651 12,934 14,478 266 18,730
1986 16,299 1,178 14,482 11,549 13,371 170 17,372
1985 9,539 703 8,412 6,687 8,141 92 10,823
1984 8,088 574 7,119 5,865 7,407 97 9,106
Annual Growth:
1994/93 16.56% 17.44% 18.07% 15.13% 11.73% 9.64% 11.27%
Compound Growth:
5 Years 27.83 28.10 27.83 28.19 26.58 38.06 27.35
10 Years 26.83 29.13 27.10 26.59 24.84 34.40 25.59
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
INCOME BEFORE CASH MARKET
DATA PER NET SECURITIES DIVIDENDS BOOK STOCK CAPITAL
COMMON SHARE YEAR INCOME TRANSACTIONS DECLARED VALUE PRICE $(MILLIONS)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $2.42 $2.83 $1.24 $18.43 $25.38 $10,076
1993 2.98 2.95 1.07 17.82 35.57 13,542
1992 2.38 2.35 .89 15.53 38.64 12,331
1991 2.12 2.12 .76 13.96 34.80 8,833
1990 1.83 1.84 .69 11.97 18.35 4,408
1989 1.66 1.67 .63 10.35 19.46 4,239
1988 1.56 1.54 .55 9.37 13.37 2,876
1987 1.19 1.16 .49 8.27 13.12 2,360
1986 1.16 1.07 .45 7.51 12.50 2,082
1985 1.10 1.07 .38 6.63 12.79 1,491
1984 .95 .95 .33 5.64 8.49 929
Annual Growth:
1994/93 (18.79)% (4.07)% 15.89% 3.42% (28.65)% (25.59)%
Compound Growth:
5 Years 7.83 11.13 14.50 12.23 5.46 18.91
10 Years 9.80 11.53 14.15 12.57 11.57 26.92
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE COMMON
SHARES SHARES STOCK DIVIDEND YEAR-END
COMMON OUTSTANDING TRADED COMMON SPLITS AND PAYOUT PRICE/
STOCK DATA YEAR (000) (000)(1) SHAREHOLDERS DIVIDENDS RATIO EARNINGS
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994 407,380 242,656 82,253 10% 51% 10.5x
1993 376,828 163,327 71,384 5:4 36 11.9
1992 319,224 113,186 58,114 10% 37 16.2
1991 220,823 69,241 43,935 36 16.4
1990 209,356 63,717 44,572 10% 38 10.1
1989 178,913 54,155 43,437 37 11.7
1988 177,939 42,347 43,892 10% 35 8.5
1987 144,387 38,297 37,693 42 11.0
1986 137,828 21,457 36,855 10% 39 10.7
1985 93,850 8,270 24,748 3:2 34 11.6
1984 88,925 4,116 24,998 10% 34 8.9
</TABLE>
52
<PAGE> 35
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
$(MILLIONS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET INCOME
NET BEFORE
INCOME AND TOTAL INTEREST NON-INTEREST NON-INTEREST SECURITIES NET
EXPENSES YEAR REVENUE INCOME(2) INCOME(3) EXPENSE TRANSACTIONS INCOME
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $7,857.1 $4,188.6 $1,680.7 $3,847.1 $1,168.9 $1,005.1
1993 7,226.8 4,169.6 1,475.6 3,514.1 1,129.6 1,140.0
1992 5,999.0 3,240.1 1,156.9 2,663.6 772.7 781.3
1991 4,154.1 1,838.5 844.3 1,486.2 529.3 529.5
1990 3,506.9 1,309.3 706.7 1,102.7 424.3 423.4
1989 3,163.0 1,193.7 513.5 967.4 365.3 362.9
1988 2,734.5 1,142.0 452.3 893.1 332.9 340.2
1987 1,959.6 907.3 284.0 666.5 203.5 208.9
1986 1,847.4 830.4 250.8 608.5 185.3 199.8
1985 1,192.2 523.2 158.1 361.2 127.6 130.4
1984 1,049.5 448.6 117.0 305.9 107.7 108.0
Annual Growth:
1994/93 8.72% .46% 13.90% 9.48% 3.48% (11.83)%
Compound Growth:
5 Years 19.96 28.54 26.76 31.80 26.19 22.60
10 Years 22.30 25.03 30.54 28.81 26.93 24.99
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMPLOYEES NET INCOME
RETURN ON NET NON-INTEREST (FT EQUIV.) PER FT
OPERATING AVERAGE INTEREST INCOME TO EFFICIENCY PER $MILLION EQUIV.
RATIOS YEAR ASSETS MARGIN(2) EXPENSE(3) RATIO(4) OF ASSETS EMPLOYEE(5)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994 1.15% 5.46% 43.7% 64.6% .55 $20,596
1993 1.53 6.29 42.0 62.2 .57 25,165
1992 1.34 6.22 43.4 60.6 .53 23,912
1991 1.56 6.09 56.8 55.4 .59 21,449
1990 1.53 5.33 64.1 54.7 .63 19,871
1989 1.42 5.20 53.1 56.7 .67 20,388
1988 1.45 5.42 50.6 56.0 .67 20,166
1987 1.19 5.80 42.6 55.9 .74 15,064
1986 1.23 5.73 41.2 56.3 .73 15,790
1985 1.37 6.22 43.8 53.0 .79 15,167
1984 1.33 6.30 38.2 54.1 .87 13,666
Average:
5 Years 1.42% 5.88% 50.00% 59.68% .57 $22,199
10 Years 1.38 5.78 48.13 57.63 .65 19,757
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETURN ON AVERAGE LONG-TERM
AVERAGE COMMON BORROWINGS TO TOTAL
EQUITY COMMON EQUITY TO COMMON MARKET TO RETURN TO
RATIOS YEAR EQUITY ASSETS EQUITY BOOK VALUE INVESTORS(6)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 13.35% 8.50% 25.5% 137.7% (25.7)%
1993 17.81 8.43 25.1 199.6 (5.4)
1992 16.26 8.04 24.2 248.9 13.9
1991 16.58 9.16 19.8 249.2 95.0
1990 16.24 9.36 20.2 153.3 (2.0)
1989 16.79 8.41 16.5 187.9 50.5
1988 17.69 8.12 18.8 142.7 5.8
1987 15.12 7.82 17.9 158.5 8.6
1986 16.49 7.23 13.6 166.4 .8
1985 17.77 7.37 11.9 193.1 56.1
1984 17.84 7.10 15.7 150.6 14.1
Average:
5 Years 16.05% 8.70% 22.96% 197.74% 15.16%(7)
10 Years 16.41 8.24 19.35 183.73 19.76 (7)
</TABLE>
(1) Amounts do not reflect stock dividends and stock splits.
(2) Fully taxable equivalent basis.
(3) Excluding security transactions.
(4) Other expense divided by net interest income(2) plus other income excluding
securities transactions.
(5) 1990 and 1991 net income exclude equity in earnings of Bank One, Texas, NA.
(6) Market change year to year with dividends reinvested.
(7) Calculation is 5- and 10-year compound growth.
53
<PAGE> 36
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
FIVE YEAR SUMMARY -- AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES(1)
(unaudited)
<TABLE>
<CAPTION>
1994 1993
----------------------------------------- --------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/
$(THOUSANDS) BALANCE EXPENSE RATE BALANCE EXPENSE
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Short-term investments........................... $ 1,113,465 $ 53,388 4.79% $ 1,319,605 $ 44,892
SECURITIES:(3)
Taxable........................................ 16,010,679 876,420 5.47 15,004,127 846,403
Tax exempt..................................... 2,331,794 202,042 8.66 2,042,759 194,441
------------ ----------- ----------- ----------
TOTAL SECURITIES............................... 18,342,473 1,078,462 5.88 17,046,886 1,040,844
LOANS AND LEASES:(2)
Commercial, financial and agricultural......... 15,533,301 1,174,391 7.56 14,598,413 1,176,101
Real estate.................................... 18,086,356 1,538,546 8.51 16,772,290 1,472,321
Consumer, net.................................. 18,768,362 1,614,093 8.60 15,657,193 1,479,106
Credit card.................................... 6,253,282 978,235 15.64 5,128,076 848,978
Leases, net.................................... 1,174,142 88,549 7.54 1,020,028 83,882
Reserve for loan and lease losses.............. (958,989) (975,743)
------------ ----------- ----------- ----------
NET LOANS AND LEASES............................. 58,856,454 5,393,814 9.16 52,200,257 5,060,388
Note receivable from FDIC........................
------------ ----------- ----------- ----------
TOTAL EARNING ASSETS............................. 78,312,392 6,525,664 8.33 70,566,748 6,146,124
Other assets..................................... 8,777,863 8,878,172
------------ -----------
TOTAL ASSETS..................................... $ 87,090,255 $79,444,920
============ ===========
LIABILITIES:
DEPOSITS:
Demand-non-interest bearing.................. $ 13,460,795 $12,779,430
Demand-interest bearing...................... 9,277,460 168,959 1.82 8,757,283 141,064
Savings...................................... 7,703,848 191,253 2.48 7,244,979 181,366
Money market savings accounts................ 12,307,266 360,314 2.93 12,140,688 320,608
Time deposits:
CD's less than $100,000...................... 17,718,121 753,590 4.25 17,826,413 676,142
CD's -- $100,000 and over:
Domestic................................... 3,575,446 144,464 4.04 3,555,761 135,002
Foreign.................................... 1,298,988 55,683 4.29 694,585 23,509
------------ ----------- ----------- ----------
TOTAL DEPOSITS................................... 65,341,924 1,674,263 2.56 62,999,139 1,477,691
BORROWED FUNDS:
Short-term..................................... 10,811,619 442,767 4.10 6,480,247 196,845
Long-term...................................... 1,834,439 131,811 7.19 1,630,343 101,215
------------ ----------- ----------- ----------
TOTAL BORROWED FUNDS............................. 12,646,058 574,578 4.54 8,110,590 298,060
------------ ----------- ----------- ----------
TOTAL INTEREST BEARING LIABILITIES............... 64,527,187 2,248,841 3.49 58,330,299 1,775,751
Other liabilities................................ 1,451,990 1,404,471
------------ -----------
TOTAL LIABILITIES................................ 79,439,972 72,514,200
Preferred stock.................................. 249,900 253,385
Common stockholders' equity...................... 7,400,383 6,677,335
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $ 87,090,255 $79,444,920
============ ===========
NET INTEREST INCOME.............................. 4,276,823 5.46 4,370,373
Provision for loan and lease losses.............. (242,269) (.31) (388,261)
----------- ----- ----------
NET FUNDS FUNCTION............................... $ 4,034,554 5.15% $3,982,112
=========== ===== ==========
<CAPTION>
YIELD/
$(THOUSANDS) RATE
--------------------------------------------------------
<S> <C>
ASSETS:
Short-term investments........................... 3.40%
SECURITIES:(3)
Taxable........................................ 5.64
Tax exempt..................................... 9.52
TOTAL SECURITIES............................... 6.11
LOANS AND LEASES:(2)
Commercial, financial and agricultural......... 8.06
Real estate.................................... 8.78
Consumer, net.................................. 9.45
Credit card.................................... 16.56
Leases, net.................................... 8.22
Reserve for loan and lease losses..............
NET LOANS AND LEASES............................. 9.69
Note receivable from FDIC........................
TOTAL EARNING ASSETS............................. 8.71
Other assets.....................................
TOTAL ASSETS.....................................
LIABILITIES:
DEPOSITS:
Demand-non-interest bearing..................
Demand-interest bearing...................... 1.61
Savings...................................... 2.50
Money market savings accounts................ 2.64
Time deposits:
CD's less than $100,000...................... 3.79
CD's -- $100,000 and over:
Domestic................................... 3.80
Foreign.................................... 3.38
TOTAL DEPOSITS................................... 2.35
BORROWED FUNDS:
Short-term..................................... 3.04
Long-term...................................... 6.21
TOTAL BORROWED FUNDS............................. 3.67
TOTAL INTEREST BEARING LIABILITIES............... 3.04
Other liabilities................................
TOTAL LIABILITIES................................
Preferred stock..................................
Common stockholders' equity......................
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......
NET INTEREST INCOME.............................. 6.19
Provision for loan and lease losses.............. (.55)
-----
NET FUNDS FUNCTION............................... 5.64%
=====
</TABLE>
(1) Fully taxable equivalent basis. The federal statutory rate was 35% for 1994
and 1993 and 34% for other years presented.
(2) Nonaccrual loans are included in loan balances. Interest income includes
related fee income.
(3) Average balance is based on amortized historical cost (excluding SFAS 115
adjustments to fair value).
54
<PAGE> 37
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1992 1991 1990
------------------------------------------- ------------------------------------------- ---------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,216,327 $ 127,345 3.96% $ 3,183,564 $ 191,385 6.01% $ 1,977,838 $ 164,016
-----------
15,041,378 1,032,202 6.86 10,965,094 919,036 8.38 8,693,160 768,298
2,065,168 216,009 10.46 2,311,533 255,385 11.05 2,581,606 292,500
----------- ----------- ----------- ----------- ----------- -----------
17,106,546 1,248,211 7.30 13,276,627 1,174,421 8.85 11,274,766 1,060,798
-----------
15,545,313 1,267,719 8.15 14,824,496 1,432,591 9.66 14,220,103 1,519,901
15,230,418 1,411,004 9.26 12,291,283 1,254,689 10.21 10,433,580 1,126,020
13,201,395 1,414,312 10.71 9,768,011 1,167,571 11.95 8,861,871 1,083,290
4,537,506 786,934 17.34 3,274,340 607,075 18.54 2,394,377 448,349
991,395 87,740 8.85 916,623 98,107 10.70 899,860 100,008
(952,868) (771,424) (726,801)
----------- ----------- ----------- ----------- ----------- -----------
48,553,159 4,967,709 10.23 40,303,329 4,560,033 11.31 36,082,990 4,277,568
213,502 18,808 8.81 383,178 33,758
----------- ----------- ----------- ----------- ----------- -----------
68,876,032 6,343,265 9.21 56,977,022 5,944,647 10.43 49,718,772 5,536,140
8,197,518 7,056,261 6,337,916
----------- ----------- -----------
$77,073,550 $64,033,283 $56,056,688
=========== =========== ===========
$11,662,949 $ 8,419,318 $ 7,379,736
8,145,956 183,521 2.25 5,643,601 238,075 4.22 4,752,686 226,155
5,595,777 180,630 3.23 3,674,076 179,176 4.88 3,298,743 177,018
12,665,456 423,884 3.35 10,313,415 521,214 5.05 8,028,201 490,526
19,968,163 993,774 4.98 18,414,440 1,267,710 6.88 16,425,725 1,324,328
4,386,790 192,715 4.39 4,796,718 305,771 6.37 5,192,273 407,376
560,578 22,348 3.99 423,227 24,698 5.84 292,335 22,746
----------- ----------- ----------- ----------- ----------- -----------
62,985,669 1,996,872 3.17 51,684,795 2,536,644 4.91 45,369,699 2,648,149
5,558,597 196,177 3.53 5,091,734 292,133 5.74 4,578,136 357,141
1,073,515 80,777 7.52 910,266 85,838 9.43 737,024 74,792
----------- ----------- ----------- ----------- ----------- -----------
6,632,112 276,954 4.18 6,002,000 377,971 6.30 5,315,160 431,933
----------- ----------- ----------- ----------- ----------- -----------
57,954,832 2,273,826 3.92 49,267,477 2,914,615 5.92 43,305,123 3,080,082
1,223,979 1,056,315 921,674
----------- ----------- -----------
70,841,760 58,743,110 51,606,533
264,811 202,704 23,720
5,966,979 5,087,469 4,426,435
----------- ----------- -----------
$77,073,550 $64,033,283 $56,056,688
=========== =========== ===========
4,069,439 5.91 3,030,032 5.31 2,456,058
(630,731) (.92) (611,851) (1.07) (469,597)
----------- ------ ----------- ----- -----------
$ 3,438,708 4.99% $ 2,418,181 4.24% $ 1,986,461
=========== ====== =========== ===== ===========
<CAPTION>
COMPOUND ANNUAL
1990 GROWTH 1989-1994
-------- ------------------------
YIELD/ AVERAGE INCOME/
RATE BALANCE EXPENSE
-------------------------------------
<C> <C> <C>
8.29% (5.36)% (16.96)%
8.84 17.20 6.83
11.33 (2.42) (7.81)
9.41 13.18 2.93
10.69 3.53 (4.85)
10.79 15.06 9.47
12.22 17.44 9.67
18.73 22.52 18.69
11.11 6.43 (1.57)
11.85 12.32 6.09
8.81
11.13 12.08 5.13
10.28
11.89
4.76 16.54 (4.97)
5.37 20.37 3.24
6.11 11.44 (4.15)
8.06 6.34 (7.56)
7.85 (8.67) (20.63)
7.78 42.06 21.47
5.84 10.27 (7.12)
7.80 21.77 4.81
10.15 15.00 7.35
8.13 20.64 5.36
7.11 10.97 (4.73)
11.62
58.54
14.32
11.89%
4.94 14.05
(.94) (16.98)
-----
4.00% 20.28%
=====
</TABLE>
55
<PAGE> 38
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
RESERVE FOR LOAN AND LEASE LOSSES
(unaudited)
<TABLE>
<CAPTION>
COMMERCIAL,
FINANCIAL
AND REAL CREDIT TOTAL
$ (THOUSANDS) AGRICULTURAL ESTATE CONSUMER CARD LEASES UNALLOCATED RESERVES
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1989....... $ 204,787 $171,731 $135,231 $ 80,129 $12,788 $ 101,427 $706,093
Reserves associated with loans
acquired and other........... 5,854 7,166 5,637 14,024 30 2,897 35,608
Provision, 1990................ 198,434 50,410 102,870 104,660 9,526 3,697 469,597
Charge-offs.................... (218,234) (104,054) (153,265) (127,808) (16,910) (620,271)
Recoveries..................... 36,698 6,548 43,424 22,554 4,739 113,963
--------- -------- -------- -------- ------- --------- --------
Net charge-offs................ (181,536) (97,506) (109,841) (105,254) (12,171) (506,308)
--------- -------- -------- -------- ------- --------- --------
BALANCE, DECEMBER 31, 1990....... 227,539 131,801 133,897 93,559 10,173 108,021 704,990
Reserves associated with loans
acquired and other........... 53,617 36,681 31,928 32,625 933 11,231 167,015
Provision, 1991................ 165,789 95,121 135,761 208,314 13,615 (6,749) 611,851
Charge-offs.................... (218,488) (93,408) (189,158) (184,313) (20,524) (705,891)
Recoveries..................... 37,317 6,948 55,180 25,364 5,629 130,438
--------- -------- -------- -------- ------- --------- --------
Net charge-offs................ (181,171) (86,460) (133,978) (158,949) (14,895) (575,453)
--------- -------- -------- -------- ------- --------- --------
BALANCE, DECEMBER 31, 1991....... 265,774 177,143 167,608 175,549 9,826 112,503 908,403
Reserves associated with loans
acquired and other........... 2,997 2,319 1,381 119 3 6,819
Provision, 1992................ 170,052 37,862 158,120 209,682 14,970 40,045 630,731
Charge-offs.................... (187,375) (97,098) (219,552) (242,459) (15,007) (761,491)
Recoveries..................... 51,015 12,424 68,995 29,103 6,175 167,712
--------- -------- -------- -------- ------- --------- --------
Net charge-offs................ (136,360) (84,674) (150,557) (213,356) (8,832) (593,779)
--------- -------- -------- -------- ------- --------- --------
BALANCE, DECEMBER 31, 1992....... 302,463 132,650 176,552 171,994 15,967 152,548 952,174
Reserves associated with loans
acquired and other........... 3,169 5,327 2,586 2,461 2,746 16,289
Provision, 1993................ (41,856) 85,728 92,052 248,587 4,835 (1,085) 388,261
Charge-offs.................... (95,136) (64,956) (167,096) (251,492) (11,878) (590,558)
Recoveries..................... 70,917 13,454 77,252 34,495 4,970 201,088
--------- -------- -------- -------- ------- --------- --------
Net charge-offs................ (24,219) (51,502) (89,844) (216,997) (6,908) (389,470)
--------- -------- -------- -------- ------- --------- --------
BALANCE, DECEMBER 31, 1993....... 239,557 172,203 181,346 206,045 13,894 154,209 967,254
Reserves associated with loans
acquired and other........... 738 812 (224) 4,317 (1,117) 4,526
Provision, 1994................ (69,068) (36,315) 68,783 195,318 1,030 82,521 242,269
Charge-offs.................... (49,504) (29,373) (176,045) (260,510) (5,737) (521,169)
Recoveries..................... 60,088 19,806 80,662 40,386 3,358 204,300
--------- -------- -------- -------- ------- --------- --------
Net (charge-offs) recoveries... 10,584 (9,567) (95,383) (220,124) (2,379) (316,869)
--------- -------- -------- -------- ------- --------- --------
BALANCE, DECEMBER 31, 1994....... $ 181,811 $127,133 $154,522 $185,556 $12,545 $ 235,613 $897,180
========= ======== ======== ======== ======= ========= ========
</TABLE>
56
<PAGE> 39
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
LOAN AND LEASE ANALYSIS
(unaudited)
<TABLE>
<CAPTION>
$(THOUSANDS) 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENDING LOAN AND LEASE BALANCES:
Commercial, financial and
agricultural....................... $16,619,186 $15,208,355 $15,085,540 $16,955,907 $13,686,518
Real estate........................... 19,039,988 17,780,781 16,335,864 14,753,327 10,758,895
Consumer, net......................... 19,070,286 17,311,474 14,062,562 11,476,940 9,080,191
Credit card........................... 5,924,383 6,112,545 5,087,076 4,676,589 2,684,172
Leases, net........................... 1,339,069 1,107,220 1,000,484 975,340 995,482
----------- ----------- ----------- ----------- -----------
TOTAL LOANS AND LEASES.................. $61,992,912 $57,520,375 $51,571,526 $48,838,103 $37,205,258
=========== =========== =========== =========== ===========
Nonperforming assets and delinquencies:
Nonaccrual loans...................... $ 377,409 $ 482,331 $ 680,408 $ 767,238 $ 770,471
Renegotiated loans.................... 3,910 7,567 28,361 22,669 24,380
Other real estate owned............... 84,355 153,260 191,665 387,296 352,490
----------- ----------- ----------- ----------- -----------
TOTAL NONPERFORMING ASSETS.............. $ 465,674 $ 643,158 $ 900,434 $ 1,177,203 $ 1,147,341
=========== =========== =========== =========== ===========
Loans delinquent 90 days or more
(not included in nonaccrual).......... $ 173,456 $ 207,816 $ 211,832 $ 296,309 $ 199,718
Loans classified as doubtful included in
non-accrual(1)........................ 33,160 59,949 78,120 203,119 185,702
Interest foregone on nonperforming loans
(after tax)(2)........................ $ 18,584 $ 26,727 $ 35,483 $ 46,504 $ 55,630
RESERVE AND LOSS RATIOS:
Ending reserve to ending balances:
Commercial, financial and
agricultural....................... 1.09% 1.58% 2.00% 1.57% 1.66%
Real estate........................... .67 .97 .81 1.20 1.23
Consumer, net......................... .81 1.05 1.26 1.46 1.47
Credit card........................... 3.13 3.37 3.38 3.75 3.49
Leases, net........................... .94 1.25 1.60 1.01 1.02
TOTAL LOANS AND LEASES.................. 1.45 1.68 1.85 1.86 1.89
Net charge-offs (recoveries) to average
balances:
Commercial, financial and
agricultural....................... (.07) .17 .88 1.22 1.28
Real estate........................... .05 .31 .56 .70 .93
Consumer, net......................... .51 .57 1.14 1.37 1.24
Credit card........................... 3.52 4.23 4.70 4.85 4.40
Leases, net........................... .20 .68 .89 1.62 1.35
Total loans and leases.................. .53 .73 1.20 1.40 1.38
Recoveries to gross charge-offs......... 39.20 34.05 22.02 18.48 18.37
To ending loans and leases:
Nonperforming assets.................. .75 1.12 1.75 2.41 3.08
Loans delinquent 90 days or more...... .28% .36% .41% .61% .54%
</TABLE>
(1) Defined as loans with a high loss possibility after collateral liquidation
based on existing facts, market conditions and value. These loans are
provided for in the reserve for loan losses, as appropriate. Any interest
income recognized on these loans is immaterial.
(2) The amount of gross interest on nonperforming loans that would have been
recorded during 1994 and 1993 if the loans had been current throughout the
year totaled $45 million and $61 million, respectively. Of this amount, $16
million and $20 million of interest was actually recorded on nonperforming
loans during 1994 and 1993, respectively. Texas is included in these amounts
for the whole year of 1991 even though it was consolidated beginning
October 1, 1991.
57
<PAGE> 40
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
QUARTERS
-------------------------------------------------------------------------------
1994 1993
--------------------------------------------------- -----------------------
$(MILLIONS, EXCEPT PER SHARE DATA) FOURTH THIRD SECOND FIRST FOURTH THIRD
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KEY AVERAGE BALANCES:
Taxable securities(3)................. $ 14,079 $ 16,534 $ 18,122 $ 15,316 $ 15,231 $ 14,186
Tax exempt securities(3).............. 2,248 2,351 2,384 2,346 2,149 2,010
--------- --------- --------- --------- --------- ---------
TOTAL SECURITIES........................ 16,327 18,885 20,506 17,662 17,380 16,196
Commercial loans...................... 16,087 15,576 15,443 15,015 14,744 14,489
Real estate loans..................... 18,872 18,241 17,674 17,543 17,371 16,949
Consumer loans, net................... 19,054 19,354 18,745 17,901 16,821 15,996
Credit card loans..................... 6,166 6,569 6,192 6,081 5,562 5,199
Leases, net........................... 1,255 1,184 1,143 1,114 1,077 1,006
Loan and lease reserve................ (928) (960) (975) (974) (963) (971)
--------- --------- --------- --------- --------- ---------
NET LOANS AND LEASES.................... 60,506 59,964 58,222 56,680 54,612 52,668
Other earning assets.................. 1,876 725 785 1,062 919 1,317
TOTAL EARNING ASSETS.................... 78,709 79,574 79,513 75,404 72,911 70,181
TOTAL ASSETS............................ 87,273 88,254 88,349 84,442 81,905 78,986
Demand deposits:
Non-interest bearing................ 13,674 13,397 13,338 13,433 13,651 12,795
Interest bearing.................... 9,142 9,221 9,392 9,357 9,057 8,719
Savings deposits...................... 19,659 20,062 20,315 20,012 19,540 19,364
Time deposits......................... 23,670 22,982 21,951 21,742 21,685 21,574
--------- --------- --------- --------- --------- ---------
TOTAL DEPOSITS.......................... 66,145 65,662 64,996 64,544 63,933 62,452
Borrowed funds:
Short-term.......................... 10,127 11,603 12,479 9,017 7,567 6,475
Long-term........................... 1,843 1,840 1,844 1,811 1,809 1,690
--------- --------- --------- --------- --------- ---------
TOTAL BORROWED FUNDS.................... 11,970 13,443 14,323 10,828 9,376 8,165
TOTAL INTEREST BEARING LIABILITIES...... 64,441 65,708 65,981 61,939 59,658 57,822
Preferred stock......................... 250 250 250 250 250 250
Common stockholders' equity............. $ 7,440 $ 7,465 $ 7,351 $ 7,344 $ 6,848 $ 6,766
MARGIN ANALYSIS(1):
(as a percent of average earning
assets)
Interest income..................... 8.44% 8.27% 8.15% 8.48% 8.35% 8.58%
Interest expense.................... 3.29 3.02 2.72 2.43 2.37 2.47
--------- --------- --------- --------- --------- ---------
Net interest income................. 5.15 5.25 5.43 6.05 5.98 6.11
Provision for loan and lease
losses............................ .18 .38 .25 .43 .61 .56
Net funds function.................. 4.97 4.87 5.18 5.62 5.37 5.55
KEY OPERATING RATIOS:
Return on average assets.............. .29 1.27 1.50 1.57 1.45 1.49
Return on average common equity....... 3.20 14.82 17.80 17.81 17.14 17.11
Return on average total equity........ 3.32 14.56 17.44 17.46 16.78 16.75
Average common equity to assets....... 8.52 8.46 8.32 8.70 8.36 8.57
Average total equity to assets........ 8.81 8.74 8.60 8.99 8.67 8.88
CREDIT ANALYSIS:
Net charge-offs to average loans and
leases.............................. .59 .50 .49 .54 .87 .78
Ending reserves to loans and leases... 1.45 1.55 1.58 1.66 1.68 1.77
As a percent of ending loans and
leases:
Nonperforming assets................ .75 .85 .87 1.02 1.12 1.28
Loans delinquent 90 or more
days(2)........................... .28 .32 .35 .32 .36 .40
COMMON STOCK:
Average shares outstanding (000)...... 405,199 408,963 408,508 407,390 402,302 401,411
Shares traded (000)................... 72,342 46,939 55,251 68,124 54,635 39,072
Per share data
Net income.......................... $ .15 $ .68 $ .80 $ .79 $ .74 $ .73
Cash dividends declared............. .31 .31 .31 .31 .28 .28
Book value.......................... 18.43 18.52 18.25 18.12 17.72 17.26
Stock price:
High.............................. 30.50 35.50 38.00 35.47 39.77 42.19
Low............................... 24.13 29.50 30.75 31.88 32.27 34.55
Close............................. $ 25.38 $ 30.00 $ 34.25 $ 33.00 $ 35.57 $ 37.73
PREFERRED STOCK, SERIES C:
Shares traded (000)................... 1,679 892 1,200 2,851 2,082 1,712
Stock price:
High................................ $ 57.50 $ 63.75 $ 68.25 $ 68.75 $ 74.63 $ 73.25
Low................................. 49.00 57.00 57.50 60.50 66.63 72.75
Close............................... $ 49.63 $ 57.50 $ 62.50 $ 61.00 $ 68.75 $ 73.25
<CAPTION>
QUARTERS
-----------------------
1993
-----------------------
$(MILLIONS, EXCEPT PER SHARE DATA) SECOND FIRST
-----------------------------------------------------------------
<S> <C> <C>
KEY AVERAGE BALANCES:
Taxable securities(3)................. $ 14,800 $ 15,809
Tax exempt securities(3).............. 2,016 2,004
--------- ---------
TOTAL SECURITIES........................ 16,816 17,813
Commercial loans...................... 14,658 14,761
Real estate loans..................... 16,765 16,034
Consumer loans, net................... 15,135 14,744
Credit card loans..................... 4,917 4,828
Leases, net........................... 994 1,000
Loan and lease reserve................ (995) (974)
--------- ---------
NET LOANS AND LEASES.................... 51,474 50,393
Other earning assets.................. 1,329 1,691
TOTAL EARNING ASSETS.................... 69,619 69,897
TOTAL ASSETS............................ 78,422 78,420
Demand deposits:
Non-interest bearing................ 12,655 12,084
Interest bearing.................... 8,678 8,570
Savings deposits...................... 19,322 19,363
Time deposits......................... 22,240 22,764
--------- ---------
TOTAL DEPOSITS.......................... 62,895 62,781
Borrowed funds:
Short-term.......................... 5,706 6,172
Long-term........................... 1,623 1,395
--------- ---------
TOTAL BORROWED FUNDS.................... 7,329 7,567
TOTAL INTEREST BEARING LIABILITIES...... 57,569 58,264
Preferred stock......................... 255 259
Common stockholders' equity............. $ 6,593 $ 6,399
MARGIN ANALYSIS(1):
(as a percent of average earning
assets)
Interest income..................... 8.74% 9.14%
Interest expense.................... 2.55 2.68
--------- ---------
Net interest income................. 6.19 6.46
Provision for loan and lease
losses............................ .37 .65
Net funds function.................. 5.82 5.81
KEY OPERATING RATIOS:
Return on average assets.............. 1.51 1.55
Return on average common equity....... 17.71 18.70
Return on average total equity........ 17.30 18.25
Average common equity to assets....... 8.41 8.16
Average total equity to assets........ 8.73 8.49
CREDIT ANALYSIS:
Net charge-offs to average loans and
leases.............................. .66 .61
Ending reserves to loans and leases... 1.82 1.91
As a percent of ending loans and
leases:
Nonperforming assets................ 1.47 1.69
Loans delinquent 90 or more
days(2)........................... .41 .40
COMMON STOCK:
Average shares outstanding (000)...... 401,079 399,908
Shares traded (000)................... 35,563 34,057
Per share data
Net income.......................... $ .72 $ .74
Cash dividends declared............. .26 .25
Book value.......................... 16.82 16.61
Stock price:
High.............................. 44.73 42.27
Low............................... 36.73 36.36
Close............................. $ 40.91 $ 42.00
PREFERRED STOCK, SERIES C:
Shares traded (000)................... 1,827 1,093
Stock price:
High................................ $ 81.75 $ 78.50
Low................................. 70.50 69.50
Close............................... $ 77.00 $ 78.50
</TABLE>
(1) Fully taxable equivalent basis.
(2) Excluding nonperforming loans.
(3) Average balance is based on amortized historical cost (excluding SFAS 115
adjustments to fair value).
58
<PAGE> 41
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
QUARTERS
-------------------------------------------------------------------------------
1994 1993
--------------------------------------------------- -----------------------
$(MILLIONS) FOURTH THIRD SECOND FIRST FOURTH THIRD
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONDENSED INCOME STATEMENT:
Interest income(1)
Taxable securities.................... $ 206.53 $ 228.44 $ 244.99 $ 196.45 $ 200.28 $ 194.95
Tax exempt securities................. 48.89 50.27 51.33 51.55 48.90 47.99
--------- --------- --------- --------- --------- ---------
Securities income....................... 255.42 278.71 296.32 248.00 249.18 242.94
Commercial loans...................... 302.64 294.85 288.73 288.17 289.69 294.65
Real estate loans..................... 412.08 388.84 372.14 365.48 373.73 372.82
Consumer loans........................ 412.03 406.11 386.02 409.93 368.41 357.88
Credit card loans..................... 241.42 259.61 241.97 235.24 224.53 217.69
Leases................................ 25.01 21.47 21.24 20.84 21.59 20.54
--------- --------- --------- --------- --------- ---------
Loan and lease income................... 1,393.18 1,370.88 1,310.10 1,319.66 1,277.95 1,263.58
Other earning assets.................. 26.63 9.12 8.26 9.38 8.16 11.56
TOTAL INTEREST INCOME................... 1,675.23 1,658.71 1,614.68 1,577.04 1,535.29 1,518.08
Demand deposits....................... 46.73 43.03 40.56 38.65 34.72 33.30
Savings deposits...................... 156.03 143.66 131.42 120.46 122.60 124.38
Time deposits:
CD's under $100,000................. 227.37 201.93 169.34 154.94 150.32 166.75
CD's $100,000 and over.............. 59.25 52.17 46.54 42.18 43.87 34.75
--------- --------- --------- --------- --------- ---------
TOTAL INTEREST ON DEPOSITS.............. 489.38 440.79 387.86 356.23 351.51 359.18
Borrowed funds:
Short-term.......................... 124.43 128.41 120.23 69.70 56.08 50.35
Long-term........................... 39.10 37.23 29.07 26.41 27.43 26.78
--------- --------- --------- --------- --------- ---------
TOTAL INTEREST ON BORROWED FUNDS........ 163.53 165.64 149.30 96.11 83.51 77.13
--------- --------- --------- --------- --------- ---------
TOTAL INTEREST EXPENSE.................. 652.91 606.43 537.16 452.34 435.02 436.31
--------- --------- --------- --------- --------- ---------
Net interest income..................... 1,022.32 1,052.28 1,077.52 1,124.70 1,100.27 1,081.77
Provision for loan and lease losses..... 35.62 75.94 50.54 80.17 112.70 99.66
--------- --------- --------- --------- --------- ---------
Net funds function...................... 986.70 976.34 1,026.98 1,044.53 987.57 982.11
NON-INTEREST INCOME:
Service charges on deposit accounts... 128.14 125.03 116.64 114.07 116.59 112.42
Income from fiduciary activities...... 53.88 53.45 59.28 59.01 57.71 56.15
Loan processing and servicing
income.............................. 145.91 116.73 114.16 107.22 128.29 121.59
Securities gain (losses).............. (254.27) (12.98) 2.74 3.45 5.52 2.97
Other................................. 111.06 171.68 100.36 104.06 104.92 103.08
--------- --------- --------- --------- --------- ---------
TOTAL NON-INTEREST INCOME............... 184.72 453.91 393.18 387.81 413.03 396.21
NON-INTEREST EXPENSE:
Salaries and related costs............ 459.15 427.29 425.24 441.99 421.19 430.32
Other................................. 604.36 551.61 477.66 459.85 506.12 478.36
--------- --------- --------- --------- --------- ---------
TOTAL NON-INTEREST EXPENSE.............. 1,063.51 978.90 902.90 901.84 927.31 908.68
Taxable equivalent adjustment........... 21.04 22.33 22.81 21.99 22.04 23.22
--------- --------- --------- --------- --------- ---------
Income before income taxes and
cumulative effect of change in
accounting principle.................. 86.87 429.02 494.45 508.51 451.25 446.42
Income tax (provision) benefit:
Income excluding securities
transactions........................ (117.35) (150.35) (162.92) (180.35) (149.08) (149.08)
Securities transactions............... 94.86 4.54 (.96) (1.21) (1.93) (1.13)
--------- --------- --------- --------- --------- ---------
Income before cumulative effect of
change in accounting principle........ 64.38 283.21 330.57 326.95 300.24 296.21
Cumulative effect of change in method
of accounting for income taxes........ --------- --------- --------- --------- --------- ---------
Net income........................ $ 64.38 $ 283.21 $ 330.57 $ 326.95 $ 300.24 $ 296.21
========= ========= ========= ========= ========= =========
Net income available to common
stockholders.......................... $ 60.00 $ 278.84 $ 326.20 $ 322.58 $ 295.87 $ 291.84
========= ========= ========= ========= ========= =========
<CAPTION>
QUARTERS
-----------------------
1993
-----------------------
$(MILLIONS) SECOND FIRST
-----------------------------------------------------------------
<S> <C> <C>
CONDENSED INCOME STATEMENT:
Interest income(1)
Taxable securities.................... $ 212.35 $ 238.83
Tax exempt securities................. 48.72 48.83
--------- ---------
Securities income....................... 261.07 287.66
Commercial loans...................... 297.01 294.75
Real estate loans..................... 368.67 357.10
Consumer loans........................ 355.73 397.09
Credit card loans..................... 203.47 203.29
Leases................................ 20.50 21.25
--------- ---------
Loan and lease income................... 1,245.38 1,273.48
Other earning assets.................. 10.50 14.67
TOTAL INTEREST INCOME................... 1,516.95 1,575.81
Demand deposits....................... 38.27 34.76
Savings deposits...................... 124.98 130.02
Time deposits:
CD's under $100,000................. 173.91 185.16
CD's $100,000 and over.............. 37.92 41.98
--------- ---------
TOTAL INTEREST ON DEPOSITS.............. 375.08 391.92
Borrowed funds:
Short-term.......................... 43.18 47.24
Long-term........................... 23.63 23.37
--------- ---------
TOTAL INTEREST ON BORROWED FUNDS........ 66.81 70.61
--------- ---------
TOTAL INTEREST EXPENSE.................. 441.89 462.53
--------- ---------
Net interest income..................... 1,075.06 1,113.28
Provision for loan and lease losses..... 64.72 111.18
--------- ---------
Net funds function...................... 1,010.34 1,002.10
NON-INTEREST INCOME:
Service charges on deposit accounts... 110.48 111.51
Income from fiduciary activities...... 57.24 54.40
Loan processing and servicing
income.............................. 116.26 98.59
Securities gain (losses).............. 1.19 7.43
Other................................. 104.30 83.41
--------- ---------
TOTAL NON-INTEREST INCOME............... 389.47 355.34
NON-INTEREST EXPENSE:
Salaries and related costs............ 424.43 411.84
Other................................. 501.04 502.65
--------- ---------
TOTAL NON-INTEREST EXPENSE.............. 925.47 914.49
Taxable equivalent adjustment........... 20.79 23.46
--------- ---------
Income before income taxes and
cumulative effect of change in
accounting principle.................. 453.55 419.49
Income tax (provision) benefit:
Income excluding securities
transactions........................ (157.70) (136.76)
Securities transactions............... (.41) (2.52)
--------- ---------
Income before cumulative effect of
change in accounting principle........ 295.44 280.21
Cumulative effect of change in method of
accounting for income taxes........... 19.39
--------- ---------
Net income........................ $ 295.44 $ 299.60
========= =========
Net income available to common
stockholders.......................... $ 291.07 $ 295.00
========= =========
</TABLE>
59
<PAGE> 42
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
RATE-VOLUME ANALYSIS(1, 2)
(unaudited)
<TABLE>
<CAPTION>
1994-93 1993-92 1992-91
-------------------------------------- ------------------------------------- -----------
CHANGE IN CHANGE IN CHANGE IN
INCOME/ RATE VOLUME INCOME/ RATE VOLUME INCOME/
$(THOUSANDS) EXPENSE EFFECT EFFECT EXPENSE EFFECT EFFECT EXPENSE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNING ASSETS:
Short-term
investments....... $ 8,496 $ 16,302 $ (7,806) $ (82,453) $ (15,890) $ (66,563) $ (64,040)
Securities:(5)
Taxable............. 30,017 (25,597) 55,614 (185,799) (183,249) (2,550) 113,166
Tax exempt.......... 7,601 (18,401) 26,002 (21,568) (19,247) (2,321) (39,376)
--------- --------- --------- --------- --------- ---------- -----------
Total securities.... 37,618 (43,998) 81,616 (207,367) (202,496) (4,871) 73,790
Loans and
leases:(3)(4)
Commercial.......... (1,710) (74,664) 72,954 (91,618) (15,178) (76,440) (164,872)
Real estate......... 66,225 (46,569) 112,794 61,317 (76,591) 137,908 156,315
Consumer, net....... 134,987 (140,765) 275,752 64,794 (179,287) 244,081 246,741
Credit card......... 129,257 (48,824) 178,081 62,044 (36,930) 98,974 179,859
Leases, net......... 4,667 (7,328) 11,995 (3,858) (6,340) 2,482 (10,367)
--------- --------- --------- --------- --------- ---------- -----------
Net loans and
leases.............. 333,426 (318,150) 651,576 92,679 (314,326) 407,005 407,676
Note receivable from
FDIC................ (18,808)
--------- --------- --------- --------- --------- ---------- -----------
TOTAL EARNING ASSETS.. 379,540 (345,846) 725,386 (197,141) (532,712) 335,571 398,618
INTEREST BEARING
LIABILITIES:
Demand-interest
bearing............. 27,895 19,174 8,721 (42,457) (55,411) 12,954 (54,554)
Savings............... 9,887 (1,516) 11,403 736 (45,716) 46,452 1,454
Money market savings.. 39,706 35,253 4,453 (103,276) (86,321) (16,955) (97,330)
Time deposits:
CD's less than
$100,000........ 77,448 81,579 (4,131) (317,632) (218,921) (98,711) (273,936)
CD's $100,000 and
over:
Domestic...... 9,462 8,711 751 (57,713) (24,092) (33,621) (113,056)
Foreign....... 32,174 7,544 24,630 1,161 (3,687) 4,848 (2,350)
--------- --------- --------- --------- --------- ---------- -----------
Total deposits........ 196,572 150,745 45,827 (519,181) (434,148) (85,033) (539,772)
Borrowed funds:
Short-term.......... 245,922 84,231 161,691 668 (29,397) 30,065 (95,956)
Long-term........... 30,596 17,042 13,554 20,438 (15,980) 36,418 (5,061)
--------- --------- --------- --------- --------- ---------- -----------
Total borrowed
funds............... 276,518 101,273 175,245 21,106 (45,377) 66,483 (101,017)
--------- --------- --------- --------- --------- ---------- -----------
Total interest bearing
liabilities......... 473,090 252,018 221,072 (498,075) (479,525) (18,550) (640,789)
--------- --------- --------- --------- --------- ---------- -----------
Net interest income... $ (93,550) $(597,864) $ 504,314 $ 300,934 $ (53,187) $ 354,121 $ 1,039,407
========= ========= ========= ========= ========= ========== ===========
<CAPTION>
1992-91
-----------------------
RATE VOLUME
$(THOUSANDS) EFFECT EFFECT
-------------------------------------------------
<S> <C> <C>
EARNING ASSETS:
Short-term
investments....... $ (65,990) $ 1,950
Securities:(5)
Taxable............. (186,860) 300,026
Tax exempt.......... (13,124) (26,252)
---------- ----------
Total securities.... (199,984) 273,774
Loans and
leases:(3)(4)
Commercial.......... (231,947) 67,075
Real estate......... (123,709) 280,024
Consumer, net....... (130,787) 377,528
Credit card......... (41,380) 221,239
Leases, net......... (17,926) 7,559
---------- ----------
Net loans and
leases.............. (545,749) 953,425
Note receivable from
FDIC................ (18,808)
---------- ----------
TOTAL EARNING ASSETS.. (811,723) 1,210,341
INTEREST BEARING
LIABILITIES:
Demand-interest
bearing............. (136,133) 81,579
Savings............... (73,018) 74,472
Money market savings.. (200,014) 102,684
Time deposits:
CD's less than
$100,000........ (373,981) 100,045
CD's $100,000 and
over:
Domestic...... (88,676) (24,380)
Foreign....... (9,080) 6,730
---------- ----------
Total deposits........ (880,902) 341,130
Borrowed funds:
Short-term.......... (120,758) 24,802
Long-term........... (18,993) 13,932
---------- ----------
Total borrowed
funds............... (139,751) 38,734
---------- ----------
Total interest bearing
liabilities......... (1,020,653) 379,864
---------- ----------
Net interest income... $ 208,930 $ 830,477
========== ==========
</TABLE>
(1) Fully taxable equivalent basis. The federal statutory rate was 35% for 1994
and 1993 and 34% for other years presented.
(2) The unallocated portion of the total change has been prorated into rate and
volume components.
(3) Interest income on loans and leases includes $156 million and $143 million
of credit card fees in 1994 and 1993, respectively. Other fees included in
interest income are not material.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) Average balances are based on amortized historical cost (excluding SFAS 115
adjustments to fair value).
60
<PAGE> 43
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
This discussion should be read in conjunction with the
financial statements, notes and tables included elsewhere in
this report. Definitions of terms used in this discussion
include:
THE CORPORATION, BANC ONE
The Corporation refers to the parent company only whereas BANC
ONE refers to the Corporation and majority-owned subsidiaries
(affiliates).
AVERAGE BALANCES
All average balances are calculated on the basis of daily
averages. Interim period annualizations are based on actual
days in the relevant period.
FULLY TAXABLE EQUIVALENT BASIS (FTE)
Income on earning assets that is subject to either a reduced
rate or zero rate of income tax, adjusted to give effect to
the appropriate incremental federal income tax rate and
adjusted for non-deductible carrying costs, where applicable.
Where appropriate, yield calculations include these
adjustments.
NET INTEREST INCOME
Interest and related fee income on earning assets (FTE basis
where appropriate) reduced by total interest expense on
interest bearing liabilities.
NET INTEREST MARGIN
Net interest income on an FTE basis expressed as a percent of
average earning assets.
NET FUNDS FUNCTION
Net interest income reduced by the provision for loan and
lease losses.
TIER I CAPITAL
The sum of common stockholders' equity and preferred stock,
less goodwill and certain other deductions (including net
unrealized holding losses on securities available for sale,
certain intangible assets and 50% of the investment in
unconsolidated subsidiaries).
TIER II CAPITAL
The sum of subordinated debt and the allowance for loan and
lease losses, subject to limitation by regulatory guidelines
less 50% of the investment in unconsolidated subsidiaries.
61
<PAGE> 44
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
I. OVERVIEW OF OPERATIONS
Net income for 1994 was $1,005 million, or $2.42 per share,
decreasing from $1,191 million, or $2.93 per share, in 1993.
All prior period results are restated to include the
acquisition of Liberty National Bancorp, Inc. (Liberty),
accounted for as a pooling of interests as described in Note
2.
The earnings decrease was caused primarily by significant
events that occurred during the last half of 1994. During the
fourth quarter, BANC ONE recognized $220 million of after tax
charges relating to securities sales to reduce exposure to
rising interest rates (see Asset Liability Management
discussion) and operations consolidations charges relating to
the standardization and consolidation of certain loan, deposit
and back office functions. These charges were partially offset
by loan loss provision relief of $52 million related to the
sale of $2 billion of credit card receivables. During the
third quarter, BANC ONE recognized after tax charges of $51
million relating to the acquisition of Liberty, the creation
of reserves for certain litigation, the consolidation of
mortgage operations and the loss on the sale of securities to
reduce the Corporation's exposure to rising interest rates.
These charges were partially offset by a $30 million after tax
gain on the sale of $1 billion of student loans. Details of
changes in net income per common share are presented in Table
1.
Although 1994 key performance measures declined from 1993,
they remained strong in comparison to industry standards.
Return on average assets decreased to 1.15% from 1.50% in
1993. The 1994 return on average common equity decreased to
13.35% compared to 17.58% in 1993. The change in these key
performance measures resulted primarily from the significant
third and fourth quarter charges mentioned above, an increase
in loan balances and purchase of treasury stock (see Capital
discussion on page 72).
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Table 1 ANALYSIS OF NET INCOME PER COMMON SHARE
1993-94 1992-93 1991-92
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income per common share, prior year............ $ 2.93 $2.27 $ 1.82
Increase/(decrease) from changes in:
Earning asset volume............................. 1.68 .39 3.28
Rates and other effects of net interest income... (1.91) .39 (.50)
Provision for loan and lease losses.............. .36 .61 (.05)
Non-interest income, excluding securities
transactions.................................. .36 .17 .35
Securities transactions.......................... (.69) (.02) (.08)
Non-interest expense............................. (.43) (.46) (1.94)
Provision for income taxes....................... .16 (.40) (.51)
------ ----- ------
Subtotal........................................... 2.46 2.95 2.37
Change in average common shares.................... (.04) (.02) (.09)
Change in preferred stock dividend................. (.01)
------ ----- ------
Net income per common share........................ $ 2.42 $2.93 $ 2.27
====== ===== ======
</TABLE>
62
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--------------------------------------------------------------------------------
II. NET INTEREST INCOME/NET INTEREST MARGIN
BANC ONE's interest income increased 6.3% to $6.4 billion and
interest expense increased 26.6% to $2.2 billion from 1993 to
1994. Net interest income is affected by the growth, pricing,
mix and maturity of earning assets and interest bearing
liabilities; interest rate sensitivity; interest rate
fluctuations; off-balance sheet investment products and loan
quality. The following describes how these factors affected
BANC ONE's net interest income and margin.
Earning Assets
Average earning assets increased 11% to $78.3 billion in 1994
from $70.6 billion in 1993. The increase in earning assets is
primarily due to a 12.5% increase in average loans and leases
to $59.8 billion in 1994 up from $53.2 billion in 1993. Loan
growth was strong in all of BANC ONE's markets and is expected
to continue during 1995. The overall yield on loans decreased
during 1994. Yields on retail loans paid off in 1994 were
generally higher than rates on new originations which were
impacted by increasingly competitive pricing. New credit card
accounts were originated at low, introductory rates and were
principally variable rate. In addition, as part of BANC ONE'S
effort to reduce the sensitivity of its earnings to interest
rate increases, certain fixed rate credit card receivables
were converted to variable rates. As market interest rates
increase, the yield on these variable rate credit cards will
also increase. Also, as discussed more fully below, the
contribution to yields from off-balance sheet investment
products declined in 1994.
Although loan yields dropped during 1994, interest and
fees on loans and leases (FTE) increased $333 million due
principally to $4.2 billion growth in average higher-yielding
consumer and credit card loans. In the future, increases in
loan processing and servicing income are expected to partially
offset decreases in net interest income because cash flows in
excess of servicing costs were retained on the sale of $2
billion in credit card receivables and $1 billion in student
loans. The yield on the consumer loan portfolio was enhanced
by the income tax refund anticipation loan (RAL) program.
During the first quarter of 1994, BANC ONE originated
approximately $2.2 billion of such loans. The very short-term,
high-yielding loans had an average balance during the first
quarter of 1994 and 1993 of $268 million and $264 million,
respectively. During 1995 the Internal Revenue Service made
program changes resulting in the reduced availability of
information used by BANC ONE to underwrite RAL transactions.
As a result, BANC ONE has changed its RAL program which will
lead to a shift from making loans to receiving fee income for
transmitting tax returns electronically in 1995 and future
years.
Table 2 depicts the maturities of certain loans at
December 31, 1994. As noted in the table, significant loan
maturities occur in 1995; most of these balances are expected
to be replaced or renewed. Demand loans and loans having no
stated maturity are classified as being due within one year.
Loans that have adjustable rates are shown in their maturity
category by their scheduled principal repayment dates rather
than the dates at which they are repriced.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Table 2 MATURITY SCHEDULE FOR LOANS AT DECEMBER 31, 1994
COMMERCIAL,
FINANCIAL & REAL ESTATE,
AGRICULTURAL CONSTRUCTION
------------------- ---------------------
$(MILLIONS) FIXED VARIABLE FIXED VARIABLE
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995................................... $1,776 $ 7,389 $ 222 $1,230
1996 through 1999...................... 1,597 3,907 88 560
After 1999............................. 678 1,272 30 65
------ -------- ------ ------
$4,051 $ 12,568 $ 340 $1,855
====== ======== ====== ======
</TABLE>
--------------------------------------------------------------
Interest-Bearing Liabilities
Total average interest-bearing liabilities increased 10.6% to
$64.5 billion in 1994 from $58.3 billion in 1993, primarily
reflecting increases in short-term borrowings. As expected,
deposit growth lagged loan growth during 1994 as consumers
chose other higher yielding forms of investment. In order to
fund increased loan growth, BANC ONE issued $2.4 billion in
short-term bank notes during 1994 and, on average, purchased
$2 billion more in Federal Funds compared to
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--------------------------------------------------------------------------------
the previous year. During the last half of 1994, the need to
purchase Federal Funds decreased due to the liquidity
generated by the sales of $2 billion of credit card
receivables and $1 billion in student loans. As noted in Table
8 on page 72, large liability dependence decreased to 15.99%
at December 31, 1994 from 16.21% at December 31, 1993.
Average borrowed funds balances increased by 55.9% in 1994
from 1993 and the average rate paid increased to 4.54% in 1994
from 3.67% in 1993, resulting in related interest expense
growth of 92.8%, from 1993 to 1994.
Interest Rate Sensitivity
During 1994 BANC ONE reduced its interest rate sensitivity
from approximately 3% liability sensitive based on a gradual
1% increase in interest rates to approximately 1% liability
sensitive based on a gradual 2% increase in interest rates.
(see page 69 for further discussion). This was accomplished by
selling $8 billion in United States Treasury and Agency
securities during the second half of the year and by
purchasing short-term or variable rate securities. In
addition, liability maturities were extended by marketing
programs designed to increase fixed rate certificates of
deposit. Moreover, $2 billion of credit card receivables were
sold during the fourth quarter of 1994 to facilitate this
reduction in interest rate sensitivity.
Interest Rate Fluctuations
BANC ONE's net interest margin decreased from 6.19% in 1993 to
5.46% in 1994. The yield on average earning assets declined
during 1994 while the cost of funds increased. This decrease
primarily reflects the impact of increasingly competitive
pricing, contractual repricing lags on loans and a lower
contribution from off-balance sheet investment products. The
lower contribution from off-balance sheet investment products
and contractual repricing of earning assets caused the
majority of the 38 basis point decrease in the yield on
earning assets. The national market increase in interest rates
during 1994, the issuance of $2.4 billion in short-term bank
notes in 1994 and the increase in interest expense as a result
of off-balance sheet investment products contributed to a 38
basis point increase in the average rate paid on deposits and
borrowed funds for the year ended December 31, 1994.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Table 3 RATE AND YIELD ANALYSIS
1994 1993 1992
------------------------------------------------------------------------
<S> <C> <C> <C>
Earning asset yield.......................... 8.33% 8.71% 9.21%
Cost of deposits and other borrowed funds.... 2.88% 2.50% 3.27%
------------------------------------------------------------------------
</TABLE>
Off-Balance Sheet Investment Products
BANC ONE manages its interest rate sensitivity using both
on-balance sheet and off-balance sheet investment products.
Off-balance sheet investment products, primarily interest rate
swaps, increased interest income by $22 million in 1994
compared with $230 million in 1993. Off-balance sheet
investment products decreased deposit and other borrowing
costs by $72 million in 1994 and $216 million during 1993.
These products effectively alter on-balance sheet yields and
costs. In the current rate environment, it is anticipated that
these off-balance sheet products will act to reduce yields on
interest earning assets and increase interest rates on
interest bearing liabilities in 1995. This effect is partially
offset by improved contributions from short-term earning
assets and long-term liabilities carried on the balance sheet.
See page 68 for a more complete discussion of asset/liability
management.
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--------------------------------------------------------------------------------
III. NON-INTEREST INCOME, NON-INTEREST EXPENSE AND
OPERATIONS CONSOLIDATION AND OTHER CHARGES
Non-interest income, excluding securities transactions,
increased to $1.7 billion in 1994 from $1.5 billion in 1993.
Non-interest income, excluding securities transactions, as a
percent of average assets remained at 1.93% in 1994.
Loan processing and servicing income, the largest
component of non-interest income, increased $19 million, or
4.1% in 1994 from a year ago. The increase over 1993 was
primarily attributable to a $19 million increase in servicing
income related to loan sales and a $22 million increase in
merchant processing income due to increases in private label
credit card sales as a result of promotional pricing and
expanded servicing capabilities. These increases were offset
by a $25 million decrease in mortgage banking income due to a
decrease in loan originations as a result of increasing
interest rates and net losses in 1994 of $5 million recognized
from the sale of mortgage loans compared to net gains of $9
million in 1993.
Service charges on deposit accounts increased $33 million,
or 7.3% during 1994 over 1993. The increase is primarily
attributable to a change in check processing which resulted in
an increase in fees from overdrafts.
Other non-interest income increased $91 million, or 23.1%
in 1994 over 1993. The increase was due to a $49 million gain
on the sale of $1 billion of student loans and a $13 million
gain on the sale of mortgage loan servicing rights. The gain
recorded on the student loan sale represents the present value
of future cash flows less servicing costs. The assumptions
underlying the related asset will be assessed on a periodic
basis with reductions, if any, in expected cash flows
recognized in future periods. These gains were offset by $8
million in expenses related to the sale of $2 billion of
credit card receivables which occurred in the fourth quarter
of 1994. Other non-interest income also increased due to an
$11 million increase in computer services income related to
the sale of credit card processing software licenses, a $3
million gain from the sale of Bank One, Fresno, NA, a $3
million increase in income earned on the cash surrender value
of corporate-owned life insurance, and a $12 million increase
in revenues from the sale of credit life and credit accident
and health insurance policies.
BANC ONE expects to recognize revenue of $17 million from
the sale of a credit card processing software license in the
first quarter of 1995. BANC ONE expects to close the sale of
its four Michigan banks in the first quarter of 1995 at a gain
in excess of $40 million. Upon closing of the sale of the
Michigan banks, management expects to make a decision to sell
low yielding consumer loans that are expected to generate a
loss in the same range.
The loss on sale of securities is substantially due to the
sale of $8 billion in U.S. Treasury and Agency securities that
resulted in a $285 million net loss. The loss was partially
offset by a $21 million gain on the sale of equity securities.
Non-interest expense increased 4.7% from $3.7 billion in
1993 to $3.8 billion in 1994. Non-interest expense, as a
percentage of average assets, decreased from 4.63% to 4.42% in
1994.
Salaries and related costs increased $66 million or 3.9%
during 1994 compared to 1993. The increase reflects merit and
other pay increases and an increase in headcount resulting
from expansion into new markets, products and business
opportunities. Additionally, $36 million in severance pay
related to operations consolidation was recorded and
hospitalization expense increased approximately $10 million
due to increased participation and employee claims. The
increases discussed above were offset by a $10 million
decrease in bonuses and a $20 million decrease in 401(k)
benefits due to decreased earnings per share.
Net occupancy expense, exclusive of depreciation,
increased $22 million, or 14% in 1994 from 1993. The increase
is primarily attributable to $12 million of expenses related
to the operations consolidation. The remaining increase is
related to increases in rent on facilities and related costs.
Taxes other than income and payroll decreased $26 million,
or 31.0% in 1994 compared to 1993 reflecting the settlement of
prior years franchise and intangible taxes.
Depreciation and amortization increased $82 million, or
30.0%, in 1994 compared to 1993. The increase is due to $46
million of expenses related to the operations consolidation
and $21 million of merger-related expenses relating to the
Liberty acquisition. Additional increases relate to
depreciation of branch equipment, depreciation related to the
purchase of data processing equipment and software
amortization related to the credit card processing software
system. These increases were offset by a write-off of
approximately $18 million of goodwill during 1993 to provide
for consistent amortization methods among BANC ONE affiliates.
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Outside services and processing increased $21 million, or
4.1%, in 1994 over 1993. The increase is primarily due to an
increase of approximately $28 million related to new credit
card programs, an increase of $4 million in the use of
temporary employees, an increase of $4 million in software
maintenance expense resulting from the purchase of software,
offset by a $19 million reduction in consulting expenses.
Communication and transportation expense increased $13
million, or 5.5%, in 1994 over 1993. The increase is primarily
the result of an increase in postage related to credit card
solicitations and additional travel related expenses.
Other non-interest expense decreased $15 million, or 3.3%
in 1994 from 1993. The decrease was attributable to a $35
million decline in other real estate owned (OREO) expense, a
$5 million decrease in supplies expense, and a $4 million
decrease in merger-related expenses as compared to 1993. The
decrease in OREO expenses relates to a decline of $69 million
in OREO property. These decreases were offset by an increase
of approximately $13 million in litigation expense during
1994, $7 million in expenses related to the operations
consolidation and a $7 million increase in credit card-related
activities.
BANC ONE could benefit from an FDIC proposal to lower
premiums on deposit insurance for most banks from 23 cents to
4 cents for every $100 in certain deposits (e.g., deposits
covered through the Savings Insurance Fund and Eurodollar
deposits would be excluded). The benefit may be offset by an
increase in rates on deposit products to allow BANC ONE to be
more competitive with other financial service providers.
During 1994, BANC ONE recorded operations consolidation
charges of $74 million and other charges relating to the
writedown of assets of $32 million. The decision to
consolidate certain deposit and loan operations and to
streamline and standardize backroom functions will allow BANC
ONE to take advantage of improved technology resulting in
economy-of-scale savings and the ability to provide customers
with the high level of service required by an increasingly
competitive marketplace.
The operations consolidation charges relate primarily to a
plan to consolidate certain deposit and loan operations and
standardize back office functions in Arizona, Colorado,
Illinois, Indiana, Ohio, Texas, Utah and Wisconsin. The
consolidation will also include the sale or closure of
approximately 100 branches and other facilities. Additionally,
BANC ONE Mortgage Corporation implemented a plan to
consolidate 22 loan processing centers into five. In addition
to the operations consolidation charges, BANC ONE recorded
other charges of $32 million which relate to the writedown of
assets to be replaced.
The benefits of the operations consolidation and
standardization of back office functions will be minimal
during 1995 as significant parts of the plan will not be
completed until late in the year. Moreover, any potential 1995
savings will be offset by on-going consulting and staff
expenses, moving, training and other costs associated with the
plan. Accordingly, significant benefits are not expected until
1996.
During 1994, BANC ONE consolidated several bank charters
in an effort to reduce the overhead cost of compliance and
regulation. As a result, BANC ONE operates 69 separately
chartered banks in 12 states as of December 31, 1994, as
compared to 82 banks in 13 states at the end of 1993. Arizona,
Colorado, Texas and Utah now operate under single statewide
charters. West Virginia has consolidated 16 bank charters into
three. The move toward reducing the number of bank charters
will continue as the installation of standard, common systems
occurs. The benefits of reducing bank charters will be minimal
in 1995.
--------------------------------------------------------------------------------
IV. LOAN QUALITY
BANC ONE's process for monitoring loan 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.
BANC ONE has no significant loan concentration in any
single industry, borrower or area of the country. The
commercial loan portfolio consists primarily of numerous small
balance loans in diverse businesses located throughout the
markets served by BANC ONE affiliates. Only 16 customers had
borrowings or commitments greater than $50 million at December
31, 1994 with
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
the largest outstanding being $128 million. As BANC ONE
expands its geographic coverage, standardized loan-monitoring
system and credit policies, including underwriting standards,
are implemented immediately. Centralized state management of
problem assets with active programs for resolution and
disposition of foreclosed properties, as well as
implementation of BANC ONE's internal loan monitoring system
at newly acquired affiliates, have reduced the level of
nonperforming assets.
As shown in Table 4, the loan portfolio continues to
reflect BANC ONE's policy of avoiding concentrations in any
one industry.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Table 4 LOAN CONCENTRATIONS(1)
1994 1993
---------------------------------------------------------
BALANCE AT PERCENT OF BALANCE AT PERCENT OF
$(MILLIONS) YEAR-END LOANS(1) YEAR-END LOANS(1)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Real estate operators, managers and
developers................................... $3,957 16.23% $3,366 15.44%
Retail--building, food, auto, clothing and
general...................................... 1,896 7.78 1,873 8.59
Construction contractors....................... 1,495 6.13 1,142 5.24
Oil and mining................................. 1,208 4.95 1,115 5.11
Wholesale trade -- durables.................... 992 4.07 888 4.07
Mortgage banking, finance companies, financial
institutions and brokers..................... 909 3.73 1,371 6.29
Manufacturing -- machinery..................... 880 3.61 744 3.41
Holding and investment companies............... 833 3.42 874 4.01
Health services................................ 688 2.82 644 2.95
Transportation and public utilities............ 657 2.69 638 2.93
</TABLE>
(1) Includes commercial, financial and agricultural,
commercial real estate and construction loans.
--------------------------------------------------------------
BANC ONE's foreign loans totaled less than 1% of total
loans at December 31, 1994 and 1993.
BANC ONE maintained generally high credit quality, with
risk appropriately priced on new loan volume during 1994.
Table 5 below presents the major components of the $105
million decrease in nonaccrual loans and $69 million decrease
in OREO for the year ended December 31, 1994.
--------------------------------------------------------------
Table 5 NONACCRUAL LOANS AND OREO
NONACCRUAL LOANS:
<TABLE>
<CAPTION>
$(THOUSANDS) 1994
------------------------------------------------------------------------------------
<S> <C>
Balance, beginning of period............................................ $ 482,331
Nonaccrual additions.................................................... 301,734
Loans returned to accrual and payments received......................... (312,231)
Reduction due to transfers to OREO...................................... (20,216)
Charge-offs............................................................. (66,778)
Other, net.............................................................. (7,431)
----------
Balance, end of period.................................................. $ 377,409
==========
</TABLE>
OREO:
<TABLE>
<S> <C>
Balance, beginning of period............................................ $ 153,260
Transfers from loans.................................................... 68,806
Write-downs............................................................. (15,713)
Sales and other, net.................................................... (121,998)
----------
Balance, end of period.................................................. $ 84,355
==========
</TABLE>
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
The reserve for loan and lease losses decreased to $897
million at December 31, 1994 from $967 million at December 31,
1993. This decrease can be attributed to the $52 million of
loan loss provision reduction related to the sale of $2
billion in credit card receivables, coupled with a continued
general improvement in credit quality evidenced by a decrease
in nonperforming assets of $178 million and a decrease in net
charge-offs of $73 million from 1993 to 1994. The level of
nonperforming assets declined as a result of the stabilization
of the national economy, management's continual monitoring of
problem loans, and the refinement of credit policies as
discussed above. Loans classified as doubtful decreased $27
million from December 31, 1993 to December 31, 1994.
The adequacy of the reserve for loan and lease losses is
assessed based upon the above credit quality and other
pertinent loan portfolio information. The reserve for loan and
lease losses decreased as a percentage of ending loans from
1.68% at December 31, 1993 to 1.45% at December 31, 1994. The
reserve continues to provide strong nonperforming loan
coverage, increasing to 235% at December 31, 1994 compared
with 197% at December 31, 1993. 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.
On January 1, 1995, BANC ONE adopted Statements of
Financial Accounting Standards Nos. 114 and 118, "Accounting
by Creditors for Impairment of a Loan" and "Accounting by
Creditors for Impairment of a Loan -- Income Recognition and
Disclosures." BANC ONE does not expect a material effect from
the adoption of these Statements.
--------------------------------------------------------------------------------
V. ASSET LIABILITY MANAGEMENT
BANC ONE takes a unified approach to management of liquidity,
capital and interest rate risk through its Asset and Liability
Management (ALM) process. The following discussion describes
certain key elements of this process, including BANC ONE's use
of on- and off-balance sheet investment products to manage
risk.
BANC ONE's Natural Asset Sensitivity
BANC ONE serves as a financial intermediary by taking deposits
and making loans. Although the interest rate risk profile of
BANC ONE may change in the future as projected new business
activity changes, historically, the terms of these loans and
deposits create an interest rate risk profile that is asset
sensitive. As Table 6 highlights, this interest rate risk
profile (Structural Gap) is asset sensitive. Asset sensitivity
occurs when loan repricings and maturities tend to be shorter
than liabilities. A simplistic way to represent this natural
sensitivity is through a repricing gap report adjusted to
exclude all investment products (on- and off-balance sheet).
The information shows BANC ONE's interest rate sensitivity
that results from the remaining core bank loans, deposits and
borrowings. BANC ONE's one year cumulative structural gap is a
positive $13.2 billion. This indicates that without the term
structure of investment products, BANC ONE is naturally asset
sensitive, which is consistent with recent years. The middle
of the table contains all investment products in their
expected repricing periods. A consolidated gap position is
then calculated.
68
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Table 6 STRUCTURAL REPRICING GAP
<TABLE>
<CAPTION>
0-3 4-12 YR 1 YR 2 3 TO 5 OVER 5
($ MILLIONS) MONTHS MONTHS TOTAL TOTAL YEARS YEARS TOTAL
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Structural Gap.............. $ 17,651 $ (4,441) $ 13,210 $ (3,940) $(6,068) $(7,384) $ (4,182)
Cumulative Structural Gap... 17,651 13,210 13,210 9,270 3,202 (4,182)
Investment Products:
On Balance Sheet........ 11,210 3,250 14,460 1,131 1,732 1,547 18,870
Wholesale Borrowings.... (12,554) (106) (12,660) (134) (1,894) (14,688)
Off Balance Sheet....... (18,154) 3,214 (14,940) 3,304 10,735 901
-------- -------- -------- -------- ------- ------- --------
Total Investment
Products.............. (19,498) 6,358 (13,140) 4,301 10,573 2,448 4,182
Cumulative Investment
Product Gap............... (19,498) (13,140) (13,140) (8,839) 1,734 4,182
Consolidated Corporate
Gap Position.............. (1,847) 1,917 70 361 4,505 (4,936)
Cumulative Gap.............. (1,847) 70 70 431 4,936
% of Total Assets........... (2.1)% .1% .5% 5.6%
</TABLE>
--------------------------------------------------------------
Although this table provides an indication of the direction of
risk for a change in interest rates, and shows BANC ONE to be
in a relatively balanced interest rate position, it does not
fully depict the effect of option-like characteristics
contained in loans, investments and deposits. These
characteristics can be best analyzed by the use of simulation
models and duration analysis.
The Asset Liability Management (ALM) Process
Interest rate risk can be broken down into three components;
earnings sensitivity risk, basis risk, and long-term risk.
Provided below is an explanation of the major components of
interest rate risk measured at BANC ONE and a discussion of
investment products, the key risk management tools utilized by
BANC ONE.
Earnings Sensitivity Risk
The first component of interest rate risk BANC ONE actively
manages is called earnings sensitivity risk (ESR). ESR is the
risk that as interest rates change, BANC ONE's earnings will
change. More specifically, ESR is defined as the percentage
change in forecasted earnings over 12 and 24 month periods for
a specified change in forecasted interest rates. At BANC ONE,
earnings sensitivity risk is measured against simulated
increases and decreases in interest rates of 1%, 2% and 3%.
BANC ONE has established guidelines which limit the amount of
short-term earnings sensitivity it is willing to tolerate over
a one and two year period for a 1%, 2% and 3% change in
interest rates.
Assumptions used in earnings simulations are driven by the
behavior of loan and deposit repricings and volumes. These
assumptions are developed in conjunction with the individual
local market managers, and are continually monitored and
updated as market conditions change. Major assumptions include
loan and deposit growth, mix changes, loan and deposit pricing
spreads, prepayment volatility on various fixed rate assets
such as residential mortgages, mortgage-backed securities and
consumer loans, and spread and volume elasticity of the
interest and non-interest bearing deposit accounts, regular
savings, and money market accounts. A significant portion of
consumer deposits do not reprice or mature on a contractual
basis. These deposit balances and rates have been distributed
over a number of periods to reflect those portions of such
accounts that are expected to reprice fully with market rates
over the simulation periods. The assumptions are based upon
historical experience with the bank's individual markets and
customers and include projections for how management expects
to continue to price in response to marketplace and market
changes. However, markets and consumer behavior do change, and
adjustments are necessary as customer preferences, competitive
market conditions, liquidity, loan growth rates and mix
change. These estimates of how deposit rates will parallel
national market rates were revised several times in 1994 to
respond to higher market interest rate levels.
During 1994, for a gradual 1% increase in interest rates
(i.e. .08% per month), BANC ONE's maximum twelve month forward
sensitivity position was negative 2.8% including the impact of
forecasted new business, while BANC ONE's ending position was
a negative .7%, which is within established guidelines, and
below the comparable negative 2.6% figure at year-end 1993. At
year
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BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
end 1993, for an up 2% and 3% gradual increase in rates, the
simulation model projected earnings to decline 7% and 11%,
respectively.
During 1993 and early 1994, BANC ONE managed its
sensitivity to interest rate changes in the expectation that
interest rates would increase gradually by 1% in a 12 month
time frame. Unexpectedly, the Federal Reserve Board, in 6
increments during 1994, raised the Federal Funds rate target
by 250 basis points. Management expects market interest rates
to continue to rise and currently is actively managing its
risk to be less than 1% liability sensitive for a 200 basis
point stairstep increase in rates over the next year. This
position should be conservative as a 200 basis point stairstep
increase in rates is above the market's projection of forward
rates. Based on the assumptions used, excluding projected new
business, if interest rates rise 200 basis points, with 50
basis points of the increase in day one (and incrementally 50
basis points on the first day of each subsequent quarter),
BANC ONE's projected 12 month after-tax earnings at risk is
negative 1%. BANC ONE's exposure under other interest rate
risk scenarios at December 31, 1994 are as follows: 100 basis
point stairstep increase in rates results in no change in
after-tax earnings; 300 basis point stairstep increase in
rates results in a reduction in after-tax earnings of 2%; 100
basis point stairstep decrease in rates results in a reduction
in after-tax earnings of 2%. Earnings sensitivity is expected
to be managed within narrow bounds through asset-pricing
strategies and disciplined funding procedures throughout 1995.
Basis Risk
The second component of interest rate risk measured at BANC
ONE is basis risk. Basis risk is defined as the risk that the
spread between Prime loan rates and short term funding rates,
such as Federal Funds or LIBOR, will narrow. At December 31,
1994, BANC ONE had approximately $21.5 billion of prime rate
related loans which were, in effect, funded with LIBOR,
Federal Funds or other liabilities. This risk has been reduced
by entering into $7.8 billion of basis swaps in which BANC ONE
pays Prime, less a spread, and receives a LIBOR-based amount
which, in some cases, is subject to certain defined caps.
These basis swaps have declined in market value as interest
rates have increased dramatically in 1994 because the amount
BANC ONE receives in certain contracts has been limited by the
caps.
Long-Term Risk
Another component of interest rate risk is called long-term
risk or duration/market value risk. By marking each side of
the current balance sheet to market for a 1% shock increase in
rates, we determine the change in market value of the existing
bank's long-term revenue flows, which becomes a proxy for long
term risk. Table 7 includes the impact of bank, customer and
cash investment options combined with the structural gap shown
in Table 6. The effective duration in years for each loan,
cash investment, and deposit category is then calculated for
an immediate one percent change in rates. This results in an
average effective duration in years of assets and liabilities
without swaps. The assets have a shorter overall effective
duration of 1.27 years versus 1.74 years for the liabilities.
The right side of the table includes off-balance sheet
investment products to synthetically alter the loan and
deposit average lives. An asset with a 1.52 year duration
declines in market value 1.52% for a 1% shock in rates. A
liability with a 1.52 year duration increases in value 1.52%
for the same rate change. Because the market value of assets
is greater than the market value of liabilities, the net
market value of the balance sheet declines approximately 1.5%
for a 1% increase in rates. The combined effects of cash
investments and off-balance sheet investment products
mitigates BANC ONE's natural exposure to falling interest
rates.
70
<PAGE> 53
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Table 7
<TABLE>
<CAPTION>
ON BALANCE SHEET OFF BALANCE SHEET COMBINED ON & OFF
---------------------------- ------------------------ ---------------------
EFFECTIVE ADJUSTED
AS OF DECEMBER 31, 1994 DURATION NOTIONAL NET ADJUSTED EFFECTIVE
$(MILLIONS) BALANCE RATE (YEARS) AMOUNT(1) SPREAD RATE DURATION(1)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Variable Rate Prime Loans............ $21,498 10.90% .23Yrs. $ 8,448 (.92)% 10.54% 1.46Yrs.
Other Variable Loans/
Investments........................ 20,576 7.38 1.04 26 .73 7.38 1.03
------- --------
Total Variable Rate Assets........... 42,074 9.18 .62 8,474 (.90) 9.00 1.25
Fixed Rate Loans (Net of Reserves)... 28,385 9.00 1.95 (4,860) .97 9.17 1.81
Other Fixed Investments.............. 9,329 6.38 2.43 (1,796) .17 6.42 2.30
------- --------
Total Fixed Rate Assets.............. 37,714 8.35 2.06 (6,656) .76 8.49 1.93
Other Assets......................... 9,135 1.01 1.01
------- --------
Total Assets......................... $88,923 7.89% 1.27 $ 1,818 (1.44)% 7.86% 1.52
======= ========
LIABILITIES:
Contractually Repriceable............ $28,638 2.81% 1.88Yrs. $ 4,060 (.77)% 2.92% 1.51Yrs.
Variable Deposits/
Borrowings......................... 12,817 5.06 .06 (418) .59 5.04 .09
------- --------
Total Variable Liabilities........... 41,455 3.51 1.23 3,642 (.79) 3.58 1.00
Total Fixed Liabilities.............. 23,718 5.19 1.52 7,043 (.72) 5.40 1.19
Non-Interest Bearing DDA............. 14,406 3.74 3.74
------- --------
Total Deposits/
Borrowings......................... 79,579 3.37 1.74 10,685 (.75) 3.47 1.51
Other Liabilities.................... 1,779 1.85 1.85
------- --------
Total Liabilities.................... $81,358 3.30% 1.74 $ 10,685 (.75)% 3.40% 1.52
======= ========
</TABLE>
(1) $8.1 billion of basis swaps are excluded from variable rate prime notional
amounts, but included in effective duration calculations. Positive notional
amounts are net receive-fixed swaps. Negative notional amounts are net
pay-fixed swaps or purchased caps. Totals are netted.
--------------------------------------------------------------------------------
Balance Sheet Transactions and Investment Products Used to
Manage Interest Rate Risk
BANC ONE began to lower ESR in 1994 by entering into programs
in both the local and the capital markets to reduce its
liability sensitive position. During the year, BANC ONE sold
approximately $8 billion of fixed rate United States Treasury
and Agency securities and reinvested the proceeds into
short-term and variable rate instruments, entered into $3.3
billion of pay fixed interest rate swaps, converted $1.5
billion of fixed rate credit cards to variable rate, sold $2.0
billion of credit card receivables, purchased $6.2 billion of
interest rate caps which limit the exposure to future
increases in interest rates, and continued to promote BANC
ONE's fixed rate retail certificates of deposits. These
transactions significantly lowered current and projected
levels of ESR.
The use of variable rate securities and pay fixed
swaps/purchased caps was intended to warehouse liquidity and
efficiently use capital. The shift in composition of the long
term securities portfolio continued to be toward variable rate
instruments.
Credit Risk
There were no past due amounts or reserves for possible credit
losses at December 31, 1994, related to off-balance sheet
investment product transactions, nor were there any
charge-offs during the three years ending December 31, 1994.
In October 1994, the Office of the Controller of the Currency
created new tiering categories for off-balance sheet
investment product contracts. Based on these criteria, BANC
ONE is a tier II dealer. BANC ONE has customer outstandings
with notional amounts of $577 million at December 31, 1994.
These customer cap and swap agreements are created to
accommodate the needs of BANC ONE's commercial loan customers.
BANC ONE enters into offsetting transactions with third
parties and has stringent controls on transaction size, term
and customer disclosure guidelines.
Liquidity Management
Minimizing reliance on potentially volatile wholesale funds
(large liabilities) is one of the principal methods BANC ONE
uses to manage its liquidity position. BANC ONE's policy is
that the large liabilities position be no greater than 30
percent of earning assets. In practice, BANC ONE manages the
position at much lower levels.
71
<PAGE> 54
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
As of December 31, 1994, large liability dependence
decreased slightly to 15.99%.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Table 8 LIQUIDITY
DECEMBER 31, DECEMBER 31,
$(MILLIONS) 1994 1993
------------------------------------------------------------------------------------
<S> <C> <C>
Earning assets, net of short term investments....... $76,248 $74,773
Large liabilities:
Net national market liabilities..................... $ 1,954 $ 3,054
As a percent of net earning assets.................. 2.56% 4.08%
Total net large liabilities......................... $12,195 $12,121
As a percent of net earning assets.................. 15.99% 16.21%
</TABLE>
--------------------------------------------------------------
BANC ONE has a number of significant sources of liquidity. The
first and most reliable source is "On-Books Liquidity".
Substantial funding can be extracted from the $13.9 billion of
short-term investments and securities available for sale. The
second source of liquidity is a geographically diverse retail
network comprised of affiliate banks in twelve states,
providing access to a substantial retail network of over 1,400
branches. In 1994, BANC ONE raised over $3 billion of
intermediate-term local market CDs in the retail marketplace.
A third source of liquidity is the ability to acquire large
liabilities in affiliate markets. A fourth source of liquidity
is the ability to sell loans. A fifth source of liquidity is
the ability to access large liabilities in the national
marketplace. In addition to using the securities portfolio to
collateralize repurchase agreements and public fund deposits,
$1.4 billion is pledged as collateral on off-balance sheet
investment products; the amount pledged will increase as rates
rise and decrease as rates decline.
BANC ONE's size and high credit-quality ratings have made
numerous external funding sources available. A bank note
program is available, as are commercial paper lines of credit
totaling $1.6 billion. During 1994, BANC ONE affiliate banks
issued $2.8 billion of bank notes, with $2.5 billion
outstanding at December 31, 1994. BANC ONE also maintains an
extensive contingency funding plan. The various sources of
liquidity available to BANC ONE provide ample long-term as
well as short-term funding alternatives.
--------------------------------------------------------------------------------
VI. CAPITAL
To the extent possible, BANC ONE has used common stock as
consideration in acquisitions so that stockholders' equity is
increased as assets are acquired. BANC ONE has generally
issued shares in acquisitions in an amount such that little or
no dilution to earnings per share resulted based on expected
earnings from the acquiree. In recent quarters, the market
value of bank and bank holding company stock, including BANC
ONE, has decreased. This has had the effect of limiting BANC
ONE's ability to effect acquisitions in non-dilutive
acquisition transactions accounted for as poolings of
interests.
In 1994, the Board of Directors approved the purchase of
up to 18 million shares of BANC ONE common stock to be used
specifically for the acquisition of Premier Bancorp, Inc.
(Premier) in Baton Rouge, Louisiana. BANC ONE has an option to
purchase Premier between June 30, 1995 and March 31, 1997 for
a purchase price of 125% of the common stock book value
(subject to certain adjustments) of Premier. No decision has
been made as to when the option will be exercised.
BANC ONE has long had a policy of maintaining superior
capital ratios. BANC ONE's policies require it to maintain, at
a minimum, a capital position that meets the federal
regulators "well capitalized" classification. Total equity to
assets at December 31, 1994 of 8.51% has decreased 25 basis
points, from 8.76% a year ago. This decrease was caused by the
increase in loan balances and the purchase of common stock for
the Premier acquisition. Risk based Tier I and Total Capital
Levels are 9.93% and 13.33% respectively, both significantly
above regulatory capital requirements of 4% and 8%. Based on
net income per common share and BANC ONE's historical
72
<PAGE> 55
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
common dividends per share, the dividend payout ratio was 51%
and 37% in 1994 and 1993, respectively. The payout ratio is
expected to return closer to BANC ONE's normal range of 35% to
40% of earnings in 1995. Payout ratios based on BANC ONE's
historical net income per common share are presented in the
Ten Year Performance Summary.
--------------------------------------------------------------------------------
VII. FOURTH QUARTER REVIEW
Net income for the fourth quarter of 1994 was $64 million or
$.15 per share compared to $300 million or $.74 per share for
the same period in 1993. The following significantly impacted
net income for the fourth quarter of 1994:
- Sale of $6 billion in U.S. Treasury and Agency
securities to reduce exposure to rising interest rates
which resulted in a $160 million after tax loss.
- Accrual of $60 million of after tax charges related to
operations consolidation and other charges.
- Sale of $2 billion of credit card receivables resulting
in a $52 million reduction of loan loss provision and
incurrence of related selling expenses of $8 million.
- Decrease in interest income by $29 million in the
fourth quarter of 1994 compared to an increase in
interest income of $60 million in the fourth quarter
1993 from off-balance sheet investment products. These
products increased deposit and other borrowing costs
$11 million in fourth quarter 1994 and decreased them
$60 million in the fourth quarter 1993.
--------------------------------------------------------------------------------
VIII. COMPARISON OF 1993 VERSUS 1992
Overview of Operations -- Net income for 1993 was $1,191
million, or $2.93 per share, increasing from $922 million, or
$2.27 per share in 1992. All results have been restated to
include all acquisitions accounted for as poolings of
interests. In addition, all per share amounts have been
restated for a five-for-four-stock split effective August 31,
1993 and the common stock dividend effective February 10,
1994.
The 1993 earnings increase is primarily due to improved
net interest margin and credit quality and increased earnings
from 1993 acquisitions, partially offset by increased data
processing expenses and expenses related to the expansion of
non-bank subsidiaries.
Return on average assets increased to 1.50% from 1.20% in
1992. Return on average common equity increased to 17.58% in
1993 from 15.14% for 1992. The ending ratio of average common
equity to assets increased to 8.40% at December 31, 1993 from
7.74% at December 31, 1992. The increases were predominately
due to strong earnings.
Net Interest Income -- Average interest-earning assets
increased to $70.6 billion in 1993 from $68.9 billion in 1992.
The growth is primarily due to an increase in consumer, credit
card and real estate loans.
Net interest margin increased in 1993 to 6.19% from 5.91%
in 1992. Correspondingly, net interest income (FTE) increased
by $301 million from 1992 to 1993. See the rate volume
analysis for a more detailed analysis of the net interest
margin.
Both the cost of funds and the yield on average earning
assets declined during 1993. The national market interest rate
decline contributed to a 50 basis point decline in the yield
on average earning assets and a 88 basis point decrease on the
average rate paid on deposits and borrowed funds for the year
ended December 31, 1993. The larger decline in funding costs
is principally a result of the widening of the spread between
loans and their respective funding sources coupled with
changes in BANC ONE's funding mix, including a higher
concentration of savings accounts and non-interest bearing
demand deposit accounts.
Off-Balance Sheet Instruments, Securities, Short-term
Investments -- The use of off-balance sheet investment
products increased interest income by $230 million, or 33
basis points, and decreased deposit and other borrowing costs
by $216 million, or 38 basis points, in 1993.
Loan Portfolio -- Interest income on loans increased by
$93 million in 1993 over 1992. Average total loans and leases
increased to $53.2 billion for 1993 up from $49.5 billion for
1992.
73
<PAGE> 56
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
The overall yield dropped to 9.7% for 1993 from 10.2% for
1992. The yield on the consumer loan portfolio was enhanced by
the income tax refund anticipation loan ("RAL") program. These
very short-term, high-yielding loans had an average balance
during the first quarter of 1993 and 1992 of $264 and $329
million, respectively.
Deposits and Borrowed Funds -- Total average
interest-bearing funds reflect increases in short-term
borrowings and long-term debt. The rate environment has
influenced consumers to move from longer-term time deposits to
more liquid demand and savings deposits.
Average borrowed funds balances increased by 22.3% and
the related interest expense grew by only 7.6% from 1992 to
1993, causing the yield to decrease to 3.67% for 1993 from
4.18% in 1992. To fund earning asset growth, BANC ONE depended
more on short-term borrowings, primarily Federal Funds
purchased. The cost of borrowed funds decreased further during
1993 through the use of interest rate swaps.
The increase in long-term debt reflects the issuance of
the $250 million of 10-year non-callable subordinated bank
notes issued in April 1993, and $150 million of 12-year
non-callable subordinated bank notes issued in September 1993.
Non-Interest Income, Non-Interest Expense and Income
Taxes -- Net non-interest expense (excluding securities
transactions) as a percent of average assets increased to
4.63%, or $3.7 billion, in 1993 from 4.53%, or $3.5 billion in
1992. This increase was primarily the result of increased fee
income, including income from fiduciary activities, service
charges on deposit accounts and loan processing and servicing
income.
Loan processing and servicing income, the largest
component of non-interest income, increased $20 million in
1993 from 1992. The increase over 1992 was partially
attributable to increased refinancings and mortgage servicing
income due to the low interest rate environment that existed
in 1993. Mortgage loans serviced for others by BANC ONE were
approximately $14.2 billion at December 31, 1993 and $12.8
billion at December 31, 1992. Credit card merchant processing
and interchange income increased approximately $21 million in
1993 over 1992 as a result of increased accounts and
transaction volumes.
Other income increased $18 million in 1993 over 1992. The
increase was due to income earned on the cash surrender value
of corporate-owned life insurance and continued increases in
insurance annuity commissions and investment banking fees.
Non-interest expenses totaled $3.7 billion in 1993 and
$3.5 billion in 1992.
Salaries and related expense increased $110 million from
1992 to 1993. The increase reflects higher headcount and pay
rates, increased benefits including the impact of providing a
higher level of 401(k) benefits, adoption of the accrual
method of accounting for postretirement medical coverage,
higher performance bonuses as a result of stronger earnings in
1993 and volume-related commissions. These increases were
partially offset by the $26 million decrease in severance and
other merger-related expenses from 1992 to 1993.
Net occupancy expense, exclusive of depreciation
decreased $22 million in 1993 from 1992. The reduction in
expense reflects $17 million in higher merger-related costs in
1992, associated with elimination of duplicate facilities. In
addition, the decrease in 1993 included the $8 million impact
of favorable renegotiations of a building lease.
Equipment expense increased $11 million in 1993 over
1992. The majority of the increase related to hardware and
software rental and maintenance contracts entered into to meet
the demands of the growing affiliate network.
Depreciation and amortization increased $48 million in
1993 over 1992. Approximately $22 million of the increase is
attributable to increased depreciation on data processing
equipment purchased to support loan processing systems, branch
automation and technological enhancements of existing
equipment. Additionally, BANC ONE wrote off approximately $18
million of goodwill to conform amortization methods among all
entities and approximately $6 million relating to the
consolidation and closure of three credit card processing
facilities.
Outside services and processing increased $24 million in
1993 over 1992. The increase is primarily due to software
development related to loan processing systems and branch
automation, which includes fees paid to temporary employees
during peak workload periods. In addition, outside processing
and interchange increased with the growth in loan servicing
income and growth of earning assets. This increase was
partially offset by a $22 million decrease in merger-related
expenses.
74
<PAGE> 57
BANC ONE CORPORATION and Subsidiaries
--------------------------------------------------------------------------------
Marketing and development expense increased $29 million
in 1993 over 1992. Approximately $17 million of the increase
is attributed to a media campaign to stimulate branch
awareness in the markets served by BANC ONE. The remaining
increase reflects the rise in community-based marketing
activity and the costs associated with higher levels of direct
mail marketing particularly in support of growth in credit
card programs.
Communication and transportation expense increased $29
million in 1993 over 1992. The increase includes additional
travel-related expenses associated with data processing
conversions and mergers and a general increase in volume from
the growing affiliate network.
Other non-interest expenses decreased $54 million in 1993
from 1992. Included in these amounts are other real estate
owned (OREO) expenses, which declined $56 million from 1992 to
$36 million. This decrease relates primarily to write-downs in
1992 and the decline in the OREO balance in 1993. The decline
in OREO was partially offset by an increase in litigation
reserves during 1993. Additionally, merger-related expenses
decreased from 1992 to 1993 by $14 million.
The provision for income taxes increased to 33.8% of
pretax income in 1993 from 31.2% in 1992. The primary reasons
for the changes to the effective tax rate are the increase
from 34% to 35% in the federal statutory rate, the continued
decline in tax free investments and increased income in states
imposing income taxes.
Loan Quality -- The provision for loan and lease losses
decreased to $388 million for 1993 from $631 million for 1992.
The decrease can be attributed to general improvement in all
areas of loan quality, including net charge-offs which
declined $204 million. The level of nonperforming assets
declined as a result of the recovering national economy and
management's continual monitoring of problem loans, and
refinement of credit policies. Consequently, nonperforming
assets as a percentage of ending loans decreased to 1.12% at
December 31, 1993 from 1.75% at December 31, 1992.
75
<PAGE> 58
MARKET PRESENCE BY STATE
ARIZONA
---------------------------------------------------------------------
Bank One, Arizona, NA
COLORADO
---------------------------------------------------------------------
Bank One, Colorado, NA serving markets in:
Boulder
Colorado Springs
Denver
Fort Collins/Loveland
Greeley
Western Colorado
ILLINOIS
---------------------------------------------------------------------
Bank One, Bloomington-Normal
Bank One, Champaign-Urbana
Bank One, Chicago, NA
Bank One, Peoria
Bank One, Quad Cities, NA
Bank One, Rockford, NA
Bank One, Springfield
INDIANA
---------------------------------------------------------------------
Bank One, Bloomington, NA
Bank One, Crawfordsville, NA
Bank One, Indianapolis, NA
Bank One, Lafayette, NA
Bank One, Marion, NA
Bank One, Merrillville, NA
Bank One, Rensselaer, NA
Bank One, Richmond, NA
Liberty National Bank and Trust
Company of Indiana (New Albany)
KENTUCKY
---------------------------------------------------------------------
Bank One, Lexington, NA
Bank One, Pikeville, NA
Liberty National Bank and Trust
Company of Central Kentucky
(Elizabethtown)
Liberty National Bank and Trust
Company of Kentucky
(Louisville)
Liberty National Bank and Trust
Company of Western Kentucky
(Hopkinsville)
Liberty National Bank of
Northern Kentucky (Erlanger)
Liberty National Bank of
Owensboro (Owensboro)
Liberty National Bank of
Shelbyville (Shelbyville)
MICHIGAN
---------------------------------------------------------------------
Bank One, East Lansing
Bank One, Fenton, NA
Bank One, Sturgis
Bank One, Ypsilanti, NA
OHIO
---------------------------------------------------------------------
Bank One, Akron, NA
Bank One, Athens, NA
Bank One, Cambridge, NA
Bank One, Cincinnati, NA
Bank One, Cleveland, NA
Bank One, Columbus, NA
Bank One, Coshocton, NA
Bank One, Dayton, NA
Bank One, Dover, NA
Bank One, Fremont, NA
Bank One, Lima, NA
Bank One, Mansfield
Bank One, Marietta, NA
Bank One, Marion
Bank One, Portsmouth, NA
Bank One, Sidney, NA
Bank One, Steubenville, NA
Bank One, Youngstown, NA
OKLAHOMA
---------------------------------------------------------------------
Bank One, Oklahoma City
TEXAS
---------------------------------------------------------------------
Bank One, Texas, NA, serving markets in:
Abilene
Amarillo
Arlington/MidCities
Austin
Beaumont/Orange/Port Arthur
Brenham
Corsicana/Athens
Dallas
Denton
Fort Worth
Fredericksburg
Greenville/Commerce
Houston
Levelland
Longview
Marshall
Midland
Odessa
San Antonio
Sherman/Denison
Tyler/Canton
Waco/Temple
Witchta Falls
UTAH
---------------------------------------------------------------------
Bank One, Utah, NA
WEST VIRGINIA
---------------------------------------------------------------------
Bank One, West Virginia, NA serving markets in:
Beckley
Boone
Buckhannon
Charles Town
Charleston
Clarksburg
Huntington
Lincoln
Logan
Nicholas County
Philippi
Point Pleasant
St. Albans
Wayne County
Williamson
Bank One, West Virginia, New Martinsville, NA
Bank One, West Virginia, Wheeling, NA
WISCONSIN
---------------------------------------------------------------------
Bank One, Antigo
Bank One, Appleton, NA
Bank One, Beaver Dam
Bank One, Elkhorn, NA
Bank One, Fond du Lac
Bank One, Green Bay
Bank One, Janesville, NA
Bank One, Kenosha, NA
Bank One, Madison
Bank One, Milwaukee, NA
Bank One, Monroe
Bank One, Oshkosh, NA
Bank One, Racine, NA
Bank One, Stevens Point, NA
Bank One, West Bend
OTHER AFFILIATES
BANC ONE DIVERSIFIED SERVICES CORPORATION
---------------------------------------------------------------------
Banc One Credit Card Services Company
Banc One Financial Services Corporation
Banc One Mortgage Corporation
Banc One POS Services Company
BANC ONE CAPITAL HOLDINGS CORPORATION
---------------------------------------------------------------------
Banc One Capital Corporation
Banc One Insurance Services Corporation
Banc One Securities Corporation
BANC ONE TRUST GROUP
---------------------------------------------------------------------
Banc One Institutional Investor Services Group
Banc One Investment Advisors Corporation
Banc One Trust Operations/Technology Group
Bank One Trust companies
---------------------------------------------------------------------
Banc One Commercial Loan Origination Corporation
Banc One Community Development Corporation
Banc One Funds Management Company
Banc One Management and Consulting Corporation
Banc One Services Corporation
Banc One Financial Card Services Corporation
PENDING AFFILIATE
---------------------------------------------------------------------
1st*Bank, Coppell, Texas
(Pending affiliate is subject to shareholder and regulatory approval)
76
<PAGE> 1
Exhibit 13(b)
Table 9
Time Deposits - Time Remaining Until Maturity
The following represent the time remaining until maturity of time deposits
greater than $100,000.
<TABLE>
<CAPTION>
(In thousands) 1994
------------------------------
<S> <C>
0-3 months $1,165
4-6 months 443
7-12 months 398
over 1 yr 4,104
------
Total $6,110
======
</TABLE>
IX. SUBSEQUENT EVENTS
On February 28, 1995, BANC ONE completed the sale of its four Michigan banks and
recorded a gain of $47 million. The Michigan Banks had assets of $614 million.
In March 1995, BANC ONE determined to sell, with servicing retained, $1.2
billion of direct and indirect auto loans at a loss in excess of $40 million.
The sale is expected to close during the second quarter 1995 and the proceeds
are expected to provide general liquidity needs, with remaining proceeds
reinvested in earning assets that have yields in excess of the loans sold.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
BANC ONE OHIO CORPORATION (f) SAME
BANK ONE, AKRON, N.A. (a) " "
BANC ONE AKRON SERVICE CORP. (f) " "
BANK ONE, ATHENS, N.A. (a) " "
ATHENS SERVICE CORP. (m) " "
BANK ONE, CAMBRIDGE, N.A. (a) " "
BANK ONE, CINCINNATI, N.A. (a) " "
BANC ONE CINCINNATI AUTOLEASE CORP. (f) " "
BANK ONE, CLEVELAND, N.A. (a) " "
BANK ONE, COLUMBUS, N.A. (a) " "
BANC ONE INVESTMENT ADVISORS CORP. (f) " "
BANC ONE VEHICLE FINANCE CORP. (f) " "
BOC REALTY, INC. (f) " "
BOC TOLEDO, INC. (f) " "
BOC MIDWEST, INC. (f) " "
BOC FLORIDA, INC. (f) " "
BOC SOUTHERN, INC. (f) " "
BOC AFFILIATES, INC. (f) " "
BANC ONE ACCEPTANCE CORP. (f) " "
BOX LEASING CORP. (f) " "
ICF INVESTMENT CORP. (f) " "
BANC ONE COMPENSATION SERVICES CORP. (80%) (f) " "
29160 CENTER RIDGE CO., INC. (f) " "
MARIETTA HOTEL CO. (f) " "
GULF SHORES CONDOMINIUMS (f) " "
MAUMEE RIVER HOTEL CORP. (f) " "
BANK ONE, COSHOCTON, N.A. (a) " "
BANK ONE, DAYTON, N.A. (a) " "
BANC ONE DAYTON SERVICE CORP. (f) " "
BANK ONE, DOVER, N.A. (a) " "
BANK ONE, EAST LANSING (c) " "
BANK ONE, FENTON, N.A. (a) " "
BANK ONE, FREMONT, N.A. (a) " "
BANK ONE LIMA, N.A. (a) " "
BANC ONE WAPAKONETA SERVICE CORP. (e) " "
BANK ONE, MARION (b) " "
BANK ONE, MANSFIELD (b) " "
BANC ONE TRAVEL CORP. (f) " "
BANK ONE, MARIETTA, N.A. (99.99%) (a) " "
BANK ONE, PORTSMOUTH, N.A. (a) " "
BANK ONE, SIDNEY, N.A. (a) " "
BANK ONE, STEUBENVILLE, N.A. (a) " "
BANC ONE LOAN SERVICES CORP. (k) " "
BANK ONE, STURGIS (c) " "
BANK ONE OHIO TRUST COMPANY, N.A. (a) " "
BANK ONE, YOUNGSTOWN, N.A. (a) " "
BANC ONE, YOUNGSTOWN FINANCIAL SERVICES CORP. (k) " "
BANK ONE, YPSILANTI, N.A. (a) " "
</TABLE>
PAGE 1
<PAGE> 2
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
BANC ONE KENTUCKY CORPORATION (d) " "
CSB BANCSHARES, INC. (d) " "
LIBERTY NATIONAL BANK AND TRUST COMPANY OF INDIANA (a) " "
FIRST B.C. REALTY CORP. (e) " "
LIBERTY FINANCIAL SERVICES, INCORPORATED (d) " "
LIBERTY INVESTMENT SERVICES, INC. (d) " "
LIBERTY NATIONAL BANK AND TRUST COMPANY OF KENTUCKY (a) " "
LIBERTY NATIONAL LEASING COMPANY (d) " "
LIBERTY PROPERTIES INCORPORATED (d) " "
LIBERTY VEHICLE LEASING COMPANY (d) " "
LNB LIFE INSURANCE COMPANY (d) " "
MONEY CARD, INC. (d) " "
LIBERTY LEASING CORP. (d) " "
LIBERTY PAYMENT SERVICES, INC. (d) " "
LIBERTY NATIONAL BANK OF NORTHERN KENTUCKY (a) " "
LIBERTY NATIONAL BANK OF OWENSBORO (a) " "
LIBERTY NATIONAL BANK OF SHELBYVILLE (a) " "
LIBERTY NATIONAL BANK AND TRUST COMPANY
OF WESTERN KENTUCKY (a) " "
LNB ACQUISITION CORP. (d) " "
LIBERTY NATIONAL BANK AND TRUST COMPANY
OF CENTRAL KENTUCKY (a) " "
FINANCIAL DOMINION BANKCARD SERVICES, INC. (d) " "
BANK ONE, LEXINGTON, N.A. (a) " "
FS FINANCIAL SERVICES CORP. OF KENTUCKY (d) " "
FIRST PROPERTY DEVELOPMENT CO. (d) " "
SECURITY PROPERTY DEVELOPMENT CO. (d) " "
BANC ONE ARIZONA CORPORATION (g) " "
BANK ONE, ARIZONA, N.A. (a) " "
ARIZONA TRUST DEED CORP UNKNOWN " "
BANCSTAR, INC. (g) " "
WESTERN SECURITY LIFE INSURANCE CO. (g) " "
WASHINGTON STREET FOODS, INC. (g) " "
SUN COUNTRY LEASING CORP. (g) " "
VALLEY BANK BUILDING, INC. (g) " "
BANC ONE ARIZONA LEASING CORP. (g) " "
BANC ONE ARIZONA INVESTMENT SERVICES CORP. (g) " "
VALLEY NATIONAL FINANCIAL SERVICES CO. (g) " "
VALLEY NATIONAL INVESTORS, INC. (g) " "
BANK ONE, UTAH, N.A. (a) " "
50 WEST BROADWAY ASSOCIATES (50%) (dd) " "
SUN COUNTRY FINANCIAL SERVICES OF UTAH, INC. (dd) " "
BANC ONE ARIZONA INVESTMENT CORP (g) " "
BANC ONE COLORADO CORPORATION (l) " "
BANK ONE, WESTERN COLORADO, N.A. (a) " "
BANK ONE, BOULDER, N.A. (a) " "
BANC ONE BOULDER LEASING SERVICES CORP. (l) " "
BANK ONE, COLORADO SPRINGS, N.A. (a) " "
BANC ONE COLORADO SPRINGS LEASING
SERVICES CORP. (l) " "
BANK ONE, FORT COLLINS/LOVELAND, N.A. (a) " "
BANK ONE, GREELEY, N.A. (a) " "
BANK ONE, DENVER, N.A. (a) " "
BANC ONE DENVER LEASING SERVICES CORP. (l) " "
AFFILIATED BANKS BUILDING CO. (l) " "
</TABLE>
PAGE 2
<PAGE> 3
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
BANC ONE ILLINOIS CORPORATION (q) " "
BANK ONE, PEORIA (r) " "
BANK ONE, BLOOMINGTON-NORMAL (r) " "
BANK ONE, ROCKFORD, N.A. (a) " "
NORTHERN ILLINOIS DEVELOPMENT CORP (30%) (q) " "
FIRST ROCKFORD COMMUNITY DEVELOPMENT CORP. (q) " "
BANK ONE, SPRINGFIELD (r) " "
MCU CORPORATION (q) " "
BANK ONE, CHAMPAIGN-URBANA (r) " "
BANK ONE, CHICAGO, N.A. (a) " "
BANK ONE, QUAD CITIES, N.A. (a) " "
BANC ONE INDIANA CORPORATION (e) " "
AMERICAN FLETCHER REALTY CORPORATION (e) " "
BANK ONE, BLOOMINGTON, N.A. (a) " "
BANK ONE, CRAWFORDSVILLE, N.A. (a) " "
BANK ONE, INDIANAPOLIS, N.A. (a) " "
BANC ONE EQUIPMENT FINANCE, INC. (e) " "
BANK SERVICE CORP. OF INDIANA (33-1/3%) (e) " "
BANC ONE INDIANAPOLIS AUTO LEASE, INC. (e) " "
BIL INTERNATIONAL HOLDINGS, INC. (e) " "
BO-UA FSC, INC. (e) " "
BO-FE FSC, INC. (e) " "
BO-LKEUA, INC. (cc) " "
BANK ONE, LAFAYETTE, N.A. (a) " "
BANK ONE, MARION, INDIANA, N.A. (a) " "
BANK ONE, MERRILLVILLE, N.A. (a) " "
BANK ONE, RENSSELLAER, N.A. (a) " "
BANK ONE, RICHMOND, N.A. (a) " "
BANC ONE TEXAS CORPORATION (f) " "
BANC ONE TEXAS SERVICE CORPORATION (f) " "
BANK ONE, TEXAS, N.A. (a) " "
SOUTHMORE-TATAR CO. (p) " "
PSB LAND CO., INC. (p) " "
METROPOLITAN HOLDINGS, INC. (p) " "
TEXAS INVESTMENT HOLDING CORP. (p) " "
BANC ONE TEXAS LEASING CORP. (p) " "
TEAM BROKERAGE, INC. (p) " "
TEAM LIFE INSURANCE CO. (p) " "
TEAMVEST, INC. (p) " "
TEAM BANK SERVICES, INC. (p) " "
BAY OPERATING CO., INC. (p) " "
POST OAK OPERATING, INC. (p) " "
WEST U21, INC. (p) " "
FREER PROPERTIES, INC. (p) " "
INDIAN PRODUCTION CO., INC. (p) " "
TAB ASSETS CORP. (p) " "
TEXAS LYRIC CORP. (p) " "
12603 SOUTHWEST FREEWAY, INC. (p) " "
TEXAS ASSET ACQUISITION CORP. (p) " "
BANC ONE OKLAHOMA CORPORATION (z) " "
BANK ONE, OKLAHOMA CITY (z) " "
</TABLE>
PAGE 3
<PAGE> 4
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
BANC ONE WEST VIRGINIA CORPORATION (m) " "
BANK ONE, WEST VIRGINIA, N.A. (a) " "
CHARLESTON NATIONAL PLAZA COMPANY (m) " "
BANK ONE, WEST VIRGINIA, WHEELING, N.A. (a) " "
BANK ONE, WEST VIRGINIA, NEW MARTINSVILLE, N.A. (a) " "
BANK ONE, PIKEVILLE, N.A. (a) " "
RELIABLE MORTGAGE CO. (m) " "
FIRST NATIONAL REALTY CO., INC. (m) " "
HOBBS REALTY CORP., INC. (m) " "
BANC ONE WISCONSIN CORPORATION (j) " "
BANC ONE BUILDING MANAGEMENT CORPORATION (j) " "
BANK ONE, STEVENS POINT, N.A. (a) " "
STEVENS POINT INVESTMENT HOLDING CORP (n) " "
BANK ONE, ANTIGO (i) " "
ANTIGO INVESTMENT HOLDING COMPANY (n) " "
BANK ONE, BEAVER DAM (i) " "
BEAVER DAM INVESTMENT HOLDING COMPANY (n) " "
BANK ONE, ELKHORN, N.A. (a) " "
ELKHORN INVESTMENT HOLDING COMPANY (n) " "
BANC ONE INTERNATIONAL SERVICES CORPORATION (j) " "
BANK ONE, JANESVILLE, N.A. (a) " "
JANESVILLE INVESTMENT HOLDING CO. (n) " "
BANK ONE, MADISON (i) " "
MADISON INVESTMENT HOLDING CO. (n) " "
BANK ONE, MILWAUKEE, N.A. (a) " "
BANC ONE VENTURE CORP. (j) " "
MILWAUKEE INVESTMENT HOLDING CO. (n) " "
BANC ONE WISCONSIN BANKCARD CORP. (j) " "
BANC ONE WISCONSIN INVESTMENT SERVICES CORP. (j) " "
BANC ONE MEZZANINE CAPITAL CORP. (j) " "
BANC ONE WISCONSIN LEASING CORP. (j) " "
BOMOREO, INC. (j) " "
CROGHAN & ASSOCIATES, INC. (l) System One, Inc.
BANK ONE, MONROE (i) SAME
MONROE INVESTMENT HOLDING COMPANY (n) " "
BANK ONE, RACINE, N.A. (a) " "
RACINE INVESTMENT HOLDING COMPANY (n) " "
BANK ONE, WEST BEND (i) " "
WEST BEND INVESTMENT HOLDING CORP. (n) " "
BANC ONE INSURANCE SERVICES CORP. (j) " "
HIGHWAY "P" MOTEL, INC. (j) " "
BANK ONE WISCONSIN TRUST CO., N.A. (a) " "
WITRUST INVESTMENT HOLDING CO. (j) " "
BANK ONE, APPLETON, N.A. (a) " "
APPLETON INVESTMENT HOLDING CO. (n) " "
BANK ONE, FOND DU LAC (i) " "
FOND DU LAC INVESTMENT HOLDING CO. (n) " "
BANK ONE, GREEN BAY (i) " "
GREEN BAY INVESTMENT HOLDING CO. (n) " "
BANK ONE, OSHKOSH, N.A. (99.53%) (a) " "
OSHKOSH INVESTMENT HOLDING CO. (n) " "
BANK ONE, KENOSHA, N.A. (a) " "
FNBK INVESTMENTS, INC. (j) " "
</TABLE>
PAGE 4
<PAGE> 5
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
BANC ONE COMMUNITY DEVELOPMENT CORP. (f) " "
BANC ONE COMMUNITY DEVELOPMENT/WISCONSIN CORP (f) " "
BANC ONE SERVICES CORP. (f) " "
BANC ONE FINANCIAL CARD SERVICES CORP. (f) " "
BANC ONE SERVICES FSC-I, INC. (cc) " "
ELECTRONIC PAYMENT SERVICES, INC. (30.99996%) (h) " "
MAS INCO CORPORATION (h) " "
BUYPASS INCO CORP (h) " "
ELECTRONIC PAYMENT SERVICE CORP (h) " "
BUYPASS CORP (w) " "
DATA NOW NATIONAL SERVICES, INC. (w) " "
EPS NETWORK CORPORATION (w) " "
BUYPASS PETROLEUM SYSTEMS, INC. (w) " "
BUYPASS ELECTRONIC TRANSACTION SYSTEM, INC. (w) " "
MONEY ACCESS SERVICE, INC. (h) " "
METROTELLER SECURITY CORP (h) " "
MONEY ACCESS SERVICE CORP (h) " "
FINANCE ONE CORP. (f) " "
BANC ONE FINANCIAL SERVICES, INC. (e) " "
GUARDIAN AGENCY, INC. (e) " "
GUARDIAN AGENCY OF BLOOMINGTON, INC. (e) " "
GUARDIAN AGENCY OF GREENCASTLE, INC. (e) " "
GUARDIAN AGENCY OF DELPHI, INC. (e) " "
GUARDIAN AGENCY OF FORT WAYNE, INC. (e) " "
GUARDIAN AGENCY OF LEBANON, INC. (e) " "
GUARDIAN AGENCY OF RUSHVILLE, INC. (e) " "
GUARDIAN AGENCY OF VALPARAISO, INC. (e) " "
BENEFICIAL INSURANCE AGENCY, INC. (e) " "
BANC ONE CONSUMER DISCOUNT CO., A NON-BANKING
AFFILIATE OF BANC ONE CORPORATION (e) " "
BANC ONE FINANCIAL SERVICES OF MINNESOTA, INC. (s) " "
BANC ONE LEASING CORP. (f) " "
FM LEASING CORP (l)
BANC ONE FLORIDA CORP (f) " "
BANC ONE LEASING CO. OF FLORIDA (f) " "
BANC ONE CAPITAL HOLDINGS CORP. (f) " "
BOCC FUNDING CORP. (f) " "
BANC ONE CAPITAL PARTNERS CORP. (p) " "
BANC ONE CAPITAL PARTNERS II CORP (f) " "
CMH HOLDING CORP. (f) " "
BANC ONE CAPITAL PARTNERS II LIMITED PARTNERSHIP (80%) (ee) " "
BOCP HOLDINGS CORP. (f) " "
BANC ONE CAPITAL PARTNERS IV, LIMITED PARTNERSHIP (80%) (ee) " "
BANC ONE CAPITAL PARTNERS III, LIMITED PARTNERSHIP (80) (bb) " "
BANC ONE CAPITAL PARTNERS V, LIMITED PARTNERSHIP (bb) " "
BANC ONE CAPITAL CORP. (f) " "
</TABLE>
PAGE 5
<PAGE> 6
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
BANC ONE MANAGEMENT AND CONSULTING CORP. (f) " "
BANC ONE NEW HAMPSHIRE ASSET MANAGEMENT CORP. (f) " "
BONNET RESOURCES CORP. (f) " "
PINE VALLEY RESOURCES CORP. (f) " "
JR-1, INC. (p) " "
JR-2, INC. (p) " "
SUBSIDIARY CONSULTANTS, INC. (p) " "
BANC ONE BETA ASSET MANAGEMENT CORP. (f) " "
FAMCO SERVICES, INC. (p) " "
FAMCO SERVICES II, INC. (p) " "
FAMCO SERVICES III, INC. (p) " "
AFFILIATED BANKSHARES INSURANCE AGENCY, INC (l) " "
AMERICAN INSURANCE AGENCY, INC. (g) " "
BANC ONE BETA CORP. (f) " "
BANC ONE CARD SERVICES CORP. (p) " "
BANC ONE COMMERCIAL LOAN ORIGINATION CORP. (f) " "
BANC ONE FOREIGN INVESTMENT HOLDING CORP. (f) " "
BANC ONE INTERIM CORP. (f) " "
BANC ONE LIFE INSURANCE CO. (g) " "
BANC ONE MORTGAGE CORP. (h) " "
BANC ONE REALTY COLUMBUS CORP. (f) " "
BANC ONE SECURITIES CORP. (f) " "
BANC ONE STUDENT LOAN FUNDING CORP. (f) " "
STERLING ASSURANCE COMPANY (f) " "
PREMIER ACQUISITION CORP (f) " "
</TABLE>
PAGE 6
<PAGE> 7
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/94)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
--------------------------------------------------- --------------- -------------
<S> <C> <C>
</TABLE>
--------------------------------------
(a) A national banking association
(b) An Ohio banking corporation
(c) A Michigan banking corporation
(d) A Kentucky corporation
(e) An Indiana corporation
(f) An Ohio corporation
(g) An Arizona corporation
(h) A Delaware corporation
(i) A Wisconsin banking corporation
(j) A Wisconsin corporation
(k) A Pennsylvania corporation
(l) A Colorado corporation
(m) A West Virginia corporation
(n) A Nevada corporation
(o) A Louisiana corporation
(p) A Texas corporation
(q) An Illinois corporation
(r) An Illinois banking corporation
(s) A Minnesota corporation
(t) A Texas limited partnership
(u) A New Hampshire corporation
(v) A New York corporation
(w) A Georgia corporation
(x) A West Virginia banking corporation
(y) A California corporation
(z) An Oklahoma corporation
(aa) An Oklahoma banking corporation
(bb) An Ohio limited partnership
(cc) A U.S. Virgin Islands corporation
(dd) An Utah corporation
(ee) A Delaware limited partnership
Year-end 1994
As of 2/24/95
PAGE 7
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
listed below of BANC ONE CORPORATION of our report dated February 21, 1995 on
our audits of the consolidated financial statements of BANC ONE CORPORATION and
Subsidiaries as of December 31, 1994 and 1993, and for the years ended December
31, 1994, 1993, and 1992, which report is included in this Annual Report on Form
10-K.
Registration Statements on Form S-8
Registration Numbers:
..33-14475
..33-10822
..33-18277
..33-27849
..33-34294
..33-37400
..33-20890
..33-20990
..33-40041
..33-45473
..33-46189
..33-53752
..33-55172
..33-55174
..33-54100
..33-61760
..33-61758
..33-60424
..33-50117
..33-55149
..33-55315
Coopers & Lybrand L.L.P.
Columbus, Ohio
March 24, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 5,073,417
<INT-BEARING-DEPOSITS> 1,002,490
<FED-FUNDS-SOLD> 1,698,077
<TRADING-ASSETS> 213,200
<INVESTMENTS-HELD-FOR-SALE> 10,318,030
<INVESTMENTS-CARRYING> 4,834,384
<INVESTMENTS-MARKET> 4,790,431
<LOANS> 61,992,912
<ALLOWANCE> 897,180
<TOTAL-ASSETS> 88,922,586
<DEPOSITS> 68,090,054
<SHORT-TERM> 9,621,769
<LIABILITIES-OTHER> 1,779,455
<LONG-TERM> 1,866,448
<COMMON> 2,044,928
0
249,900
<OTHER-SE> 5,270,032
<TOTAL-LIABILITIES-AND-EQUITY> 88,922,586
<INTEREST-LOAN> 5,375,209
<INTEREST-INVEST> 1,012,687
<INTEREST-OTHER> 49,590
<INTEREST-TOTAL> 6,437,486
<INTEREST-DEPOSIT> 1,674,263
<INTEREST-EXPENSE> 2,248,841
<INTEREST-INCOME-NET> 4,188,645
<LOAN-LOSSES> 242,269
<SECURITIES-GAINS> (261,052)
<EXPENSE-OTHER> 3,847,146
<INCOME-PRETAX> 1,518,852
<INCOME-PRE-EXTRAORDINARY> 1,005,109
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,005,109
<EPS-PRIMARY> 2.42
<EPS-DILUTED> 2.42
<YIELD-ACTUAL> 5.46
<LOANS-NON> 377,409
<LOANS-PAST> 173,456
<LOANS-TROUBLED> 3,910
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 967,254
<CHARGE-OFFS> 521,169
<RECOVERIES> 204,300
<ALLOWANCE-CLOSE> 897,180
<ALLOWANCE-DOMESTIC> 661,567
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 235,613
</TABLE>
