<PAGE> 1
--------------------------------------------------------------------------------
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Quarterly Period Ended June 30, 1995.
( ) 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)
<TABLE>
<S> <C>
Ohio 31-0738296
------------------------------------------ ------------------------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION (IRS EMPLOYER I.D. NUMBER)
OR ORGANIZATION)
</TABLE>
100 East Broad Street, Columbus, Ohio 43271-0251
------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(614) 248-5944
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
---
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the registrant's common stock, no par value,
$5 stated value, was 392,439,723 at July 31, 1995.
--------------------------------------------------------------------------------
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<PAGE> 2
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet.................................................... 3
Consolidated Statement of Income.............................................. 4
Consolidated Statement of Cash Flows.......................................... 5
Supplemental Disclosures for Statement of Cash Flows.......................... 6
Consolidated Statement of Changes in Stockholders' Equity..................... 7
Notes to the Financial Statements............................................. 8
Consolidated Quarterly Financial Data......................................... 9
Item 2. Management's Discussion and Analysis 11
Results of Operations......................................................... 11
Net Interest Income/Net Interest Margin....................................... 11
Average Balances, Income and Expense, Yields and Rates........................ 12
Non-Interest Income........................................................... 13
Non-Interest Expense.......................................................... 14
Income Taxes.................................................................. 15
Balance Sheet Analysis........................................................ 15
Securities.................................................................... 15
Loans and Leases.............................................................. 15
Deposits...................................................................... 17
Liquidity and Capital......................................................... 17
Asset Liability Management.................................................... 18
PART II - OTHER INFORMATION 21
Item 4. Submission of Matters to a Vote of Security Holders........................... 21
Item 6. Exhibits and Reports on Form 8-K.............................................. 22
SIGNATURE............................................................................... 23
</TABLE>
i
<PAGE> 3
BANC ONE CORPORATION AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
2
<PAGE> 4
BANC ONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, JUNE 30,
$(THOUSANDS, EXCEPT SHARE AMOUNTS) (UNAUDITED) 1995 1994 1994
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks..................................... $ 5,192,560 $ 5,073,417 $ 5,304,535
Short-term investments...................................... 932,506 3,539,596 737,303
SECURITIES:
Securities held to maturity............................... 4,671,195 4,834,384 5,536,436
Securities available for sale (cost $9,245,000 at June 30,
1995)................................................... 9,224,975 10,318,030 14,502,979
----------- ------------ ------------
Total securities (fair value approximates
$14,000,000 at June 30, 1995).................... 13,896,170 15,152,414 20,039,415
Loans and leases............................................ 63,334,963 61,992,912 60,512,539
Reserve for loan and lease losses......................... 891,546 897,180 955,078
----------- ------------ ------------
Net loans and leases............................... 62,443,417 61,095,732 59,557,461
OTHER ASSETS:
Bank premises and equipment, net.......................... 1,515,261 1,517,647 1,500,190
Interest earned, not collected............................ 595,555 566,840 700,607
Other real estate owned................................... 72,904 84,355 100,606
Excess of cost over net assets of affiliates purchased.... 257,297 262,895 254,473
Other..................................................... 1,877,647 1,629,690 1,618,113
----------- ------------ ------------
Total other assets................................. 4,318,664 4,061,427 4,173,989
----------- ------------ ------------
Total assets....................................... $86,783,317 $88,922,586 $ 89,812,703
============ ============= ============
LIABILITIES
DEPOSITS:
Non-interest bearing...................................... $13,974,398 $14,405,707 $ 14,027,910
Interest bearing.......................................... 51,638,461 53,684,347 52,190,609
----------- ------------ ------------
Total deposits..................................... 65,612,859 68,090,054 66,218,519
Federal funds purchased and repurchase agreements........... 5,573,385 5,186,527 7,669,692
Other short-term borrowings................................. 3,979,094 4,435,242 4,872,845
Long-term borrowings........................................ 2,087,954 1,866,448 1,844,384
Accrued interest payable.................................... 374,570 351,293 273,819
Other liabilities........................................... 1,316,384 1,428,162 1,244,545
----------- ------------ ------------
Total liabilities.................................. 78,944,246 81,357,726 82,123,804
----------- ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, 35,000,000 shares authorized:
Series C convertible, no par value 4,997,499, 4,997,999
and 4,998,000 shares issued and outstanding,
respectively............................................ 249,875 249,900 249,900
Common stock, no par value, $5 stated value, 600,000,000
shares authorized, 410,290,638, 408,985,564 and
408,395,192 shares issued, respectively................... 2,051,453 2,044,928 2,041,976
Capital in excess of aggregate stated value of common
stock..................................................... 3,812,162 3,796,746 3,780,679
Retained earnings........................................... 2,251,965 1,921,256 1,832,504
Net unrealized holding losses on securities available for
sale, net of tax.......................................... (11,348) (111,517 ) (190,777)
Treasury stock (18,000,000, 11,999,500, and 734,000 shares,
respectively), at cost.................................... (515,036) (336,453 ) (25,383)
----------- ------------ ------------
Total stockholders' equity......................... 7,839,071 7,564,860 7,688,899
----------- ------------ ------------
Total liabilities and stockholders' equity......... $86,783,317 $88,922,586 $ 89,812,703
============ ============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
BANC ONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- -------------------------
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) 1995 1994 1995 1994
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases............ $1,484,998 $1,305,022 $2,933,965 $2,620,686
Interest and dividends on:
Taxable securities........................... 220,974 244,849 429,141 441,192
Tax exempt securities........................ 30,698 34,663 62,312 69,261
Other interest income............................ 11,602 7,340 40,159 15,787
---------- ---------- ---------- ----------
Total interest income........................ 1,748,272 1,591,874 3,465,577 3,146,926
INTEREST EXPENSE:
Interest on deposits:
Demand and savings deposits.................. 227,518 171,977 446,370 331,089
Time deposits................................ 358,772 215,885 689,850 413,007
Interest on borrowings........................... 163,929 149,299 327,705 245,408
---------- ---------- ---------- ----------
Total interest expense....................... 750,219 537,161 1,463,925 989,504
---------- ---------- ---------- ----------
Net interest income.......................... 998,053 1,054,713 2,001,652 2,157,422
Provision for loan and lease losses................ 92,565 50,538 159,082 130,710
---------- ---------- ---------- ----------
Net interest income after provision for loan and
lease losses................................... 905,488 1,004,175 1,842,570 2,026,712
NON-INTEREST INCOME:
Income from fiduciary activities................. 58,546 59,284 117,128 118,297
Service charges on deposit accounts.............. 132,462 116,636 259,573 230,710
Loan processing and servicing income............. 139,038 90,955 257,470 179,348
Securities gains................................. 2,785 2,737 12,571 6,190
Other............................................ 134,643 103,258 282,912 209,985
---------- ---------- ---------- ----------
Total non-interest income.................... 467,474 372,870 929,654 744,530
NON-INTEREST EXPENSE:
Salaries and related costs....................... 429,079 425,241 872,029 867,228
Net occupancy expense, exclusive of
depreciation................................... 45,162 40,834 89,175 82,245
Equipment expense................................ 25,667 28,887 52,574 58,315
Taxes other than income and payroll.............. 23,094 20,133 45,066 22,491
Depreciation and amortization.................... 68,960 70,564 143,690 138,545
Outside services and processing.................. 114,132 104,235 225,026 212,272
Marketing and development........................ 42,577 37,179 79,421 74,669
Communication and transportation................. 67,880 60,864 133,943 119,336
Other............................................ 93,698 94,655 197,359 193,179
---------- ---------- ---------- ----------
Total non-interest expense................... 910,249 882,592 1,838,283 1,768,280
---------- ---------- ---------- ----------
Income before income taxes......................... 462,713 494,453 933,941 1,002,962
INCOME TAX PROVISION:
Income excluding securities transactions......... 154,158 162,926 319,174 343,276
Securities transactions.......................... 1,073 957 4,767 2,166
---------- ---------- ---------- ----------
Provision for income taxes................... 155,231 163,883 323,941 345,442
---------- ---------- ---------- ----------
Net income......................................... $ 307,482 $ 330,570 $ 610,000 $ 657,520
========== ========== ========== ==========
Net income per common share........................ $ 0.77 $ 0.80 $ 1.52 $ 1.59
========== ========== ========== ==========
Weighted average common shares outstanding (000)... 394,740 408,508 395,395 407,984
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
BANC ONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended June 30
<TABLE>
<CAPTION>
$(THOUSANDS) (UNAUDITED) 1995 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income.................................................................... $ 610,000 $ 657,520
ADJUSTMENTS:
Provision for loan and lease losses....................................... 159,082 130,710
Depreciation expense...................................................... 114,446 108,234
Amortization of intangibles............................................... 29,244 30,311
Amortization and accretion -- securities.................................. (53,740) 63,684
Amortization of purchased mortgage servicing rights....................... 4,823 6,303
Net decrease in trading account........................................... 32,152 101,215
Net decrease (increase) in mortgage loans held for sale................... (82,106) 882,429
Net change in deferred loan fees and costs................................ (6,588) (9,282)
Securities gains.......................................................... (12,571) (6,190)
Gain on the sale of banks................................................. (47,247)
Loss on consumer loan mark to market...................................... 51,586
Gain on sale of loans and other assets.................................... (26,865) (15,745)
Net increase in other assets.............................................. (263,220) (105,468)
Net increase in other liabilities......................................... 82,068 81,819
Net change in deferred income taxes....................................... 78,852 57,586
---------- ----------
Net cash provided by operating activities............................... 669,916 1,983,126
---------- ----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of securities available for sale.................................. (5,029,390) (7,078,226)
Purchases of securities held to maturity.................................... (542,264) (508,356)
Maturities of securities available for sale................................. 4,418,807 1,138,881
Maturities of securities held to maturity................................... 692,353 1,544,842
Sales of securities available for sale...................................... 1,564,442 2,841,425
Net increase in loans, excluding sales and purchases........................ (3,397,800) (3,575,658)
Sales of loans and other assets............................................. 1,968,285 230,781
Purchases of loans and related premiums..................................... (501,516) (400,512)
Net decrease in short-term investments...................................... 2,665,610 351,971
Additions to bank premises and equipment.................................... (150,941) (152,964)
Sale of banks............................................................... 95,698
Net cash acquired in acquisitions........................................... 42,413 1,180,497
Net (increase) decrease in mortgage servicing rights........................ (36,061) (5,995)
All other investing activities - net........................................ 101
---------- ----------
Net cash (used in) provided by investing activities..................... 1,789,737 (4,433,314)
---------- ----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net decrease in demand deposit, money market and savings accounts........... (665,743) (1,528,162)
Net (decrease) increase in time deposits.................................... (1,206,259) 1,286,669
Net (decrease) increase in short-term borrowings............................ (61,555) 3,294,420
Issuance of long-term borrowings, net....................................... 359,202 51,520
Repayment of long-term borrowings........................................... (137,508) (12,413)
Cash dividends paid......................................................... (400,101) (361,857)
Sales of branch offices:
Deposit liabilities assumed by purchasers............................... (73,703)
Other, net.............................................................. 8,586
Purchase of treasury stock.................................................. (178,583) (25,383)
Other, net decrease......................................................... 15,154 40,040
---------- ----------
Net cash provided by (used in) financing activities..................... (2,340,510) 2,744,834
---------- ----------
Increase in cash and cash equivalents......................................... 119,143 294,646
Cash and cash equivalents at January 1........................................ 5,073,417 5,009,889
---------- ----------
Cash and cash equivalents at June 30.......................................... $5,192,560 $5,304,535
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 7
BANC ONE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURES FOR STATEMENT OF CASH FLOWS
For the six months ended June 30
<TABLE>
<CAPTION>
$(THOUSANDS) (UNAUDITED) 1995 1994
<S> <C> <C>
----------------------------------------------------------------------------------------------
Transfer from loans to Other Real Estate Owned....................... $ 38,967 $ 29,761
========== =========
Net increase (decrease) in trade date accounting entries for
investment securities.............................................. $ (309,287) $ 81,719
========== =========
Loans issued to facilitate the sale of OREO properties............... $ 3,397 $ 20,600
========== =========
Additional Disclosures:
Interest paid...................................................... $1,437,395 $958,501
========== =========
Income taxes paid.................................................. $ 181,946 $323,431
========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 8
BANC ONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) -------------------------- --------------------------
(UNAUDITED) 1995 1994 1995 1994
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, BEGINNING OF PERIOD........... $7,695,465 $7,613,373 $7,564,860 $7,433,170
Net income............................. 307,482 330,570 610,000 657,520
Exercise of stock options, net of
shares purchased..................... (2,516) (2,439) (2,802) (3,789)
Shares issued in acquisitions.......... 24,421 3,647 30,215
Pooled affiliate stock issuance, sales
of stock to employee benefit plans
and other............................ 5,245 14,263 17,956 43,916
Cash dividends:
Corporation:
Common ($.34 and $.31 per share
for the three months and $.68
and $.62 per share for the six
months ended June 30, 1995 and
1994, respectively)............. (133,357) (118,837) (267,430) (237,187)
Series C preferred ($.88 per share
for the three months and $1.75
per share for the six months
ended June 30, 1995 and 1994,
respectively)................... (4,373) (4,373) (8,746) (8,746)
Pooled affiliates.................... (5,020) (10,040)
Change in unrealized fair value
adjustment on securities available
for sale, net of tax................. 45,155 (146,029) 100,169 (190,777)
Purchase of treasury stock............. (74,030) (17,030) (178,583) (25,383)
---------- ---------- ---------- ----------
BALANCE, JUNE 30....................... $7,839,071 $7,688,899 $7,839,071 $7,688,899
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 9
NOTES TO THE FINANCIAL STATEMEMTS
1. The accompanying financial statements are unaudited. However, in the opinion
of management, they contain the adjustments (all of which are normal and
recurring in nature) necessary to present fairly the financial position and
the results of operations. The notes to the financial statements contained
in the Annual Report on Form 10-K for the year ended December 31, 1994 and
the quarterly report on Form 10-Q for the quarter ended March 31, 1995
should be read in conjunction with these financial statements. "The
Corporation" is defined as parent company only. "BANC ONE" is defined as the
Corporation and all significant majority-owned subsidiaries. Certain prior
period amounts have been reclassified to compare with current presentation.
2. The provision for income taxes is at a rate which management believes will
approximate the effective rate for the year.
3. In 1994, the Board of Directors approved the purchase of up to 18 million
shares of the Corporation's common stock for use in the acquisition of
Premier Bancorp, Inc., headquartered in Baton Rouge, Louisiana (Premier). As
of June 30, 1995, the Corporation had acquired and held 18 million of its
shares for this purpose. During July 1995, the Corporation signed an
agreement to acquire Premier in exchange for approximately 21 million shares
of BANC ONE common stock. The transaction is expected to close as early as
the fourth quarter of 1995, is subject to due diligence and shareholder and
regulatory approval, and will be accounted for as a purchase. Premier had
assets of $5.5 billion at June 30, 1995 and operates 150 banking offices
throughout Louisiana.
4. Mortgage loans held for sale were $438 million, $356 million and $396
million at June 30, 1995, December 31, 1994 and June 30, 1994, respectively.
Such loans are carried at the lower of cost or market determined on an
aggregate basis, resulting in the recognition of a $483 thousand loss at
June 30, 1995. Consumer loans held for sale of $1.2 billion at March 31,
1995 were sold in April 1995.
5. BANC ONE adopted Statements of Financial Accounting Standards No.'s 114 and
118 (SFAS 114), "Accounting by Creditors for Impairment of a Loan" and
"Accounting by Creditors for Impairment of a Loan -- Income Recognition and
Disclosures" as of January 1, 1995. SFAS 114 requires that certain impaired
loans be measured based either on the present value of expected future cash
flows discounted at the loan's effective interest rate, or the loan's
observable market price, or the fair value of the collateral if the loan is
collateral dependent. The adoption of SFAS 114 did not result in additional
provisions for loan losses primarily because the majority of impaired loan
valuations continue to be based on the fair value of collateral.
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 121 (SFAS 121), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," to establish standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to such
assets held and used and those to be disposed of. BANC ONE will adopt SFAS
121 effective January 1, 1996; the impact on BANC ONE's financial position
and results of operations is not expected to be material.
In May 1995, the FASB issued Statement of Financial Accounting Standard No.
122, "Accounting for Mortgage Servicing Rights" (SFAS 122). SFAS 122 amends
Statement of Financial Accounting Standard No. 65, "Accounting for Certain
Mortgage Banking Activities," to require that mortgage banking enterprises
recognize as separate assets rights to service mortgage loans for others,
however those mortgage servicing rights are acquired. SFAS 122 also requires
that mortgage banking enterprises assess the impairment of capitalized
mortgage servicing rights based on the fair value of those rights on a
disaggregated basis. SFAS 122 applies to fiscal years beginning after
December 15, 1995; however, earlier application is encouraged. BANC ONE has
yet to determine whether to adopt SFAS 122 early; however, if adopted during
1995 the impact on BANC ONE's financial position and results of operations
is not expected to be material.
8
<PAGE> 10
CONSOLIDATED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
QUARTERS
-----------------------------------------------------------------
1995 1994
----------------------- -------------------------------------
$(MILLIONS) (UNAUDITED) SECOND FIRST FOURTH THIRD SECOND
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PERIOD END BALANCES
Loans and leases (net of
unearned income)............. $63,335.0 $62,495.5 $61,992.9 $61,647.4 $60,512.5
Earning assets.................. 77,272.1 78,486.1 79,787.7 78,752.8 80,334.2
Total assets.................... 86,783.3 87,830.5 88,922.6 88,163.7 89,812.7
Total deposits.................. 65,612.9 65,407.9 68,090.1 65,909.7 66,218.5
Long-term borrowings............ 2,088.0 2,125.9 1,866.4 1,837.1 1,844.4
Reserve for loan and lease
losses....................... 891.5 885.3 897.2 955.2 955.1
Total stockholders' equity...... 7,839.1 7,695.5 7,564.9 7,763.1 7,688.9
CONDENSED INCOME STATEMENT
Net interest income (1)......... 1,018.95 1,026.32 1,022.32 1,052.28 1,077.52
Provision for loan and lease
losses....................... 92.57 66.51 35.62 75.94 50.54
--------- --------- --------- --------- ---------
Net funds function (1).......... 926.38 959.81 986.70 976.34 1,026.98
NON-INTEREST INCOME
Income from fiduciary
activities................. 58.54 58.58 53.88 53.45 59.28
Service charges on deposit
accounts................... 132.46 127.11 128.15 125.03 116.63
Loan processing and servicing
income..................... 139.04 118.43 121.01 93.06 90.96
Securities gains (losses).... 2.79 9.79 (254.27) (12.98) 2.74
Other........................ 134.64 148.27 113.98 174.61 103.26
--------- --------- --------- --------- ---------
Total non-interest
income................ 467.47 462.18 162.75 433.17 372.87
NON-INTEREST EXPENSE
Salaries and related costs... 429.08 442.95 459.15 427.29 425.24
Other........................ 481.17 485.09 582.39 530.87 457.35
--------- --------- --------- --------- ---------
Total non-interest
expense............... 910.25 928.04 1,041.54 958.16 882.59
Taxable equivalent adjustment... 20.89 22.72 21.04 22.33 22.81
--------- --------- --------- --------- ---------
Income before income taxes...... 462.71 471.23 86.87 429.02 494.45
Income tax provision............ (155.23) (168.71) (22.49) (145.81) (163.88)
--------- --------- --------- --------- ---------
Net income...................... $ 307.48 $ 302.52 $ 64.38 $ 283.21 $ 330.57
========= ========= ========= ========= =========
Net income available to common
shareholders.................... $ 303.11 $ 298.15 $ 60.00 $ 278.84 $ 326.20
========= ========= ========= ========= =========
</TABLE>
(1) Fully taxable equivalent basis. The Federal statutory rate used was 35% for
all periods presented.
9
<PAGE> 11
CONSOLIDATED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
QUARTERS
-------------------------------------------------------
1995 1994
$(MILLIONS, EXCEPT PER SHARE DATA) ------------------- -------------------------------
(UNAUDITED) SECOND FIRST FOURTH THIRD SECOND
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEY RATIOS
Return on average assets (1)........... 1.43% 1.42% .29% 1.27% 1.50%
Return on average common equity (1).... 16.34 16.61 3.20 14.82 17.80
Average common equity to assets........ 8.60 8.40 8.52 8.46 8.32
Tier I capital ratio................... 10.36 10.23 9.93 10.51 10.36
Total risk adjusted capital ratio...... 13.76 13.62 13.33 13.97 13.81
Leverage ratio......................... 8.72 8.58 8.28 8.53 8.44
MARGIN ANALYSIS (1)(2)(3)
Interest income........................ 9.12 9.03 8.44 8.27 8.15
Interest expense....................... 3.86 3.70 3.29 3.02 2.72
------- ------- ------- ------- -------
Net interest income.................... 5.26 5.33 5.15 5.25 5.43
Provision for loan and lease losses.... .48 .35 .18 .38 .25
------- ------- ------- ------- -------
Net funds function..................... 4.78 4.98 4.97 4.87 5.18
CREDIT ANALYSIS
Net charge-offs to average loans and
leases (1).......................... .56 .49 .59 .50 .49
Ending reserves to loans and leases.... 1.41% 1.42% 1.45% 1.55% 1.58%
Nonperforming assets:
Total............................... $ 430.8 $ 449.4 $ 465.7 $ 524.2 $ 523.7
Percent of total loans and leases... .68% .72% .75% .85% .87%
Loans delinquent 90 days or more (4):
Total............................... $ 186.7 $ 172.9 $ 173.5 $ 195.4 $ 211.9
Percent of total loans and leases... .29% .28% .28% .32% .35%
PER SHARE DATA
Net income............................. $ .77 $ .75 $ .15 $ .68 $ .80
Cash dividends declared................ .34 .34 .31 .31 .31
Book value............................. 19.35 18.88 18.43 18.52 18.25
Common stock price:
High................................ 35.13 30.13 30.50 35.50 38.00
Low................................. 28.63 25.13 24.13 29.50 30.75
Close............................... 32.25 28.50 25.38 30.00 34.25
Preferred Series C stock price:
High................................ 61.75 54.25 57.50 63.75 68.25
Low................................. 52.25 49.63 49.00 57.00 57.50
Close............................... $ 58.25 $ 51.75 $ 49.63 $ 57.50 $ 62.50
SHARES TRADED (000)
Common................................. 53,708 48,353 72,342 46,939 55,251
Preferred Series C..................... 1,316 1,233 1,679 892 1,200
</TABLE>
(1) Ratios presented on an annualized basis.
(2) Fully taxable equivalent basis. The Federal statutory rate used was 35% for
all periods presented.
(3) As a percent of average earning assets.
(4) Excluding nonperforming loans.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion should be read in conjunction with the financial
statements, notes and tables included elsewhere in this report and in the 1994
BANC ONE CORPORATION Annual Report on Form 10-K and quarterly report on Form
10-Q for the quarter ended March 31, 1995.
RESULTS OF OPERATIONS
NET INTEREST INCOME/NET INTEREST MARGIN
BANC ONE's net interest income on a taxable equivalent basis was $1.02
billion and $2.05 billion for the three and six months ended June 30, 1995,
compared with $1.08 billion and $2.2 billion for the same periods in 1994. Net
interest margin was 5.26% and 5.29% for the three and six months ended June 30,
1995, compared with 5.43% and 5.73% for the same periods in 1994.
Net interest income is affected by the growth, pricing, mix and maturity of
interest earning assets and interest bearing liabilities, as well as other
factors including loan quality. The average balance of investment securities
decreased $5.1 billion for second quarter 1995 compared to second quarter 1994.
This decrease is due primarily to sales of approximately $8.1 billion during the
second half of 1994, offset in part by various purchases of investment
securities. Despite the loan sales and the sale of the Michigan banks noted in
the Balance Sheet Analysis below, average loans, primarily commercial and credit
card loans, increased approximately $3.3 billion from the second quarter of
1994. BANC ONE used the proceeds from loan and securities sales, and the
liquidation of short term investments, to fund some of this growth in loans and
other interest earning assets as part of its overall effort to reduce
sensitivity of its earnings to changes in interest rates. Average deposits
increased from the second quarter of 1994, and the retail deposit mix continues
to change as consumers shift funds into products offering higher yields. Despite
competitive pricing on interest earning assets and interest bearing liabilities,
and excluding the effects of off-balance sheet investment products, BANC ONE
achieved a 32 basis point increase in the margin compared to the three months
ended June 30, 1994. Individual components of net interest income and net
interest margin are presented in the Summary of Average Balances, Income and
Expense, Yields and Rates presented in the table on page 12.
BANC ONE manages its interest rate sensitivity using both on-balance sheet
and off-balance sheet investment products. Off-balance sheet investment products
are generally used to modify the interest rate characteristics of on-balance
sheet assets or liabilities in order to manage sensitivity to interest rate
movements. These off-balance sheet investment products, primarily interest rate
swaps, reduced net interest income by $60 million and $113 million for the three
and six months ended June 30, 1995 as compared to increasing net interest income
by $38 million and $138 million for the same periods in 1994. These products
effectively alter on-balance sheet yields and costs. In the current interest
rate environment, it is anticipated that these off-balance sheet investment
products will continue to reduce yields on interest earning assets and increase
interest rates on interest bearing liabilities during 1995. See page 18 for a
more complete discussion of asset/liability management.
Interest income should continue to be enhanced from the reinvestment of the
proceeds from the sale of $1.2 billion in low yielding consumer loans into
higher yielding investments during the second quarter of 1995. Additionally,
increases in loan processing and servicing income are expected to partially
offset decreases in net interest income from the sale of $380 million in credit
card receivables during the second quarter of 1995 due to servicing retained on
the loans sold. Loan sale transactions typically result in the elimination of
loan loss reserve and charge-offs related to the loans sold. A shift from
interest income to loan processing and servicing income can be expected in the
forseeable future as additional loan sales occur. BANC ONE anticipates continued
loan sales in future periods as opportunities present themselves.
11
<PAGE> 13
AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES (1)
<TABLE>
<CAPTION>
1995 1994
SECOND QUARTER FOURTH QUARTER SECOND QUARTER
------------------------------- ------------------------------- -------------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
$(THOUSANDS) BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Short-term investments....... $ 795,482 $ 12,520 6.31 % $ 1,875,752 $ 26,628 5.63 % $ 785,754 $ 8,260 4.22 %
SECURITIES: (3)
Taxable.................... 13,399,586 221,118 6.62 14,078,784 206,534 5.82 18,121,937 244,988 5.42
Tax-exempt................. 2,043,265 45,232 8.88 2,248,092 48,891 8.63 2,383,837 51,330 8.64
----------- ---------- ----------- ---------- ----------- ----------
Total securities..... 15,442,851 266,350 6.92 16,326,876 255,425 6.21 20,505,774 296,318 5.80
LOANS AND LEASES: (2)
Commercial................. 17,570,318 360,794 8.24 16,087,269 302,644 7.46 15,442,813 288,728 7.50
Real estate................ 19,696,818 443,693 9.04 18,872,192 412,080 8.66 17,673,768 372,144 8.45
Consumer, net.............. 17,645,086 409,886 9.32 19,053,380 412,032 8.58 18,745,464 386,025 8.26
Credit card................ 6,087,609 250,347 16.49 6,166,139 241,415 15.53 6,192,301 241,969 15.67
Leases, net................ 1,418,744 25,574 7.23 1,254,787 25,006 7.91 1,142,610 21,237 7.45
Reserve for loan and lease
losses................... (890,911) (927,549) (975,393)
----------- ---------- ----------- ---------- ----------- ----------
Net loans and leases......... 61,527,664 1,490,294 9.72 60,506,218 1,393,177 9.14 58,221,563 1,310,103 9.03
----------- ---------- ----------- ---------- ----------- ----------
Total earning assets......... 77,765,997 1,769,164 9.12 78,708,846 1,675,230 8.44 79,513,091 1,614,681 8.15
Other assets (3)............. 8,762,773 8,563,804 8,835,774
----------- ----------- -----------
Total assets................. $86,528,770 $87,272,650 $88,348,865
=========== =========== ===========
LIABILITIES:
DEPOSITS:
Non-interest bearing
demand................... $12,689,263 $13,673,625 $13,337,867
Interest bearing demand.... 8,677,213 47,519 2.20 9,142,563 46,726 2.03 9,391,993 40,556 1.73
Savings.................... 6,259,868 47,236 3.03 7,309,707 51,620 2.80 7,995,612 46,917 2.35
Money market savings
accounts................. 12,941,740 132,763 4.11 12,349,423 104,408 3.35 12,319,317 84,504 2.75
Time deposits:
CDs less than $100,000... 19,427,161 278,119 5.74 18,647,867 227,376 4.84 17,171,010 169,341 3.96
CDs $100,000 and over:
Domestic............... 4,122,398 56,740 5.52 3,281,183 37,448 4.53 3,548,580 34,382 3.89
Foreign................ 1,630,137 23,913 5.88 1,740,769 21,805 4.97 1,231,561 12,162 3.96
----------- ---------- ----------- ---------- ----------- ----------
Total deposits....... 65,747,780 586,290 3.58 66,145,137 489,383 2.94 64,995,940 387,862 2.39
Borrowed Funds:
Short-term................. 9,107,053 128,996 5.68 10,126,610 124,426 4.87 12,478,527 120,229 3.86
Long-term.................. 2,091,910 34,932 6.70 1,842,654 39,100 8.42 1,843,993 29,070 6.32
----------- ---------- ----------- ---------- ----------- ----------
Total borrowed funds....... 11,198,963 163,928 5.87 11,969,264 163,526 5.42 14,322,520 149,299 4.18
----------- ---------- ----------- ---------- ----------- ----------
Total interest bearing
liabilities................ 64,257,480 750,218 4.68 64,440,776 652,909 4.02 65,980,593 537,161 3.27
Other liabilities............ 1,890,402 1,468,452 1,429,629
----------- ----------- -----------
Total liabilities............ 78,837,145 79,582,853 80,748,089
Preferred stock.............. 249,882 249,900 249,900
Common stockholders'
equity..................... 7,441,743 7,439,897 7,350,876
----------- ----------- -----------
Total liabilities and
stockholders' equity....... $86,528,770 $87,272,650 $88,348,865
=========== =========== ===========
Net interest income.......... 1,018,946 5.26 1,022,321 5.15 1,077,520 5.43
Provision for loan and lease
losses..................... (92,565) (0.48 ) (35,619) (0.18 ) (50,538) (0.25 )
---------- ----- ---------- ----- ---------- -----
Net funds function........... $ 926,381 4.78 % $ 986,702 4.97 % $1,026,982 5.18 %
========== ===== ========== ===== ========== =====
</TABLE>
(1) Fully taxable equivalent basis. The Federal statutory rate used was 35% for
all periods 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).
12
<PAGE> 14
NON-INTEREST INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JUNE 30, JUNE 30, INCREASE JUNE 30, JUNE 30, INCREASE
$(THOUSANDS) 1995 1994 (DECREASE) 1995 1994 (DECREASE)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income from fiduciary activities........ $ 58,546 $ 59,284 $ (738) $117,128 $118,297 $ (1,169)
Service charges on deposit accounts..... 132,462 116,636 15,826 259,573 230,710 28,863
Loan processing and servicing income:
Mortgage banking...................... 17,893 18,056 (163) 33,609 41,834 (8,225)
Credit card processing and related
fees................................ 41,519 42,154 (635) 74,609 74,416 193
Merchant processing................... 19,594 10,048 9,546 34,236 18,827 15,409
Loan servicing income................. 60,032 20,697 39,335 115,016 44,271 70,745
-------- -------- ---------- -------- -------- ----------
TOTAL LOAN PROCESSING AND SERVICING
INCOME................................ 139,038 90,955 48,083 257,470 179,348 78,122
Other income:
Insurance............................. 21,940 18,115 3,825 40,612 34,056 6,556
Securities............................ 11,507 14,481 (2,974) 22,969 29,498 (6,529)
Investment banking.................... 10,072 7,305 2,767 14,642 13,751 891
Income from management of collection
pools............................... 3,325 4,607 (1,282) 16,449 9,946 6,503
Other................................. 87,799 58,750 29,049 188,240 122,734 65,506
-------- -------- ---------- -------- -------- ----------
Total other income...................... 134,643 103,258 31,385 282,912 209,985 72,927
Securities gains........................ 2,785 2,737 48 12,571 6,190 6,381
-------- -------- ---------- -------- -------- ----------
TOTAL NON-INTEREST INCOME............... $467,474 $372,870 $ 94,604 $929,654 $744,530 $185,124
========= ========= =========== ========= ========= ===========
</TABLE>
The growth in service charges on deposit accounts is primarily due to a
change in check processing which resulted in an increase in fees from overdrafts
of $15 million for the three months and $30 million for the six months ended
June 30, 1995.
Mortgage banking income decreased for the six months ended June 30, 1995
primarily due to a 57% decrease in mortgage loan originations during the first
half of 1995 when compared to the first half of 1994 as a result of higher
interest rates.
The growth in merchant processing income is primarily due to an increase of
$7 million for the three months and $10 million for the six months ended June
30, 1995 resulting from promotional sales programs introduced during 1995.
The increase in loan servicing income is substantially due to income of $32
million for the quarter and $64 million for the six months ended June 30, 1995
from servicing retained on $2 billion in credit card receivables sold in
November 1994.
The increase in income from management of collection pools for the six
months ended June 30, 1995 relates primarily to a $7 million incentive bonus
earned upon completion of a collection contract.
The increase in the other item in other income for the quarter resulted
primarily from five transactions: 1) a $5 million gain on the sale of servicing
related to $451 million in mortgage loans, 2) a $4 million gain on the sale of a
stock transfer business, 3) a $3 million gain on the sale of $54 million in
student loans, 4) a $3 million gain related to other investments, and 5) a $3
million gain on the sale of three branches.
In addition to the quarterly items discussed above, the other item in other
income increased for the six months ended June 30, 1995 due to the following
four transactions: 1) the gain of $47 million related to the February sale of
the four Michigan banks which had combined assets of $614 million at December
31, 1994, 2) income of $17 million on the March 1995 sale of a credit card
processing software license, 3) an increase of $10 million in fees resulting
from a shift from originating income tax refund anticipation loans to receiving
fees for transmitting tax returns electronically, and 4) an $8 million gain
during the first quarter 1995 on the sale of
13
<PAGE> 15
servicing related to $541 million in mortgage loans. These increases were
partially offset by a $52 million loss related to the sale of $1.2 billion in
low-yielding consumer loans. BANC ONE anticipates continuing sales of servicing
related to mortgage loans in future periods.
NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -----------------------
JUNE 30, JUNE 30, INCREASE JUNE 30, JUNE 30, INCREASE
$(THOUSANDS) 1995 1994 (DECREASE) 1995 1994 (DECREASE)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salary and related costs............. $429,079 $425,241 $ 3,838 $ 872,029 $ 867,228 $ 4,801
Net occupancy expense................ 45,162 40,834 4,328 89,175 82,245 6,930
Equipment expense.................... 25,667 28,887 (3,220) 52,574 58,315 (5,741)
Taxes other than income and
payroll............................ 23,094 20,133 2,961 45,066 22,491 22,575
Depreciation and amortization........ 68,960 70,564 (1,604) 143,690 138,545 5,145
Outside services and processing...... 114,132 104,235 9,897 225,026 212,272 12,754
Marketing and development............ 42,577 37,179 5,398 79,421 74,669 4,752
Communication and transportation..... 67,880 60,864 7,016 133,943 119,336 14,607
Other:
Foreclosed property expense........ (3,651) (1,004) (2,647) (4,330) (756) (3,574)
FDIC Insurance..................... 35,820 35,337 483 71,735 70,674 1,061
Other.............................. 61,529 60,322 1,207 129,954 123,261 6,693
-------- -------- ---------- ---------- ---------- ----------
Total other expense.................. 93,698 94,655 (957) 197,359 193,179 4,180
-------- -------- ---------- ---------- ---------- ----------
TOTAL NON-INTEREST EXPENSE........... $910,249 $882,592 $ 27,657 $1,838,283 $1,768,280 $ 70,003
========= ========= =========== ========== ========== ===========
</TABLE>
Taxes other than income and payroll increased for the six months ended June
30, 1995 primarily due to $19 million in franchise and intangible tax reductions
recorded during the first quarter of 1994 resulting from the settlement of
certain audit issues from previous years.
Outside services and processing increased primarily due to increases in
consulting expenses of $5 million for the three month period and $8 million for
the six month period ended June 30, 1995.
Marketing and development increased for the quarter primarily due to a
customer segmentation study and marketing expenses of $2 million related to
credit card and express banking programs.
Communication and transportation increased both quarter to date and year to
date substantially as a result of increased postage expense related to three
items: 1) an increase in statement mailings related to the increase in the
number of credit card accounts, 2) an increase in the volume of mailings related
to credit card solicitations, and 3) an increase in postage rates at the
beginning of 1995.
The benefits of 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
likely 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. At June 30, 1995, BANC ONE's accrued liability related to
operations consolidations recorded during the fourth quarter of 1994 was $57
million, which reflects a reduction of $11 million related to severance related
payments and a reduction of $6 million related to other items as compared to the
quarter ended December 31, 1994.
BANC ONE will benefit in future periods from the reduction in deposit
insurance premiums announced by the FDIC on August 8, 1995. The reduction in
insurance premiums for well capitalized and well managed banks will be from the
current 23 cents to 4 cents for every $100 of certain deposits. The FDIC is
expected to announce the effective date of the deposit insurance premium
reduction during September 1995.
14
<PAGE> 16
INCOME TAXES
The provision for income taxes was 34.7% of pretax income for the six
months ended June 30, 1995 as compared to 34.4% of pretax income for the same
period in 1994. The tax rate for the six months ended June 30, 1995 approximates
the anticipated effective tax rate for the year.
BALANCE SHEET ANALYSIS
Total assets decreased $2.1 billion to $86.8 billion at June 30, 1995 from
$88.9 billion at December 31, 1994. The decrease reflects the use of proceeds
from securities sales and maturities to fund the reduction of short-term
borrowings. The sale of $1.2 billion in consumer loans, the February 1995 sale
of the four Michigan banks with assets at December 31, 1994 of $614 million and
the sale of $474 million in credit card receivables and student loans during the
first and second quarters of 1995 were offset by loan growth in the commercial,
real estate and credit card portfolios.
SECURITIES
See page 19 for the fair value and amortized cost of securities and a
discussion of the asset liability management process.
LOANS AND LEASES
The composition of the loan and lease portfolio is summarized as follows.
<TABLE>
<CAPTION>
DECEMBER
JUNE 30, 31, JUNE 30,
$(THOUSANDS) 1995 1994 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial and agricultural.............. $17,868,361 $16,619,186 $15,771,815
Real Estate:
Commercial........................................ 5,637,468 5,571,296 5,291,011
Construction...................................... 2,389,296 2,195,003 1,995,774
Residential....................................... 12,189,467 11,273,689 10,606,059
Consumer, net....................................... 17,556,970 19,070,286 19,316,465
Credit card......................................... 6,228,416 5,924,383 6,357,066
Leases, net......................................... 1,464,985 1,339,069 1,174,349
----------- ----------- -----------
Total loans and leases.............................. $63,334,963 $61,992,912 $60,512,539
========== ========== ==========
</TABLE>
Total average loans and leases were $62.4 billion for the second quarter of
1995 as compared to $61.4 billion for the fourth quarter of 1994. Adjusted for
the $2 billion in credit card loans sold during the fourth quarter 1994, the
$1.2 billion of consumer loans sold during the second quarter of 1995, and the
$474 million in credit card and student loans sold in the first and second
quarters of 1995, the second quarter 1995 total average loan balances increased
11.8% from the quarter ended December 31, 1994, on an annualized basis. This
growth was primarily the result of increases in commercial loans and leases of
18.6% and increases in credit card loans of 37.9%, annualized and adjusted for
loan and bank sales. BANC ONE's managed credit card portfolio was $9.1 billion
at June 30, 1995 as compared to $6.8 billion at June 30, 1994.
BANC ONE's process for monitoring loan quality includes detailed, monthly
analysis 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.
15
<PAGE> 17
The following summarizes the activity in the nonaccrual loans and OREO for
the quarter ended June 30, 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
$(THOUSANDS) JUNE 30, 1995 JUNE 30, 1995
----------------------------------------------------------------------------------------------
<S> <C> <C>
NONACCRUAL LOANS
BALANCE, BEGINNING OF PERIOD......................... $361,461 $377,409
Nonaccrual additions................................. 107,529 177,728
Loans returned to accrual and payments received...... (92,419) (157,234)
Reductions due to transfers to OREO.................. (4,473) (8,824)
Charge-offs.......................................... (22,154) (35,167)
Other, net........................................... 3,499 (469)
------------------ ----------------
BALANCE, JUNE 30..................................... $353,443 $353,443
================== ================
OREO
BALANCE, BEGINNING OF PERIOD......................... $ 82,080 $ 84,355
Additions............................................ 18,846 38,967
Write-downs.......................................... (3,758) (8,911)
Sales and other, net................................. (24,264) (41,507)
------------------ ----------------
BALANCE, JUNE 30..................................... $ 72,904 $ 72,904
================== ================
</TABLE>
The following summarizes activity in the reserve for loan and lease losses.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
$(THOUSANDS) 1995 1994 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, BEGINNING OF PERIOD................... $885,292 $970,910 $897,180 $967,254
(Sold) acquired reserves....................... 130 5,710 (3,922) 6,032
Provision for loan and lease losses............ 92,565 50,538 159,082 130,710
Losses charged to the reserves................. (134,456) (123,729) (258,472) (252,889)
Recoveries..................................... 48,015 51,649 97,678 103,971
-------- -------- -------- --------
Net losses charged to the reserve.............. (86,441) (72,080) (160,794) (148,918)
-------- -------- -------- --------
BALANCE, JUNE 30............................... $891,546 $955,078 $891,546 $955,078
======== ======== ======== ========
</TABLE>
The reserve for loan and lease losses is net of a $8.5 million decrease
related to $380 million of credit card receivables sold during the second
quarter of 1995. At June 30, 1995, renegotiated loans, loans delinquent over 90
days and doubtful loans were $4 million, $187 million, and $60 million,
respectively. At December 31, 1994, renegotiated loans, loans delinquent over 90
days and doubtful loans were $4 million, $173 million and $33 million,
respectively. BANC ONE's nonperforming loan coverage ratio increased to 249.1%
for the second quarter of 1995 compared to 225.7% for the second quarter of
1994.
16
<PAGE> 18
The following summarizes net charge-offs (recoveries) and delinquent loans
by loan type.
<TABLE>
<CAPTION>
NET CHARGE-OFFS LOANS
(RECOVERIES) TO DELINQUENT
AVERAGE 90 DAYS OR
BALANCES(1) MORE(2)(3)
------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural.......................... (.08)% .15%
Real estate..................................................... .13 .13
Consumer, net................................................... .59 .28
Credit card..................................................... 3.69 1.26
Leases, net..................................................... .41 .02
Total loans and leases.......................................... .56 .29
</TABLE>
---------------
(1) Ratios presented are based on amounts for the quarter ended June 30, 1995 on
an annualized basis.
(2) Excluding nonperforming loans.
(3) As a percent of ending balances as of June 30, 1995.
On January 1, 1995, BANC ONE adopted Statements of Financial Accounting
Standards Nos. 114 and 118 (SFAS 114), "Accounting by Creditors for Impairment
of a Loan" and "Accounting by Creditors for Impairment of a Loan -- Income
Recognition and Disclosures." The adoption of SFAS 114 did not result in
additional provisions for loan losses primarily because the majority of impaired
loan valuations continue to be based on the fair value of collateral.
DEPOSITS
<TABLE>
<CAPTION>
DECEMBER
JUNE 30, 31, JUNE 30,
$(THOUSANDS) 1995 1994 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-interest bearing................................ $13,974,398 $14,405,707 $14,027,910
Interest bearing:
Demand............................................ 8,524,130 9,296,774 9,169,053
Savings........................................... 6,087,672 7,033,573 7,952,445
Money market accounts............................. 13,420,077 12,336,737 12,330,559
Time deposits less than $100,000.................. 19,365,784 18,906,855 17,766,164
Time deposits greater than $100,000............... 4,240,798 6,110,408 4,972,388
----------- ----------- -----------
Total interest bearing deposits..................... 51,638,461 53,684,347 52,190,609
----------- ----------- -----------
Total deposits...................................... $65,612,859 $68,090,054 $66,218,519
========== ========== ==========
</TABLE>
The decrease in deposits from December 31, 1994 is primarily due to the
replacement of $1.3 billion in Eurodollar deposits with less expensive fed
funds, a $539 million decrease in deposits from the sale of the four Michigan
banks during the first quarter of 1995 and seasonal reductions in transaction
accounts. The deposit mix continues to change as consumers shift funds to
products offering higher yields.
LIQUIDITY AND CAPITAL
At June 30, 1995, large liability dependence was 16.85%, an increase of
.86% from December 31, 1994. The increase was primarily due to additional
short-term borrowings in the first quarter to fund increased loan growth and
seasonal fluctuations. The July 1995 issuance by BANC ONE of $600 million of
subordinated notes, $300 million with a 10 year maturity and $300 million with a
30 year maturity, is expected to decrease large liability dependence. BANC ONE's
policy is that the large liabilities position be no greater than 30
17
<PAGE> 19
percent of earning assets. In practice, BANC ONE manages the position at much
lower levels as summarized below.
<TABLE>
<CAPTION>
JUNE
30, DECEMBER 31, JUNE 30,
$(MILLIONS) 1995 1994 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earning assets, net of short term investments............ $76,340 $ 76,248 $ 79,597
Large liabilities:
Net national market liabilities........................ $ 2,565 $ 1,954 $ 3,036
As a percent of net earning assets..................... 3.36% 2.56% 3.81%
Total net large liabilities............................ $12,863 $ 12,195 $ 16,182
As a percent of net earning assets..................... 16.85% 15.99% 20.33%
</TABLE>
BANC ONE has purchased 18 million shares of BANC ONE common stock to be
used specifically for the acquisition of Premier Bancorp, Inc. (Premier),
headquarted in Baton Rouge, Louisiana. During July 1995, BANC ONE signed an
agreement to acquire Premier in exchange for approximately $21 million shares of
BANC ONE common stock. The transaction is expected to close as early as the
fourth quarter of 1995, is subject to due diligence and shareholder and
regulatory approval, and will be accounted for as a purchase.
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. At June 30,
1995, risk based tier I capital, total risk based capital and leverage ratios
were 10.36%, 13.76% and 8.72%, respectively. All of these ratios are
significantly above regulatory minimum capital requirements. If the July 1995
$600 million subordinated note issuance had taken place at June 30, 1995, the
total risk based capital ratio would have been 14.59%.
ASSET LIABILITY MANAGEMENT
Asset/Liability Management (ALM) at BANC ONE is an ongoing process used to
manage liquidity, capital and interest rate risk. The key elements of the ALM
process are discussed in further detail on pages 68 through 72 of BANC ONE's
1994 Annual Report on Form 10-K.
The management of interest rate risk in the ALM process can be broken down
into three components; earnings sensitivity risk (ESR), basis risk, and
long-term risk. ESR is the risk that as interest rates change, BANC ONE's
earnings will change. ESR is defined as the percentage change in BANC ONE's
forecasted earnings over a 12 month period for a specific change in forecasted
market interest rates. Current BANC ONE strategy is to manage ESR such that
changes in market interest rates result in a reduction no greater than
approximately one percent of projected annualized after-tax earnings for
increases and decreases of 100 basis points. At June 30, 1995, BANC ONE's
interest rate risk simulation indicated projected after-tax earnings would
decline 0.3 percent for an up 100 basis point change and 1.6 percent for a down
100 basis point change. At June 30, 1995, BANC ONE's interest rate risk
simulation indicated projected after-tax earnings would decline 1.1 percent for
an up 200 basis point change and 4.3 percent for a down 200 basis point change.
A significant contributor to the risk of falling interest rates is the
assumption in the model that certain retail deposit rates are relatively
inelastic in declining interest rate scenarios.
BANC ONE uses both on-balance and off-balance sheet investment products to
manage interest rate risk. The off-balance sheet investment products utilized
are primarily interest rate swaps. Interest rate swap agreements 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 ALM process to manage the impact of fluctuating interest rates.
Following are the fair value and amortized cost of securities by type and
the estimated maturities and weighted average fixed rates of off-balance sheet
investment products by type. A key assumption in the maturity information below
is that future variable rates move as indicated by the forward interest rate
curve in
18
<PAGE> 20
existence at June 30, 1995. To the extent that the interest rates move in a
fashion other than indicated in the forward interest rate curve the maturity
information will change.
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994 JUNE 30, 1994
---------------------- ---------------------- ----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED AMORTIZED ESTIMATED
$(MILLIONS) COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY:
United States treasury and
agencies..................... $ 433 $ 432 $ 546 $ 532 $ 889 $ 881
Mortgage and asset-backed
securities:
Government................... 1,559 1,595 1,405 1,378 1,533 1,542
Other........................ 505 511 492 485 563 565
Tax exempt..................... 1,971 2,013 2,182 2,167 2,392 2,426
Other.......................... 203 224 209 228 159 180
--------- ---------- --------- ---------- --------- ----------
Total securities held to
maturity....................... 4,671 4,775 4,834 4,790 5,536 5,594
--------- ---------- --------- ---------- --------- ----------
SECURITIES AVAILABLE FOR SALE:
United States treasury and
agencies..................... 3,012 3,011 3,700 3,693 8,249 8,040
Mortgage and asset-backed
securities:
Government................... 3,507 3,502 3,312 3,206 3,347 3,278
Other........................ 2,468 2,445 3,144 3,072 2,938 2,885
Tax exempt..................... 21 21 34 34 33 34
Other.......................... 237 246 306 313 239 266
--------- ---------- --------- ---------- --------- ----------
Total securities available for
sale........................... 9,245 9,225 10,496 10,318 14,806 14,503
--------- ---------- --------- ---------- --------- ----------
TOTAL SECURITIES................. $13,916 $ 14,000 $15,330 $ 15,108 $20,342 $ 20,097
========== =========== ========== ========== ========== ==========
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
Maturities of off-Balance Sheet Investment
Products at June 30, 1995 (1)(2) Ending Balances at
------------------------------------------------------------ ----------------------------------
2000- June 30, December 31, June 30,
$(millions) 1995 1996 1997 1998 1999 2004 2005+ 1995 1994 1994
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Receive fixed generic swaps
Notional value............ $1,080 $1,045 $3,053 $1,000 $1,126 $ 150 $ 7,454 $ 6,995 $ 7,116
Weighted average receive
rate.................... 5.97% 5.78% 5.10% 5.64% 6.78% 5.82% 5.66% 5.37% 5.37%
Receive fixed amortizing swaps
Notional value............ $1,845 $5,955 $2,112 $ 732 $ 24 $ 15 $10,683 $ 15,442 $14,950
Weighted average receive
rate.................... 5.53% 5.26% 5.26% 5.47% 7.56% 8.82% 5.33% 5.24% 5.31%
Pay fixed swaps
Notional value............ $1,185 $2,505 $ 63 $ 110 $ 6 $ 6 $ 3,875 $ 5,548 $ 4,612
Weighted average pay
rate.................... 6.42% 5.60% 9.45% 6.22% 8.69% 8.16% 5.94% 5.51% 5.24%
Purchased caps
Notional value............ $4,712 $ 3 $ 4 $ 4 $ 23 $ 7 $ 4,753 $ 6,186 $ 3,672
------ ------ ------ ------ ------ ------ ------ -------- ------------ --------
Net receive fixed position.... $1,740 (217) 5,099 1,618 14 1,112 143 9,509 10,703 13,782
Basis swaps
Notional value............ 13 4,211 3,648 322 24 8,218 8,102 8,128
Forward starting swaps (3)
Notional value............ 500 3,950
Other(4)
Notional value............ $2,443 $2,305 $ 650 $ 162 $ 109 $ 424 $ 5 $ 6,098 $ 2,846 $ 2,585
</TABLE>
(1) Maturities are based on estimated future interest rates from the forward
interest curve at June 30, 1995.
(2) Variable receive and pay interest rates, which are based primarily on three
month LIBOR or prime, are not included in the table above.
(3) Forward starting swaps at June 30, 1994 were generic receive fixed swaps.
(4) Other off-balance sheet investment products include customer transactions,
floors, futures, options, swap options, caps, forward rate agreements, and
currency swaps.
<TABLE>
<CAPTION>
December 31,
June 30, 1995 1994
--------------------------------------------------------- --------------
Total Notional Unrealized Unrealized Net Unrealized Net Unrealized
$(millions) Amount Gains Losses Gain (Loss) Gain (Loss)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Generic receive fixed.... $ 7,454 $ 31 $ (84) $ (53) $ (153)
Amortizing receive
fixed.................. 10,683 17 (139) (122) (988)
Pay fixed................ 3,875 12 (18) (6) 86
Purchased caps........... 4,753 (22) (22) 81
Basis.................... 8,218 (100) (100) (342)
Forward starting......... (34)
Other.................... 6,098 59 (5) 54 44
-------------- ---------- ---------- ------- --------------
Total.................... $ 41,081 $119 $ (368) $ (249) $ (1,306)
============= ========= ========= ============= =============
</TABLE>
The 1994 BANC ONE CORPORATION annual report provided certain fair value
information based on interest rates at December 31, 1994. Since that date,
interest rates have decreased and, as a result the fair value of fixed rate
liabilities has become less favorable and the value of certain loan products
more favorable due to these changes in market interest rates. The net change is
not material.
20
<PAGE> 22
BANC ONE CORPORATION AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1 - Inapplicable
Item 2 - Inapplicable
Item 3 - Inapplicable
Item 4 - Submission of Matters to a Vote of Security Holders
a. The matters discussed in paragraphs (c) and (d) below were
submitted to a vote of security holders at the Annual Meeting of
Shareholders of the Registrant held on April 18, 1995.
b. Inapplicable.
c. (1) Election of Directors:
<TABLE>
<CAPTION>
Shares Voted
---------------------------------------------------------
Against/
Name For Withheld
---------------------------------------------------------
<S> <C> <C>
Charles E. Exley 324,383,945 2,566,989
E. Gordon Gee 323,858,754 3,092,180
John R. Hall 324,530,822 2,420,112
Laban P. Jackson 324,168,900 2,782,034
Richard J. Lehmann 324,545,509 2,405,425
John B. McCoy 324,277,055 2,673,879
John G. McCoy 324,161,480 2,789,454
Richard L. Scott 324,150,195 2,800,739
Thekla R. Shackelford 324,461,552 2,489,382
Alex Shumate 320,817,624 6,133,310
Frederick P. Stratton,
Jr. 324,487,592 2,463,342
Robert D. Walter 324,506,131 2,444,803
</TABLE>
(2) Approval of the BANC ONE CORPORATION 1995 Stock Incentive Plan:
<TABLE>
<CAPTION>
Shares Voted
---------------------------------------------------------
Abstentions/
For Against Broker Non-Votes
---------------------------------------------------------
<S> <C> <C>
227,497,940 52,171,586 47,281,408
</TABLE>
(3) Approval of Amendment of the BANC ONE CORPORATION 1994 Key
Executive Management Incentive Compensation Plan:
<TABLE>
<CAPTION>
Shares Voted
---------------------------------------------------------
Abstentions/
For Against Broker Non-Votes
---------------------------------------------------------
<S> <C> <C>
299,883,544 20,133,088 6,934,302
</TABLE>
d. Inapplicable.
21
<PAGE> 23
Item 5 - Inapplicable
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. In compliance with Part I Financial Information the following
exhibits are incorporated by reference:
Exhibit 10 - Material Contracts
a. BANC ONE CORPORATION 1995 Stock Incentive Plan
b. BANC ONE CORPORATION Amended 1994 Key Executive Management
Incentive Compensation Plan
Exhibit 11 Statement Regarding Computation of Earnings per Common
Share
Exhibit 12 Statement Regarding Computation of Ratio of Earnings to
Fixed Charges
Exhibit 27 Financial Data Schedules
22
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
BANC ONE CORPORATION
<S> <C>
August 14, 1995 /s/ WILLIAM C. LEITER
------------------------------ ---------------------------------------------
Date William C. Leiter
Controller and
Chief Accounting Officer
</TABLE>
23
<PAGE> 1
EXHIBIT 10.1
------------
BANC ONE CORPORATION
1995 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the BANC ONE CORPORATION 1995 Stock Incentive Plan is to
provide incentives and rewards for Employees and Eligible Directors of the
Corporation and its Subsidiaries (i) to support the execution of the
Corporation's business and human resource strategies and the achievement of its
goals and (ii) to associate the interests of Employees and Eligible Directors
with those of the Corporation's shareholders.
2. DEFINITIONS
"Award" includes, without limitation, stock options (including incentive
stock options under Section 422 of the Code and Director Stock Options), stock
appreciation rights, restricted and performance shares, restricted and
performance share units, Performance Stock Awards, dividend or equivalent
rights, or other awards that are valued in whole or in part by reference to, or
are otherwise based on, the Common Stock ("other Common Stock-based Awards"),
all on a stand alone, combination or tandem basis, as described in or granted
under this Plan.
"Award Agreement" means a written agreement entered into between the
Corporation and a Participant setting forth the terms and conditions of an
Award made to such Participant under this Plan, in the form prescribed by the
Committee.
"Board" means the Board of Directors of the Corporation.
"Change of Control" shall have the meaning specified in Section 12(b).
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
<PAGE> 2
"Committee" means the Committee appointed by the Board, each member of which
shall be a "disinterested person" within the meaning of Rule 16b-3 under the
Exchange Act and shall be an "outside director" within the meaning of Section
162(m) of the Code. The Committee shall be composed of no fewer than the
minimum number of disinterested persons as may be required by Rule 16b-3.
"Common Stock" means the common stock of the Corporation, without par value.
"Corporation" means BANC ONE CORPORATION, a bank holding company under the
Bank Holding Company Act of 1956 headquartered in Columbus, Ohio.
"Director Stock Option" means the right, granted to an Eligible Director, to
purchase Common Stock at a stated price for a specified period of time. Each
Director Stock Option shall be a nonqualified stock option whose grant is not
intended to comply with the requirements of Section 422 of the Code or any
successor Section as it may be amended from time to time.
"Eligible Director" means any statutory director of the Corporation who is
not an employee of the Corporation or any Subsidiary.
"Employee" means an employee of the Corporation or a Subsidiary.
"Employee Award" means an Award (other than a Director Stock Option) to an
Employee under this Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the closing price of the Common Stock as reported
on the New York Stock Exchange Composite Transactions Tape on the relevant
valuation date or, if there were no Common Stock transactions on the valuation
date, on the next preceding date on which there were Common Stock transactions;
provided, however, that the Committee may specify some other definition of Fair
Market Value with respect to any particular Employee Award.
"Negative Discretion" means other factors to be applied by the Committee in
reducing the number of restricted shares to be issued pursuant to a Performance
Stock Award if the Performance Goals have been met or exceeded if, in the
Committee's sole judgment, such application is appropriate in order to act in
the best interest of the Corporation and its shareholders. The Negative
Discretion factors include, but are not limited to, the achievement of
measurable individual performance objectives established by the Committee and
communicated to the Employee in advance of the Performance Period, and
competitive pay practices.
"Participant" means an Employee or an Eligible Director who has been granted
an Award under this Plan.
<PAGE> 3
"Performance Goals" means, with respect to any Performance Period,
performance goals based on any of the following criteria and established by the
Committee prior to the beginning of such Performance Period or performance
goals based on any of the following criteria and established by the Committee
after the beginning of such Performance Period that meet the requirements to be
considered pre-established performance goals under Section 162(m) of the Code:
earnings or earnings growth; return on equity, assets or investment; revenues;
expenses; stock price; market share; charge-offs; or reductions in
non-performing assets. Such Performance Goals may be particular to an Employee
or the division, department, branch, line of business, Subsidiary or other Unit
in which the Employee works, or may be based on the performance of the
Corporation generally.
"Performance Period" means the period of time designated by the Committee
applicable to a Performance Stock Award during which the Performance Goals
shall be measured.
"Performance Stock Award" shall have the meaning specified in Section 6(g).
"Plan" means this BANC ONE CORPORATION 1995 Stock Incentive Plan.
"Plan Year" means a twelve-month period beginning with January 1 of each
year.
"Reporting Person" means an officer or director of the Corporation subject
to the reporting requirements of Section 16 of the Exchange Act.
"Subsidiary" means any corporation or other entity, whether domestic or
foreign, in which the Corporation has or obtains, directly or indirectly, a
proprietary interest of more than 50% by reason of stock ownership or
otherwise.
3. ELIGIBILITY
(a) Any Employee selected by the Committee is eligible to receive an
Employee Award.
(b) Eligible Directors are entitled to participate in this Plan solely with
respect to the grant of Director Stock Options and may not receive any other
Awards under this Plan. The selection of Eligible Directors is not subject to
the discretion of the Committee. Persons serving on the Committee who are
Eligible Directors may receive grants of Director Stock Options.
4. PLAN ADMINISTRATION
(a) This Plan shall be administered by the Committee. The Committee shall
periodically make determinations with respect to the participation of Employees
in this Plan and, except as otherwise required by law or this Plan, the grant
terms of Awards including vesting schedules, price, performance standards
(including Performance Goals), length of relevant performance, restriction or
option period, dividend rights, post-retirement and termination rights, payment
alternatives such as cash, stock, contingent awards or other means of payment
consistent with the purposes of this Plan, and such other terms and conditions
as the Committee deems appropriate. Except as otherwise required by this Plan,
the Committee shall have
<PAGE> 4
authority to interpret and construe the provisions of this Plan and the Award
Agreements and make determinations pursuant to any Plan provision or Award
Agreement which shall be final and binding on all persons.
(b) The Committee may designate persons other than its members to carry out
its responsibilities under such conditions or limitations as it may set, other
than its authority with regard to Awards granted to Reporting Persons.
5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The stock subject to the provisions of this Plan shall either be shares
of authorized but unissued Common Stock, shares of Common Stock held as
treasury stock or previously issued shares of Common Stock reacquired by the
Corporation, including shares purchased on the open market. Subject to
adjustment in accordance with the provisions of Section 11, and subject to
Section 5(d), (i) the total number of shares of Common Stock available for
grants of Awards (including, without limitation, Awards of restricted and
performance shares) in any Plan Year shall not exceed one percent of the
outstanding Common Stock as reported in the Corporation's Annual Report on Form
10-K for the fiscal year ending immediately prior to such Plan Year and (ii)
the total number of shares of Common Stock available for grants of restricted
and performance shares (including restricted shares to be issued pursuant to
Performance Stock Awards) in any Plan Year shall not exceed one fourth of one
percent of the outstanding Common Stock as reported in the Corporation's Annual
Report on form 10-K for the fiscal year ending immediately prior to such Plan
Year.
(b) Subject to adjustment in accordance with Section 11, and subject to
Section 5(a), (i) the total number of shares of Common Stock available for
grants of Awards in any Plan Year to any Participant shall not exceed one half
of one percent of the outstanding Common Stock as reported in the Corporation's
Annual Report on Form 10-K for the fiscal year ending immediately prior to such
Plan Year and (ii) the total number of shares of Common Stock available for
grants of restricted shares to be issued pursuant to Performance Stock Awards
in any Plan Year to any Employee shall not exceed one eighth of one percent of
the outstanding Common Stock as reported in the Corporation's Annual Report on
form 10-K for the fiscal year ending immediately prior to such Plan Year.
(c) For purposes of calculating the total number of shares of Common Stock
available for grants of Awards, (i) the grant of a performance or restricted
share unit Award shall be deemed to be equal to the maximum number of shares of
Common Stock which may be issued under the Award and (ii) where the value of an
Award is variable on the date it is granted, the value shall be deemed to be
the maximum limitation of the Award. Awards payable solely in cash will not
reduce the number of shares of Common Stock available for Awards granted under
this Plan.
(d) There shall be carried forward and be available for Awards under this
Plan in each succeeding Plan Year, in addition to shares of Common Stock
available for grant under paragraph (a) of this Section 5, all of the
following: (i) any unused portion of the limit set forth in paragraph (a) of
this Section 5 for the two immediately preceding Plan Years; (ii) shares of
<PAGE> 5
Common Stock represented by Awards which have been cancelled, forfeited,
surrendered, terminated or expire unexercised during that Plan Year or the two
immediately preceding Plan Years; (iii) the excess amount of variable Awards
which become fixed at less than their maximum limitations; (iv) authorized
shares of Common Stock as to which stock options, stock appreciation rights,
restricted stock awards, performance shares or performance awards were not
granted under the BANC ONE CORPORATION 1989 Stock Incentive Plan; and (v)
shares of Common Stock under the BANC ONE CORPORATION 1989 Stock Incentive Plan
subject to stock options, stock appreciation rights, restricted stock awards,
performance shares or performance awards which have been cancelled, forfeited,
surrendered, terminated or expire unexercised during that Plan Year or the two
immediately preceding Plan Years.
6. EMPLOYEE AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Employee Awards may be
granted under this Plan to Employees on a stand alone, combination or tandem
basis:
(a) Stock Option. A right to buy a specified number of shares of Common
Stock at a fixed exercise price during a specified time, all as the Committee
may determine; provided that the exercise price of any option shall not be less
than 100% of the Fair Market Value of the Common Stock on the date of grant of
the Award.
(b) Incentive Stock Option. An award in the form of a stock option which
shall comply with the requirements of Section 422 of the Code or any successor
Section as it may be amended from time to time.
(c) Stock Appreciation Right. A right to receive the excess of the Fair
Market Value of a share of Common Stock on the date the stock appreciation
right is exercised over the Fair Market Value of a share of Common Stock on the
date the stock appreciation right was granted.
(d) Restricted and Performance Shares. A transfer of shares of Common Stock
to a Participant, subject to such restrictions on transfer or other incidents
of ownership, or subject to specified performance standards, for such periods
of time as the Committee may determine.
(e) Restricted and Performance Share Unit. A fixed or variable share or
dollar denominated unit subject to conditions of vesting, performance and time
of payment as the Committee may determine, which may be paid in shares of
Common Stock, cash or a combination of both.
(f) Dividend Or Equivalent Right. A right to receive dividends or their
equivalent in value in shares of Common Stock, cash or in a combination of both
with respect to any new or previously existing Employee Award.
(g) Performance Stock Awards. A right, granted to an Employee, to receive
restricted shares (as defined in Section 6(d) hereof) that are not to be issued
to the Employee until after the end of the related Performance Period, subject
to satisfaction of the Performance Goals for such Performance Period.
<PAGE> 6
(h) Other Common Stock-Based Awards. Other Common Stock-based Awards which
are related to or serve a similar function to those Employee Awards set forth
in this Section 6.
In addition to granting Employee Awards for purposes of incentive
compensation, Employee Awards may also be made in tandem with or in lieu of
current or deferred Employee compensation.
7. PERFORMANCE STOCK AWARDS.
(a) Administration. Performance Stock Awards may be granted to Employees
either alone or in addition to other Employee Awards granted under this Plan.
The Committee shall determine the Employees to whom Performance Stock Awards
shall be awarded for any Performance Period, the duration of the applicable
Performance Period, the number of restricted shares to be awarded at the end of
a Performance Period to Employees if the Performance Goals are met or exceeded
and the terms and conditions of the Performance Stock Award in addition to
those contained in this Section 7.
(b) Payment of Award. After the end of a Performance Period, the financial
performance of the Corporation during such Performance Period shall be measured
against the Performance Goals. If the Performance Goals are not met, no
restricted shares shall be issued pursuant to the Performance Stock Award. If
the Performance Goals are met or exceeded, the Committee shall certify that
fact in writing in the Committee minutes or elsewhere and certify the number of
restricted shares to be issued under each Performance Stock Award in accordance
with the related Award Agreement. The Committee may, in its sole discretion,
apply Negative Discretion to reduce the number of restricted shares to be
issued under a Performance Stock Award.
(c) Requirement of Employment. To be entitled to receive a Performance
Stock Award, an Employee must remain in the employment of the Corporation
through the end of the Performance Period, except that the Committee may
provide for partial or complete exceptions to this requirement as it deems
equitable in its sole discretion.
8. DIRECTOR STOCK OPTIONS
Subject to the provisions of Section 5, Director Stock Options shall be
granted to Eligible Directors as provided in this Section 8 and the Committee
shall have no discretion with respect to any matters set forth in this Section
8.
(a) Vesting. Each Director Stock Option shall become exercisable on and
after the first anniversary of the date of the grant.
(b) Number of Shares. Director Stock Options shall be granted as follows:
(i) Each person who is first elected or appointed to serve as a
director of the Corporation after the effective date of this Plan and who is
an Eligible Director shall, upon such person's initial appointment or
election as an Eligible Director, automatically
<PAGE> 7
be granted Director Stock Options for that number of shares of Common Stock
having a Fair Market Value of $100,000 on the date the Director Stock Options
are granted; and
(ii) Commencing immediately after the adjournment of the Corporation's
annual meeting of shareholders (an "Annual Meeting") in 1995 and immediately
after the adjournment of the Annual Meeting each year thereafter, each
Eligible Director who was an Eligible Director immediately preceding such
Annual Meeting and who has been elected as a director at such Annual Meeting
shall automatically be granted Director Stock Options for that number of
shares of Common Stock having a Fair Market Value of $60,000 on the date the
Director Stock Options are granted if, but only if, the return on common
equity of the Corporation as set forth in the Corporation's annual report to
shareholders for the immediately preceding fiscal year is equal to or greater
than 10%.
(c) Option Price. Each Director Stock Option shall have an option price
("Option Price") that is equal to the Fair Market Value of the Common Stock on
the date the Director Stock Option is granted.
(d) Duration of Options. No Director Stock Option may be exercisable later
than twenty years and one day from the date of its grant.
(e) Payment. The Option Price upon exercise of any Director Stock Option
shall be payable to the Corporation in full either (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits, (ii) through the
delivery or deemed delivery based on attestation of ownership of shares of
Common Stock with a Fair Market Value at the time of exercise equal to the
total Option Price or (iii) by a combination of the methods described in items
(i) and (ii) above.
(f) Termination of Director Stock Options. If an Eligible Director ceases
to be an Eligible Director for any reason, the rights under any then
outstanding Director Stock Option granted pursuant to this Plan which are
exercisable as of the date such person ceases to be an Eligible Director shall
terminate upon the date determined as provided in Section 8(d), above, or three
years after such cessation date, whichever first occurs. Any then outstanding
Director Stock Option granted to such Eligible Director which is not
exercisable as of the date such person ceases to be an Eligible Director shall
terminate on and as of such date.
9. OTHER TERMS AND CONDITIONS
(a) Assignability. Except to the extent, if any, as may be permitted by the
Code and rules promulgated under Section 16 of the Exchange Act, (i) no Award
shall be assignable or transferable except by will, by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code and (ii) during the lifetime of a Participant, the Award shall be
exercisable only by such Participant or such Participant's guardian, legal
representative or assignee pursuant to a qualified domestic relations order.
(b) Award Agreement. Each Award under this Plan shall be evidenced by an
Award Agreement.
<PAGE> 8
(c) Rights As A Shareholder. Except as otherwise provided herein or in any
Award Agreement, a Participant shall have no rights as a shareholder with
respect to shares of Common Stock covered by an Award until the date the
Participant or his nominee (which, for purposes of this Plan, shall include
any third party agent selected by the Committee to hold such shares on behalf
of a Participant), guardian or legal representative is the holder of record of
such shares.
(d) No Obligation to Exercise. The grant of an Award shall impose no
obligation upon the Participant to exercise the Award.
(e) Payments by Participants. The Committee may determine that Employee
Awards for which a payment is due from a Participant may be payable: (i) in
U.S. dollars by personal check, bank draft or money order payable to the order
of the Corporation, by money transfers or direct account debits; (ii) through
the delivery or deemed delivery based on attestation to the ownership of shares
of Common Stock with a Fair Market Value equal to the total payment due from
the Participant; (iii) by a combination of the methods described in (i) and
(ii) above; or (iv) by such other methods as the Committee may deem
appropriate.
(f) Tax Withholding. The Corporation shall have the right to withhold from
any payments made under this Plan, or to collect as a condition of payment, any
taxes required by law to be withheld. At any time when a Participant is
required to pay to the Corporation an amount required to be withheld under
applicable income tax laws in connection with a distribution of shares of
Common Stock pursuant to this Plan, the Participant may satisfy this obligation
in whole or in part by electing to have the Corporation withhold from such
distribution shares of Common Stock having a value equal to the amount required
to be withheld. The value of the shares of Common Stock to be withheld shall
be based on the Fair Market Value of the Common Stock on the date that the
amount of tax to be withheld shall be determined (the "Tax Date"). Any such
election is subject to the following restrictions: (i) the election must be
made on or prior to the Tax Date; (ii) the election must be irrevocable; and
(iii) the election must be subject to the disapproval of the Committee. To the
extent required to comply with rules promulgated under Section 16 of the
Exchange Act, elections by Reporting Persons are subject to the following
additional restrictions: (i) no election shall be effective for a Tax Date
which occurs within six months of the grant of the award; and(ii) the election
must be made either (A) six months or more prior to the Tax Date or (B) during
a period beginning on the third business day following the date of release for
publication of the Corporation's quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day following such date.
(g) Restrictions On Sale and Exercise. With respect to Reporting Persons,
and if required to comply with rules promulgated under Section 16 of the
Exchange Act, (i) no Award providing for exercise, a vesting period, a
restriction period or the attainment of performance standards shall permit
unrestricted ownership of shares of Common Stock by the Participant for at
least six months from the date of grant, and (ii) shares of Common Stock
acquired pursuant to this Plan (other than shares of Common Stock acquired as a
result of the granting of a "derivative security") may not be sold or otherwise
disposed of for at least six months after acquisition.
(h) Requirements of Law. The granting of Awards and the issuance of shares
of
<PAGE> 9
Common Stock upon the exercise of Awards shall be subject to all applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any
stock exchanges upon which the Common Stock may be listed. As a condition
precedent to the issuer of shares of Common Stock pursuant to the grant or
exercise of an Award, the Corporation may require the Participant to take any
reasonable action to meet such requirements.
10. AMENDMENTS
(a) Except as otherwise provided in this Plan, the Board may at any time
terminate and, from time to time, may amend or modify this Plan. Any such
action of the Board may be taken without the approval of the Corporation's
shareholders, but only to the extent that such shareholder approval is not
required by applicable law or regulation, including specifically Rule 16b-3
under the Exchange Act.
(b) Except to the extent, if any, as may be permitted by rules promulgated
under Section 16 of the Exchange Act, the provisions of this Plan relating to
the amount, price and timing of Director Stock Options may not be amended more
than once every six months, other than to comport with changes in the Code,
ERISA or the rules thereunder.
(c) No amendment, modification or termination of this Plan shall in any
manner adversely affect any Awards theretofore granted to a Participant under
this Plan without the consent of such Participant.
11. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be
granted to Participants, the number of shares thereof covered by each
outstanding Award, and the price per share thereof in each such Award, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, stock dividend,
combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization or other such change. Any such adjustment may provide for the
elimination of fractional shares.
12. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the grant
of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Corporation or a Subsidiary. Nothing in this
Plan shall interfere with or limit in any way the right of the Corporation or
any Subsidiary to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employ of the
Corporation or any Subsidiary.
13. CHANGE OF CONTROL
(a) Notwithstanding anything contained in this Plan or any Award Agreement to
the
<PAGE> 10
contrary, in the event of a Change of Control, as defined below, the following
(i) may, in the sole discretion of the Committee, occur with respect to any and
all Employee Awards outstanding as of such Change of Control and (ii) shall
occur with respect to any and all Director Stock Options outstanding as of such
Change of Control:
(i) automatic maximization of performance standards, lapse of all
restrictions and acceleration of any time periods relating to the exercise,
realization or vesting of such Awards so that such Awards may be immediately
exercised, realized or vested in full on or before the relevant date fixed in
the Award Agreement;
(ii) performance shares or performance units shall be paid entirely in
cash;
(iii) upon exercise of a stock option or an incentive stock option
(collectively, an "Option") during the 60-day period from and after the date
of a Change of Control, the Participant exercising the Option may in lieu of
the receipt of Common Stock upon the exercise of the Option, elect by written
notice to the Corporation to receive an amount in cash equal to the excess of
the aggregate Value (as defined below) of the shares of Common Stock covered
by the Option or portion thereof surrendered determined on the date the
Option is exercised, over the aggregate exercise price of the Option (such
excess is referred to herein as the "Aggregate Spread"); provided, however,
and notwithstanding any other provision of this Plan, if the end of such
60-day period from and after the date of a Change of Control is within six
months of the date of grant of an Option held by a Participant who is a
Reporting Person, such Option shall be cancelled in exchange for a cash
payment to the Participant equal to the Aggregate Spread on the day which is
six months and one day after the date of grant of such Option. As used in
this Section 13(a)(iii) the term "Value" means the higher of (i) the highest
Fair Market Value during the 60-day period from and after the date of a
Change of Control and (ii) if the Change of Control is the result of a
transaction or series of transactions described in paragraphs (i) or (iii) of
the definition of Change of Control, the highest price per share of the
Common Stock paid in such transaction or series of transactions (which in the
case of paragraph (i) shall be the highest price per share of the Common
Stock as reflected in a Schedule 13D filed by the person having made the
acquisition);
(iv) if a Participant's employment terminates for any reason other than
retirement or death following a Change of Control, any Options held by such
Participant may be exercised by such Participant until the earlier of three
months after the termination of employment or the expiration date of such
Options; and
(v) all Awards become non-cancellable.
(b) A "Change of Control" of the Corporation shall be deemed to have
occurred upon the happening of any of the following events:
(i) the acquisition, other than from the Corporation, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership of 20% or more of either the then
outstanding shares of Common
<PAGE> 11
Stock of the Corporation or the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally
in the election of directors; PROVIDED, HOWEVER, that any acquisition by the
Corporation or any of its Subsidiaries, or any employee benefit plan (or
related trust) of the Corporation or its Subsidiaries, or any corporation
with respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners, respectively,
of the Common Stock and voting securities of the Corporation immediately
prior to such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the then outstanding
shares of Common Stock of the Corporation or the combined voting power of the
then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors, as the case may be, shall not
constitute a Change of Control;
(ii) individuals who, as of January 1, 1995, constitute the Board as of
the date hereof the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any individual becoming a
director subsequent to such date whose election, or nomination for election
by the Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of the directors of the Corporation (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(iii) approval by the shareholders of the Corporation of a reorganization,
merger or consolidation of the Corporation, in each case, with respect to
which the individuals and entities who were the respective beneficial owners
of the Common Stock and voting securities of the Corporation immediately
prior to such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
Common Stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the Corporation or
of the sale or other disposition of all or substantially all of the assets of
the Corporation.
14. GOVERNING LAW
To the extent that federal laws do not otherwise control, this Plan shall be
construed in accordance with and governed by the law of the State of Ohio.
15. INDEMNIFICATION
<PAGE> 12
Each person who is or shall have been a member of the Committee or of the
Board shall be indemnified and held harmless by the Corporation against and
from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under this Plan and
against and from any and all amounts paid by him in settlement thereof, with
the Corporation's approval, or paid by him in satisfaction of any judgment in
any such action, suit or proceeding against him, provided he shall give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Corporation's
Articles of Incorporation or Code of Regulations, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify them or hold
them harmless.
16. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Employees who are Reporting
Persons, Rule 16b-3 under the Exchange Act. In case any one or more of the
provisions of this Plan shall be held invalid, illegal or unenforceable in any
respect under applicable law and regulation (including Rule 16b-3), the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent
permissible by laws, any provision which could be deemed null and void shall
first be construed, interpreted or revised retroactively to permit this Plan to
be construed in compliance with all applicable laws (including Rule 16b-3) so
as to foster the intent of this Plan. Notwithstanding anything in this Plan to
the contrary, the Committee, in its sole and absolute discretion, may bifurcate
this Plan so as to restrict, limit or condition the use of any provision of
this Plan to Participants who are Reporting Persons without so restricting,
limiting or conditioning this Plan with respect to other Participants.
17. EFFECTIVE DATE AND TERM
The effective date of this Plan is April 17, 1995 subject to its approval by
the Corporation's shareholders at their next annual meeting or at any
adjournment thereof, within twelve months following the date of its adoption by
the Board. This Plan shall remain in effect until terminated by the Board.
<PAGE> 1
EXHIBIT 10.2
------------
BANC ONE CORPORATION
AMENDED 1994 KEY EXECUTIVE MANAGEMENT
INCENTIVE COMPENSATION PLAN
SECTION 1. Establishment, Purpose, and Effective Date of Plan
1.1 Establishment. BANC ONE CORPORATION (the "CORPORATION") hereby
establishes the "Amended 1994 Key Executive Management Incentive Compensation
Plan" (the Plan) for the Chairman and the President of the CORPORATION.
1.2 Purpose. The purpose of the Plan is to promote the interest of the
CORPORATION and its shareholders by strengthening its ability to attract and
retain executive key management talent and to motivate superior levels of
performance.
1.3 Effective Date. The Plan is amended effective as of January 1, 1995, by
action of the Personnel and Compensation Committee of the CORPORATION (the
"Committee") on January 23, 1995, subject to the approval of the amendment by
the shareholders of the CORPORATION prior to the payment of any awards for the
year 1995. The Plan was originally established on December 23, 1993 by the
Committee and approved by shareholders on April 19, 1994.
SECTION 2. Plan Administration
2.1 Plan Administration. The Plan is administered by the Personnel and
Compensation Committee of the Board of Directors of the 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:
<PAGE> 2
(a) "Award" means the cash amount payable upon the achievement of
performance goals as established by the Committee as authorized by the
Plan.
(b) "Committee" means the committee appointed by the Board of Directors of
the CORPORATION to administer the Plan. The 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.
(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 the
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 a designated Plan Year. The Target Award levels for the Chairman
and President, respectively, will be established by the Committee from year to
year pursuant to the provisions of this Plan within the time period required by
Section 162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder ("Section 162(m)").
5.2 Maximum Award Level. The maximum amount payable under the Plan is
defined as a percentage of the Target Award as established by the Committee for
a designated Plan Year
<PAGE> 3
within the time period required by Section 162(m); provided, however, that the
maximum payment for any one Plan Year hereunder to any participant under the
Plan is $3,000,000.
5.3 Corporate Performance Measure. The Corporate Performance Thresholds for
a Plan Year shall be established by the Committee within the time period
required by Section 162(m) and shall be based upon the achievement of
designated performance objectives or goals. The performance measures to be
used to establish such objectives or goals shall be (i) earnings growth for the
CORPORATION for the Plan Year as compared with the prior year and (ii) Return
on Assets of the CORPORATION for the Plan Year as compared with the previous
year. The established performance thresholds as established by this Committee
based on such goals or objectives 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 based upon the goals established for the Plan
Year. 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 and, if and as applicable, the shareholders. The existence of the
Plan does not obligate or bind the 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.
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
<PAGE> 4
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.
<PAGE> 1
<TABLE>
EXHIBIT 11
BANC ONE CORPORATION and Subsidiaries
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
($thousands, except per share amounts)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------------------------------------------
1995 1994 1995 1994
---------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY:
Earnings:
Net income $307,482 $330,570 $610,000 $657,520
Deduct: Dividends on preferred shares 4,373 4,373 8,746 8,746
----- ----- ----- -----
Net income available to common shareholders $303,109 $326,197 $601,254 $648,774
======== ======== ======== ========
Shares:
Weighted average common shares outstanding 393,397 407,286 394,253 406,745
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,343 1,222 1,142 1,239
----- ----- ----- -----
Weighted average common shares outstanding,
as adjusted 394,740 408,508 395,395 407,984
======= ======= ======= =======
PRIMARY EARNINGS PER COMMON SHARE $0.77 $0.80 $1.52 $1.59
===== ===== ===== =====
FULLY DILUTED:
Earnings:
Net income $307,482 $330,570 $610,000 $657,520
======== ======== ======== ========
Shares:
Weighted average common shares outstanding 393,397 407,286 394,253 406,745
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,379 1,292 1,325 1,275
Add: Conversion of preferred stock 8,764 8,765 8,764 8,765
----- ----- ----- -----
Weighted average common shares outstanding, as
adjusted 403,540 417,343 404,342 416,785
======= ======= ======= =======
FULLY DILUTED EARNINGS PER COMMON SHARE $0.76 $0.79 $1.51 $1.58
===== ===== ===== =====
</TABLE>
26
<PAGE> 1
<TABLE>
BANC ONE CORPORATION and Subsidiaries EXHIBIT 12
Statement Regarding Computation of Ratio of Earnings to Fixed Charges
$(thousands)
<CAPTION>
Six Months Ended Years Ended
June 30, December 31,
---------------------+------------------------------------------------------------
1995 1994 | 1994 1993 1992 1991 1990
---------------------+------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Calculation excluding interest on
deposits:
Earnings
Income before income taxes and
change in accounting
principle and equity in
earnings of Bank One, Texas,
NA (1) $ 933,941 $1,002,962 $1,518,852 $1,770,712 $1,341,249 $928,947 $727,310
Fixed charges 355,022 272,024 633,569 348,327 321,402 419,274 467,263
Less: Capitalized interest (726) (483) (1,000) (652) (1,199) (1,732) (2,181)
----- ----- ------- ----- ------- ------- -------
Earnings $1,288,237 $1,274,503 $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
expenses $ 328,497 $245,943 $575,734 $298,857 $278,615 $379,708 $433,953
Portion of rental payments under
operating leases deemed to be
interest 26,525 26,081 57,835 49,470 42,787 39,566 33,310
---------- -------- -------- -------- -------- -------- --------
Fixed charges $ 355,022 $272,024 $633,569 $348,327 $321,402 $419,274 $467,263
========== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges
excluding interest on deposits: 3.63x 4.69x 3.40x 6.08x 5.17x 3.21x 2.55x
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) $ 933,941 $1,002,962 $1,518,852 $1,770,712 $1,341,249 $928,947 $727,310
Fixed charges 1,491,242 1,016,120 2,307,832 1,826,018 2,318,274 2,955,918 3,115,412
Less: Capitalized interest (726) (483) (1,000) (652) (1,199) (1,732) (2,181)
---------- -------- -------- -------- -------- -------- --------
Earnings $2,424,457 $2,018,599 $3,825,684 $3,596,078 $3,658,324 $3,883,133 $3,840,541
========== ========== ========= ========= ========= ========= =========
Fixed charges:
As detailed above $ 355,022 $272,024 $633,569 $348,327 $321,402 $419,274 $467,263
Interest on deposits 1,136,220 744,096 1,674,263 1,477,691 1,996,872 2,536,644 2,648,149
---------- -------- -------- -------- -------- -------- --------
Fixed charges $1,491,242 $1,016,120 $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 1.63x 1.99x 1.66x 1.97x 1.58x 1.31x 1.23x
<FN>
(1)Results of Bank One, Texas, NA are consolidated beginning October 1, 1991.
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 5,192,560
<INT-BEARING-DEPOSITS> 21,948
<FED-FUNDS-SOLD> 684,320
<TRADING-ASSETS> 181,047
<INVESTMENTS-HELD-FOR-SALE> 9,224,975
<INVESTMENTS-CARRYING> 4,671,195
<INVESTMENTS-MARKET> 4,774,781
<LOANS> 63,334,963
<ALLOWANCE> 891,546
<TOTAL-ASSETS> 86,783,317
<DEPOSITS> 65,612,859
<SHORT-TERM> 9,552,479
<LIABILITIES-OTHER> 1,690,954
<LONG-TERM> 2,087,954
<COMMON> 2,051,453
0
249,875
<OTHER-SE> 5,537,743
<TOTAL-LIABILITIES-AND-EQUITY> 86,783,317
<INTEREST-LOAN> 2,933,965
<INTEREST-INVEST> 491,453
<INTEREST-OTHER> 40,159
<INTEREST-TOTAL> 3,465,577
<INTEREST-DEPOSIT> 1,136,220
<INTEREST-EXPENSE> 1,463,925
<INTEREST-INCOME-NET> 2,001,652
<LOAN-LOSSES> 159,082
<SECURITIES-GAINS> 12,571
<EXPENSE-OTHER> 1,838,283
<INCOME-PRETAX> 933,941
<INCOME-PRE-EXTRAORDINARY> 610,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 610,000
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.51
<YIELD-ACTUAL> 5.29
<LOANS-NON> 353,443
<LOANS-PAST> 186,703
<LOANS-TROUBLED> 4,465
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 897,180
<CHARGE-OFFS> 258,472
<RECOVERIES> 97,678
<ALLOWANCE-CLOSE> 891,546
<ALLOWANCE-DOMESTIC> 640,010
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 251,536
</TABLE>
