<PAGE> 1
Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-8552
BANC ONE CORPORATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0738296
--------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 East Broad Street, Columbus, Ohio 43271
--------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 248-5944
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
New York Stock Exchange
Common Stock Cincinnati Stock Exchange
without par value Midwest Stock Exchange
----------------- -------------------------
Securities registered pursuant to Section 12(g) of the Act:
Series C Convertible Preferred Stock with no par value
----------------------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
As of March 6, 1996 the aggregate market value of the common voting stock
held by non-affiliates of the Registrant calculated by reference to the quoted
price of BANC ONE Common Stock as reported on the New York Stock Exchange was
$16,165,307,379. As of March 6, 1996 there were outstanding 435,429,155 shares
of BANC ONE CORPORATION Common Stock, no par value, which stock is the only
class of Registrant's common stock. As of February 26, 1996 there were 86,374
common stockholders of record.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the 1995 Annual Report to Shareholders are incorporated by
reference into Parts I and II. Portions of the Definitive Proxy Statement for
the BANC ONE CORPORATION Annual Meeting to be held April 16, 1996 are
incorporated by reference into Part III.
<PAGE> 2
BANC ONE CORPORATION
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
PART I
------
<S> <C> <C>
Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . 10
Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II
-------
Item 5 Market for the Registrant's Common Stock and Related Stockholder Matters . . . . . . . . . . . . . . 12
Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . 12
Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . 12
PART III
--------
Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . 13
Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART IV
-------
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K - Index
to Financial Statements and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
PART I
------
ITEM 1 BUSINESS
--------
BANC ONE CORPORATION ("Registrant" or "BANC ONE") is a multi-bank
holding company incorporated under the laws of the State of Ohio
that, at December 31, 1995, operated 1,352 banking offices in
Arizona, Colorado, Illinois, Indiana, Kentucky, Ohio, Oklahoma, Texas, Utah,
West Virginia and Wisconsin. On January 2, 1996, BANC ONE added 150 banking
offices with the acquisition of Premier Bancorp, Inc. of Baton Rouge,
Louisiana. Its executive offices are located at 100 East Broad Street,
Columbus, Ohio 43215, and its telephone number is (614) 248-5944. At December
31, 1995, BANC ONE had consolidated total assets of $90.5 billion, consolidated
total deposits of $67.3 billion and consolidated total stockholders' equity of
$8.2 billion (9.1% of its consolidated total assets). At December 31, 1995,
BANC ONE ranked tenth among the nation's publicly owned bank holding companies
in terms of consolidated average total assets and eighth in terms of
consolidated average common equity. BANC ONE's 1995 consolidated net income of
$1.3 billion ranked seventh among the nation's 50 largest publicly owned bank
holding companies.
At December 31, 1995 BANC ONE's affiliate banks held the largest
statewide share of total bank deposits in Arizona and Kentucky, the second
largest share of such deposits in Indiana, Ohio and West Virginia, and the third
largest share of such deposits in Colorado, Wisconsin and Texas. BANC ONE has
smaller statewide market shares in the other states in which BANC ONE operates
banks. At December 31, 1995, except for Bank One Texas, N.A., no single BANC ONE
affiliate bank accounted for more than 20% of BANC ONE's consolidated total
assets. BANC ONE also owns nonbank subsidiaries that engage in credit card and
merchant processing, consumer finance, mortgage banking, insurance, trust and
investment management, brokerage, investment and merchant banking, venture
capital, equipment leasing and data processing.
Since its formation in 1968, BANC ONE has acquired over 100 banking
institutions and the number of banking offices of its affiliate banks has
increased from 24 to over 1,300. BANC ONE continues to explore opportunities to
acquire banks and nonbank companies permitted by the Bank Holding Company Act.
Discussions are continually being carried on relating to such acquisitions. It
is not presently known whether, or on what terms, such discussions will result
in further acquisitions. BANC ONE's acquisition strategy is flexible in that it
does not require BANC ONE to effect specific acquisitions so as to enter certain
markets or to attain specified growth levels. Rather than being market driven or
size motivated, BANC ONE's acquisition strategy reflects BANC ONE's willingness
to consider potential acquisitions wherever and whenever such opportunities
arise based on the then-existing market conditions and other circumstances.
Banks to be acquired must be of sufficient size to support and justify having
management of a caliber capable of making lending and other management decisions
at the local level under BANC ONE's operating philosophy. BANC ONE also is
willing from time to time to acquire a smaller bank when it can be acquired
through a reorganization into an existing affiliate. BANC ONE's interest in the
acquisition of nonbank companies has been limited to bank-related services with
which BANC ONE already has familiarity. BANC ONE's acquisitions may be made by
the exchange of stock, through cash purchases and with other consideration.
BANC ONE is a legal entity separate and distinct from its affiliate
banks and its nonbanking subsidiaries (collectively, the "affiliates").
Accordingly, the right of BANC ONE, and thus the right of BANC ONE's creditors
and shareholders, to participate in any distribution of the assets or earnings
of any affiliate is necessarily subject to the prior claims of creditors of the
affiliate, except to the extent that claims of BANC ONE in its capacity as a
creditor may be recognized. The principal sources of BANC ONE's revenues are
dividends and fees from its affiliates. See "Regulatory Matters--Dividend
Restrictions" for a discussion of the restrictions on the affiliate banks'
ability to pay dividends to BANC ONE.
For a further description of BANC ONE's business, refer to the
following sections of the 1995 Annual Report to Shareholders, which are
expressly incorporated herein by reference:
1. Location of Banking offices and list of subsidiaries on the inside back
cover.
2. Note 2, "Affiliations, Pending Affiliations, and Divestitures," on page 54.
3. "Five Year Summary - Average Balances, Income and Expenses, Yields and
Rates" table on pages 24 and 25.
4. "Rate-Volume Analysis" table on page 26.
5. Note 3, "Securities and Investment Products", on pages 55 through 58.
6. Loans and leases on pages 51, 52, 59 through 61, 32 and 33.
7. "Deposit Analysis" on page 34.
8. The Key Operating Ratios section of the "Consolidated Quarterly Financial
Data" on page 44.
9. Note 7, "Short-term Borrowings", on page 62.
10. The portions of the feature section on pages 7 through 19 except for the
information under the captions "Our Affiliation Philosophy", "Measuring
Financial Strength", "The Changing Role of the Branch Delivery System" and the
"Conclusion".
BANC ONE cautions that any forward looking statements contained in this
report, in a report incorporated by reference to this report or made by
management of the company involve risks and uncertainties and are subject to
change based on various important factors. The forward looking statements could
cause actual results for 1996 and beyond to differ materially from those
expressed or implied.
1
<PAGE> 4
COMPETITION
- -----------
Active competition exists in all principal areas in which BANC ONE or one or
more of its subsidiaries is presently engaged, not only with respect to
commercial banks, but also with savings and loan associations, credit unions,
finance companies, credit card issuers, mortgage companies, leasing companies,
insurance companies, money market mutual funds and brokerage firms together
with other domestic and foreign financial and non-financial institutions such
as General Electric, General Motors and Ford.
EMPLOYEES
- ---------
As of December 31, 1995 BANC ONE and its consolidated subsidiaries had
approximately 46,900 full-time equivalent employees.
REGULATORY MATTERS
GENERAL
BANC ONE is subject to the supervision of, and to regular inspection
by, the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). BANC ONE's principal bank affiliates are organized as national
banking associations, which are subject to regulation and regular inspection by
the Office of the Comptroller of the Currency ("OCC"). In addition, various
state authorities regulate BANC ONE's state affiliate banks, and all of BANC
ONE's affiliate banks are subject to regulation in some degree by the Federal
Reserve and the Federal Deposit Insurance Corporation (the "FDIC").
In addition to banking laws, regulations and regulatory agencies, BANC
ONE and its affiliates are subject to various other laws, regulations and
regulatory agencies, all of which directly or indirectly affect BANC ONE's
operations, management and ability to make distributions. For example, BANC
ONE's affiliate banks are affected by various state and federal laws and by the
fiscal and monetary policies of the federal government and its agencies,
including the Federal Reserve. An important purpose of these fiscal and monetary
policies is to
2
<PAGE> 5
curb inflation and control recessions through control of the supply of money and
credit. The Federal Reserve uses its powers to regulate reserve requirements of
its member banks, to set the discount rate on extensions of credit to insured
depository institutions and to conduct open market operations in United States
government securities so as to exercise control over the supply of money and
credit. These policies directly affect the amount of, and the interest rates on,
bank loans and deposits, and this materially affects bank earnings. Future
policies of the Federal Reserve and other authorities cannot be predicted, nor
can their effect on future bank earnings be predicted. Similarly, future changes
in state and federal laws and wage, price and other economic restraints of the
federal government cannot be predicted nor can their effect on future bank
earnings be predicted.
The following discussion summarizes certain aspects of those laws and
regulations that affect BANC ONE. Proposals to change the laws and regulations
governing the banking industry are frequently raised in Congress, in the state
legislatures and by the various bank regulatory agencies. The likelihood and
timing of any legislative or regulatory changes and the impact such changes
might have on BANC ONE and its affiliates are difficult to determine.
HOLDING COMPANY STRUCTURE
BANC ONE is a legal entity separate and distinct from its affiliates.
However, the right of BANC ONE, and thus the rights of BANC ONE's creditors and
shareholders, to participate in any distribution of the assets or earnings of
any affiliate is necessarily subject to regulatory restrictions on such
distributions and to the prior claims of creditors of such affiliate, except to
the extent that claims of BANC ONE in its capacity as a creditor may be
recognized.
BANC ONE's affiliate banks are subject to restrictions under federal
law which limit the transfer of funds by the affiliate banks to BANC ONE and its
nonbanking subsidiaries, whether in the form of loans, extensions of credit,
investments or asset purchases. Such transfers by any affiliate bank to BANC ONE
or any nonbanking subsidiary are limited in amount to 10% of the bank's capital
and surplus and, with respect to BANC ONE and all such nonbanking subsidiaries,
to an aggregate of 20% of such bank's capital and surplus. Furthermore, such
loans and extensions of credit are required to be secured in specified amounts.
The Federal Reserve has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its affiliate banks and to maintain resources adequate to support each
such affiliate bank. This support may be required at times when BANC ONE may not
have the resources to provide it. Any capital loans by BANC ONE to any of the
affiliate banks are subordinate in right of payment to deposits and to certain
other indebtedness of such affiliate bank. In addition, in the event of a bank
holding company's bankruptcy any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of an affiliate bank will
be assumed by the bankruptcy trustee and entitled to a priority of payment.
3
<PAGE> 6
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (i) the default of a commonly controlled
FDIC-insured depository institution or (ii) any assistance provided by the FDIC
to a commonly controlled FDIC-insured depository institution in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur in the absence
of regulatory assistance.
Federal law (12 U.S.C. Section 55) permits the OCC to order the pro
rata assessment of shareholders of a national bank whose capital stock has
become impaired, by losses or otherwise, to relieve a deficiency in such
national bank's capital stock. This statute also provides for the enforcement of
any such pro rata assessment of shareholders of such national bank to cover such
impairment of capital stock by sale, to the extent necessary, of the capital
stock of any assessed shareholder failing to pay the assessment. Similarly, the
laws of certain states provide for such assessment and sale with respect to
banks chartered by such states. BANC ONE, as the sole shareholder of its
affiliate national banks, is subject to such provisions.
CAPITAL REQUIREMENTS
BANC ONE is subject to capital ratios, requirements and guidelines
imposed by the Federal Reserve, which are substantially similar to the ratios,
requirements and guidelines imposed by the Federal Reserve, the OCC and the FDIC
on the banks within their respective jurisdictions. These capital requirements
establish higher capital standards for banks and bank holding companies that
assume greater credit risks. For this purpose, a bank's or holding company's
assets and certain specified off-balance sheet commitments are assigned to four
risk categories, each weighted differently based on the level of risk that is
ascribed to such assets or commitments. A bank's or holding company's capital,
in turn, is divided into two tiers: core ("Tier 1") capital, which includes
common equity, non-cumulative perpetual preferred stock and related surplus
(excluding auction rate issues), and minority interests in equity accounts of
consolidated subsidiaries, less goodwill, certain identifiable intangible assets
and certain other assets; and supplementary ("Tier 2") capital, which includes,
among other items, perpetual preferred stock not meeting the Tier 1 definition,
mandatory convertible securities, subordinated debt and allowances for loan and
lease losses, subject to certain limitations, less certain required deductions.
BANC ONE, like other bank holding companies, currently is required to
maintain Tier 1 and total capital (the sum of Tier 1 and Tier 2 capital) equal
to at least 4% and 8% of its total risk-weighted assets, respectively. At
December 31, 1995, BANC ONE met both requirements, with Tier 1 and total capital
equal to 10.05% and 14.05% of its total risk-weighted assets, respectively.
The Federal Reserve also requires bank holding companies to maintain a
minimum "leverage ratio" (Tier 1 capital to adjusted total assets) of 3%, if the
holding company has the
4
<PAGE> 7
highest regulatory rating and meets certain other requirements, or of 3% plus an
additional cushion of at least 100 to 200 basis points if the holding company
does not meet these requirements. At December 31, 1995, BANC ONE's leverage
ratio was 8.87%.
The Federal Reserve may set capital requirements higher than the
minimums noted above for holding companies whose circumstances warrant it. For
example, holding companies experiencing or anticipating significant growth may
be expected to maintain capital ratios including tangible capital positions well
above the minimum levels. The Federal Reserve has not, however, imposed any such
special capital requirement on BANC ONE.
On August 2, 1995, the Federal Reserve, the FDIC and the OCC jointly
adopted a two-step approach to implementing minimum capital standards for
interest rate risk exposures. First, the three agencies have revised their
respective capital standards to include a bank's (or bank holding company's)
exposure to declines in the economic value of its capital due to changes in
interest rates as a factor that the agencies will consider in evaluating the
bank's (or holding company's) capital. Second, after collecting industry data
and evaluating the level of interest rate risk exposure in the banking industry
generally, the agencies plan, at some future date, to issue a proposed rule that
would establish an explicit minimum capital charge for interest rate risk.
DIVIDEND RESTRICTIONS
Various federal and state statutory provisions limit the amount of
dividends BANC ONE's affiliate banks can pay to BANC ONE without regulatory
approval. The approval of the appropriate bank regulator is required for any
dividend by a national bank or by a state-chartered bank that is a member of the
Federal Reserve System (a "state member bank") if the total of all dividends
declared by the bank in any calendar year would exceed the total of its net
profits, as defined by regulatory agencies, for such year combined with its
retained net profits for the preceding two years. In addition, a national bank
or a state member bank may not pay a dividend in an amount greater than its net
profits then on hand. At December 31, 1995, total stockholders' equity of the
affiliate banks approximated $7.6 billion, of which $1.1 billion was available
for payment of dividends without approval by the applicable regulatory
authority.
In addition, federal bank regulatory authorities have authority to
prohibit the affiliate banks from engaging in an unsafe or unsound practice in
conducting their business. The payment of dividends, depending upon the
financial condition of the bank in question, could be deemed to constitute such
an unsafe or unsound practice. The ability of BANC ONE's affiliate banks to pay
dividends in the future is presently, and could be further, influenced by bank
regulatory policies and capital guidelines.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
5
<PAGE> 8
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") significantly expanded the regulatory and enforcement powers of
federal banking regulators, in particular the FDIC, and has important
consequences for BANC ONE, its affiliate banks and other depository institutions
located in the United States.
A major feature of FDICIA is the comprehensive directions it gives to
federal banking regulators to promptly direct or require the correction of
problems at inadequately capitalized banks in the manner that is least costly to
the federal deposit insurance funds. The degree of corrective regulatory
involvement in the operations and management of banks and their holding
companies is, under FDICIA, largely determined by the actual or anticipated
capital positions of the subject institution.
FDICIA established five tiers of capital measurement for regulatory
purposes ranging from "well capitalized" to "critically undercapitalized." Under
regulations adopted by the federal banking agencies, a depository institution is
well capitalized if it significantly exceeds the minimum level required by
regulation for each relevant capital measure, adequately capitalized if it meets
each such measure, undercapitalized if it fails to meet any such measure,
significantly undercapitalized if it is significantly below any such measure and
critically undercapitalized if, among other things, its tangible equity is not
greater than 2% of total tangible assets. A depository institution may be deemed
to be in a capitalization category lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating. FDICIA requires
banking regulators to take increasingly strong corrective steps, based on the
capital tier of any subject bank, to cause such bank to achieve and maintain
capital adequacy. Even if a bank is adequately capitalized, however, the banking
regulators are authorized to apply corrective measures if the bank is determined
to be in an unsafe or unsound condition or engaging in an unsafe or unsound
activity.
Depending on the level of capital of an insured depository institution,
the banking regulatory agencies' corrective powers can include: requiring a
capital restoration plan; placing limits on asset growth and restrictions on
activities; requiring the institution to reduce total assets; requiring the
institution to issue additional stock (including voting stock) or to be
acquired; placing restrictions on transactions with affiliates; restricting the
interest rate the institution may pay on deposits; ordering a new election for
the institution's board of directors; requiring that certain senior executive
officers or directors be dismissed; prohibiting the institution from accepting
deposits from correspondent banks; requiring the institution to divest certain
subsidiaries; prohibiting the payment of principal or interest on subordinated
debt; prohibiting the institution's parent bank holding company from making
capital distributions without prior regulatory approval; and, ultimately,
appointing a conservator or receiver for the institution.
If the insured depository institution is undercapitalized, the parent
bank holding company is required to guarantee that the institution will comply
with any capital restoration plan submitted to, and approved by, the appropriate
federal banking agency in an amount equal to the lesser of (i) 5% of the
institution's total assets at the time the institution became undercapitalized
6
<PAGE> 9
or (ii) the amount which is necessary (or would have been necessary) to bring
the institution into compliance with all applicable capital standards as of the
time the institution failed to comply with the capital restoration plan. If such
parent bank holding company guarantee is not obtained, the capital restoration
plan may not be accepted by the banking regulators. As a result, such
institution would be subject to the more severe restrictions imposed on
significantly undercapitalized institutions. Further, the failure of such a
depository institution to submit an acceptable capital plan is grounds for the
appointment of a conservator or receiver.
FDICIA also contains a number of other provisions affecting depository
institutions, including additional reporting and independent auditing
requirements, the establishment of safety and soundness standards, the changing
of FDIC insurance premiums from flat amounts to the system of risk-based
assessments described below under "Deposit Insurance Assessments", a review of
accounting standards, and supplemental disclosures and limits on the ability of
all but well capitalized depository institutions to acquire brokered deposits.
The Riegle Community Development and Regulatory Improvement Act of 1994,
however, among other things, contains a number of specific provisions easing the
regulatory burden on banks and bank holding companies, including some imposed by
FDICIA, and making the bank regulatory system more efficient. Federal banking
regulators are taking actions to implement these provisions.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of BANC ONE's affiliate banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") and Savings Association
Insurance Fund ("SAIF") administered by the FDIC. The FDIC has adopted
regulations establishing a permanent risk-related deposit insurance assessment
system. Under this system, the FDIC places each insured bank in one of nine risk
categories based on (a) the bank's capitalization and (b) supervisory
evaluations provided to the FDIC by the institution's primary federal regulator.
Each insured bank's insurance assessment rate is then determined by the risk
category in which it is classified by the FDIC.
Until June 1, 1995, there was an eight basis point spread between the
highest and lowest assessment rates, with banks classified in the highest
capital and supervisory evaluation categories being subject to a rate of $0.23
per $100 of deposits and banks classified in the lowest capital and supervisory
evaluation categories being subject to a rate of $0.31 per $100 of deposits.
These assessment rates reflected, in substantial part, the amount the FDIC had
determined necessary to increase the reserve ratio of the BIF to 1.25% of total
insured bank deposits. Under FDICIA, the FDIC was required to set deposit
insurance premium rates at a level sufficient to achieve that ratio by 2006.
On August 8, 1995, having determined that the BIF had attained the
required 1.25% reserve ratio during May 1995, the FDIC amended its regulations
to adopt a new assessment rate schedule for BIF deposits, effective
retroactively on June 1, 1995. This new schedule
7
<PAGE> 10
established a 27 basis point spread between the highest and lowest assessment
rates, with banks classified in the highest capital and supervisory evaluation
categories being subject to a rate of $0.04 per $100 of deposits and banks
classified in the lowest capital and supervisory evaluation categories
continuing to be subject to a rate of $0.31 per $100 of deposits.
The new regulations also authorized the FDIC to increase or reduce
annual assessment rates by up to 5 basis points from those set forth in the new
assessment rate schedule, without formal rulemaking, based on the amount of
assessment revenue necessary to maintain the required 1.25% reserve ratio and
the assessment schedule that would generate that amount of assessment revenue
considering the risk profile of BIF members. On December 11, 1995, based on
these factors, the FDIC made such an adjustment, reducing assessment rates by 4
basis points for the semiannual assessment period beginning January 1, 1996. For
this six-month period, the annual assessment rate thus will range from $0.00 per
$100 of deposits for banks classified in the highest capital and supervisory
evaluation categories to $0.27 per $100 of deposits for banks classified in the
lowest capital and supervisory evaluation categories subject to a $2,000 per
bank minimum assessment. There can be no assurance, however, that this
adjustment will continue in effect for subsequent assessment periods, or that
the FDIC will not make further adjustments, up or down, in assessment rates.
Because the SAIF, which insures savings institution deposits, has not
yet reached the required 1.25% reserve ratio, and is not projected to do so for
several years, SAIF deposit insurance premium rates have not been lowered, and
will continue to range from $0.23 per $100 of deposits for savings institutions
classified in the highest capital and supervisory evaluation categories to $0.31
per $100 of deposits for savings institutions classified in the lowest capital
and supervisory evaluation categories. However, Congress is considering
proposals to recapitalize the SAIF and/or merge the SAIF with the BIF. It is
uncertain whether or when such proposals might be adopted, or what impact they
might have on the BIF or on FDIC-insured institutions.
Some BANC ONE affiliate banks hold deposits that were acquired from
savings institutions and that, accordingly, are insured by SAIF. At December 31,
1995, BANC ONE's affiliate banks held $6.3 billion of such deposits. Deposit
insurance premiums will be charged on these deposits at the higher SAIF rate.
DEPOSITOR PREFERENCE STATUTE
Federal legislation has been enacted providing that deposits and
certain claims for administrative expenses and employee compensation against an
insured depository institution would be afforded a priority over other general
unsecured claims against such institution, including federal funds and letters
of credit, in the "liquidation or other resolution" of the institution by any
receiver.
BROKERED DEPOSITS
8
<PAGE> 11
Under FDIC regulations, no FDIC-insured bank or savings institution can
accept brokered deposits unless it is (a) well capitalized or (b) adequately
capitalized and receives a waiver from the FDIC. In addition, these regulations
prohibit any bank or savings institution that is not well capitalized from (a)
paying an interest rate on deposits in excess of 75 basis points over certain
prevailing market rates or (b) offering "pass through" deposit insurance on
certain employee benefit plan accounts unless it provides certain notice to
affected depositors. At December 31, 1995, BANC ONE's affiliate banks had
aggregate total brokered deposits of approximately $87 million.
INTERSTATE BANKING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 ("Riegle-Neal"), subject to certain concentration limits, (a) bank
holding companies such as BANC ONE are permitted, beginning September 29, 1995,
to acquire banks and bank holding companies located in any state; (b) any bank
that is a subsidiary of a bank holding company is permitted, again beginning
September 29, 1995, to receive deposits, renew time deposits, close loans,
service loans and receive loan payments as an agent for any other bank
subsidiary of that holding company; and (c) banks are permitted, beginning June
1, 1997, to acquire branch offices outside their home states by merging with
out-of-state banks, purchasing branches in other states and establishing de novo
branch offices in other states, provided that, in the case of any such purchase
or opening of individual branches, the host state has adopted legislation
"opting in" to those provisions of Riegle-Neal; and provided that, in the case
of a merger with a bank located in another state, the host state has not adopted
legislation "opting out" of that provision of Riegle-Neal. BANC ONE might use
Riegle-Neal to acquire banks in additional states and to consolidate its
affiliate banks under a smaller number of separate charters.
9
<PAGE> 12
ITEM 2 PROPERTIES
----------
BANC ONE leases its principal offices in Columbus, Ohio under several long-term
leases. As of December 31, 1995 BANC ONE's affiliate banks had 1,352 banking
offices located in Arizona, Colorado, Illinois, Indiana, Kentucky, Michigan,
Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. BANC ONE and its
subsidiaries own or lease various office space, computer centers and
warehouses. For additional information see the following portions of the 1995
Annual Report to Shareholders, which are expressly incorporated herein by
reference:
1. Note 6, "Bank Premises, Equipment and Leases" on page 61.
ITEM 3 LEGAL PROCEEDINGS
-----------------
In 1992, Bank One, Columbus, N.A. ("Columbus") was named a defendant in a
purported class action lawsuit in Pennsylvania challenging whether Columbus can
impose various types of fees, allowed by the state of Ohio, on credit
cardholders residing in Pennsylvania (the "Suit"). The Suit seeks
unquantified compensatory and triple damages and other equitable relief. The
Suit is one of many similar class action lawsuits brought against credit card
issuing banks throughout the United States. The dismissal of the Suit by the
Court of Common Pleas of Philadelphia County, Pennsylvania, which had been
upheld by a panel of the Pennsylvania Superior Court, was reversed by the
entire Pennsylvania Superior Court in December 1994. Columbus has appealed the
decision to the Pennsylvania Supreme Court, which has postponed oral argument
pending a decision by the United States Supreme Court in a similar action
entitled SMILEY V. CITIBANK, in which the California Supreme Court has affirmed
the lower court's decision in favor of the bank. Legal counsel believes that
the decision of the entire Pennsylvania Superior Court is contrary to the
decisions of most state and federal courts outside Pennsylvania that have
considered the issue, which have held that national banks may use the rates and
fees of the bank's home state in contracts with cardholders from other states.
There can be no assurance that bank affiliates of BANC ONE will not be named as
defendants in future similar lawsuits.
Except as stated above, neither BANC ONE nor any of its subsidiaries is
involved in any material pending legal proceedings other than ordinary routine
litigation incident to the business. Similarly, no property owned by any of
said entities is the subject of any material pending legal proceedings other
than ordinary routine litigation incident to the business.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
During the fourth quarter of 1995 no matters were submitted to a vote of
securityholders.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
Executive officers as of January 1, 1996 are set forth below. Unless otherwise
designated, they are officers of BANC ONE CORPORATION. Others hold the
positions indicated in wholly owned subsidiaries. All of these executive
officers, with the exception of Messrs. Chancey, Lehmann, Logan, Neubert and
Steinhart, have been employed by BANC ONE in various capacities during the past
5 years.
<TABLE>
<CAPTION>
Year Joined
Name Age Title BANC ONE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Joseph D. Barnette, Jr. 56 Chairman/CEO--Banc One Indiana Corporation 1982
Steven A. Bennett 43 Senior Vice President 1989
William P. Boardman 54 Senior Executive Vice President 1984
Malcolm B. Chancey, Jr. 64 Chairman/CEO--Banc One Kentucky Corporation 1994
Roman J. Gerber 63 Executive Vice President 1966
Richard D. Headley 47 Chairman/CEO--Banc One Services Corporation 1975
Thomas E. Hoaglin 46 Chairman/CEO--Banc One Ohio Corporation 1973
Craig J. Kelly 50 Senior Vice President 1987
David J. Kundert 54 Chairman/CEO--Bank One Investment Management
and Trust Group 1971
James C. LaVelle 57 Senior Vice President and Senior Credit Officer 1978
Richard J. Lehmann 51 President/COO 1993
William C. Leiter 56 Senior Vice President and Controller 1981
Richard D. Lodge 48 Senior Vice President 1973
</TABLE>
10
<PAGE> 13
<TABLE>
<S> <C> <C> <C>
Robert F. B. Logan 63 Chairman/CEO--Bank One, Arizona, N.A. 1993
John B. McCoy 52 Chairman/CEO 1967
Michael J. McMennamin 50 Executive Vice President-Finance 1990 (1)
George R. L. Meiling 53 Treasurer 1977
Jeffrey P. Neubert 53 Chairman--Banc One Diversified Services
Corporation 1991
Ronald G. Steinhart 55 Chairman/CEO--Bank One, Texas, N.A. 1992
</TABLE>
(1) From June 1981 to April 1985, Mr. McMennamin was the Vice Chairman of Bank
One Columbus, N.A. and Chief Investment Officer of Banc One Corporation.
Mr. Chancey has served as Chairman and Chief Executive Officer of Banc One
Kentucky Corporation since August 1994. From January 1993 until the acquisition
of Liberty National Bancorp, Inc. by BANC ONE in August 1994, Mr. Chancey
served as Chairman, President and Chief Executive Officer of Liberty National
Bancorp. Inc. and as Chairman and Chief Executive Officer of Liberty National
Bank and Trust Company of Kentucky. From February 1990 to December 1992, Mr.
Chancey served as President of Liberty National Bancorp. Inc. and Liberty
National Bank and Trust Company of Kentucky.
Mr. Logan has served as Chairman and Chief Executive Officer of Bank One,
Arizona, N.A. since April 1995. From May 1993 to March 1995, Mr. Logan served
as a director of Banc One Arizona Corporation. From January 1990 until the
acquisition of Valley National Bank in April 1993, Mr. Logan served as
President and Chief Operating Officer of Valley National Bank (now Bank One,
Arizona, N.A.)
Mr. Neubert has served as Executive Vice President of BANC ONE since 1991.
From 1974 to 1991, Mr. Neubert served in various positions with Citicorp.
Mr. Steinhart has served as Chairman and Chief Executive Officer of Bank One,
Texas, N.A. since January 1995. From December 1992 to January 1995, Mr.
Steinhart served as President and Chief Operating Officer of Bank One, Texas,
N.A. From February 1988 until the acquisition of Team Bancshares, Inc. by BANC
ONE in November 1992, Mr. Steinhart served as Chairman and Chief Executive
Officer of Team Bancshares, Inc., a bank holding company.
Information regarding Mr. Lehmann's business experience during the past five
years is set forth under the caption "Election of Directors" in the definitive
Proxy Statement for the 1996 Annual Meeting of Shareholders to be held April
16, 1996 (the "Proxy Statement"), which information is expressly incorporated
by reference herein.
11
<PAGE> 14
PART II
-------
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
----------------------------------------------------------------
MATTERS
-------
STOCK LISTING
COMMON
- ------
New York Stock Exchange: BancOne
Ticker Symbol: ONE
SERIES C PREFERRED
- ------------------
NASD National Market Symbol: BancOne pfC
Ticker Symbol: BONEO
See the following portions of the 1995 Annual Report to Shareholders which are
expressly incorporated herein by reference:
- - "Financial Highlights" on page 1.
- - "Consolidated Quarterly Financial Data" on pages 44 and 45.
- - Notes 8, 9, 10, and 15 on pages 63, 64 and 70.
- - "Five Year Performance Summary" on page 22.
- - "Ten Year Performance Summary" on pages 42 and 43.
ITEM 6 SELECTED FINANCIAL DATA
-----------------------
See the following portions of the 1995 Annual Report to Shareholders which are
expressly incorporated herein by reference:
- - "Five Year Performance Summary" on page 22.
- - "Ten Year Performance Summary" on pages 42 and 43.
- - Note 2 on page 54.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
See the following portions of the 1995 Annual Report to Shareholders
which are expressly incorporated herein by reference:
- - "Management's Discussion and Analysis" on pages 22 through 41.
- - "Five Year Summary-Average Balances, Income and Expense, Yields and Rates"
on pages 24 and 25.
- - "Rate-Volume Analysis" on page 26.
- - "Allowance for credit loans" on page 32.
- - "Loan and Lease Analysis" on page 33.
- - "Consolidated Quarterly Financial Data" on pages 44 and 45.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
See the following portions of the 1995 Annual Report to Shareholders which are
expressly incorporated herein by reference:
- - "Consolidated Financial Statements and footnotes" on pages 46 through 74.
- - "Consolidated Quarterly Financial Data" on pages 44 and 45.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Registrant has had no disagreement on accounting and financial disclosure
matters and has not changed accountants during the two year period ending
December 31, 1995.
12
<PAGE> 15
PART III
--------
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The information set forth under the captions "Election of Directors" and
"Certain Reports" in the Proxy Statement is expressly incorporated herein by
reference.
Reference is made to Part I of this Form 10-K for information as to the
executive officers of the registrant.
ITEM 11 EXECUTIVE COMPENSATION
----------------------
The information set forth under the captions "Directors Fees and Compensation"
and "Executive Compensation" (excluding the information set forth under the
caption "Executive Compensation--Comparison of Five Year Cumulative Total
Return") and "Compensation Committee Interlocks and Insider Participation" in
the Proxy Statement is expressly incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Information concerning the beneficial ownership of BANC ONE Common Stock as of
January 1, 1996 by (i) each person who is known by the Registrant to own
beneficially more than 5% of BANC ONE Common Stock (ii) all BANC ONE directors
and executive officers (30 individuals) as a group as of January 1, 1996 and
(iii) by the executive officers of BANC ONE named in the Summary Compensation
Table (except with respect to Messrs. John B. McCoy and Lehmann whose share
ownership is reported in the information on nominees for election as directors
under "Election of Directors" in the Proxy Statement) is set forth under the
caption "Ownership of Shares" in the Proxy Statement, which information is
expressly incorporated herein by reference. Information concerning the
beneficial ownership of BANC ONE Common Stock as of January 1, 1996 by each
current director and each nominee for director is set forth under the caption
"Election of Directors" in the Proxy Statement, which information is expressly
incorporated herein by reference.
No shares of BANC ONE Preferred Stock are beneficially owned by any BANC ONE
director or executive officer, except for 600 shares of BANC ONE Preferred
Stock owned by one executive officer and constituting less than 1% of the
outstanding shares of BANC ONE Preferred Stock.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The information set forth under the captions "Compensation Committee Interlocks
and Insider Participation" and "Transactions with Management and Others" in the
Proxy Statement is expressly incorporated herein by reference.
13
<PAGE> 16
PART IV
-------
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K INDEX
----------------------------------------------------------------------
TO FINANCIAL STATEMENTS AND SCHEDULES
- -------------------------------------
BANC ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Annual Report
Data incorporated by reference from the to Shareholders
1995 Annual Report to Shareholders: Page
-----------------
<S> <C>
Financial Highlights 1
Discussion of our Business 7 - 19
Management's Discussion and Analysis 22 - 41
Additional financial information 42 - 45
Consolidated Balance Sheet, December 31, 1995 and 1994 46
Consolidated Statement of Income for the years ended
December 31, 1995, 1994 and 1993 47
Consolidated Statement of Changes in Stockholders' Equity
for the years ended December 31, 1995, 1994 and 1993 48
Consolidated Statement of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 49
Notes to Consolidated Financial Statements 50 - 74
Report of Independent Accountants 75
Location of Banking offices and list of subsidiaries inside back cover
</TABLE>
No schedules are included because they are not required, not applicable, or the
required information is contained elsewhere.
14
<PAGE> 17
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit Number
--------------
<S> <C>
3.1 Amended Articles of Incorporation of BANC ONE CORPORATION.(1)
3.2 Code of Regulations of BANC ONE CORPORATION.(1)
10 Material Contracts
a. BANC ONE CORPORATION Amended 1994 Key Executive Management Incentive Compensation Plan.(4)
b. BANC ONE CORPORATION Dividend Equivalent Unit Plan.(3)
c. BANC ONE CORPORATION Executive Management Incentive Compensation Plan.(3)
d. BANC ONE CORPORATION Incentive Compensation Deferral Plan.(3)
e. BANC ONE Executive Life Insurance Plan.(3)
f. Deferred Compensation Plan for Directors of BANC ONE CORPORATION and BANC ONE Affiliates.(2)
g. BANC ONE CORPORATION 1989 Stock Incentive Plan.(2)
1. Agreement for Restricted Stock Award under the BANC ONE CORPORATION 1989 Stock Incentive Plan.(2)
2. Stock Option Agreement for Non-Qualified Stock Options under the BANC ONE CORPORATION 1989 Stock
Incentive Plan. (2)
3. Stock Option agreement for Incentive Stock Options under the BANC ONE CORPORATION 1989 Stock Incentive
Plan .(2)
h. BANC ONE CORPORATION Amended Incentive Compensation Deferral Plan.
i. BANC ONE Supplemental Executive Security Savings Plan. (2)
j. BANC ONE CORPORATION Supplemental Employees Retirement Plan, As Amended and Restated Effective January 1,
1993.(2)
k. The Valley National Bank of Arizona Supplemental Excess Benefit Retirement Plan. (2)
l. American Fletcher Corporation Deferred Compensation Plan. (2)
m. Valley National Corporation 401(+)TM Executive Deferred Compensation Plan. (2)
n. BANC ONE CORPORATION 1995 Stock Incentive Plan. (4)
o. Agreement dated October 2, 1995 between BANC ONE CORPORATION and Richard Lehmann.
11 Statement regarding computation of earnings per common share.
12 Statement regarding computation of ratio of earnings to fixed charges.
13a Portions of BANC ONE's Annual Report to Shareholders for the calendar year ended December 31, 1995.
21 Subsidiaries of Registrant.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedules.
</TABLE>
There are no agreements with respect to long-term debt of the Registrant to
authorize securities in an amount
15
<PAGE> 18
which exceeds 10% of the total assets of the Registrant and its subsidiaries on
a consolidated basis. The Registrant agrees to furnish a copy of any agreement
with respect to long-term debt of the Registrant to the Securities and Exchange
Commission upon request.
<TABLE>
<S> <C>
(1) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991.
(2) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
(3) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.
(4) Incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995.
</TABLE>
16
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BANC ONE CORPORATION
By: John B. McCoy March 28, 1996
-------------------------------------- ---------------------------
John B. McCoy Date
its Chairman
By: Michael J. McMennamin March 28, 1996
-------------------------------------- ---------------------------
Michael J. McMennamin Date
its Executive Vice President - Finance
By: William C. Leiter March 28, 1996
-------------------------------------- ---------------------------
William C. Leiter Date
its Controller
<PAGE> 20
Pursuant to the requirements of Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
By: Charles E. Exley, Jr March 28, 1996
-------------------------------------- ---------------------------
Charles E. Exley, Jr., Director Date
By: E. Gordon Gee March 28, 1996
-------------------------------------- ---------------------------
E. Gordon Gee, Director Date
By: John R. Hall March 28, 1996
-------------------------------------- ---------------------------
John R. Hall, Director Date
By: Laban P. Jackson, Jr. March 28, 1996
-------------------------------------- ---------------------------
Laban P. Jackson, Jr., Director Date
By: John W. Kessler March 28, 1996
-------------------------------------- ---------------------------
John W. Kessler, Director Date
By: Richard J. Lehmann March 28, 1996
-------------------------------------- ---------------------------
Richard J. Lehmann, Director Date
By: John B. McCoy March 28, 1996
-------------------------------------- ---------------------------
John B. McCoy, Director Date
By: John G. McCoy March 28, 1996
-------------------------------------- ---------------------------
John G. McCoy, Director Date
By: Richard L. Scott March 28, 1996
-------------------------------------- ---------------------------
Richard L. Scott, Director Date
By: Thekla R. Shackelford March 28, 1996
-------------------------------------- ---------------------------
Thekla R. Shackelford, Director Date
By: Alex Shumate March 28, 1996
-------------------------------------- ---------------------------
Alex Shumate, Director Date
By: Frederick P. Stratton, Jr. March 28, 1996
-------------------------------------- ---------------------------
Frederick P. Stratton, Jr., Director Date
By: Robert D. Walter March 28, 1996
-------------------------------------- ---------------------------
Robert D. Walter, Director Date
<PAGE> 1
EXHIBIT 10h
BANC ONE CORPORATION INCENTIVE COMPENSATION
DEFERRAL PLAN
PURPOSE
-------
The purpose of the BANC ONE CORPORATION Incentive Compensation Deferral Plan
(the "Plan") is to provide a means by which eligible Participants of the BANC
ONE CORPORATION Key Management Incentive Compensation Plan or any specialized
incentive compensation plan designated by the Board of Directors or Plan
Administrator may defer such compensation earned under such plan.
Effective Date
- --------------
This Plan was originally effective as of January 1, 1982. This amended and
restated version of the Plan is effective October 1, 1994.
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meaning stated herein,
unless the context clearly indicates otherwise
Section 1.1 - Appeals Committee
- -------------------------------
A committee consisting of three (3) or more officers of the Corporation who
shall be appointed by the Chief Executive Officer of the Corporation to hear
appeals of denied employee, Participant, or Beneficiary benefit claims under
the Plan, provided that with respect to denied claims of an executive officer
who has been identified by the Corporation as an "Insider", as defined by
applicable Securities and Exchange Commission (SEC) rules, such Appeals
Committee shall be the Personnel and Compensation Committee of the Board.
Section 1.2 - Base Salary
- -------------------------
The employee's annual basic salary or wage rate with the Corporation or a
Related Corporation in effect at any given point in time, prior to the
application of any salary deferrals to qualified or non-qualified plans
sponsored by BANC ONE CORPORATION or Related Corporation.
Section 1.3 - Beneficiary
- -------------------------
A person or persons designated by a Participant in accordance with provisions
of Section 3.8, to receive any death benefit which may be payable under this
Plan upon the death of said Participant.
Section 1.4 - Board
- -------------------
The Board of Directors of BANC ONE CORPORATION or the Personnel and
Compensation Committee of said Board which shall have the authority of said
-1-
<PAGE> 2
Board with respect to this Plan.
Section 1.5 - Change of Control
- -------------------------------
Any change in control of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"); provided that,
without limitation, such a change of control shall be deemed to have occurred
if: (i) any "person" (as such term is defined in Sections 13(d) and 14(d)(2)
of the Exchange Act) other than the Corporation or an entity then directly or
indirectly controlling, controlled by or under common control with the
Corporation is, becomes or commences a tender offer to become the beneficial
owner, directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then-outstanding
securities; (ii) the Corporation merges or consolidates with another
corporation; or (iii) a sale, lease, exchange, or other disposition of all or
substantially all of the assets of the Corporation takes place.
Section 1.6 - Corporation
- -------------------------
BANC ONE CORPORATION including all of its Related Corporations.
Section 1.7 - Incentive Compensation
- ------------------------------------
The annual monetary award given to an employee under the Incentive Plan.
Section 1.8 - Incentive Plan
- ----------------------------
The BANC ONE CORPORATION Key Management Incentive Compensation Plan or any
specialized incentive compensation plan designated by the Board of Directors.
Section 1.9 - Participant
- -------------------------
Any person who satisfies the eligibility and participation requirements of this
Plan and who elects or has previously elected to defer incentive compensation
under this Plan.
Section 1.10 - Plan Administrator
- ---------------------------------
BANC ONE CORPORATION.
Section 1.11 - Plan Year
- ------------------------
The twelve (12) month period commencing on January 1 and ending the following
December 31.
Section 1.12 - Related Corporation
- ----------------------------------
A subsidiary or any entity which is a member of a common controlled group with
BANC ONE CORPORATION pursuant to Internal Revenue Code Sections 414(b),
-2-
<PAGE> 3
(c),(m) or (o).
ARTICLE II
PARTICIPATION
Section 2.1 - Eligibility
- -------------------------
Any officer of the Corporation (a) who is designated by the Plan Administrator
as a participant in the Incentive Plan, (b) who is awarded compensation under
the Incentive Plan on an annual basis only, and (c) whose Base Salary as of
December 31 of the preceding calendar year equals or exceeds One Hundred
Thousand Dollars ($100,000), shall be eligible to participate in the Plan. The
Plan Administrator shall notify officers as to their eligibility.
Section 2.2 - Conditions of Participation
- -----------------------------------------
An individual shall not become a Participant hereunder until he or she
furnishes within a reasonable time limit established by the Plan Administrator
such completed and executed elections, Beneficiary designations, consents and
other documents and information prescribed by the Plan Administrator. Each
person upon becoming a Participant shall be deemed conclusively, for all
purposes, to have assented to the terms and provisions of this Plan and shall
be bound thereby.
Section 2.3 - Election To Defer
- -------------------------------
(a) DEFERRAL OF ANNUAL INCENTIVE COMPENSATION. A Participant may elect, on
or before December 31 of any calendar year, to defer payment of any portion of
his Incentive Compensation which he will receive during the calendar year
following such election. Notwithstanding the preceding sentence, if an
officer of the Corporation first becomes eligible to participate in the Plan
during the calendar year, such officer may elect to participate in the Plan and
to defer his Incentive Compensation which he has not yet received, but will
receive during the calendar year, if he makes such election within thirty (30)
days of becoming eligible to participate in the Plan. The minimum amount of
such Compensation which may be deferred under this subparagraph (a) is Five
Thousand Dollars ($5,000). Any such elections shall be made in such format
(including but not limited to approved forms or electronic data response) and
in the manner provided by the Plan Administrator. Any such election shall be
effective on and until the earlier of the following events: (1) December 31 of
the calendar year for which the election applies; or (2) the Participant ceases
to be an employee of the Corporation.
(b) TIMELINESS OF ELECTION. If a Participant who is eligible to participate in
this Plan fails to file (or fails to timely file) the forms(s) or take any
action required by the Plan Administrator to participate in this Plan for each
Plan year, such person shall not be permitted to participate in this Plan until
the next open enrollment period applicable for the next calendar year.
-3-
<PAGE> 4
Section 2.4 - Participant Directed Accounts
- -------------------------------------------
Incentive Compensation deferred at the election of a Participant shall be held
in the general funds of the Corporation and shall be credited to an account
established by the Corporation in the Participant's name to which deferrals
made in accordance with this Plan are credited. Each Participant who chooses
to participate in this Plan shall elect, on the form(s) and in the manner
prescribed by the Plan Administrator, to direct the investment of his account
in any of the alternative investment funds established by the Board from time
to time. Participants may change their investment decisions in the manner
permitted by the Plan Administrator which shall be no less frequently than
quarterly. The Plan Administrator may, in its discretion, disregard the
investment directions of participants at any time and from time to time. Any
Participant who is required to file reports of his beneficial ownership of BANC
ONE CORPORATION capital stock with the Securities and Exchange Commission
pursuant to Section 16(a) of the Securities and Exchange Act of 1934 shall only
be permitted to invest in BANC ONE CORPORATION capital stock by making an
irrevocable election, during the annual election period described in Section
2.3 hereof, to invest all or a portion of the next year's deferral amount in
such BANC ONE stock. No other transfers for such "Insiders" in or out of BANC
ONE stock will be permitted.
Participants with deferred vested account balances who have terminated
employment and who will be receiving a distribution of their entire account
balances as soon as administratively feasible (within thirty (30) days) on or
after January 1, 1995 pursuant to Section 3.1 hereof, shall not be eligible to
change their investment elections or otherwise access any electronic
information source with respect to their accounts with regard to this Section
2.4. Such participants' account balances shall remain in the same funds and/or
stock they chose in accordance with such participants' most current investment
elections made prior to October 1, 1994.
Section 2.5 - Funding
- ---------------------
The Plan shall be entirely unfunded and no provision shall at any time be made
with respect to segregating any assets of the Corporation for payment of any
benefits hereunder. No Participant, Participant's spouse or any other person
shall have any interest in any particular assets of the Corporation by reason
of the right to receive a benefit under the Plan, and any such Participant,
Participant's spouse, or other person shall have only the rights of a general
unsecured creditor of the Corporation with respect to any rights under the
Plan. Nothing contained in the Plan shall constitute a guaranty by the
Corporation or other entity or person that the assets of the Corporation will
be sufficient to pay any benefit hereunder.
Section 2.6 - Statement of Accounts
- -----------------------------------
At least once annually, the Plan Administrator shall furnish each Participant
with a written statement of his account setting forth the net income or loss
-4-
<PAGE> 5
of the account; any administrative expenses charged to the account; all
payments and distributions made from the account; and such further information
as the Plan Administrator deems appropriate.
ARTICLE III
DISTRIBUTIONS
Section 3.1 - Timing of Distributions
- -------------------------------------
Amounts credited to a Participant under the Plan shall be distributed as
soon as administratively feasible (within thirty (30) days of the stated
event) as follows:
(a) On or after January 1st on or following the Participant's
retirement or termination of employment from the Corporation;
(b) Upon the death of the Participant, in accordance with Section
3.4; or
(c) After an acceleration of benefits under Section 3.6;
(d) After termination of this Plan in accordance with Section 5.1.
For those participants with deferred vested account balances who terminated
employment prior to reaching age fifty-five (55) and who have not yet received
a distribution of their entire account balance, such accounts shall be
distributed in a lump sum as soon as administratively feasible (within thirty
(30) days) on or after January 1, 1995.
Section 3.2 - Form of Distributions
- -----------------------------------
Amounts credited to a Participant under the Plan shall be distributed in a lump
sum payment or in annual installments over a five- or ten-year period as the
Participant has elected on the form(s) and in the manner provided by the Plan
Administrator. Any such payment election shall continue in effect until the
Participant elects a different form of payment. All such elections must be
made prior to the date on which the Participant ceases to be an employee. The
Participant's election regarding form of payment only applies to those
Participants who terminate employment due to retirement or disability. If a
Participant terminates employment for any other reason or if a Participant
fails to make such an election with respect to the amounts credited to his
account, such amount shall be paid in a lump sum.
The first installment (or the lump sum payment if the Participant so elects)
shall be paid on the commencement date described above and subsequent
installments shall be paid within thirty (30) days after the first (1st)
business day of each succeeding calendar year until the entire amount credited
to the Participant's deferred account shall have been paid. During such time
as amounts credited to a Participant under the Plan continue to be held for the
Participant or the Participant's beneficiary, such amounts shall continue
-5-
<PAGE> 6
to earn interest or cash dividends in accordance with the Participant's
investment elections and shall be charged administrative expenses as provided
in Section 4.2.
Section 3.3 - Cash Payments; Determination of Amount
- ----------------------------------------------------
All distributions to Participants shall be made in the form of cash. Subject
to Section 3.2, the amount to be distributed shall be determined based on the
fair market value of the balance credited to the Participant's account as of
the close of business on last day of the calendar month immediately preceding
distribution.
Section 3.4 - Payments in the Event of a Participant's Death
- ------------------------------------------------------------
In the event a Participant dies before payments from the Participant's account
have commenced or after such payments have commenced but before the entire
amount credited to the Participant's account has been paid, all amounts
credited to the Participant's account at the time of the Participant's death,
together with accumulated earnings thereon net of charges for administrative
expenses, shall be paid to the beneficiary or beneficiaries described in
Section 3.8, below, in a lump sum payment as soon as administratively feasible
after the Plan Administrator is notified of the Participant's death unless the
Participant has indicated on any beneficiary designation forms an alternate
manner of payment which is permitted by the Plan Administrator.
Section 3.5 - Vesting
- ---------------------
Each Participant is immediately one hundred percent (100%) vested in all
amounts credited to his account and any earnings thereon.
Section 3.6 - Acceleration Of Benefits For Unforeseeable Emergencies
- --------------------------------------------------------------------
The Plan Administrator may accelerate the payment of any amounts held in any
Participant's account in the case of unforeseeable emergencies. An
"unforeseeable emergency" is a severe financial hardship to the Participant or
beneficiary resulting from a sudden and unexpected illness or accident of the
Participant or dependent of the Participant, loss of Participant's property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The
circumstances which will constitute a "unforeseeable emergency" will depend
upon the facts of each case, but in any case, payment will not be made to the
extent that such hardship is or may be relieved: (a) Through reimbursement or
compensation by insurance or otherwise; (b) By liquidation of the Participant's
assets, to the extent the liquidation of such assets would not itself cause
severe financial hardships; or (c) By cessation of deferrals under the Plan.
"Unforeseeable emergency" will not include the need to send the Participant's
child to college or the desire to purchase a home. Any early distributions
made under this Section 3.6 will only be permitted to the extent reasonably
needed to satisfy the emergency needs.
-6-
<PAGE> 7
Section 3.7 - Withholding and Deductions
- ----------------------------------------
All benefit payments made under the Plan to any Participant or Beneficiary
shall be subject to allocable withholding and to such other deductions as shall
at the time of such payment be required under any income tax or other law,
whether of the United States or any other jurisdiction, and, in the case of
payments to the Beneficiary of a Participant, the delivery to the Plan
Administrator of all necessary documents. To the extent that the Corporation
is required to withhold any current taxes at the time of deferral of Incentive
Compensation, the deferral amount shall be reduced by the required taxes.
Determinations by the Plan Administrator as to withholding shall be binding on
the Participant and applicable Beneficiary(ies).
Section 3.8 - Beneficiary Designation
- -------------------------------------
Each Participant who has a deferred account hereunder may from time to time
designate a beneficiary(ies) to receive the amounts credited to the
Participant's account in the event of the Participant's death prior to the time
such account is distributed to the Participant. Such designation shall be made
pursuant to the procedures established by the Plan Administrator and in a form
satisfactory to the Plan Administrator. Each proper designation of beneficiary
will revoke all previous beneficiary designations. The revocation of a
beneficiary designation, no matter how effected, shall not require the consent
of or notice to any designated beneficiary.
If any Participant fails to designate a beneficiary in the manner provided
above, or if any Participant is not survived by such beneficiary(ies) the
Participant's account shall be paid as follows:
(1) If the Participant is married, to the Participant's spouse;
(2) If the Participant is unmarried, to the Participant's estate.
Section 3.9 - Rights to Benefits
- --------------------------------
Nothing contained in this Plan is intended to give or shall give any spouse,
former spouse or beneficiary of a Participant or any other person any right to
benefits under this Plan by virtue of Internal Revenue Code Sections 401(a)(11)
and 417 (relating to qualified pre-retirement survivor annuities) and qualified
joint and survivor annuities) or Internal Revenue Code Sections 401(a)(13)(B)
and 414(p) (relating to qualified domestic relations orders) as amended.
ARTICLE IV
ADMINISTRATION
Section 4.1 - Administrative Powers and Duties
- ----------------------------------------------
BANC ONE CORPORATION shall be responsible for the general operation and
administration of the Plan and for carrying out the provisions thereof. The
-7-
<PAGE> 8
Chief Executive Officer of BANC ONE CORPORATION may, in his discretion, appoint
an employee or employees or an administrative committee in writing to
administer the provisions of this Plan. The decision of the Plan Administrator
with respect to any questions arising as to the administration or
interpretation of this Plan, including the discontinuance of any or all of the
provisions thereof, shall be final, conclusive, and binding. If the Plan is
administered by a committee, such committee may act by a majority of its
members by a vote at a meeting or in writing without a meeting signed by all
the members of the committee.
Section 4.2 - Expenses
- ----------------------
Any cost or expense of administering the Plan shall be paid by BANC ONE
CORPORATION. Notwithstanding the above, the Plan Administrator may charge each
Participant's account with the amount of reasonable administrative expenses it
determines, in its sole discretion, for the cost of administering this Plan.
Any such charges shall reduce the earnings credited to the Participant's
account and shall be applied in a uniform and nondiscriminatory manner.
Section 4.3 - Records
- ---------------------
The Plan Administrator shall keep such records of such information, as shall be
proper, necessary or desirable to effectuate the purposes of the Plan,
including without in any manner limiting the generality of the foregoing,
records and information with respect to deferral elections, Participant
accounts, dates of employment and termination and determinations made
hereunder. To the extent that the Plan Administrator shall prescribe forms for
use by the Participants and their Beneficiaries in communicating with the Plan
Administrator and shall establish periods during which communications may be
received, the Plan Administrator shall be protected in disregarding any notice
or communication for which a form shall so have been prescribed and which shall
not be made in such form and any notice or communication for the receipt of
which a period shall so have been established and which shall not be received
during such period. The Corporation, the Plan Administrator and the Appeals
Committee shall respectively also be protected in acting upon any notice or
other communication purporting to be signed by any person and reasonably
believed to be genuine and accurate, including the Participant's current
mailing address.
Section 4.4 - Determinations
- ----------------------------
All determinations hereunder made by the Plan Administrator or the Appeals
Committee shall be made in the sole and absolute discretion of the Plan
Administrator or Appeals Committee, as the case may be.
Section 4.5 - Claims Procedure
- ------------------------------
The Plan Administrator shall have discretion regarding benefit determinations.
If required by the Plan Administrator, any person entitled to benefits
-8-
<PAGE> 9
hereunder must file a claim with the Plan Administrator upon forms furnished by
the Plan Administrator. Notwithstanding any other provision of this Plan,
payment of benefits need not be made until receipt of the claim and the
expiration of the time periods specified in this Section 4.5 for rendering a
decision on the claim. In the event a claim is denied, benefits need not be
made or commence until a final decision is reached by the Appeals Committee
subject to the provisions of Section 4.6.
The Plan Administrator shall notify the claimant of its decision within ninety
(90) days after receipt of the claim. However, if special circumstances
require, the Plan Administrator may defer action on a claim for benefits for an
additional period not to exceed ninety (90) days, and in that case it shall
notify the claimant of the special circumstances involved and the time by which
it expects to render a decision.
If the Plan Administrator determines that any benefits claimed should be
denied, it shall give notice to the claimant setting forth the specific reason
or reasons for the denial and provide a specific reference to the Plan
provisions on which the denial is based. The Plan Administrator shall also
describe any additional information necessary for the claimant to perfect the
claim and explain why the information is necessary. Such claimant shall be
entitled to full and fair review by the Appeals Committee of the denial.
Section 4.6 - Appeal and Review Procedure
- -----------------------------------------
If a claim has been denied by the Plan Administrator, the claimant shall have
sixty (60) days after receipt of the denial in which to file a notice of appeal
with the Plan Administrator. A final determination by the Plan Administrator
shall be rendered within sixty (60) days after receipt of the claimant's notice
of appeal. Under special circumstances such determination may be delayed for
an additional period not to exceed sixty (60) days, in which case the claimant
shall be notified of the delay prior to the close of the initial sixty (60) day
period. The Appeals Committee's final decision shall set forth the reasons and
the references to the Plan provisions on which it is based.
Section 4.7 - Facility of Payment
- ---------------------------------
Whenever a person entitled under the Plan to receive any payment of a benefit,
or installment thereof, is under a legal disability or incapacity or is in any
way unable to manage his financial affairs, the Plan Administrator may, in its
discretion, direct payments on behalf of such person to be made to the
incapacitated person's legal representative, custodian, relative, or other such
individual(s) as is (are) known by the Plan Administrator to be assisting such
person. Such decision by the Plan Administrator shall be made after
consultation with those persons, if any, which may include legal counsel and/or
medical personnel, which the Plan Administrator in his sole discretion
determines are necessary in order to make such decision. Any payment of a
benefit or installment thereof in accordance with the provisions of this
Section 4.7 shall be a complete discharge of any liability relating to the
-9-
<PAGE> 10
making of or entitlement to such payment under the provisions of the Plan.
Section 4.8 - Action by the Corporation
- ---------------------------------------
Any action by the Corporation under this Plan may be by resolution of its Board
of Directors, or by any person or persons, duly authorized by resolution of
said Board to take such action.
Section 4.9 - Exemption from Liability/Indemnification
- ------------------------------------------------------
The members of the Appeals Committee and the persons acting on behalf of the
Plan Administrator, shall be free from all liability, joint or several, for
their acts, omissions, and conduct, and for the acts, omissions and conduct of
their duly appointed agents, in the administration of the Plan, except for
those acts or omissions and conduct resulting from willful misconduct or lack
of good faith.
The Corporation shall indemnify each member of the Appeals Committee, the
persons acting on behalf of the Plan Administrator and any other employee,
officer or director of the Corporation against any claims, loss, damage,
expense and liability, by insurance or otherwise, reasonably incurred by the
individual in connection with any action or failure to act by reason of
membership on the Appeals Committee or performance of an authorized duty or
responsibility for or on behalf of the Corporation pursuant to the Plan unless
the same is judicially determined to be the result of the individual's gross
negligence or willful misconduct. Such indemnification by the Corporation
shall be made only to the extent such expense or liability is not payable to or
on behalf of such person under any liability insurance coverage. The foregoing
right to indemnification shall be in addition to any other rights to which any
such person may be entitled as a matter of law.
Section 4.10 - Nonassignability
- -------------------------------
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, assign, sell, pledge, encumber or charge the same shall
be void.
The Plan shall not in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person entitled to benefits
hereunder.
ARTICLE V
AMENDMENT OR TERMINATION
Section 5.1 - Amendment or Termination
- --------------------------------------
BANC ONE CORPORATION reserves the right in its sole discretion to amend or
terminate this Plan at any time. In the event of a termination, BANC ONE
CORPORATION in its sole discretion may pay Plan benefits to those Participants
-10-
<PAGE> 11
participating in the Plan on the date of such termination, to the extent such
benefits would be otherwise payable as defined in Section 3.1 determined on the
basis that each Participant's presumed termination date was the date the Plan
was terminated.
Section 5.2 - Transfer Between Related Companies
- ------------------------------------------------
In the event that a Participant's employment is transferred from one Related
Corporation to another, the transfer shall not adversely affect the
administration of amounts then credited to the Plan account(s) of such
Participant on or as of the date of transfer.
Section 5.3 - Change of Control
- -------------------------------
The Plan shall not be automatically terminated upon change of control or by a
transfer or sale of assets of the Corporation or by the merger or consolidation
of the Corporation into or with any other Corporation or other entity when the
Corporation is not the surviving or continuing Corporation, but the Plan shall
be continued after such sale, merger or consolidation only if and to the
extent that the transferee, purchaser or successor entity, shall be obligated
to pay Plan benefits to those Participants participating in the Plan on the
date of such termination, to the extent such Plan benefits would be otherwise
payable as defined in Section 3.1, determined on the basis that each
Participant's presumed termination date was the date the Plan was terminated.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 - Offset to Benefits
- --------------------------------
Notwithstanding any provisions of the Plan to the contrary, the Corporation
may, in its sole and absolute discretion, enforce the right to offset against
any amounts to be paid to a Participant under the Plan against any debt of the
Participant which has been reduced to judgment in favor of the Corporation.
Section 6.2 - Construction
- --------------------------
In the construction of the Plan, the masculine shall include the feminine and
the singular the plural where such meanings would be appropriate.
Section 6.3 - Controlling Law
- -----------------------------
The laws of the State of Ohio shall be controlling in all matters relating to
the Plan and shall be controlling state law in all matters relating to the Plan
and shall apply to the extent that it is not preempted by the laws of the
United States of America.
-11-
<PAGE> 12
Section 6.4 - Effect of Invalid Provisions
- ------------------------------------------
If any provision of this Plan is held invalid or unenforceable for any reason,
such invalidity or unenforceability shall not effect any provisions hereof, and
the remaining provisions of this Plan shall be construed and enforced as if
such provisions had not been included.
Section 6.5 - ERISA Status
- --------------------------
This Plan shall constitute a plan which is unfunded and which maintained
primarily for the purpose of providing deferred compensation benefits for a
select group of management or highly compensated employees within the meaning
of Section 202, 301, and 401 of ERISA and the ERISA reporting and disclosure
regulation.
IN WITNESS WHEREOF, BANC ONE CORPORATION has caused this Plan to be adopted and
effective October 1, 1994.
Date: March 24, 1995 BANC ONE CORPORATION
-------------------------
Attest: By: /s/ ROMAN J. GERBER
------------------------ ----------------------------
Roman J. Gerber
Executive Vice President
and Secretary
-12-
<PAGE> 1
Exhibit 10o
RICHARD J. LEHMANN
In re: Retirement Benefits
This letter agreement constitutes the commitment of BANC ONE CORPORATION (BANC
ONE) with regard to your retirement, deferred compensation and certain benefits
as set forth herein.
In consideration of your prior employment agreement with The Valley National
Bank of Arizona, the supplemental retirement and other benefits described in
this letter will be provided by BANC ONE as a supplement the retirement and
other benefits otherwise provided under BANC ONE's Qualified Retirement Plan
(the Plan), BANC ONE's Supplemental Employees Retirement Plan (the SERP) and
other benefit plans. This commitment is made so as to assure you that the
retirement and related benefits to which you are and will be entitled to
receive from BANC ONE will be calculated and payable as though you had been
employed with BANC ONE during the time you were employed by Citicorp. This
special calculation of your retirement and survivor benefit which is being
provided to you as a supplemental benefit shall be effective in the event of
your death while employed by BANC ONE or in the event your employment by BANC
ONE terminates for any reason other than for your gross negligence or
malfeasance as an employee of BANC ONE.
The following shall constitute the terms and provisions of the supplemental
benefit available to you in consideration of your employment with BANC ONE:
1. In computing your retirement benefits under the BANC ONE CORPORATION
Retirement Plan and the BANC ONE Supplemental Employees Retirement
Plan, your Credited Service shall include all of your service with
BANC ONE, Valley National Bank and Citicorp.
2. Your retirement benefits calculated under the Plan shall be the
greater benefit as between:
a. The sum of
i. the frozen accrued benefit under the Retirement Plan for
Employees of The Valley National Bank of Arizona plus
ii. the benefit accrued under the BANC ONE CORPORATION
Retirement
Page 1
<PAGE> 2
Plan, recognizing Credited Service from and after January 1,
1994, or
b. the benefit accrued under the Plan recognizing Credited
Service for all eligible periods of employment.
3. Your supplemental retirement benefit shall be calculated using all of
your Credited Service with BANC ONE, Valley National Bank of Arizona
and Citicorp less the amount payable under the qualified plan as
stated in the foregoing paragraph two.
4. Your supplemental plan retirement benefit as determined under
paragraph three, shall be calculated in accordance with the terms of
the Plan governing early retirement and the optional forms of payment
and shall be offset by the actual retirement benefits to be received
under the retirement plan or plans of Citicorp. The benefits payable
under the retirement plan or plans of Citicorp shall be adjusted as
necessary to be actuarially equivalent to the benefit payable under
the BANC ONE CORPORATION Retirement Plan using reasonable actuarial
assumptions.
5. In the event the amount of your benefit calculated under the BANC ONE
CORPORATION Retirement Plan exceeds the benefit limits permitted
under Section 415(e) of the Internal Revenue Code, then the excess
amount which is payable at the time of such calculation to eligible
BANC ONE employees through the BANC ONE CORPORATION Supplemental
Employees Retirement Plan will also be payable to you under said
Plan.
6. The supplemental benefits to be provided pursuant to this agreement
shall also cover benefits payable to your spouse under the BANC ONE
CORPORATION Retirement Plan taking into account your service with
Citicorp, should you die prior to retirement.
7. For all purposes, you will be considered fully vested in the benefit
calculated and payable under the Valley National Supplemental
Retirement Plan with the amount payable under said plan being a
frozen minimum benefit as set forth in the attachment. If when you
retire from BANC ONE, you are at least age fifty five (55) with a
minimum of ten (10) years of service (with such service to include
service with Valley National Bank of Arizona), you will receive the
greater of the benefit calculated under the BANC ONE CORPORATION
Supplemental Employees Retirement Plan or said frozen minimum
benefit. If however, your
Page 2
<PAGE> 3
employment by BANC ONE terminates prior to age fifty five (55), you
will be eligible to receive only said frozen minimum benefit in
addition to the benefit accrued under the BANC ONE CORPORATION
Retirement as of the date of termination.
8. Benefits under this supplemental benefit arrangement shall be
forfeited in the event that BANC ONE terminates your employment due
to your gross negligence or malfeasance. If you terminate employment
due to death, retirement or are terminated by BANC ONE for any reason
other than those set forth above, you will be fully vested in the
benefit described in this agreement.
9. Payments actually made under the BANC ONE CORPORATION Retirement
Plan, under the retirement plan or plans of Citicorp or the
Supplemental Retirement Plan of the former Valley National Bank of
Arizona shall be credited against SERP payments due hereunder so that
no duplication of benefits shall occur. All payments due hereunder
shall be subject to any applicable withholding taxes.
/s/ Richard J. Lehmann October 2, 1995
- ------------------------------- -------------------------------------
Richard J. Lehmann, President
/s/ John B. McCoy /s/ Michael W. Hager
- ------------------------------- -------------------------------------
John B. McCoy, Chairman and Michael W. Hager, Secretary
Chief ExecutiveOfficer Personnel and Compensation Committee
Page 3
<PAGE> 1
EXHIBIT 11
BANC ONE CORPORATION and Subsidaries
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
(000's, except per share amounts)
<TABLE>
<CAPTION>
For the year ended December 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
PRIMARY:
Earnings:
Net income $ 1,277,863 $ 1,005,109 $ 1,191,494
Deduct: Dividends on preferred shares 17,487 17,492 17,714
------------ ------------ ------------
Net income available to common shareholders $ 1,260,376 $ 987,617 $ 1,173,780
============ ============ ============
Shares:
Weighted average common shares outstanding $ 432,093 $ 446,645 $ 439,356
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,230 1,473 1,995
------------ ------------ ------------
Weighted average common shares outstanding,
as adjusted $ 433,323 $ 448,118 $ 441,351
============ ============ ============
PRIMARY EARNINGS PER COMMON SHARE $ 2.91 $ 2.20 $ 2.66
============ ============ ============
FULLY DILUTED:
Earnings:
Net income $ 1,277,863 $ 1,005,109 $ 1,191,494
============ ============ ============
Shares:
Weighted average common shares outstanding $ 432,093 $ 446,645 $ 439,356
Add: Dilutive effect of outstanding options,
as determined by the application of the
treasury stock method 1,945 1,473 2,062
Add: Conversion of preferred stock 9,639 9,642 10,021
------------ ------------ ------------
Weighted average common shares outstanding,
as adjusted $ 443,677 $ 457,760 $ 451,439
============ ============ ============
FULLY DILUTED EARNINGS PER COMMON SHARE $ 2.88 $ 2.20 $ 2.64
============ ============ ============
</TABLE>
Share information restated to reflect the 10% common stock dividend effective
February 21, 1996.
<PAGE> 1
Exhibit 12
BANC ONE CORPORATION and Subsidiaries
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
$(thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
------------- ----------- ------------ ------------ -------------
<S> <C>
Calculation excluding interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
of Bank One, Texas, NA (1) $ 1,910,282 $ 1,518,852 $ 1,770,712 $ 1,341,249 $ 928,947
Fixed charges 736,249 633,569 348,327 321,402 419,274
Less: Capitalized interest (1,671) (1,000) (652) (1,199) (1,732)
------------- ----------- ------------ ------------ -----------
Earnings $ 2,644,860 $ 2,151,421 $ 2,118,387 $ 1,661,452 $ 1,346,489
============ =========== ============== ============ ============
Fixed charges:
Interest expense, including interest factor
of capitalized leases and amortization of
deferred debt expense $ 683,372 $ 575,734 $ 298,857 $ 278,615 $ 379,708
Portion of rental payments under operating
leases deemed to be interest 52,877 57,835 49,470 42,787 39,566
------------- ----------- ------------ ------------ -----------
Fixed charges $ 736,249 $ 633,569 $ 348,327 $ 321,402 $ 419,274
============ =========== ============== ============ ============
Ratio of earnings to fixed charges excluding
interest on deposits 3.59 x 3.40 x 6.08 x 5.17 x 3.21 x
Calculation including interest on deposits:
Earnings:
Income before income taxes and change in
accounting principle and equity in earnings of
of Bank One, Texas, NA (1) $ 1,910,282 $ 1,518,852 $ 1,770,712 $ 1,341,249 $ 928,947
Fixed charges 3,026,343 2,307,832 1,826,018 2,318,274 2,955,918
Less: Capitalized interest (1,671) (1,000) (652) (1,199) (1,732)
------------- ----------- ------------ ------------ -----------
Earnings $ 4,934,954 $ 3,825,684 $ 3,596,078 $ 3,658,324 $ 3,883,133
============ =========== ============== ============ ============
Fixed charges:
As detailed above $ 736,249 $ 633,569 $ 348,327 $ 321,402 $ 419,274
Interest on deposits 2,290,094 1,674,263 1,477,691 1,996,872 2,536,644
------------- ----------- ------------ ------------ ------------
Fixed charges $ 3,026,343 $ 2,307,832 $ 1,826,018 $ 2,318,274 $ 2,955,918
============ =========== ============== ============ ============
Ratio of earnings to fixed charges including
interest on deposits 1.63 x 1.66 x 1.97 x 1.58 x 1.31 x
</TABLE>
(1) Results of Bank One, Texas, NA are consolidated beginning October 1, 1991
<PAGE> 1
EXHIBIT 13a
Financial Highlights
<TABLE>
<CAPTION>
Percent
1995 1994 Change
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per common share:
Net income $ 2.91 $ 2.20 32.3 %
Cash dividends declared 1.24 1.13 9.7
Book value 18.58 16.75 10.9
For the year: $(millions)
---------------------------
Total revenue $ 8,971 $ 7,778 15.3 %
Net income 1,278 1,005 27.2
At year end:
Assets $ 90,454 $ 88,923 1.7 %
Deposits 67,320 68,090 (1.1)
Total loans and leases 65,329 61,993 5.4
Total equity $ 8,197 $ 7,565 8.4
Weighted average common shares
outstanding (000) 433,323 448,118
Common stockholders of record 87,632 82,253
Employees (full-time equivalent) 46,900 48,800
</TABLE>
Shares and per share data reflect the 10% common stock dividend payable March
6, 1996 to shareholders of record on February 21, 1996.
<PAGE> 2
DISCUSSION OF OUR BUSINESS
POISED TO TAKE ADVANTAGE OF A VASTLY CHANGING FINANCIAL SERVICES BUSINESS.
We're living in extraordinarily interesting times...an era when
competitors become strategic partners, challenges become opportunities and
opportunities may be loaded with consequences. In order to thrive, most
successful national companies have a set of fundamentals that guide their
operations. These fundamentals serve almost like lasers, designed to focus the
enterprise in a common direction with a common purpose. While structure and
function are likely to change radically over time, it is important that the
fundamentals remain relatively constant. This consistency provides a common
thread and a clear set of values that serve as a foundation for all activities.
Over the years, our core values have remained essentially the same.
However, major structure and functional changes are weaving what used to be a
confederation of exceptional banks into a national company dedicated to
providing improved customer access, service, simplicity and efficiency.
In early 1995, senior management endorsed a comprehensive plan which
set this new direction for BANC ONE. This plan includes a new, crisper and more
customer-focused direction for retail, middle-market, wholesale and business
banking, as well as a standard platform for systems and operations. It means an
important shift in direction, one that enables us to function like a national
company rather than a group of individually managed entities.
While BANC ONE has set many of the important records in the industry
for the last 27 years, including earning over $1 billion in each of the last
three years, it is important to look ahead, not to live in the past, since
historic successes have little to do with future accomplishments.
We are all in a different business now than we were five years ago, and
it is sure to be very different five years from now. The transition we are
making is necessary, based on a boundlessly different operating environment we
see developing in the financial services business. The result is a far more
focused company, dedicated to taking care of our customers.
The scope of our competition has changed across the board. Who would
have thought just a couple of years ago that AT&T would have 24 million credit
card customers today, and that the major automobile companies would also be
major credit card competitors? Or that there would be almost $3 trillion
invested in mutual funds by the end of last year and that the largest lenders in
the country are not commercial banks? Non-banks have replaced large banks as
lenders.
The fact is that many other companies are trying to attract our most
profitable customer segments. In addition, we have yet to see who the major
players will be on the Internet or who will thrive in the new world of national
electronic banking. The only thing we do know for sure is that the competition
is smarter and faster, has better resources and is a lot bigger than it used to
be.
There simply is no mercy to be shown for companies which can't move
fast and adjust to this new operating environment. This phenomenon has enormous
implications, not only for BANC ONE, but also for the companies that provide us
with product, service and technical support that ultimately deliver information
to our customers. For example,
<PAGE> 3
customers and investors are currently able to access product and financial
information about BANC ONE over the Internet or in person.
A FOND FAREWELL TO THE "UNCOMMON PARTNERSHIP"
For the first quarter century of our history, BANC ONE operated what we
called an "Uncommon Partnership" philosophy. The core of this structure revolved
around a highly refined financial management and reporting system which
permitted affiliate banks to operate on an almost totally autonomous basis.
Products offered and pricing were determined by each bank.
The "Uncommon Partnership" served us exceptionally well as we grew from
a small organization to the current position we hold in the industry. It enabled
each of our bank chief executive officers to have total control over the bank
and the market. However, as we grew, it automatically placed roadblocks in the
way of taking advantage of a unified effort in any direction. Since affiliates
had the option of opting in or out of any decision, the "Uncommon Partnership"
also hampered the deployment of the new technology BANC ONE has been developing
over the past five years. We were faced with the prospect that there may not be
a single product or service being consistently offered by all banks. At the same
time, systems support for all the various services being offered across the
country reached an unacceptable high watermark of inefficiency. Perhaps most
important, it became impossible to communicate to customers about all the
benefits of banking with BANC ONE affiliates. Therefore, this "total freedom"
mentality stood in the way of progress and actually started to strangle the
Company.
We realized that there could no longer be over 60 separate entities
comprising BANC ONE. We realized that a national perspective was critical to the
way we'll operate in the future.
However, we also realized that there are a few elements of the old
"Uncommon Partnership" that we need to retain. They include the importance of
strong, local leadership, the need for local credit decisions and for local
management of our people. We need to stay involved in our local communities.
These important elements we have retained enable us to differentiate ourselves
from other national companies.
A NEW STRUCTURE AND FUNCTION FOR BANC ONE
Successfully running a national financial services company requires a
different mind- and skill-set than for running a highly decentralized banking
company. In our particular case, consolidated size plays an important role in
being able to take advantage of talent, technology and economies of scale in
almost all areas. The new structure for our operations focuses on four major
principles:
- - Accepting the fact that we now are a national company. The center of
this vision is that we are transforming ourselves into a national,
financial services company. This objective does not mean a bank with
offices nationally-we currently have 1,500 bank offices-but rather a
national, financial services company able to meet all of its customers'
financial service needs wherever customers happen to be located.
- - Recognizing our critical need for standardization. National companies
can't survive without a common focus and approach. We have made
significant progress
<PAGE> 4
developing common approaches in all areas of our operation. Our
objective is to make sure that customers know exactly what kind of
products we offer and what kind of service they can expect from us
across the country. Common approaches also permit us to take advantage
of the cost savings associated with using the best practices across the
Company.
- - Establishing our vision by line of business. A national company has one
vision for its major lines of business that operate across markets; it
takes advantage of economies of scale; it leverages its size; it's not
parochial; it's global. In addition, the vision must be flexible enough
to accommodate different needs, based on different customer segments.
For example, while the retail function can operate on a national
platform, small business financial services can operate from a common
platform but can be tailored and delivered, based on individual
customer needs, on a local basis.
Establishing a common vision is not easy for any company. At one time,
under the "Uncommon Partnership," we had 88 visions - one for each
bank. We needed a single, clear and inspiring vision for each of the
major product lines within the Company. The vision defines how we
create more value for our customers than the competition.
- - Streamlining all operations services and functions. Operating from
national platforms greatly enhances our decision-making process. Now we
can make single decisions that affect all affiliates, rather than
having to address individual issues in each affiliate.
MEASURING OUR NATIONAL SCOPE
If we have common products and common systems supporting those
products, then we can also have a common performance system to measure results.
The performance measuring system includes market potential, actual penetration,
and product and customer profitability.
When current local and regional activities are aggregated and tabulated
by lines of business, BANC ONE plays a major role in a number of areas in the
financial services business, including credit card, finance, mortgage,
investment banking, brokerage and leasing functions. For example, the indirect
lending function in BANC ONE now has some financial relationship with 8,300 of
the 22,000 automobile dealers in the country. BANC ONE is one of the leading
lenders in the country to business banking clients with sales up to $5 million.
We are now the third-largest Visa? card processor and the largest issuer of Visa
check cards. BANC ONE is also the third-largest automated clearing house
processor in the country.
Banc One POS Services Company was formed in April 1995, and was charged
with the responsibility for managing all of the Corporation's merchant card
processing business. It currently ranks ninth in the U. S. in volume sales
processed, and serves over 80,000 merchant customers who processed over $7.5
billion in bank card transactions in 1995. In June 1995, Banc One POS Services
entered into an agreement with First Data Resources Inc./CES, forming a joint
venture named Banc One Payment Services, LLC. The arrangement enables BANC ONE
to focus its attention on building stronger merchant relationships by expanding
access to a broader merchant base while taking advantage of
<PAGE> 5
state-of-the-art processing capabilities. Banc One POS Services Company is also
charged with managing the Corporation's national effort for commercial
electronic commerce activities over the Internet.
Banc One sponsors a group of proprietary mutual funds in which
customers have invested over $11 billion, placing BANC ONE third in the country
among the 25 largest banks. Successes in these and other areas are changing the
dynamics of our business. As a result, we continually refine and streamline all
operating areas to take advantage of these changing dynamics.
THE MOVE TO STATE AND NATIONAL CHARTERS
At the end of 1994, BANC ONE had 69 well-run, profitable banking
organizations operating in an autonomous way. However, what we didn't have was
consistency. We needed consistency to be a core strength. It's now hard to copy
our consistency, so it differentiates us. Consistency harmonizes the
organization and enables our people to provide exceptionally high levels of
service to our customers.
As recently as the 1990s, it made sense to maintain separate charters
for each of our banks. However, the rules were changed when national banking and
branching were approved by Congress in 1994.
The increasingly high cost of governmental compliance and regulation
made it impractical to continue to operate with individual charters. Over the
past few years, we have been consolidating our individually chartered banks into
a single charter by state. At the beginning of the decade, we had 88 separate
banks and approximately $30 billion in assets. At the end of 1995, we had 59
banks and $90 billion in assets. Arizona, Colorado, Oklahoma, Texas and Utah
currently operate under single charters and Premier Bank, NA in Louisiana joined
BANC ONE as a single charter financial institution on January 2, 1996.
Consolidation of charters has also taken place in all other states
where BANC ONE operates, and we expect to make significant progress toward the
goal of single state charters in 1996. In addition, we anticipate the BANC ONE
affiliate banks and other non-bank affiliates could operate under a single
charter nationally some time in the future. Regulations are in place or are
changing to permit nationally chartered financial institutions.
MANAGING CHANGE AS A LINE OF BUSINESS
Our objective is to be in a position to anticipate, rather than react
to, change. We believe it is virtual, and, therefore, have structured BANC ONE
to manage change as a line of business. The scope of this activity is continuous
and immense.
The numerous standardization, consolidation and reengineering projects
currently under way across the Corporation have been brought together and are
administered by a single organization called Project One.
The Project One group is responsible for streamlining the process used
to determine which functions to standardize and consolidate, for establishing
priorities and for
<PAGE> 6
ensuring that our efforts are leveraged across all projects. The focus of
Project One is to standardize, consolidate and reengineer our affiliate banks
and the areas that support them. This will accelerate our progress toward
becoming a national financial services company.
A NEW NATIONAL RETAIL BANKING STRUCTURE
The forces of change are reshaping our entire distribution system,
management responsibility, product structure and our strategic partnership
arrangements. If we are to stand out in an increasingly crowded financial
services industry and remain successful, we must continue to concentrate
relentlessly on adding value. This requires a constant quest for enhancing
service. It impacts every area of the Company, from the roles which branches
will play to the redefinition of the role of the chief executive officers in our
affiliates.
During the year, we focused a great deal of time, attention and talent
on reshaping our decentralized retail structure into a national chain of
financial services offices. The retail banking units in each affiliate are being
centralized as a single retail group across BANC ONE. The move was driven by a
need to give us the ability to react swiftly to trends and changes in the
marketplace. A centralized structure will move retail business in a single
direction quickly while ensuring direct accountability for results.
The national structure, which is expected to be completed during 1996,
will place a chief retail executive in charge of all retail business for all
affiliates. The retail executive position will have at least six key management
areas under it: sales, product and segmentation management, distribution,
marketing, change management and risk management. In the new structure, regional
sales managers representing each geographic area of BANC ONE will report
directly to the national sales manager.
A group of senior managers and retail heads from around the Company,
called the Retail Operating Group, is presiding over this transition. The group
includes statewide retail heads and representatives of mortgage, securities,
operations and systems groups. The transition signals a move from a pure
geographic focus to a customer focus.
A great deal of work has already been completed by the Retail Operating
Group. Standard operating systems have been identified and put in place. Key
support management has been identified and is in place, functioning to support
the retail effort. National sales training has been completed from the ranks of
executive management to all contact staff. Several national sales programs have
been completed across the retail group with encouraging results. For example,
the "Smart Choices" campaign challenged all Bank One branches with a $200
million goal in mutual fund and annuity sales over a 60-day period. The banking
offices exceeded the goal by 153 percent and generated $305 million in sales.
COMMERCIAL BANKING INITIATIVES
The changing character of our national branch delivery system has also
transformed the role of the chief executive officers responsible for the
branches of our affiliates. In the
<PAGE> 7
1980s, our CEOs were primarily responsible for a bank in a defined market, and
had direct management responsibility for employees, products and pricing of all
services in that market. This was a well-defined economic unit. Operations
consolidation and standardization permit our CEOs to concentrate more on
assessing and meeting the financial needs of their customers and much less on
systems and operations management.
Local presidents of BANC ONE affiliates concentrate on the commercial
side of their affiliate's business. They also act as the Company's senior
representatives in their areas and will ensure that strategic partners, like the
Company's mortgage and finance affiliates, continue to act as one unit with the
retail business in their affiliates. Keeping commercial lending close to the
marketplace is a distinguishing characteristic of the new structure.
In addition, bank staff in each of the offices now concentrate on
determining the financial needs of their customers and fulfilling those needs
with a wider range of products. This also requires a level of selling skills not
normally associated with bankers. Therefore, extensive sales training has become
an important element in future operations. There is every indication that this
trend will continue as banks become full, financial service providers in the
future.
In addition to being known for our expertise in retail and
middle-market banking, we also want to be an exceptional provider serving other
niche markets, including middle-market corporate banking, merchant and
investment banking, mortgage banking, bank card, trust and cash management
services. These services have all been developed to be complemented by the
affiliate network and distribution system.
Banc One Capital Corporation's objective has been to offer alternative
funding sources for current and prospective corporate customers. Banc One
Capital works in conjunction with the corporate banking staff to expand and
augment banking relationships. The company has grown from a staff of 25 in 1989
to a staff that exceeds 250 people today. They have successfully expanded their
business by offering a wider range of funding options, which have enabled us to
redefine the traditional role of corporate lending officers from primarily
developing a commercial lending portfolio to establishing a total financing and
cash management relationship with customers.
We believe there still is ample opportunity in corporate banking,
particularly aimed at companies in the middle market with sales of $10 million
to $125 million. We have found that companies in this group traditionally are
looking for a financial relationship with a partner who can provide counsel and
solutions, not just funding that is available from many non-bank sources. Our
strategy is to help these companies by building new capabilities within BANC ONE
wherever possible.
In addition, since business lending decisions are made by each
affiliate on a local basis, we need to ensure that all lenders are following the
same set of "blueprints" in evaluating credit. Three years ago, the Corporation
created a corporate credit development group and charged it with the development
of a systemwide credit training program. It includes a three-tier credit
education program designed to reinforce our credit culture. It starts with
formal credit training for all lenders and ends with a program of continuing
education for all commercial credit employees. Nearly 1,500 corporate bankers
are in the process of completing this training.
<PAGE> 8
SUBSIDIARY ACTIVITIES
Finance One Corporation is BANC ONE's fast-growing, non-bank finance
subsidiary. It consists of Banc One Financial Services, Inc., a consumer finance
company with 72 offices in 24 states, and Banc One Leasing Corporation, which
provides commercial finance services from 27 offices in 13 states.
Banc One Financial Services has $913 million in consumer loans on the
books, a 44 percent increase in new loans over a year ago. The company
specializes in helping customers who have difficulty qualifying for traditional
bank loans, often because they already have a high level of debt. By
consolidating and restructuring their loans, Banc One Financial Services puts
them on an affordable payment schedule. The loans are marketed through the
branches as well as by direct mail promotion with follow-up via telemarketing.
Banc One Leasing, with total assets of $455 million, realized a 35
percent increase in new leasing volume in 1995 compared to 1994. Most of its
business involves equipment leases to Bank One commercial clients who are
referred by the affiliate banks. However, the company is planning significant
expansion of its direct business nationwide.
BANC ONE INVESTMENT MANAGEMENT AND TRUST GROUP
1995 was a year of significant progress for Banc One Investment
Management and Trust Group. The group reorganized into a national line of
business, created a common vision and implemented a 1995 tactical plan which
resulted in a significant boost of the group's earnings contribution to BANC ONE
CORPORATION.
The One Group(R) Family of Mutual Funds, advised by the investment
affiliate of Banc One Investment Management and Trust Group, called Banc One
Investment Advisors Corporation, continued its growth and reputation as one of
the premier mutual fund sources in the nation. In 1995, The One Group grew to
$11 billion in assets under management from conversions of existing mutual funds
of newly acquired BANC ONE affiliates, increased sales and strong investment
performance.
The One Group continued its strong investment performance from 1994. Of
23 funds in The One Group, almost half performed in the top third of their
Lipper Universe in 1995. One of the funds, The One Group Income Equity Fund,
placed in the top 15 of all funds in the equity income category for the second
year in a row and was cited by The Wall Street Journal.
As part of its nationalization plan, Banc One Investment Management and
Trust Group combined 11 independently operated and geographically scattered Banc
One organizations. These actions resulted in expense savings of $5 million in
1995 and will result in $7 million annualized expense savings in 1996.
By the end of 1995, 12 investment management and trust operating
systems were consolidated into one set of common systems in one location. As a
result, operations expense savings exceeded expectations by $2 million. The full
benefits of these consolidation and standardization efforts are expected to be
realized in 1996 and beyond.
<PAGE> 9
With continued consolidation and nationalization, an enhanced sales and
service culture and solid investment performance, Banc One Investment Management
and Trust Group is counting on becoming a key contributor to BANC ONE's success
in the future.
ELECTRONIC BANKING AND "SURFING" THE INTERNET
While there are legitimate questions about who the winning service
providers are likely to be on the Internet, there is no question about the
future potential of this rapidly developing international electronic highway.
New major players, including Microsoft, Visa, Intuit and others, almost
guarantee that the Internet will develop into an integral avenue for all types
of electronic commerce, including financial services.
BANC ONE is working with a number of strategic partners to ensure that
we are ready for any Internet opportunities that are sure to develop. These
partners include well-known, major corporations like Visa, as well as new
business start-ups specifically formed to develop services for Internet
providers. For example, we are working with a Massachusetts company to bring
commerce to the Internet, the vast network of interconnected computers that
until recently offered little or no security for business transactions. The
security issue has been solved by Open Market, Inc., a Cambridge,
Massachusetts-based technology company that is also providing BANC ONE with a
spot on the World Wide Web, the graphics-based, easily navigable portion of the
Internet that many businesses are focusing on as a way to reach customers.
The Internet is an open network, meaning nobody owns it or controls
what is on it. Because it is so wide open, businesses need to make sure the
information they send out is secure and received by the party it is intended to
reach.
The first application of the new technology is Subscribe96, a system
that helps libraries use the Internet to automate the way they order and pay for
magazine and journal subscriptions. The system, developed with RoweCom, a
service provider for libraries, routes subscription orders to BANC ONE's web
site and then to the appropriate publishers. Payment orders are then sent to
BANC ONE which routes debits and credits to the libraries' and publishers' banks
as automated clearing house transactions.
Future Internet projects could include corporate purchasing of
supplies, electronic bill paying and automated applications for financial
services.
BANC ONE is also experimenting with a range of home financial service
programs to make sure we stay on the leading edge of these developments. We are
now jointly experimenting with a screen phone, home information system with GTE
and Visa in Dallas, Texas. This project permits customers with special phones
which include displays to complete banking, retailing and other transactions
from home. Customers in Columbus, Ohio, can use the Prodigy(R) system to
complete banking transactions with Bank One.
It is our belief that customers will want to use multiple devices,
including personal computers, touch-tone phones and screen phones, to access
BANC ONE in the future. Therefore, we are developing our systems to accommodate
a multitude of access devices to serve the expected range of individual needs.
<PAGE> 10
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
MANAGEMENT'S DISCUSSION AND ANALYSIS
I. Overview of Operations....................................................................... 22
II. Net Interest Income.......................................................................... 22
III. Non-Interest Income and Non-Interest Expense................................................. 27
IV. Balance Sheet Analysis....................................................................... 29
V. Asset Liability Management................................................................... 34
VI. Capital...................................................................................... 39
VII. Fourth Quarter Review........................................................................ 40
VIII. Comparison of 1994 versus 1993............................................................... 40
Ten Year Performance Summary.......................................................................... 42
Consolidated Quarterly Financial Data................................................................. 44
CONSOLIDATED BALANCE SHEET............................................................................ 46
CONSOLIDATED STATEMENT OF INCOME...................................................................... 47
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY............................................. 48
CONSOLIDATED STATEMENT OF CASH FLOWS.................................................................. 49
NOTES TO FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies........................................... 50
Note 2 Affiliations, Pending Affiliations and Divestitures.................................. 54
Note 3 Securities and Investment Products................................................... 55
Note 4 Loans and Leases..................................................................... 59
Note 5 Allowance for Credit Losses.......................................................... 60
Note 6 Bank Premises, Equipment and Leases.................................................. 61
Note 7 Short-Term Borrowings................................................................ 62
Note 8 Long-Term Borrowings................................................................. 63
Note 9 Stock Dividends and Convertible Preferred Stock...................................... 63
Note 10 Dividend and Capital Restrictions.................................................... 64
Note 11 Income Taxes......................................................................... 64
Note 12 Disclosures About Fair Value of Financial Instruments................................ 65
Note 13 Pledged Securities and Contingent Liabilities........................................ 68
Note 14 Employee Benefit Plans............................................................... 68
Note 15 Stock Compensation................................................................... 70
Note 16 Related Party Transactions........................................................... 71
Note 17 Supplemental Disclosures for Statement of Cash Flows................................. 72
Note 18 Parent Company Financial Statements.................................................. 72
REPORT OF INDEPENDENT ACCOUNTANTS..................................................................... 75
</TABLE>
21
<PAGE> 11
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
(UNAUDITED)
I. OVERVIEW OF OPERATIONS
"The Corporation" is defined as parent company only. "BANC
ONE" is defined as the Corporation and all significant
majority-owned subsidiaries.
Net income for 1995 was $1.3 billion, or $2.91 per
share, increasing from $1.0 billion, or $2.20 per share,
in 1994. Results for 1994 were significantly impacted by
securities losses, merger and litigation expenses and
operations consolidation charges (a total of $271 million,
after tax). As discussed further on the following pages,
1995 results were favorably impacted by significant
earning asset generation in 1995 and 1994. BANC ONE's
sources of funding, like that of the rest of the banking
industry, are in the process of changing from traditional
commercial and retail bank deposits to a mix of such
deposits, borrowings and loan sales with servicing
retained. As a result, average earning assets were
approximately equal in 1995 to the 1994 level due to
numerous loan sales in late 1994 and throughout 1995. Net
interest income declined only slightly, despite these
sales. The provision for credit losses increased during
1995 reflecting loan growth and cyclical behavior of
consumer credit. Non-interest income increased $540
million and non-interest expense decreased $136 million
during 1995, as further described on the following pages.
Key performance measures were strong with return on
average assets increasing to 1.47% from 1.15% in 1994. The
1995 return on average common equity increased to 16.77%
compared to 13.35% in 1994.
The five year performance summary below and the ten
year performance summary on page 42 provide additional
operating statistics.
FIVE YEAR PERFORMANCE SUMMARY
<TABLE>
<CAPTION>
$(MILLIONS, EXCEPT FOR PER SHARE
DATA) 1995 1994 1993 1992 1991
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income....................... $1,277.9 $1,005.1 $1,191.5 $ 922.2 $ 703.4
Total revenue.................... 8,970.9 7,777.9 7,547.1 7,740.7 7,223.9
Net income per common share(1)... $ 2.91 $ 2.20 $ 2.66 $ 2.06 $ 1.65
Return on average assets......... 1.47% 1.15% 1.50% 1.20% 1.10%
Return on average common
equity......................... 16.77 13.35 17.58 15.14 13.53
Average common equity to average
assets......................... 8.64% 8.50% 8.40% 7.74% 7.95%
At year end:
Total assets..................... $ 90,454 $ 88,923 $ 84,835 $ 81,305 $ 78,179
Long-term borrowings............. $ 2,720 $ 1,866 $ 1,805 $ 1,397 $ 983
</TABLE>
(1) Amounts have been restated to reflect the 10% common
stock dividend payable March 6, 1996 to shareholders
of record on February 21, 1996.
- --------------------------------------------------------------------------------
II. NET INTEREST INCOME
BANC ONE's interest income increased 10.1% to $7.1 billion
and interest expense increased 32.1% to $3.0 billion from
1994 to 1995, resulting in a slight decline in net
interest income.
Earning asset balances remained essentially constant
when compared to 1994 and the increase in interest income
was primarily due to a significant shift in asset mix.
Average loans and leases grew 6.2% to $63.5 billion in
1995 from $59.8 billion in 1994, while average investment
security balances declined 19.6% to $14.8 billion in 1995
from $18.3 billion in 1994. Yields in all major loan
portfolios increased from 1994 to 1995, generally
reflecting the higher level of market interest rates in
1995 as compared to 1994. Margins in some loan portfolios
and product lines showed evidence of declining spreads due
to the impact of competitive pricing pressure and
marketing efforts which utilized introductory pricing to
achieve growth in balances. Loan interest income in 1995
was also negatively impacted by a lower contribution from
tax refund anticipation loan products, largely offset by
higher fee income, due primarily to changes in Internal
Revenue Service regulations governing electronic tax
filing programs.
As discussed above, BANC ONE relies on both traditional
bank funding sources and loan sales with servicing
retained to fund the origination of earning assets. Most
of the loan sales during 1995 and 1994 include
arrangements whereby BANC ONE continues to service the
loans sold, to yield a specified amount of interest to
investors with revenue in excess of net
22
<PAGE> 12
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
charge-offs and such interest to investors recorded as
servicing income. BANC ONE's net income is substantially
unaffected by these loan sales; however, classifications
within the income statement are changed. Net interest
income and provision for credit losses decrease while
non-interest income increases due to these sales. While
these loan sales have included both consumer loans and
credit card receivables (credit card sales), and may in
the future include other types of loans, the most
significant impact on BANC ONE's income statement
classifications results from credit card sales. The
following table presents the impact of credit card sales
with servicing retained on income statement line items and
certain other information pertaining to the total credit
card portfolio.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
----------------------------------- -----------------------------------
EFFECT OF PRO- EFFECT OF PRO-
CREDIT CARD FORMA CREDIT CARD FORMA
$ (MILLIONS) REPORTED SALES ADJUSTED REPORTED SALES ADJUSTED
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income statement:
Net interest income --
fully taxable
equivalent........... $4,209 $ 308 $ 4,517 $4,288 $ 115 $ 4,403
Provision for credit
losses............... 457 139 596 242 46 288
Non-interest income.... 1,870 (163) 1,707 1,330 (68) 1,262
Non-interest expense... 3,632 6 3,638 3,768 1 3,769
Net income............. $1,278 $ 1,278 $1,005 $ 1,005
Other data:
Credit card balances:
Ending at December
31,.................. $7,665 $ 3,440 $11,105 $5,924 $ 2,680 $ 8,604
Average for year....... 6,438 2,990 9,428 6,253 931 7,184
Net charge-offs as a
percentage of average
credit cards......... 3.75% 4.65% 4.03 % 3.52% 4.94% 3.70%
Credit card
delinquencies over 90
days as a percentage
of ending credit
cards................ 1.54% 1.86% 1.64 % 1.24% 1.52% 1.33%
Net interest margin.... 5.37% 10.30% 5.56 % 5.48% 12.35% 5.56%
</TABLE>
----------------------------------------------------------
The increase in interest expense reflects a rise in the
average rate paid on interest-bearing liabilities from
3.49% in 1994 to 4.61% in 1995. Higher funding costs were
attributable to higher market interest rates and to a
shift in the composition of BANC ONE's retail funding base
away from relatively low-cost deposit products (including
interest-bearing demand and savings accounts) into other
deposit products offering yields which enabled BANC ONE to
compete effectively against non-bank providers of retail
money market investment products. The offering of
competitively priced products enabled BANC ONE to avoid
runoff of its retail funding base during 1995 and ensured
continued access to retail funds at rates which remained
below large liability funding costs.
BANC ONE's policy is to manage interest rate risk to a
level which places narrow limits on the sensitivity of its
earnings to changes in market interest rates. Various
capital market transactions were executed in both 1994 and
1995 to ensure that interest rate risk remains within
policy limits. Consequently, the significant changes in
market interest rates which occurred in 1995 did not
significantly impact net interest income. A detailed
explanation of the asset liability management process is
found beginning on page 34.
Off-balance sheet investment products, primarily
interest rate swaps, decreased interest income by $145
million in 1995 compared with increasing interest income
$22 million in 1994. Off-balance sheet investment products
increased deposit and other borrowing costs by $59 million
in 1995 and decreased such costs $72 million during 1994.
In the current rate environment, it is anticipated that
these off-balance sheet products will continue to reduce
yields on interest earning assets and increase interest
rates on interest bearing liabilities in 1996.
BANC ONE's net interest income and the net interest
margin declined from 1994 to 1995, however, both increased
during each of the last three quarters of 1995 primarily
reflecting the earning asset mix changes discussed above.
23
<PAGE> 13
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
FIVE YEAR SUMMARY -- AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND
RATES(1)(4)
<TABLE>
<CAPTION>
1995 1994
----------------------------------------- --------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/
$(THOUSANDS) BALANCE EXPENSE RATE BALANCE EXPENSE
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS:
Short-term investments........................... $ 950,833 $ 59,862 6.30% $ 1,113,465 $ 53,388
SECURITIES:(3)
Taxable........................................ 12,791,932 834,808 6.53 16,010,679 876,420
Tax-exempt..................................... 1,964,544 171,626 8.74 2,331,794 202,042
------------- ------------ ----------- ----------
TOTAL SECURITIES............................... 14,756,476 1,006,434 6.82 18,342,473 1,078,462
LOANS AND LEASES:(2)
Commercial, financial and agricultural......... 17,439,240 1,426,070 8.18 15,533,301 1,174,391
Real estate.................................... 19,941,310 1,796,487 9.01 18,086,356 1,538,546
Consumer, net.................................. 18,209,617 1,710,328 9.39 18,768,362 1,614,093
Credit card.................................... 6,437,512 1,074,026 16.68 6,253,282 989,165
Leases, net.................................... 1,479,726 107,143 7.24 1,174,142 88,549
Allowance for credit losses.................... (900,061) (958,989)
------------- ------------ ----------- ----------
Net loans and leases............................. 62,607,344 6,114,054 9.77 58,856,454 5,404,744
Note receivable from FDIC........................
------------- ------------ ----------- ----------
Total earning assets............................. 78,314,653 7,180,350 9.17 78,312,392 6,536,594
Other assets(3).................................. 8,736,993 8,777,863
------------- -----------
Total assets..................................... $ 87,051,646 $87,090,255
============ ============
LIABILITIES:
DEPOSITS:
Non-interest bearing demand.................. $ 12,968,315 $13,460,795
Interest bearing demand...................... 8,263,124 175,734 2.13 9,277,460 168,959
Savings...................................... 6,108,441 181,323 2.97 7,703,848 191,253
Money market savings......................... 13,986,972 565,241 4.04 12,307,266 360,314
Time deposits:
CDs less than $100,000....................... 19,181,386 1,089,761 5.68 17,718,121 753,590
CDs $100,000 and over:
Domestic................................... 3,724,043 190,453 5.11 3,575,446 144,464
Foreign.................................... 1,531,360 87,582 5.72 1,298,988 55,683
------------- ------------ ----------- ----------
TOTAL DEPOSITS................................... 65,763,641 2,290,094 3.48 65,341,924 1,674,263
BORROWED FUNDS:
Short-term................................... 9,302,237 518,682 5.58 10,811,619 442,767
Long-term.................................... 2,339,092 162,692 6.96 1,834,439 131,811
------------- ------------ ----------- ----------
TOTAL BORROWED FUNDS............................. 11,641,329 681,374 5.85 12,646,058 574,578
------------- ------------ ----------- ----------
TOTAL INTEREST BEARING LIABILITIES............... 64,436,655 2,971,468 4.61 64,527,187 2,248,841
Other liabilities................................ 1,879,174 1,451,990
------------- -----------
TOTAL LIABILITIES................................ 79,284,144 79,439,972
Preferred stock.................................. 249,855 249,900
Common stockholders' equity...................... 7,517,647 7,400,383
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $ 87,051,646 $87,090,255
============ ============
NET INTEREST INCOME.............................. 4,208,882 5.37 4,287,753
Provision for credit losses...................... (457,499) (.58) (242,269)
------------ ------ ----------
NET FUNDS FUNCTION............................... $ 3,751,383 4.79% $4,045,484
=========== ===== ===========
<CAPTION>
YIELD/
$(THOUSANDS) RATE
<S> <C>
- ---------------------------------------------------------------
ASSETS:
Short-term investments........................... 4.79%
SECURITIES:(3)
Taxable........................................ 5.47
Tax-exempt..................................... 8.66
TOTAL SECURITIES............................... 5.88
LOANS AND LEASES:(2)
Commercial, financial and agricultural......... 7.56
Real estate.................................... 8.51
Consumer, net.................................. 8.60
Credit card.................................... 15.82
Leases, net.................................... 7.54
Allowance for credit losses....................
Net loans and leases............................. 9.18
Note receivable from FDIC........................
Total earning assets............................. 8.35
Other assets(3)..................................
Total assets.....................................
LIABILITIES:
DEPOSITS:
Non-interest bearing demand..................
Interest bearing demand...................... 1.82
Savings...................................... 2.48
Money market savings......................... 2.93
Time deposits:
CDs less than $100,000....................... 4.25
CDs $100,000 and over:
Domestic................................... 4.04
Foreign.................................... 4.29
TOTAL DEPOSITS................................... 2.56
BORROWED FUNDS:
Short-term................................... 4.10
Long-term.................................... 7.19
TOTAL BORROWED FUNDS............................. 4.54
TOTAL INTEREST BEARING LIABILITIES............... 3.49
Other liabilities................................
TOTAL LIABILITIES................................
Preferred stock..................................
Common stockholders' equity......................
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......
NET INTEREST INCOME.............................. 5.48
Provision for credit losses...................... (.31)
-----
NET FUNDS FUNCTION............................... 5.17%
======
</TABLE>
(1) Income amounts are presented on a fully taxable equivalent basis (FTE),
which is defined as income on earning assets that is subject to either a
reduced rate or zero rate of income tax, adjusted to give effect to the
appropriate incremental federal income tax rate and adjusted for
non-deductible carrying costs, where applicable. Where appropriate, yield
calculations include these adjustments. The federal statutory rate was 35%
for 1995, 1994 and 1993 and 34% for other years presented.
(2) Non-accrual loans are included in loan balances. Interest income includes
related fee income.
(3) Average securities balances are based on amortized historical cost,
excluding SFAS 115 adjustments to fair value which are included in other
assets.
(4) All average balances are calculated on the basis of daily averages.
24
<PAGE> 14
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992 1991
- ------------------------------------------- ------------------------------------------- ---------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 1,319,605 $ 44,892 3.40% $ 3,216,327 127,345 3.96% $ 3,183,564 $ 191,385
15,004,127 846,403 5.64 15,041,378 1,032,202 6.86 10,965,094 919,036
2,042,759 194,441 9.52 2,065,168 216,009 10.46 2,311,533 255,385
- ----------- ----------- ----------- ----------- ----------- -----------
17,046,886 1,040,844 6.11 17,106,546 1,248,211 7.30 13,276,627 1,174,421
14,598,413 1,176,101 8.06 15,545,313 1,267,719 8.15 14,824,496 1,432,591
16,772,290 1,472,321 8.78 15,230,418 1,411,004 9.26 12,291,283 1,254,689
15,657,193 1,479,106 9.45 13,201,395 1,414,312 10.71 9,768,011 1,167,571
5,128,076 848,978 16.56 4,537,506 786,934 17.34 3,274,340 607,075
1,020,028 83,882 8.22 991,395 87,740 8.85 916,623 98,107
(975,743) (952,868) (771,424)
- ----------- ----------- ----------- ----------- ----------- -----------
52,200,257 5,060,388 9.69 48,553,159 4,967,709 10.23 40,303,329 4,560,033
213,502 18,808
- ----------- ----------- ----------- ----------- ----------- -----------
70,566,748 6,146,124 8.71 68,876,032 6,343,265 9.21 56,977,022 5,944,647
8,878,172 8,197,518 7,056,261
- ----------- ----------- -----------
$79,444,920 $77,073,550 $64,033,283
============ ============ ============
$12,779,430 $11,662,949 $ 8,419,318
8,757,283 141,064 1.61 8,145,956 183,521 2.25 5,643,601 238,075
7,244,979 181,366 2.50 5,595,777 180,630 3.23 3,674,076 179,176
12,140,688 320,608 2.64 12,665,456 423,884 3.35 10,313,415 521,214
17,826,413 676,142 3.79 19,968,163 993,774 4.98 18,414,440 1,267,710
3,555,761 135,002 3.80 4,386,790 192,715 4.39 4,796,718 305,771
694,585 23,509 3.38 560,578 22,348 3.99 423,227 24,698
- ----------- ----------- ----------- ----------- ----------- -----------
62,999,139 1,477,691 2.35 62,985,669 1,996,872 3.17 51,684,795 2,536,644
6,480,247 196,845 3.04 5,558,597 196,177 3.53 5,091,734 292,133
1,630,343 101,215 6.21 1,073,515 80,777 7.52 910,266 85,838
- ----------- ----------- ----------- ----------- ----------- -----------
8,110,590 298,060 3.67 6,632,112 276,954 4.18 6,002,000 377,971
- ----------- ----------- ----------- ----------- ----------- -----------
58,330,299 1,775,751 3.04 57,954,832 2,273,826 3.92 49,267,477 2,914,615
1,404,471 1,223,979 1,056,315
- ----------- ----------- -----------
72,514,200 70,841,760 58,743,110
253,385 264,811 202,704
6,677,335 5,966,979 5,087,469
- ----------- ----------- -----------
$79,444,920 $77,073,550 $64,033,283
============ ============ ============
4,370,373 6.19 4,069,439 5.91 3,030,032
(388,261) (.55) (630,731) (.92) (611,851)
----------- ----------- ----------- ----------- -----------
$ 3,982,112 5.64% $ 3,438,708 4.99% $ 2,418,181
=========== ====== =========== ====== ===========
<CAPTION>
COMPOUND ANNUAL
- ----------- ------------------------
AVERAGE YIELD/ AVERAGE INCOME/
BALANCE RATE BALANCE EXPENSE
<S> <C> <C> <C>
- ---------------------------------------------------------------------
$ 1,319,605 6.01% (13.63)% (18.26)%
15,004,127 8.38 8.03 1.67
2,042,759 11.05 (5.32) (10.11)
- -----------
17,046,886 8.85 5.53 (1.05)
14,598,413 9.66 4.17 (1.27)
16,772,290 10.21 13.83 9.79
15,657,193 11.95 15.49 9.56
5,128,076 18.54 21.87 19.09
1,020,028 10.70 10.46 1.39
(975,743
- -----------
52,200,257 11.31 11.65 7.41
8.81
- -----------
70,566,748 10.43 9.51 5.34
8,878,172 6.63
- -----------
$79,444,920 9.20
===========
$12,779,430
8,757,283 4.22 11.70 (4.92)
7,244,979 4.88 13.11 .48
12,140,688 5.05 11.74 2.88
17,826,413 6.88 3.15 (3.82)
3,555,761 6.37 (6.43) (14.11)
694,585 5.84 39.26 30.95
- -----------
62,999,139 4.91 7.71 (2.86)
6,480,247 5.74 15.23 7.75
1,630,343 9.43 25.98 16.82
- -----------
8,110,590 6.30 16.98 9.55
- -----------
58,330,299 5.92 8.27 (.72)
1,404,471
- -----------
72,514,200 8.97
253,385 60.15
6,677,335 11.17
- -----------
$79,444,920 9.20%
===========
5.31 11.37
(1.07) (.52)
----------- --------
4.24% 13.56%
====== =========
</TABLE>
25
<PAGE> 15
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
RATE-VOLUME ANALYSIS(1, 2)
<TABLE>
<CAPTION>
1995-94 1994-93
--------------------------------------- ------------------------------------
CHANGE IN CHANGE IN
INCOME/ RATE VOLUME INCOME/ RATE VOLUME
$(THOUSANDS) EXPENSE EFFECT EFFECT EXPENSE EFFECT EFFECT
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------
EARNING ASSETS:
Short-term investments..................... $ 6,474 $ 15,048 $ (8,574) $ 8,496 $ 16,302 $ (7,806)
Securities:(5)
Taxable.................................... (41,612) 151,894 (193,506) 30,017 (25,597) 55,614
Tax exempt................................. (30,416) 1,655 (32,071) 7,601 (18,401) 26,002
----------- --------- --------- --------- --------- --------
Total securities........................... (72,028) 153,549 (225,577) 37,618 (43,998) 81,616
Loans and Leases:(3)(4)
Commercial................................. 251,679 100,519 151,160 (1,710 ) (74,664) 72,954
Real estate................................ 257,941 94,234 163,707 66,225 (46,569) 112,794
Consumer, net.............................. 96,235 145,369 (49,134) 134,987 (140,765) 275,752
Credit card................................ 84,861 55,161 29,700 140,187 (39,201) 179,388
Leases, net................................ 18,594 (3,655) 22,249 4,667 (7,328) 11,995
----------- --------- --------- --------- --------- --------
Total loans and leases....................... 709,310 391,628 317,682 344,356 (308,527) 652,883
TOTAL EARNING ASSETS......................... 643,756 560,225 83,531 390,470 (336,223) 726,693
INTEREST BEARING LIABILITIES:
Demand-interest bearing...................... 6,775 26,471 (19,696) 27,895 19,174 8,721
Savings...................................... (9,930) 33,662 (43,592) 9,887 (1,516) 11,403
Money market savings......................... 204,927 150,812 54,115 39,706 35,253 4,453
Time deposits:
CDs less than $100,000................... 336,171 269,810 66,361 77,448 81,579 (4,131)
CDs $100,000 and over:
Domestic............................. 45,989 39,769 6,220 9,462 8,711 751
Foreign.............................. 31,899 20,777 11,122 32,174 7,544 24,630
----------- --------- --------- --------- --------- --------
Total deposits 615,831 541,301 74,530 196,572 150,745 45,827
Borrowed funds:
Short-term................................. 75,915 143,954 (68,039) 245,922 84,231 161,691
Long-term.................................. 30,881 (4,340) 35,221 30,596 17,042 13,554
----------- --------- --------- --------- --------- --------
Total borrowed funds......................... 106,796 139,614 (32,818) 276,518 101,273 175,245
----------- --------- --------- --------- --------- --------
Total interest bearing liabilities........... 722,627 680,915 41,712 473,090 252,018 221,072
----------- --------- --------- --------- --------- --------
Net interest income.......................... $ (78,871) $(120,690) $ 41,819 $(82,620 ) $(588,241) $505,621
========= ========= ========= ========== ========= ========
</TABLE>
(1) Fully taxable equivalent basis. The Federal statutory rate was 35% for all
years presented.
(2) The change not solely due to volume or rate has been prorated into rate and
volume components.
(3) Interest income on loans and leases includes $131 million, $156 million and
$143 million of credit card fees in 1995, 1994 and 1993, respectively. Other
fees included in interest income are not material.
(4) Non-accrual loans and related income are included in their respective loan
categories.
(5) Average securities balances are based on amortized historical cost,
excluding SFAS 115 adjustments to fair value which are included in other
assets.
26
<PAGE> 16
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
III. NON-INTEREST INCOME AND NON-INTEREST EXPENSE
NON-INTEREST INCOME
<TABLE>
<CAPTION>
INCREASE
$(THOUSANDS) 1995 1994 (DECREASE)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from fiduciary activities...... $ 239,411 $ 232,700 $ 6,711
Service charges on deposit accounts... 544,697 483,884 60,813
Loan processing and servicing income:
Mortgage banking.................... 78,185 74,519 3,666
Credit card and merchant processing
fees............................. 193,479 204,442 (10,963)
Loan servicing income............... 249,137 103,531 145,606
---------- ---------- ----------
Total loan processing and servicing
income.............................. 520,801 382,492 138,309
Other income:
Insurance........................... 84,808 69,567 15,241
Securities.......................... 50,602 48,479 2,123
Investment banking.................. 30,857 30,621 236
Income from management of collection
pools............................ 23,436 21,035 2,401
Other............................... 347,511 321,799 25,712
---------- ---------- ----------
Total other income.................... 537,214 491,501 45,713
---------- ---------- ----------
Non-interest income before securities
gains (losses)...................... 1,842,123 1,590,577 251,546
Securities gains (losses)............. 27,847 (261,052) 288,899
---------- ---------- ----------
TOTAL NON-INTEREST INCOME............. $1,869,970 $1,329,525 $540,445
========== ========== ==========
</TABLE>
----------------------------------------------------------
Income from fiduciary activities increased $7 million or
3% during 1995 due primarily to an increase in investment
management fees resulting from increased funds under
management in proprietary mutual funds.
Service charges on deposit accounts increased $61
million or 12.6% during 1995. The increase is attributable
to an increase in fees on overdrafts as a result of a
change in check processing made in June 1994, an overall
increase in fees per transaction in 1995 and improved
service fee collection in 1995.
Mortgage banking income increased $4 million during
1995 due to the $5.3 million impact of adoption of SFAS
122 "Accounting for Mortgage Servicing Rights."
Credit card and merchant processing fees decreased by
$11 million during 1995 after reflecting the impact of
credit card sales. Credit card interchange and merchant
processing volume increased $10 million and $27 million
respectively in 1995. Offsetting these increases was the
effect of credit card sales with servicing retained which
resulted in $49 million in credit card fee income being
reported as loan servicing income in 1995.
Loan servicing income increased $146 million or 141%
during 1995. The increase is attributable to an increase
in servicing fee income related to sales of loans with
servicing retained. Credit card sales, along with a $1
billion student loan sale in September 1994 and a consumer
loan sale of $1.2 billion in April 1995, contributed to
the increase.
Insurance income increased $15 million or 22% in 1995.
The increase is attributable to improved sales during 1995
related to credit life insurance policies and annuity
products as a result of customers' continued focus on tax
deferred investment products.
27
<PAGE> 17
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Other non-interest income increased $26 million or 8%
in 1995. The following transactions contributed to the
increase:
<TABLE>
<CAPTION>
$ (MILLIONS)
--------------------------------------------------------------------------------
<C> <S>
$47 Gain recognized on the 1995 sale of four Michigan banks
6 Increase from 1994 to 1995 from the gain on the sale of credit card
processing software licenses
21 Gain on the sale of branches during 1995
10 Increase in fees resulting from a shift in 1995 from originating tax
refund anticipation loans to receiving fees for arranging for direct
deposit of income tax refunds
35 Net change in the gain on sale of loans and other assets
(49) Gain recognized on the 1994 sale of $1 billion of student loans
(52) Loss related to the sale of $1.2 billon of low yielding consumer loans
in 1995
8 Computer processing and other increases
---
$26 Total increase in other non-interest income
====
</TABLE>
The change in securities gains (losses) is primarily
due to sales of $8 billion in U.S. Treasury and Agency
securities during 1994 to reduce liability sensitivity
which resulted in an aggregate pretax loss of $285
million.
NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
INCREASE
$(THOUSANDS) 1995 1994 (DECREASE)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Salary and related costs.............. $1,750,517 $1,753,672 $ (3,155)
Net occupancy expense, exclusive of
depreciation........................ 164,456 182,223 (17,767)
Equipment expense..................... 104,030 119,270 (15,240)
Taxes other than income and payroll... 87,805 56,628 31,177
Depreciation and amortization......... 292,522 356,762 (64,240)
Outside services and processing....... 426,897 424,559 2,338
Marketing and development............. 171,163 178,905 (7,742)
Communication and transportation...... 274,694 245,455 29,239
Other:
Foreclosed property expense, net.... (3,926) (2,636) (1,290)
FDIC Insurance...................... 81,144 141,778 (60,634)
Other............................... 282,337 311,363 (29,026)
---------- ---------- ----------
Total other expense................... 359,555 450,505 (90,950)
---------- ---------- ----------
TOTAL NON-INTEREST EXPENSE............ $3,631,639 $3,767,979 $(136,340)
========== ========== ==========
</TABLE>
----------------------------------------------------------
Salaries and related costs decreased $3 million or .2%
in 1995 as a result of the recognition of $36 million in
severance costs in 1994 related to operations
consolidation, offset by merit and other pay increases and
a continued shift to incentive compensation in 1995.
Net occupancy expense, exclusive of depreciation,
decreased $18 million or 10% in 1995. The decrease is
primarily attributable to $12 million of expenses related
to operations consolidation that were recognized during
1994.
Equipment expense decreased $15 million or 13% in 1995.
The decrease is primarily due to $6.4 million in
operations consolidation expenses recognized during 1994
and $6.3 million in reduced rental expense due to the
negotiation of favorable lease terms.
28
<PAGE> 18
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Taxes other than income and payroll increased $31
million or 55% during 1995. This increase is primarily due
to the resolution of franchise and intangible tax matters
which resulted in a refund of $26 million in 1994.
Depreciation and amortization decreased $64 million or
18% during 1995. The decrease is due to expenses
recognized during 1994 of $46 million related to the
operations consolidation and $21 million of merger-related
costs.
Communication and transportation expense increased $29
million or 12% during 1995. The increase is a result of
increased postage for statement mailings due to the
increase in credit card accounts, an increase in the
volume of mailings related to credit card solicitations
and an increase in postage rates in 1995.
FDIC insurance expense decreased $61 million or 43%
during 1995. The decrease is attributable to the Federal
Deposit Insurance Corporation's decision to lower deposit
insurance premiums from $.23 to $.04 per $100 in Bank
Insurance Fund (BIF) deposits for well capitalized and
well managed banks. Congress is considering various
proposals for fully capitalizing the Savings Association
Insurance Fund (SAIF). Certain proposals include a special
assessment on SAIF insured deposits of which BANC ONE has
$6 billion at December 31, 1995. It is uncertain whether
or when this pending legislation will become law.
Other non-interest expense decreased $29 million or 9%
during 1995. The following contributed to the change: a
$10 million reversal of accrued interest due to a
favorable IRS appeals negotiation principally regarding
the timing of deductibility of loan charge-offs, a net
decrease in litigation expense of $6 million in 1995 and
$7 million in expenses related to operations consolidation
recognized in 1994.
- --------------------------------------------------------------------------------
IV. BALANCE SHEET ANALYSIS
Loans and Leases
BANC ONE experienced 6.2% growth in average loans and
leases from $59.8 billion in 1994 to $63.5 billion in
1995. Significant origination activity is not fully
reflected in the average or ending loan balances due to
the following sales and securitizations of loans:
1995
----
- $1.3 billion of consumer loans sold during the first
three quarters of 1995
- $1.4 billion of mortgage loans securitized and
reclassified to investment securities during the
fourth quarter of 1995
- $.8 billion of credit card sales in the first three
quarters of 1995
- $.6 billion related to the first quarter 1995 sale of
four Michigan banks
1994
----
- $1 billion of student loans sold during the third
quarter of 1994
- $2 billion of credit card sales during the fourth
quarter of 1994
The table on the following page depicts the maturities
of certain loans at December 31, 1995. As noted in the
table, significant loan maturities occur in 1996; most of
these balances are expected to be replaced or renewed.
Demand loans and loans having no stated maturity are
classified as being due within one year. Loans that have
adjustable rates are shown in their maturity category by
their scheduled principal repayment dates rather than the
dates at which they are repriced. The repricing
characteristics of certain loans included below have
29
<PAGE> 19
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
been synthetically altered by the use of off-balance sheet
investment products, however classifications below are
based on the contractual terms of the loans.
<TABLE>
<CAPTION>
COMMERCIAL, FINANCIAL
AND REAL ESTATE,
AGRICULTURAL CONSTRUCTION
---------------------- ----------------------
$ (MILLIONS) FIXED VARIABLE FIXED VARIABLE
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996................................ $1,471 $7,897 $ 166 $1,503
1997 through 2000................... 1,787 4,907 105 800
After 2000.......................... 573 1,269 38 81
------ ----------- ------ -----------
$3,831 $14,073 $ 309 $2,384
====== ========= ====== =========
</TABLE>
----------------------------------------------------------
Credit Quality
BANC ONE's process for monitoring loan quality includes
detailed, monthly analyses of delinquencies, nonperforming
assets and potential problem loans from each affiliate
bank. Management extensively monitors credit policies,
including policies related to appraisals, assessing the
financial condition of borrowers, restrictions on
out-of-area lending and avoidance of loan concentrations.
BANC ONE has no significant loan concentration with any
single borrower or area of the country. The commercial
loan portfolio consists primarily of numerous small
balance loans in diverse businesses located throughout the
markets served by BANC ONE affiliates. Only 18 customers
had borrowings greater than $50 million at December 31,
1995, with the largest outstanding being $107 million. As
BANC ONE enters new markets, a standardized loan-
monitoring system and credit policies, including
underwriting standards, are implemented immediately.
Centralized management of problem assets with active
programs for resolution and disposition of foreclosed
properties, as well as implementation of BANC ONE's
internal loan monitoring system at newly acquired
affiliates, have aided in the reduction of the level of
nonperforming assets.
As shown in the following table, the loan portfolio
continues to reflect BANC ONE's policy of minimizing
concentrations in any one industry.
<TABLE>
<CAPTION>
1995 1994
-------------------------------- ---------------------------------
BALANCE AT PERCENT OF BALANCE AT PERCENT OF
$ (MILLIONS) YEAR-END WHOLESALE LOANS(1) YEAR-END WHOLESALE LOANS(1)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
Real estate operators,
managers and developers.... $4,401 16.76% $3,957 16.23%
Retail....................... 2,249 8.56 1,896 7.78
Construction contractors..... 1,788 6.81 1,495 6.13
Oil and mining............... 1,443 5.49 1,208 4.95
Mortgage banking, finance
companies, financial
institutions and brokers... 1,138 4.33 909 3.73
Wholesale trade --
durables................... 1,067 4.06 992 4.07
Manufacturing -- machinery... 1,030 3.92 880 3.61
Holding and investment
companies.................. 933 3.55 833 3.42
Transportation and public
utilities.................. 842 3.21 657 2.69
Health services.............. 761 2.90 688 2.82
</TABLE>
(1) Wholesale loans include commercial, financial and
agricultural, commercial real estate and construction
real estate loans.
----------------------------------------------------------
BANC ONE's foreign loans totaled less than 1% of total
loans at December 31, 1995 and 1994.
30
<PAGE> 20
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Non-accrual loans decreased $28 million and other real
estate owned (OREO) decreased $9 million during 1995.
Management expects credit quality to decline somewhat
throughout 1996, due substantially to cyclical
deterioration of consumer credit quality. The banking
industry is currently experiencing an increase in consumer
delinquencies and charge-offs.
The following summarizes the activity in non-accrual loans
and OREO.
<TABLE>
<CAPTION>
($ THOUSANDS) 1995
-------------------------------------------------------------------------------
<S> <C>
NON-ACCRUAL LOANS:
Balance, beginning of period......................................... $377,409
Non-accrual additions................................................ 375,029
Loans returned to accrual and payments received...................... (278,919)
Reductions due to transfers to OREO.................................. (26,158)
Charge-offs.......................................................... (98,541)
Other, net........................................................... 264
--------
Balance, end of period............................................... $349,084
========
OREO:
Balance, beginning of period......................................... $ 84,355
Additions............................................................ 91,163
Write-downs.......................................................... (19,382)
Sales and other, net................................................. (80,653)
--------
Balance, end of period............................................... $ 75,483
========
</TABLE>
----------------------------------------------------------
The following shows delinquent loans by loan type:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
LOANS DELINQUENT 90 DAYS OR MORE (1) 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C>
Wholesale......................................... .15% .10%
Real estate, residential.......................... .25 .16
Consumer.......................................... .34 .29
Credit card....................................... 1.54 1.24
Leases............................................ .03 .02
TOTAL LOANS AND LEASES............................ .39 .28
</TABLE>
(1) Ratios presented exclude nonperforming loans and are
expressed as a percent of ending balances.
----------------------------------------------------------
Allowance for Credit Losses
The allowance for credit losses increased to $938 million
at December 31, 1995 from $897 million at December 31,
1994. This increase was caused by an increase in the
consumer loan and credit card provisions due to the growth
in these portfolios and the cyclical deterioration in
consumer credit quality offsetting improvement in
wholesale credit quality. Refer to the Allowance for
Credit Losses and the Loan and Lease Analysis tables on
the following pages for more detail.
The adequacy of the allowance for credit losses is
assessed based upon the above credit quality and other
pertinent loan portfolio information. The allowance for
credit losses as a percentage of ending loans remained
essentially constant from December 31, 1994 to 1995. The
allowance continues to provide strong nonperforming loan
coverage, increasing to 265% at December 31, 1995,
compared with 235% at December 31, 1994. The adequacy of
the allowance and provision for credit losses is
consistent with the composition of the portfolio and
recent credit quality history.
31
<PAGE> 21
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
COMMERCIAL,
FINANCIAL
AND REAL CREDIT TOTAL
$(THOUSANDS) AGRICULTURAL ESTATE CONSUMER CARD LEASES UNALLOCATED ALLOWANCES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990................... $227,539 $ 131,801 $133,897 $ 93,559 $10,173 $108,021 $704,990
Allowances associated with loans acquired and
other...................................... 53,617 36,681 31,928 32,625 933 11,231 167,015
Provision.................................... 165,789 95,121 135,761 208,314 13,615 (6,749) 611,851
Charge-offs.................................. (218,488) (93,408) (189,158) (184,313) (20,524) (705,891)
Recoveries................................... 37,317 6,948 55,180 25,364 5,629 130,438
---------- --------- -------- --------- ------- ----------- ----------
Net charge-offs.............................. (181,171) (86,460) (133,978) (158,949) (14,895) (575,453)
---------- --------- -------- --------- ------- ----------- ----------
BALANCE, DECEMBER 31, 1991................... 265,774 177,143 167,608 175,549 9,826 112,503 908,403
Allowances associated with loans acquired and
other...................................... 2,997 2,319 1,381 119 3 6,819
Provision.................................... 170,052 37,862 158,120 209,682 14,970 40,045 630,731
Charge-offs.................................. (187,375) (97,098) (219,552) (242,459) (15,007) (761,491)
Recoveries................................... 51,015 12,424 68,995 29,103 6,175 167,712
---------- --------- -------- --------- ------- ----------- ----------
Net charge-offs.............................. (136,360) (84,674) (150,557) (213,356) (8,832) (593,779)
---------- --------- -------- --------- ------- ----------- ----------
BALANCE, DECEMBER 31, 1992................... 302,463 132,650 176,552 171,994 15,967 152,548 952,174
Allowances associated with loans acquired and
other...................................... 3,169 5,327 2,586 2,461 2,746 16,289
Provision.................................... (41,856) 85,728 92,052 248,587 4,835 (1,085) 388,261
Charge-offs.................................. (95,136) (64,956) (167,096) (251,492) (11,878) (590,558)
Recoveries................................... 70,917 13,454 77,252 34,495 4,970 201,088
---------- --------- -------- --------- ------- ----------- ----------
Net charge-offs.............................. (24,219) (51,502) (89,844) (216,997) (6,908) (389,470)
---------- --------- -------- --------- ------- ----------- ----------
BALANCE, DECEMBER 31, 1993................... 239,557 172,203 181,346 206,045 13,894 154,209 967,254
Allowances associated with loans acquired and
other...................................... 738 812 (224) 4,317 (1,117) 4,526
Provision.................................... (69,068) (36,315) 68,783 195,318 1,030 82,521 242,269
Charge-offs.................................. (49,504) (29,373) (176,045) (260,510) (5,737) (521,169)
Recoveries................................... 60,088 19,806 80,662 40,386 3,358 204,300
---------- --------- -------- --------- ------- ----------- ----------
Net (charge-offs) recoveries................. 10,584 (9,567) (95,383) (220,124) (2,379) (316,869)
---------- --------- -------- --------- ------- ----------- ----------
BALANCE, DECEMBER 31, 1994................... 181,811 127,133 154,522 185,556 12,545 235,613 897,180
Allowances associated with loans acquired and
other...................................... (7) (1,562) (2,737) (60) 478 (3,888)
Provision.................................... (10,760) (5,646) 143,624 330,156 7,081 (6,956) 457,499
Charge-offs.................................. (50,335) (36,016) (218,763) (287,546) (11,334) (603,994)
Recoveries................................... 41,057 16,696 83,580 46,379 3,499 191,211
---------- --------- -------- --------- ------- ----------- ----------
Net charge-offs.............................. (9,278) (19,320) (135,183) (241,167) (7,835) (412,783)
---------- --------- -------- --------- ------- ----------- ----------
BALANCE, DECEMBER 31, 1995................... $161,766 $ 100,605 $160,226 $ 274,485 $12,269 $228,657 $938,008
============ ========= ========== ========= ======= ============ ===========
</TABLE>
32
<PAGE> 22
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
LOAN AND LEASE ANALYSIS
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENDING LOAN AND LEASE BALANCES:
Commercial, financial and
agricultural....................... $17,903,692 $16,619,186 $15,208,355 $15,085,540 $16,955,907
Real estate........................... 19,619,908 19,039,988 17,780,781 16,335,864 14,753,327
Consumer, net......................... 18,407,595 19,070,286 17,311,474 14,062,562 11,476,940
Credit card........................... 7,665,274 5,924,383 6,112,545 5,087,076 4,676,589
Leases, net........................... 1,732,196 1,339,069 1,107,220 1,000,484 975,340
----------- ----------- ----------- ----------- -----------
TOTAL LOANS AND LEASES.................. $65,328,665 $61,992,912 $57,520,375 $51,571,526 $48,838,103
=========== =========== =========== =========== ===========
Nonperforming assets and delinquencies:
Non-accrual loans..................... $ 349,084 $ 377,409 $ 482,331 $ 680,408 $ 767,238
Renegotiated loans(1)................. 5,211 3,910 7,567 28,361 22,669
Other real estate owned............... 75,483 84,355 153,260 191,665 387,296
----------- ----------- ----------- ----------- -----------
TOTAL NONPERFORMING ASSETS.............. $ 429,778 $ 465,674 $ 643,158 $ 900,434 $ 1,177,203
=========== =========== =========== =========== ===========
Loans delinquent 90 days or more and
accruing interest..................... $ 254,417 $ 173,456 $ 207,816 $ 211,832 $ 296,309
Loans classified as doubtful (included
in non-accrual)(2).................... 53,789 33,160 59,949 78,120 203,119
Interest foregone on nonperforming loans
(after tax)(3)........................ $ 27,540 $ 18,584 $ 26,727 $ 35,483 $ 46,504
ALLOWANCE AND LOSS RATIOS:
Ending allowance to ending balances:
Commercial, financial and
agricultural....................... .90% 1.09% 1.58% 2.00% 1.57%
Real estate........................... .51 .67 .97 .81 1.20
Consumer.............................. .87 .81 1.05 1.26 1.46
Credit card........................... 3.58 3.13 3.37 3.38 3.75
Leases................................ .71 .94 1.25 1.60 1.01
TOTAL LOANS AND LEASES.................. 1.44 1.45 1.68 1.85 1.86
Net charge-offs (recoveries) to average
balances:
Commercial, financial and
agricultural....................... .05 (.07) .17 .88 1.22
Real estate........................... .10 .05 .31 .56 .70
Consumer.............................. .74 .51 .57 1.14 1.37
Credit card........................... 3.75 3.52 4.23 4.70 4.85
Leases................................ .53 .20 .68 .89 1.62
TOTAL LOANS AND LEASES.................. .65 .53 .73 1.20 1.40
Recoveries to gross charge-offs......... 31.66 39.20 34.05 22.02 18.48
To ending loans and leases:
Nonperforming assets.................. .66 .75 1.12 1.75 2.41
Loans delinquent 90 days or more...... .39% .28% .36% .41% .61%
</TABLE>
(1) Excludes certain smaller balance loans collectively evaluated for
impairment.
(2) Defined as loans with a high loss possibility after collateral liquidation
based on existing facts, market conditions and value. These loans are
provided for in the allowance for credit losses, as appropriate. Any
interest income recognized on these loans is immaterial.
(3) The amount of gross interest on nonperforming loans that would have been
recorded during 1995 if the loans had been current throughout the year
totaled $52 million. Of this amount, $9 million of interest was actually
recorded on nonperforming loans during 1995. Texas is included in the
amounts in the table for the whole year of 1991 even though it was
consolidated beginning October 1, 1991.
33
<PAGE> 23
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Deposit Analysis
Total deposits decreased slightly compared with December
31, 1994. The decrease is primarily due to the replacement
of $1.6 billion in Eurodollar deposits with less expensive
borrowings and a $539 million decrease in deposits from
the sale of the four Michigan banks during the first
quarter of 1995. The retail deposit mix continues to
change as consumers shift funds out of lower rate savings
and demand accounts into higher yielding market rate
products, primarily money market savings and time
deposits. The repricing characteristics of certain
deposits included below have been synthetically altered by
the use of off-balance sheet investment products, however
classifications below are based on the contractual terms
of the deposits.
The following represents the time remaining until
maturity of time deposits (including all foreign deposits)
greater than $100,000.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
$(MILLIONS) 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C>
0-3 months........................................ $2,782 $4,304
4-6 months........................................ 527 441
7-12 months....................................... 524 393
Over 1 year....................................... 700 972
------ ------
Total............................................. $4,533 $6,110
====== ======
</TABLE>
- --------------------------------------------------------------------------------
V. ASSET LIABILITY MANAGEMENT
BANC ONE takes a unified approach to management of
liquidity, capital and interest rate risk through its
Asset and Liability Management (ALM) process. The
following discussion describes certain key elements of
this process, including BANC ONE's use of on- and off-
balance sheet investment products to manage risk.
BANC ONE's Natural Asset Sensitivity
BANC ONE serves as a financial intermediary by taking
deposits and making loans. Although the interest rate risk
profile of BANC ONE may change in the future as new
business activity changes, historically, the terms of
loans and deposits create an interest rate risk profile
with asset maturities and terms to repricing shorter than
those of liabilities (asset sensitive). Asset sensitivity
results in higher earnings from rising interest rates and
lower earnings from falling interest rates. The table on
the following page shows BANC ONE's Structural Gap which
is defined as interest rate sensitivity excluding all
investment products (on-and off- balance sheet). BANC
ONE's one year cumulative structural gap is a positive
$15.1 billion. This indicates that without investment
products, BANC ONE is naturally asset sensitive. The
middle of the table contains all investment products in
their expected repricing periods. A consolidated gap
position is then calculated.
34
<PAGE> 24
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
STRUCTURAL GAP
<TABLE>
<CAPTION>
0-3 4-12 YEAR 1 YEAR 2 3 TO 5
($ MILLIONS) MONTHS MONTHS TOTAL TOTAL YEARS
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
Structural gap.............. $ 16,662 $ (1,589) $ 15,073 $ 2,558 $ 8,484
Cumulative structural gap... 16,662 15,073 17,631 26,115
Investment products:
On-balance sheet........ 6,307 2,109 8,416 1,810 3,639
Wholesale borrowings.... (11,693) (4) (11,697) (8) (1,651)
Off-balance sheet....... (14,049) 5,255 (8,794) 4,454 2,433
Total investment
products.............. (19,435) 7,360 (12,075) 6,256 4,421
Cumulative investment
product gap........... (19,435) (12,075) (5,819) (1,398)
Consolidated corporate
gap position.............. (2,773) 5,771 2,998 8,814 12,905
Cumulative gap.............. (2,773) 2,998 11,812 24,717
Percent of total assets..... (3.1)% 3.3% 13.1% 27.3%
<CAPTION>
OVER 5
($ MILLIONS) YEARS TOTAL
<S> <C> <C>
----------------------------
Structural gap.............. $(28,128) $ (2,013)
Cumulative structural gap... (2,013)
Investment products:
On-balance sheet........ 2,154 16,019
Wholesale borrowings.... (650) (14,006)
Off-balance sheet....... 1,907
Total investment
products.............. 3,411 2,013
Cumulative investment
product gap........... 2,013
Consolidated corporate
gap position.............. (24,717)
Cumulative gap..............
Percent of total assets.....
------------------------------------------------------------------------------------------
</TABLE>
Although this table provides an indication of the
direction of risk for a change in interest rates, it does
not fully depict the effect of option-like characteristics
contained in loans, investments and deposits. These
characteristics can be best analyzed by the use of
earnings sensitivity models and economic value at risk
analysis.
The Asset Liability Management (ALM) Process
The impact of changes in interest rates is measured on
both near-term earnings and long-term earnings. BANC ONE
measures the first impact by determining how earnings from
existing assets and liabilities would change over a 12 to
24 month period if interest rates changed. This is called
Earnings Sensitivity Risk (ESR). The risk of changing
spreads between certain categories of indexed assets and
liabilities is measured over a 12 to 24 month period. This
is referred to as Basis Risk. As an indicator of the
sensitivity of longer term earnings to interest rates,
BANC ONE determines a baseline measure of the economic
value of future earnings to be derived from the current
balance sheet and then measures the percentage change in
that value for given changes in rates. This method is
referred to as Economic Value at Risk (VAR).
Earnings Sensitivity Risk (ESR)
ESR is defined as the percentage change in forecasted
earnings over a 12 month period for a specified change in
forecasted interest rates. At BANC ONE, ESR is measured
against simulated increases and decreases in interest
rates of 1%, 2% and 3%. BANC ONE has established
guidelines which limit the amount of short-term earnings
sensitivity it is willing to tolerate for these changes in
interest rates.
35
<PAGE> 25
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Assumptions used in earnings simulations include the
behavior of loan and deposit repricings and volumes. Major
assumptions include loan and deposit growth, mix changes,
loan and deposit pricing spreads, prepayment volatility on
various fixed rate assets, and spread and volume
elasticity of interest and non-interest bearing deposit
accounts. A significant portion
of consumer deposits do not reprice or mature on a
contractual basis. These deposit balances and rates are
expected to react to market rates with a lag. Assumptions
are based upon historical experience with BANC ONE's
markets and customers, and include projections for how
management expects to price loans and deposits in response
to market changes. Because markets and consumer behavior
are not entirely predictable, the assumptions are
continually monitored and updated as market conditions
change.
The following table reflects ESR at December 31, 1995
for gradual rate changes (i.e. .25% per quarter for a 1%
annual rate movement).
<TABLE>
<CAPTION>
GRADUAL RATE CHANGE ESR
---------------------------------------------------------------------- -----
<S> <C>
+3%......................................................... (4.30)%
+2%......................................................... (2.20)%
+1%......................................................... (.50)%
-1%......................................................... (1.50)%
-2%......................................................... (3.10)%
</TABLE>
----------------------------------------------------------
Changes in income are not symmetrical to changes in rates
due to option-like characteristics embedded in balance
sheet assets and liabilities and expected customer
responses to rate changes.
Basis Risk
The primary basis risk faced by BANC ONE is the risk that
the spread between Prime loan rates and short-term funding
rates will narrow. At December 31, 1995, BANC ONE had
approximately $19.1 billion of Prime rate related loans.
Basis risk has been reduced by entering into $8.0 billion
of basis swaps in which BANC ONE pays Prime, less a
spread, and receives London Inter-Bank Offered Rate
(LIBOR), which, in some cases, is subject to certain caps.
These basis swaps have declined in market value since
their purchase because the amount BANC ONE receives in
certain contracts has been limited by the caps.
An immediate decline of ten basis points in the spread
between Prime and Fed Funds, and Prime and LIBOR, lasting
a full year would cause projected earnings to decline by
.6%.
36
<PAGE> 26
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Economic Value at Risk
The change in the economic value of BANC ONE's long-term
revenue flows for a 1% and 2% shock in rates, both up and
down, provides a measurement of long-term risk, as shown
below.
<TABLE>
<CAPTION>
PERCENT CHANGE
IN ECONOMIC
SHOCK SCENARIO VALUE
---------------------------------------------------------------- --------------
<S> <C>
+2%................................................... 1.0 %
+1%................................................... .9 %
-1%................................................... (5.0)%
-2%................................................... (12.0)%
</TABLE>
----------------------------------------------------------
The decrease in economic value when rates fall is
primarily caused by BANC ONE's limited ability to reduce
rates on deposits in step with market rates and by the
accelerated amortization of interest rate swaps. On the
other hand, changes in economic value are modest when
rates rise. It is expected that as rates rise, customers
will accelerate the shift from low-cost deposits to higher
cost products and deposit rates will therefore increase.
In addition, amortization of certain interest rate swaps
will be slower in a higher rate climate than in a falling
rate climate. The mix of these two factors makes the
change in economic value for rising rates
disproportionately smaller than the change for falling
rates and their mix is substantially responsible for the
lack of significant economic value change between the +1%
and +2% shock scenarios.
Balance Sheet Transactions and Investment Products Used to
Manage Interest Rate Risk
In 1994, BANC ONE was active in both the local and capital
markets to reduce its liability sensitive position. This
was accomplished principally by selling $8 billion in
fixed rate U.S. Treasury and Agency securities. By the end
of 1994, earnings sensitivity was within narrow bounds.
Throughout 1995, earnings sensitivity was managed
within a modest band of risk. Since BANC ONE's structural
gap is asset sensitive, as investment products mature,
exposure to falling rates increases. As a result, various
programs were entered into to offset this exposure.
BANC ONE purchased approximately $2 billion of U.S.
Treasury and Agency securities, entered into approximately
$1.9 billion of receive-fixed interest rate swaps and
extended the duration of approximately $1.6 billion of
asset-backed and U.S. Agency assets by sale and subsequent
purchase of a like amount of similar, but longer duration,
securities. In addition, almost $4.5 billion of
receive-fixed rate index amortizing interest rate swaps
were converted to generic swaps, both increasing the
positive earnings impact on these instruments in a falling
interest rate environment and reducing the negative
earnings impact on these instruments from a rising
interest rate environment. Because these actions increased
BANC ONE's near term exposure to increased interest rates
BANC ONE purchased $2.1 billion of interest rate caps.
37
<PAGE> 27
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Credit Risk
There were no past due amounts or reserves for possible
credit losses at December 31, 1995, related to off-balance
sheet investment product transactions, nor were there any
charge-offs during the three years ending December 31,
1995. In October 1994, the Office of the Comptroller of
the Currency created new tiering categories for
off-balance sheet investment product contracts. Based on
these criteria, BANC ONE is a Tier II dealer. Customer cap
and swap agreements are created to accommodate the needs
of BANC ONE's commercial loan customers. BANC ONE enters
into offsetting transactions with third parties and has
prudent controls on transaction size, term and customer
disclosure guidelines. BANC ONE has customer outstandings,
excluding offsetting transactions, with notional amounts
of $1.2 billion at December 31, 1995.
Liquidity Management
Liquidity is managed in order to preserve stable and
reliable sources of cash to fund loan growth as well as
expected and unexpected outflows of deposits and other
liabilities. In addition, liquidity management seeks to
avoid over-concentration on a limited number of liability
sources and to minimize reliance on potentially volatile
wholesale funds and large liabilities. The liquidity
management guidelines at BANC ONE include those practices
that promote adequate but not excessive liquidity,
resulting in a balanced blend of several liabilities each
of which is used in moderation. This allows BANC ONE entry
into several markets and provides the mechanisms to either
hypothecate unmarketable loans to generate cash or enable
the securitization of loans for sale in the marketplace.
BANC ONE has a number of significant sources of
liquidity. The most reliable source is "On-Books
Liquidity". Substantial funding can be extracted from the
$15.1 billion of short-term investments and securities
available for sale. The other sources of liquidity are:
(i) a geographically diverse retail network comprised of
affiliate banks in 12 states, providing access to a
substantial number of retail deposits; (ii) the ability to
acquire large liabilities in affiliate markets; (iii) the
ability to sell and securitize loans; (iv) the ability to
access large liabilities in the national marketplace; and
(v) the ability to borrow against specific unmarketable
loans. In addition to using the securities portfolio to
collateralize repurchase agreements and public funds
deposits, $111 million is pledged as collateral on
off-balance sheet investment products. The amount pledged
will increase as rates rise and decrease as rates decline.
BANC ONE's size and high credit quality ratings have
made numerous external funding sources available. A bank
note program is available, as are commercial paper lines
of credit totaling $2 billion. During 1995, BANC ONE
affiliate banks issued $4.1 billion of bank notes, with
$2.8 billion outstanding at December 31, 1995. BANC ONE
also maintains an extensive contingency funding plan. The
various sources of liquidity available to BANC ONE provide
ample long-term as well as short-term funding
alternatives.
At December 31, 1995, large liability dependence was
17.3%, an increase from 16.0% at December 31, 1994. BANC
ONE's policy is that the large liability position be no
greater than 30 percent of net earning assets. In
practice, BANC ONE manages the position at much lower
levels as summarized in the table on the following page.
The sales of loans and securities coupled with the
issuance of long-term debt, allowed BANC ONE to reduce
reliance on short-
38
<PAGE> 28
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
term debt during 1995. Because the large liability
dependence is calculated net of short-term investments,
the decrease of short-term investments has slightly
increased the net large liability reliance. During 1996,
BANC ONE expects to continue to enter into loan sale
transactions as funding tools.
LIQUIDITY
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
$(MILLIONS) 1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Earning assets, net of short-term investments.... $80,099 $76,248
Large liabilities:
Net national market liabilities................ $3,209 $1,954
As a percent of net earning assets............. 4.01% 2.56%
Total net large liabilities.................... $13,857 $12,195
As a percent of net earning assets............. 17.30% 15.99%
</TABLE>
----------------------------------------------------------
Non-bank affiliates are partially funded by advances
from the Corporation. Funding for the Corporation comes
principally from dividends from bank affiliates,
management fees and the issuance of commercial paper and
term debt. During 1995, the Corporation reduced commercial
paper usage and financed its purchase of $324 million of
treasury stock with funds from dividends from its bank
affiliates and the issuance of $600 million of
subordinated notes.
- --------------------------------------------------------------------------------
VI. CAPITAL
Historically, BANC ONE has used common stock as
consideration in acquisitions so that stockholders' equity
is increased as assets are acquired. BANC ONE has
generally issued shares in acquisitions in an amount such
that little or no dilution to earnings per share resulted
based on expected earnings from the acquiree. On January
2, 1996, the Corporation acquired Premier Bancorp, Inc.
for 24 million common shares (previously held as treasury
shares and adjusted for the 10% common stock dividend
payable March 6, 1996 to shareholders of record on
February 21, 1996) valued at $711 million.
BANC ONE has long had a policy of maintaining superior
capital ratios. Total equity to assets at December 31,
1995 of 9.06% increased 55 basis points, from 8.51% a year
ago. This was caused by the increase in net income and in
the net unrealized holding gains on securities available
for sale. BANC ONE's policies require it to maintain, at a
minimum, a capital position that meets the federal
regulators "well capitalized" classification. Tier I
capital is defined as the sum of common stockholders'
equity and preferred stock, less goodwill and certain
other deductions (including net unrealized holding gains
(losses) on securities available for sale, certain
intangible assets and 50% of the investment in
unconsolidated subsidiaries). Tier I and total risk
adjusted capital ratios were 10.05% and 14.05%
respectively, both significantly above regulatory capital
requirements of 4% and 8%. All of the Corporation's banks
meet the regulatory definition of well capitalized banks.
In February 1996, the Corporation purchased and retired
16.5 million common shares (15 million prior to the 10%
common stock dividend). Since these shares have been
effectively reissued in connection with the 10% common
stock dividend, they will not prohibit the Corporation
from entering into an acquisition using the pooling of
interests method.
BANC ONE generally matches dividend increases with
earnings increases so that dividends paid out typically
average between 35% and 45% of net income. The dividend
payout ratio was 43% and 51% in 1995 and 1994,
respectively. Payout ratios based on BANC ONE's historical
net income per common share are presented in the Ten Year
Performance Summary.
39
<PAGE> 29
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
VII. FOURTH QUARTER REVIEW
Net income for the fourth quarter of 1995 was $337 million
or $.77 per share compared to $64 million or $.13 per
share for the same period in 1994. The following
significantly impacted net income in the fourth quarter:
- FDIC premiums paid in 1995 decreased $26 million as a
result of reduced deposit insurance premiums from
$.23 to $.04 per $100 for Bank Insurance Fund (BIF)
deposits for well capitalized and well managed banks.
- An after tax loss of $160 million was recognized in
1994 due to the sale of $6 billion in U.S. Treasury
and Agency securities.
- An after tax accrual of $60 million was recorded
related to operations consolidation and other charges
in 1994.
See the Consolidated Quarterly Financial Data Schedules
on pages 44 and 45 for a comparison of quarterly results
for 1995 and 1994.
- --------------------------------------------------------------------------------
VIII. COMPARISON OF 1994 VERSUS 1993
Overview of Operations -- Net income for 1994 was $1,005
million or $2.20 per share, declining from $1,191 million
or $2.66 per share in 1993. All per share amounts have
been restated for two 10% common stock dividends effective
February 10, 1994 and February 21, 1996.
The 1994 earnings decrease was primarily due to a loss
on the sale of securities to reduce BANC ONE's exposure to
rising interest rates, merger and litigation expenses and
operations consolidation charges relating to
standardization and consolidation of certain loan, deposit
and back office functions. These decreases were partially
offset by a gain on sale of student loans.
Return on average assets decreased to 1.15% in 1994
from 1.50% in 1993. Return on average common equity
decreased to 13.35% in 1994 from 17.58% in 1993. The
ending ratio of average common equity to average assets
increased to 8.50% in 1994 from 8.40% in 1993.
Net Interest Income -- Average interest-earning assets
increased 11% to $78.3 billion in 1994 from $70.6 billion
in 1993. The growth was primarily due to an increase in
average loans and leases in 1994.
Net interest margin decreased to 5.48% in 1994 from
6.19% in 1993. Correspondingly, net interest income (FTE)
decreased by $83 million in 1994 from 1993. Cost of funds
increased while the yield on average earning assets
declined during 1994. The national market interest rate
increases contributed to an increase in the average rate
paid on deposits and borrowed funds for the year ended
December 31, 1994. The decrease in the yield on average
earning assets reflects the impact of increasingly
competitive pricing and contractual repricing lags on
loans.
Loan Portfolio -- Interest income on loans (FTE)
increased by $344 million in 1994 over 1993. Average total
loans and leases increased to $59.8 billion for 1994, up
from $53.2 billion for 1993. The overall yield on loans
declined to 9.2% in 1994 from 9.7% in 1993. Yields on
retail loans paid off in 1994 were generally higher than
rates on new originations which were impacted by
increasingly competitive pricing in 1994. Some new credit
card accounts were originated at low, introductory rates
in 1994. Although loan yields declined during 1994,
interest and fees on loans and leases increased, due to
growth in consumer and credit card loans.
40
<PAGE> 30
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Deposits and Borrowed Funds -- Total average
interest-bearing liabilities increased 10.6% to $64.5
billion in 1994 from $58.3 billion in 1993, primarily
reflecting increases in short-term borrowings. Deposit
growth lagged loan growth during 1994 as consumers chose
other higher yielding forms of investment.
Average borrowed funds increased $4.5 billion in 1994
from 1993 and the average rate paid increased to 4.54% in
1994 from 3.67% in 1993, resulting in related interest
expense growth of $277 million. To fund increased loan
growth, BANC ONE issued short-term bank notes during 1994
and, on average, purchased more federal funds compared to
the previous year.
Off-Balance Sheet Investment Products -- The use of
off-balance sheet investment products increased interest
income by $22 million, or 3 basis points, and decreased
deposit and other borrowing costs by $72 million, or 11
basis points, in 1994. The use of off-balance sheet
investment products increased income by $230 million, or
33 basis points, and decreased deposit and other borrowing
costs by $216 million, or 38 basis points, in 1993.
Non-Interest Income, Non-Interest Expense and Income
Taxes -- Other non-interest income increased $88 million
in 1994 from 1993. The increase was primarily due to a
gain on the sale of student loans and a gain on the sale
of mortgage loan servicing rights.
Salaries and related expense increased $66 million
during 1994 compared to 1993. Severance pay of $36 million
related to operations consolidation was recorded in 1994.
The increase also reflects merit and other pay increases
and an increase in headcount resulting from expansion into
new markets, products and business opportunities. This
increase is offset by a decrease in bonuses and a decrease
in 401(k) benefits due to a decreased employer match.
Net occupancy expense, exclusive of depreciation,
increased $22 million in 1994 from 1993. The increase is
primarily attributable to expenses related to the
operations consolidation.
Depreciation and amortization increased $82 million in
1994 compared to 1993. The increase is primarily due to
$46 million of expenses related to the operations
consolidation and $21 million of merger-related expenses.
Other non-interest expenses decreased $15 million in
1994 from 1993. Included in these amounts are other real
estate owned (OREO) expenses, which declined $35 million
in 1994 as compared to 1993. The decrease in OREO expenses
relates to a decline of $69 million in OREO property held.
These decreases were offset by an increase in litigation
expenses, and expenses related to the operations
consolidation.
Loan Quality -- The allowance for credit losses decreased
to $897 million at December 31, 1994 from $967 million at
December 31, 1993. This decrease can be primarily
attributed to $52 million of credit loss provision
reduction related to the sale of $2 billion in credit card
receivables, coupled with a continued general improvement
in credit quality evidenced by a decrease in nonperforming
assets of $178 million and a decrease in net charge-offs
of $73 million from 1993 to 1994.
41
<PAGE> 31
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
TEN YEAR PERFORMANCE SUMMARY
(unaudited)
NOT RESTATED FOR ACQUISITIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARLY AVERAGE BALANCES YEAR-END BALANCES
BALANCE ------------------------------------- ------------------------------------------------------
SHEET TOTAL COMMON EARNING LOANS AND LONG-TERM TOTAL
$(MILLIONS) YEAR ASSETS EQUITY ASSETS LEASES DEPOSITS BORROWINGS ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
1995 $87,052 $7,518 $78,315 $65,329 $67,320 $2,720 $90,454
1994 87,090 7,400 78,312 61,993 68,090 1,866 88,923
1993 74,716 6,301 66,326 53,846 60,943 1,702 79,919
1992 58,249 4,685 52,114 38,722 48,465 1,198 61,417
1991 33,861 3,103 30,184 30,197 37,057 703 46,293
1990 27,654 2,590 24,568 20,363 22,316 581 30,336
1989 25,518 2,145 22,945 17,909 20,952 372 26,552
1988 23,484 1,906 21,054 17,325 19,502 379 25,274
1987 17,538 1,372 15,651 12,934 14,478 266 18,730
1986 16,299 1,178 14,482 11,549 13,371 170 17,372
1985 9,539 703 8,412 6,687 8,141 92 10,823
Annual Growth:
1995/94 (.04)% 1.59% 0% 5.38% (1.13)% 45.77% 1.72%
Compound Growth:
5 Years 25.78 23.75 26.09 26.26 24.71 36.17 24.42
10 Years 24.75 26.74 25.00 25.60 23.52 40.31 23.65
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET TOTAL
INCOME BEFORE CASH MARKET
DATA PER NET SECURITIES DIVIDENDS BOOK STOCK CAPITAL
COMMON SHARE YEAR INCOME TRANSACTIONS DECLARED VALUE PRICE $(MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
1995 $2.91 $2.87 $1.24 $18.58 $34.21 $14,630
1994 2.20 2.57 1.13 16.75 23.07 10,076
1993 2.71 2.68 .97 16.20 32.34 13,542
1992 2.16 2.14 .81 14.12 35.13 12,331
1991 1.93 1.93 .69 12.69 31.64 8,833
1990 1.66 1.67 .63 10.88 16.68 4,408
1989 1.51 1.52 .57 9.41 17.69 4,239
1988 1.42 1.40 .50 8.52 12.15 2,876
1987 1.08 1.05 .45 7.52 11.93 2,360
1986 1.05 .97 .41 6.83 11.36 2,082
1985 1.00 .97 .35 6.03 11.63 1,491
Annual Growth:
1995/94 32.27% 11.67% 9.73% 10.93% 48.29% 45.20%
Compound Growth:
5 Years 11.88 11.44 14.50 11.30 15.45 27.12
10 Years 11.27 11.46 13.48 11.91 11.39 25.65
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE COMMON
SHARES SHARES STOCK DIVIDEND YEAR-END
COMMON OUTSTANDING TRADED COMMON SPLITS AND PAYOUT PRICE/
STOCK DATA YEAR (000) (000)(1) SHAREHOLDERS DIVIDENDS RATIO EARNINGS
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
1995 433,323 179,034 87,632 43% 11.8x
1994 448,118 242,656 82,253 10% 51 10.5
1993 414,511 163,327 71,384 5:4 36 11.9
1992 351,146 113,186 58,114 10% 37 16.2
1991 242,905 69,241 43,935 36 16.4
1990 230,292 63,717 44,572 10% 38 10.1
1989 196,804 54,155 43,437 37 11.7
1988 195,733 42,347 43,892 10% 35 8.5
1987 158,826 38,297 37,693 42 11.0
1986 151,611 21,457 36,855 10% 39 10.7
1985 103,235 8,270 24,748 3:2 34 11.6
</TABLE>
42
<PAGE> 32
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
$(MILLIONS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET INCOME
NET BEFORE
INCOME AND TOTAL INTEREST NON-INTEREST NON-INTEREST SECURITIES NET
EXPENSES YEAR REVENUE INCOME (2) INCOME (3) EXPENSE TRANSACTIONS INCOME
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
1995 $8,970.9 $4,208.9 $1,842.1 $3,631.6 $1,260.4 $1,277.9
1994 7,777.9 4,287.8 1,590.6 3,768.0 1,168.9 1,005.1
1993 7,163.3 4,169.6 1,412.1 3,450.6 1,129.6 1,140.0
1992 5,999.0 3,240.1 1,156.9 2,663.6 772.7 781.3
1991 4,154.1 1,838.5 844.3 1,486.2 529.3 529.5
1990 3,506.9 1,309.3 706.7 1,102.7 424.3 423.4
1989 3,163.0 1,193.7 513.5 967.4 365.3 362.9
1988 2,734.5 1,142.0 452.3 893.1 332.9 340.2
1987 1,959.6 907.3 284.0 666.5 203.5 208.9
1986 1,847.4 830.4 250.8 608.5 185.3 199.8
1985 1,192.2 523.2 158.1 361.2 127.6 130.4
Annual Growth:
1995/94 15.34% (1.84)% 15.81% (3.62)% 7.83% 27.14%
Compound Growth:
5 Years 20.67 26.31 21.12 26.92 24.33 24.72
10 Years 22.36 23.18 27.83 25.96 25.74 25.64
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMPLOYEES NET INCOME
RETURN ON NET NON-INTEREST (FT EQUIV.) PER FT
OPERATING AVERAGE INTEREST INCOME TO EFFICIENCY PER $MILLION EQUIV.
RATIOS YEAR ASSETS MARGIN(2) EXPENSE (3) RATIO (4) OF ASSETS EMPLOYEE
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
1995 1.47% 5.37% 50.7% 60.0% .52 $27,235
1994 1.15 5.48 42.2 64.1 .55 20,596
1993 1.53 6.29 40.9 61.8 .57 25,165
1992 1.34 6.22 43.4 60.6 .53 23,912
1991 1.56 6.09 56.8 55.4 .59 21,449
1990 1.53 5.33 64.1 54.7 .63 19,871
1989 1.42 5.20 53.1 56.7 .67 20,388
1988 1.45 5.42 50.6 56.0 .67 20,166
1987 1.19 5.80 42.6 55.9 .74 15,064
1986 1.23 5.73 41.2 56.3 .73 15,790
1985 1.37 6.22 43.8 53.0 .79 15,167
Average:
5 Years 1.41% 5.89% 46.8% 60.4% .55 $23,671
10 Years 1.39 5.69 48.6 58.2 .62 20,964
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE
RETURN ON COMMON LONG-TERM
AVERAGE EQUITY TO BORROWINGS TO TOTAL
EQUITY COMMON AVERAGE COMMON MARKET TO RETURN TO
RATIOS YEAR EQUITY ASSETS EQUITY BOOK VALUE INVESTORS
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
1995 16.77% 8.64% 34.2% 184.1% 54.4%
1994 13.35 8.50 25.5 137.7 (25.7)
1993 17.81 8.43 25.1 199.6 (5.4)
1992 16.26 8.04 24.2 248.9 13.9
1991 16.58 9.16 19.8 249.2 95.0
1990 16.24 9.36 20.2 153.3 (2.0)
1989 16.79 8.41 16.5 187.9 50.5
1988 17.69 8.12 18.8 142.7 5.8
1987 15.12 7.82 17.9 158.5 8.6
1986 16.49 7.23 13.6 166.4 .8
1985 17.77 7.37 11.9 193.1 56.1
Average:
5 Years 16.15% 8.55% 25.8% 203.9% 19.26(7)
10 Years 16.31 8.37 21.6 182.8 15.21(7)
- ---------------
<FN>
(1) Amounts do not reflect stock dividends and stock splits.
(2) Fully taxable equivalent basis.
(3) Excluding security transactions.
(4) Non-interest expense divided by net interest income (2) plus
non-interest income excluding securities transactions.
(5) 1990 and 1991 net income exclude equity in earnings of Bank One,
Texas, NA.
(6) Market change year to year with dividends reinvested.
(7) Calculation is 5- and 10-year compound growth.
</TABLE>
43
<PAGE> 33
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
QUARTERS
-------------------------------------------------------------------------------
1995 1994
--------------------------------------------------- -----------------------
$(MILLIONS, EXCEPT PER SHARE DATA) FOURTH THIRD SECOND FIRST FOURTH THIRD
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------
KEY AVERAGE BALANCES:
Taxable securities(1)................. $ 12,436 $ 12,154 $ 13,400 $ 13,194 $ 14,079 $ 16,534
Tax-exempt securities(1).............. 1,769 1,905 2,043 2,145 2,248 2,351
--------- --------- --------- --------- --------- ---------
TOTAL SECURITIES........................ 14,205 14,059 15,443 15,339 16,327 18,885
Commercial loans...................... 17,913 17,686 17,570 16,570 16,087 15,576
Real estate loans..................... 20,451 20,426 19,697 19,172 18,872 18,241
Consumer loans, net................... 18,387 17,904 17,645 18,911 19,054 19,354
Credit card loans..................... 7,296 6,542 6,088 5,807 6,166 6,569
Leases, net........................... 1,636 1,507 1,419 1,354 1,255 1,184
Allowance for credit losses........... (918) (894) (891) (897) (928) (960)
--------- --------- --------- --------- --------- ---------
NET LOANS AND LEASES.................... 64,765 63,171 61,528 60,917 60,506 59,964
Other earning assets.................. 456 673 795 1,898 1,876 725
TOTAL EARNING ASSETS.................... 79,426 77,903 77,766 78,154 78,709 79,574
TOTAL ASSETS............................ 88,237 86,780 86,529 86,646 87,273 88,254
Demand deposits:
Non-interest bearing................ 13,280 12,978 12,689 12,922 13,674 13,397
Interest bearing.................... 7,050 8,416 8,677 8,928 9,142 9,221
Savings and money market deposits..... 21,875 19,994 19,202 19,284 19,659 20,062
Time deposits......................... 23,442 24,229 25,180 24,915 23,670 22,982
--------- --------- --------- --------- --------- ---------
TOTAL DEPOSITS.......................... 65,647 65,617 65,748 66,049 66,145 65,662
Borrowed funds:
Short-term.......................... 9,871 8,918 9,107 9,310 10,127 11,603
Long-term........................... 2,676 2,524 2,091 2,056 1,843 1,840
--------- --------- --------- --------- --------- ---------
TOTAL BORROWED FUNDS.................... 12,547 11,442 11,198 11,366 11,970 13,443
TOTAL INTEREST BEARING LIABILITIES...... 64,914 64,081 64,257 64,493 64,441 65,708
Preferred stock......................... 250 250 250 250 250 250
Common stockholders' equity............. 7,761 7,582 7,442 7,280 $ 7,440 $ 7,465
MARGIN ANALYSIS(2)(5)(6)
Interest income..................... 9.26% 9.19% 9.15% 9.06% 8.47% 8.28%
Interest expense.................... 3.79 3.80 3.86 3.70 3.29 3.02
--------- --------- --------- --------- --------- ---------
Net interest income................. 5.47 5.39 5.29 5.36 5.18 5.26
Provision for credit losses......... .83 .68 .48 .35 .18 .38
--------- --------- --------- --------- --------- ---------
Net funds function.................. 4.64 4.71 4.81 5.01 5.00 4.88
KEY OPERATING RATIOS
Return on average assets(5)........... 1.51 1.51 1.43 1.42 .29 1.27
Return on average common equity(5).... 17.00 17.09 16.34 16.61 3.20 14.82
Return on average total equity(5)..... 16.68 16.77 16.03 16.29 3.32 14.56
Average common equity to
average assets...................... 8.80 8.74 8.60 8.40 8.52 8.46
Average total equity to average
assets.............................. 9.08 9.02 8.89 8.69 8.81 8.74
Tier I capital ratio.................. 10.05 10.11 10.36 10.23 9.93 10.51
Total risk adjusted capital ratio..... 14.05 14.17 13.76 13.62 13.33 13.97
Leverage ratio........................ 8.87 8.88 8.72 8.58 8.28 8.53
CREDIT ANALYSIS:
Net charge-offs to average loans and
leases(5)........................... .87 .67 .56 .49 .59 .50
Ending allowance to loans and
leases.............................. 1.44 1.40 1.41 1.42 1.45 1.55
Nonperforming assets(3):
Total............................... $ 429.8 $ 444.7 $ 430.8 $ 449.4 $ 465.7 $ 524.2
Percent of total loans and leases... .66 .68 .68 .72 .75 .85
Loans delinquent 90 or more days(4):
Total............................... $ 254.4 $ 212.3 $ 186.7 $ 172.9 $ 173.5 $ 195.4
Percent of total loans and leases... .39 .32 .29 .28 .28 .32
Allowance to nonperforming loans...... $ 264.8 $ 253.3 $ 249.1 $ 241.0 $ 235.3 $ 220.2
COMMON STOCK:
Average shares outstanding (000)(7)... 431,746 432,891 434,214 435,893 445,719 449,859
Shares traded (000)................... 37,100 39,873 53,708 48,353 72,342 46,939
Per share data(7):
Net income.......................... $ .77 $ .76 $ .70 $ .68 $ .13 $ .62
Cash dividends declared............. .31 .31 .31 .31 .28 .28
Book value.......................... 18.58 18.02 17.59 17.16 16.75 16.84
Stock price:
High.............................. 36.48 33.41 31.94 27.39 27.73 32.27
Low............................... 30.35 27.95 26.03 22.85 21.94 26.82
Close............................. $ 34.21 $ 33.18 $ 29.32 $ 25.91 $ 23.07 $ 27.27
PREFERRED STOCK, SERIES C:
Shares traded (000)................... 1,678 990 1,316 1,233 1,679 892
Stock price:
High................................ $ 70.75 $ 64.00 $ 61.75 $ 54.25 $ 57.50 $ 63.75
Low................................. 59.38 55.58 52.25 49.63 49.00 57.00
Close............................... $ 65.63 $ 63.75 $ 58.25 $ 51.75 $ 49.63 $ 57.50
<CAPTION>
$(MILLIONS, EXCEPT PER SHARE DATA) SECOND FIRST
<S> <C> <C>
- ----------------------------------------
KEY AVERAGE BALANCES:
Taxable securities(1)................. $ 18,122 $ 15,316
Tax-exempt securities(1).............. 2,384 2,346
--------- ---------
TOTAL SECURITIES........................ 20,506 17,662
Commercial loans...................... 15,443 15,015
Real estate loans..................... 17,674 17,543
Consumer loans, net................... 18,745 17,901
Credit card loans..................... 6,192 6,081
Leases, net........................... 1,143 1,114
Allowance for credit losses........... (975) (974)
--------- ---------
NET LOANS AND LEASES.................... 58,222 56,680
Other earning assets.................. 785 1,062
TOTAL EARNING ASSETS.................... 79,513 75,404
TOTAL ASSETS............................ 88,349 84,442
Demand deposits:
Non-interest bearing................ 13,338 13,433
Interest bearing.................... 9,392 9,357
Savings and money market deposits..... 20,315 20,012
Time deposits......................... 21,951 21,742
--------- ---------
TOTAL DEPOSITS.......................... 64,996 64,544
Borrowed funds:
Short-term.......................... 12,479 9,017
Long-term........................... 1,844 1,811
--------- ---------
TOTAL BORROWED FUNDS.................... 14,323 10,828
TOTAL INTEREST BEARING LIABILITIES...... 65,981 61,939
Preferred stock......................... 250 250
Common stockholders' equity............. $ 7,351 $ 7,344
MARGIN ANALYSIS(2)(5)(6)
Interest income..................... 8.15% 8.49%
Interest expense.................... 2.71 2.44
--------- ---------
Net interest income................. 5.44 6.05
Provision for credit losses......... .25 .43
--------- ---------
Net funds function.................. 5.19 5.62
KEY OPERATING RATIOS
Return on average assets(5)........... 1.50 1.57
Return on average common equity(5).... 17.80 17.81
Return on average total equity(5)..... 17.44 17.46
Average common equity to
average assets...................... 8.32 8.70
Average total equity to average
assets.............................. 8.60 8.99
Tier I capital ratio.................. 10.36 10.59
Total risk adjusted capital ratio..... 13.81 14.17
Leverage ratio........................ 8.44 8.61
CREDIT ANALYSIS:
Net charge-offs to average loans and
leases(5)........................... .49 .54
Ending allowance to loans and
leases.............................. 1.58 1.66
Nonperforming assets(3):
Total............................... $ 523.7 $ 600.2
Percent of total loans and leases... .87 1.02
Loans delinquent 90 or more days(4):
Total............................... $ 211.9 $ 189.0
Percent of total loans and leases... .35 .32
Allowance to nonperforming loans...... $ 225.7 $ 208.7
COMMON STOCK:
Average shares outstanding (000)(7)... 449,359 448,129
Shares traded (000)................... 55,251 68,124
Per share data(7):
Net income.......................... $ .73 $ .72
Cash dividends declared............. .28 .28
Book value.......................... 16.59 16.47
Stock price:
High.............................. 34.55 32.25
Low............................... 27.95 28.98
Close............................. $ 31.14 $ 30.00
PREFERRED STOCK, SERIES C:
Shares traded (000)................... 1,200 2,851
Stock price:
High................................ $ 68.25 $ 68.75
Low................................. 57.50 60.50
Close............................... $ 62.50 $ 61.00
</TABLE>
44
<PAGE> 34
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
QUARTERS
-------------------------------------------------------------------------------
1995 1994
--------------------------------------------------- -----------------------
$(MILLIONS) FOURTH THIRD SECOND FIRST FOURTH THIRD
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------
CONDENSED INCOME STATEMENT:
Interest income(2)
Taxable securities.................... $ 204.09 $ 200.87 $ 221.12 $ 208.73 $ 206.53 $ 228.44
Tax-exempt securities................. 37.81 41.84 45.23 46.75 48.89 50.27
--------- --------- --------- --------- --------- ---------
Total interest on securities............ 241.90 242.71 266.35 255.48 255.42 278.71
Commercial loans...................... 368.78 364.82 360.79 331.68 302.64 294.85
Real estate loans..................... 464.35 464.42 443.69 424.02 412.08 388.84
Consumer loans........................ 438.79 422.88 409.89 438.77 412.03 406.11
Credit card loans..................... 303.86 273.37 255.76 241.04 246.93 261.98
Leases................................ 30.37 26.47 25.58 24.73 25.01 21.47
--------- --------- --------- --------- --------- ---------
Total interest on loans and leases...... 1,606.15 1,551.96 1,495.71 1,460.24 1,398.69 1,373.25
Total interest on other earning
assets.............................. 6.50 10.53 12.52 30.30 26.63 9.12
TOTAL INTEREST INCOME................... 1,854.55 1,805.20 1,774.58 1,746.02 1,680.74 1,661.08
Interest expense
Demand deposits....................... 35.35 43.25 47.52 49.62 46.73 43.03
Savings and money market deposits..... 205.90 191.43 180.00 169.23 156.03 143.66
Time deposits:
CDs under $100,000.................. 275.25 280.28 278.12 256.11 227.37 201.93
CDs $100,000 and over............... 58.84 63.57 80.65 74.97 59.25 52.17
--------- --------- --------- --------- --------- ---------
TOTAL INTEREST ON DEPOSITS.............. 575.34 578.53 586.29 549.93 489.38 440.79
Borrowed funds:
Short-term.......................... 137.64 124.72 129.00 127.33 124.43 128.41
Long-term........................... 47.02 44.29 34.93 36.45 39.10 37.23
--------- --------- --------- --------- --------- ---------
TOTAL INTEREST ON BORROWED FUNDS........ 184.66 169.01 163.93 163.78 163.53 165.64
--------- --------- --------- --------- --------- ---------
TOTAL INTEREST EXPENSE.................. 760.00 747.54 750.22 713.71 652.91 606.43
--------- --------- --------- --------- --------- ---------
Net interest income(2).................. 1,094.55 1,057.66 1,024.36 1,032.31 1,027.83 1,054.65
Provision for credit losses............. 165.90 132.52 92.56 66.51 35.62 75.94
--------- --------- --------- --------- --------- ---------
Net funds function(2)................... 928.65 925.14 931.80 965.80 992.21 978.71
NON-INTEREST INCOME:
Income from fiduciary activities...... 62.23 60.05 58.54 58.58 56.03 55.19
Service charges on deposit accounts... 144.31 140.81 132.46 127.11 128.15 125.03
Loan processing and servicing
income.............................. 135.53 142.59 130.24 112.44 115.50 90.69
Securities gains (losses)............. 7.98 7.29 2.79 9.79 (254.27) (12.98)
Other................................. 141.16 122.13 130.10 143.83 111.83 172.87
--------- --------- --------- --------- --------- ---------
TOTAL NON-INTEREST INCOME............... 491.21 472.87 454.13 451.75 157.24 430.80
NON-INTEREST EXPENSE:
Salaries and related costs............ 448.35 430.14 429.08 442.95 459.15 427.29
Other................................. 477.15 450.07 473.25 480.65 582.39 530.87
--------- --------- --------- --------- --------- ---------
TOTAL NON-INTEREST EXPENSE.............. 925.50 880.21 902.33 923.60 1,041.54 958.16
Taxable equivalent adjustment........... 16.57 19.25 20.89 22.72 21.04 22.33
--------- --------- --------- --------- --------- ---------
Income before income taxes.............. 477.79 498.55 462.71 471.23 86.87 429.02
Income tax (provision) benefit:
Income excluding securities
transactions........................ (137.86) (165.00) (154.16) (165.02) (117.35) (150.35)
Securities transactions............... (3.08) (2.53) (1.07) (3.69) 94.86 4.54
--------- --------- --------- --------- --------- ---------
Net income.............................. $ 336.85 $ 331.02 $ 307.48 $ 302.52 $ 64.38 $ 283.21
======== ======== ======== ======== ========= =========
Net income available to common
stockholders.......................... $ 332.48 $ 326.65 $ 303.11 $ 298.15 $ 60.00 $ 278.84
======== ======== ======== ======== ========= =========
<CAPTION>
$(MILLIONS) SECOND FIRST
<S> <C> <C>
- ----------------------------------------
CONDENSED INCOME STATEMENT:
Interest income(2)
Taxable securities.................... $ 244.99 $ 196.45
Tax-exempt securities................. 51.33 51.55
--------- ---------
Total interest on securities............ 296.32 248.00
Commercial loans...................... 288.73 288.17
Real estate loans..................... 372.14 365.48
Consumer loans........................ 386.02 409.93
Credit card loans..................... 243.91 236.34
Leases................................ 21.24 20.84
--------- ---------
Total interest on loans and leases...... 1,312.04 1,320.76
Total interest on other earning
assets.............................. 8.26 9.38
TOTAL INTEREST INCOME................... 1,616.62 1,578.14
Interest expense
Demand deposits....................... 40.56 38.65
Savings and money market deposits..... 131.42 120.46
Time deposits:
CDs under $100,000.................. 169.34 154.94
CDs $100,000 and over............... 46.54 42.18
--------- ---------
TOTAL INTEREST ON DEPOSITS.............. 387.86 356.23
Borrowed funds:
Short-term.......................... 120.23 69.70
Long-term........................... 29.07 26.41
--------- ---------
TOTAL INTEREST ON BORROWED FUNDS........ 149.30 96.11
--------- ---------
TOTAL INTEREST EXPENSE.................. 537.16 452.34
--------- ---------
Net interest income(2).................. 1,079.46 1,125.80
Provision for credit losses............. 50.54 80.17
--------- ---------
Net funds function(2)................... 1,028.92 1,045.63
NON-INTEREST INCOME:
Income from fiduciary activities...... 61.13 60.35
Service charges on deposit accounts... 116.64 114.07
Loan processing and servicing
income.............................. 89.01 87.30
Securities gains (losses)............. 2.74 3.45
Other................................. 101.41 105.39
--------- ---------
TOTAL NON-INTEREST INCOME............... 370.93 370.56
NON-INTEREST EXPENSE:
Salaries and related costs............ 425.24 441.99
Other................................. 457.35 443.70
--------- ---------
TOTAL NON-INTEREST EXPENSE.............. 882.59 885.69
Taxable equivalent adjustment........... 22.81 21.99
--------- ---------
Income before income taxes.............. 494.45 508.51
Income tax (provision) benefit:
Income excluding securities
transactions........................ (162.92) (180.35)
Securities transactions............... (.96) (1.21)
--------- ---------
Net income.............................. $ 330.57 $ 326.95
========= =========
Net income available to common
stockholders.......................... $ 326.20 $ 322.58
========= =========
</TABLE>
(1) Average balances are based on amortized historical cost excluding SFAS 115
adjustments to fair value which are included in other assets.
(2) Fully taxable equivalent basis. The Federal statutory rate used was 35% for
all periods presented.
(3) Excludes certain smaller balance loans collectively evaluated for
impairment.
(4) Excluding nonperforming loans.
(5) Ratios presented on an annualized basis.
(6) As a percent of average earning assets.
(7) Amounts have been restated for the 10% common stock dividend payable March
6, 1996 to shareholders of record on February 21, 1996.
45
<PAGE> 35
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
at December 31, 1995 and 1994
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994
<S> <C> <C>
------------------------------------------------------------------------------------------
ASSETS:
Cash and due from banks................................... $ 5,501,266 $ 5,073,417
Short-term investments (including Eurodollar placements
and foreign negotiable certificates of deposit of
$1,000,982 at December 31, 1994)........................ 454,718 3,539,596
SECURITIES:
Securities held to maturity............................. 1,087,654 4,834,384
Securities available for sale........................... 14,620,334 10,318,030
------------- -----------
Total securities (fair value approximates
$15,756,000 and $15,108,000, at December 31, 1995
and 1994, respectively).......................... 15,707,988 15,152,414
LOANS AND LEASES (NET OF UNEARNED INCOME OF $978,831 AND
$802,703 AT DECEMBER 31, 1995 AND 1994, RESPECTIVELY)... 65,328,665 61,992,912
Allowance for credit losses............................... 938,008 897,180
------------- -----------
NET LOANS AND LEASES................................ 64,390,657 61,095,732
OTHER ASSETS:
Bank premises and equipment, net........................ 1,558,676 1,517,647
Interest earned, not collected.......................... 669,709 566,840
Other real estate owned................................. 75,483 84,355
Excess of cost over net assets of affiliates
purchased............................................. 242,817 262,895
Other................................................... 1,852,649 1,629,690
------------- -----------
Total other assets.................................. 4,399,334 4,061,427
------------- -----------
TOTAL ASSETS........................................ $ 90,453,963 $88,922,586
============ ============
LIABILITIES:
DEPOSITS:
Non-interest bearing.................................... $ 14,767,497 $14,405,707
Interest bearing........................................ 52,552,653 53,684,347
------------- -----------
TOTAL DEPOSITS........................................ 67,320,150 68,090,054
Federal funds purchased and repurchase agreements......... 6,261,009 5,186,527
Other short-term borrowings............................... 3,516,191 4,435,242
Long-term borrowings...................................... 2,720,373 1,866,448
Accrued interest payable.................................. 410,946 351,293
Other liabilities......................................... 2,027,816 1,428,162
------------- -----------
TOTAL LIABILITIES..................................... 82,256,485 81,357,726
------------- -----------
Commitments and contingencies (Notes 4, 6 and 13)
STOCKHOLDERS' EQUITY:
Preferred stock, 35,000,000 shares authorized:
Series C convertible, no par value 4,992,694 and
4,997,999 shares issued and outstanding,
respectively.......................................... 249,635 249,900
Common stock, no par value, $5 stated value, 600,000,000
shares authorized, 451,741,054 and 408,985,564 shares
issued, respectively (December 31, 1995 shares reflect
the 10% stock dividend payable March 6, 1996 to
shareholders of record on February 21, 1996)............ 2,258,705 2,044,928
Capital in excess of aggregate stated value of common
stock................................................... 5,157,763 3,796,746
Retained earnings......................................... 1,100,345 1,921,256
Net unrealized holding gains (losses) on securities
available for sale, net of tax.......................... 91,804 (111,517)
Treasury stock (24,090,000 and 11,999,500 shares,
respectively), at cost.................................. (660,774) (336,453)
------------- -----------
TOTAL STOCKHOLDERS' EQUITY............................ 8,197,478 7,564,860
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $ 90,453,963 $88,922,586
============ ============
</TABLE>
The accompanying notes are an integral part of the
financial statements.
46
<PAGE> 36
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME
for the three years ended December 31, 1995
<TABLE>
<CAPTION>
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1993
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans and leases..................................... $ 6,094,335 $5,386,139 $5,038,807
Interest and dividends on:
Taxable securities...................................................... 833,715 875,846 844,791
Tax-exempt securities................................................... 116,737 136,841 132,590
Other interest income, including interest on Eurodollar placements
and foreign negotiable certificates of deposits of $6,740, $6,802
and $2,415 in 1995, 1994 and 1993, respectively......................... 56,131 49,590 40,438
------------ ---------- ----------
TOTAL INTEREST INCOME..................................................... 7,100,918 6,448,416 6,056,626
INTEREST EXPENSE:
Interest on deposits:
Demand, savings and money market deposits............................... 922,298 720,526 643,038
Time deposits........................................................... 1,367,796 953,737 834,653
Interest on borrowings.................................................... 681,374 574,578 298,060
------------ ---------- ----------
TOTAL INTEREST EXPENSE.................................................. 2,971,468 2,248,841 1,775,751
------------ ---------- ----------
NET INTEREST INCOME..................................................... 4,129,450 4,199,575 4,280,875
Provision for credit losses................................................. 457,499 242,269 388,261
------------ ---------- ----------
Net interest income after provision for credit losses..................... 3,671,951 3,957,306 3,892,614
NON-INTEREST INCOME:
Income from fiduciary activities.......................................... 239,411 232,700 227,700
Service charges on deposit accounts....................................... 544,697 483,884 450,998
Loan processing and servicing income...................................... 520,801 382,492 391,348
Securities gains (losses)................................................. 27,847 (261,052) 17,114
Other..................................................................... 537,214 491,501 403,344
------------ ---------- ----------
TOTAL NON-INTEREST INCOME............................................... 1,869,970 1,329,525 1,490,504
NON-INTEREST EXPENSE:
Salaries and related costs................................................ 1,750,517 1,753,672 1,687,778
Net occupancy expense, exclusive of depreciation.......................... 164,456 182,223 159,837
Equipment expense......................................................... 104,030 119,270 113,315
Taxes other than income and payroll....................................... 87,805 56,628 82,083
Depreciation and amortization............................................. 292,522 356,762 274,520
Outside services and processing........................................... 426,897 424,559 425,370
Marketing and development................................................. 171,163 178,905 170,931
Communication and transportation.......................................... 274,694 245,455 232,596
Other..................................................................... 359,555 450,505 465,976
------------ ---------- ----------
TOTAL NON-INTEREST EXPENSE.............................................. 3,631,639 3,767,979 3,612,406
------------ ---------- ----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE...................................................... 1,910,282 1,518,852 1,770,712
INCOME TAX PROVISION (BENEFIT):
Income excluding securities transactions.................................. 622,039 610,970 592,619
Securities transactions................................................... 10,380 (97,227) 5,990
------------ ---------- ----------
Provision for income taxes.............................................. 632,419 513,743 598,609
------------ ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE........... 1,277,863 1,005,109 1,172,103
Cumulative effect of change in method of accounting for income taxes........ 19,391
------------ ---------- ----------
NET INCOME.................................................................. $ 1,277,863 $1,005,109 $1,191,494
=========== =========== ===========
NET INCOME PER COMMON SHARE (AMOUNTS REFLECT THE 10%
COMMON STOCK DIVIDEND PAYABLE MARCH 6, 1996 TO SHAREHOLDERS
OF RECORD ON FEBRUARY 21, 1996):
Income before cumulative effect of change in method of accounting
for income taxes........................................................ $ 2.91 $ 2.20 $ 2.62
Cumulative effect of change in accounting for income taxes................ .04
------------ ---------- ----------
NET INCOME PER COMMON SHARE................................................. $ 2.91 $ 2.20 $ 2.66
=========== =========== ===========
Weighted average common shares outstanding (000)............................ 433,323 448,118 441,351
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
47
<PAGE> 37
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the three years ended December 31, 1995
<TABLE>
<CAPTION>
CAPITAL IN NET UNREALIZED
EXCESS OF HOLDING GAINS
AGGREGATE (LOSSES) ON TOTAL
STATED VALUE SECURITIES TREASURY STOCK-
$ (THOUSANDS, EXCEPT PER PREFERRED COMMON OF COMMON RETAINED AVAILABLE STOCK, HOLDERS'
SHARE AMOUNTS) STOCK STOCK STOCK EARNINGS FOR SALE AT COST EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992......... $259,700 $1,451,504 $3,033,359 $1,850,250 $6,594,813
Net income........................ 1,191,494 1,191,494
Cash dividends:
Corporation:
Common ($.97 per share)(1).... (388,245) (388,245)
Class B Preferred ($.75 per
share)...................... (216) (216)
Series C Preferred ($3.50 per
share)...................... (17,498) (17,498)
Pooled affiliates............. (25,505) (25,505)
Shares issued in acquistions..... 24,539 12,269 59,409 96,217
Conversion of Preferred into
common......................... (9,800) 5,029 4,771
Exercise of stock options, net of
share purchased................ (2,876) (44,758) (47,634)
Pooled affiliate stock issuance,
sales of stock to employee
benefit plans and other........ 34,973 (9,244) 4,015 29,744
Common stock split five-for-four,
effective August 31, 1993...... 340,949 (340,949)
10% common stock dividend at
fair market value.............. 173,040 1,180,995 (1,354,035)
-------- ---------- ---------- ---------- --------- ---------- ----------
BALANCE, DECEMBER 31, 1993........ 249,900 2,027,158 3,836,443 1,319,669 7,433,170
Accounting change, adjustment for
unrealized gains on securities
available for sale at January
1, 1994........................ $ 84,105 84,105
Net income....................... 1,005,109 1,005,109
Cash dividends:
Corporation:
Common ($1.13 per share)(1)... (487,218) (487,218)
Series C Preferred ($3.50 per
share)...................... (17,492) (17,492)
Pooled affiliates............. (10,040) (10,040)
Shares issued in acquistions..... 8,342 11,166 14,316 (316) 33,508
Exercise of stock options, net of
shares purchased................ 193 (5,852) (5,659)
Pooled affiliate stock issuance,
sales of stock to employee
benefit plans and other......... 9,235 (45,011) 96,912 61,136
Purchase of treasury stock....... $ (336,453) (336,453)
Change in unrealized holding
gains (losses) on securities
available for sale, net of tax.. (195,306) (195,306)
-------- ---------- ---------- ---------- --------- ---------- ----------
BALANCE, DECEMBER 31, 1994........ 249,000 2,044,928 3,796,746 1,921,256 (111,517) (336,453) 7,564,860
Net income....................... 1,277,863 1,277,863
Cash dividends:
Corporation:
Common ($1.24 per share)(1)... (532,807) (532,807)
Series C Preferred ($3.50 per
share)....................... (17,487) (17,487)
Shares issued in acquisitions.... 2,500 4,262 (3,115) 3,647
Conversion of preferred into common (265) 46 219
Exercise of stock options, net
of shares purchased............ 1,998 (7,458) (5,460)
Sales of stock to employee
benefit plans and other........ 3,896 23,966 27,862
Purchase of treasury stock....... (324,321) (324,321)
Change in unrealized holding
gains (losses) on securities
available for sale, net of tax. 203,321 203,321
10% common stock dividend at
fair market value.............. 205,337 1,340,028 (1,545,365)
-------- ---------- ---------- ---------- --------- ---------- ----------
BALANCE, DECEMBER 31, 1995........ $249,635 $2,258,705 $5,157,763 $1,100,345 $ 91,804 $ (660,774) $8,197,478
======== ========== ========== ========== ========= ========== ==========
- ---------------
<FN>
(1) Amounts reflect the effect of the 10% common stock dividends effective
February 10, 1994 and February 21, 1996.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 38
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three years ended December 31, 1995
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
NET INCOME...................................... $ 1,277,863 $ 1,005,109 $ 1,191,494
Adjustments:
Provision for credit losses................. 457,499 242,269 388,261
Depreciation expense........................ 236,287 271,928 191,348
Amortization of intangibles................. 56,235 84,834 83,172
Amortization of securities premiums and
discounts, net........................... (57,118) 97,945 74,482
Amortization of purchased mortgage servicing
rights................................... 12,939 10,948 18,134
Net (increase) decrease in trading
account.................................. (30,199) 92,549 (7,777)
Net (increase) decrease in loans held for
sale..................................... (187,758) 869,482 (429,375)
Net decrease in deferred loan fees.......... (4,178) (13,416) (7,335)
Securities (gains) losses................... (27,847) 261,052 (17,114)
Gain on the sale of banks and branch
offices.................................. (68,297) (390) (803)
Gain on sale of loans and other assets...... (5,995) (71,898) (26,058)
Net (increase) decrease in other assets..... (323,381) (145,441) 16,694
Net increase (decrease) in other
liabilities.............................. 161,828 2,355 (130,746)
Net increase in deferred income taxes....... 172,034 173,090 48,180
Cumulative effect of change in accounting
principle................................ (19,391)
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES... 1,669,912 2,880,416 1,373,166
----------- ----------- -----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of securities available/held for
sale.......................................... (8,110,473) (11,739,005) (350,000)
Purchases of securities held to maturity........ (630,407) (1,090,779) (6,402,608)
Maturities of securities available/held for
sale.......................................... 6,712,867 2,142,467 476,242
Maturities of securities held to maturity....... 1,474,813 2,501,689 6,439,257
Sales of securities available/held for sale..... 2,544,358 10,900,079 716,764
Sales of securities held to maturity............ 101,844
Net increase in loans, excluding sales and
purchases..................................... (9,038,907) (8,283,794) (4,555,005)
Sales of loans and other assets................. 3,694,661 3,620,460 306,673
Purchases of loans and related premiums......... (667,442) (641,556) (768,264)
Net decrease (increase) in short-term
investments................................... 3,143,398 (2,450,281) 1,478,925
Additions to bank premises and equipment........ (340,606) (325,291) (293,288)
Sale of banks................................... 95,698
Net cash acquired in acquisitions............... 42,413 1,180,497 36,148
Net increase in mortgage servicing rights....... (44,153) (8,186) (4,948)
All other investing activities, net............. 100 1,245
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES....... (1,123,680) (4,193,700) (2,817,015)
----------- ----------- -----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net increase (decrease) in demand, money market
and savings deposits.......................... 1,639,689 (1,385,486) 683,978
Net (decrease) increase in time deposits........ (1,472,921) 2,943,921 (2,237,643)
Net increase in short-term borrowings........... 163,166 557,093 2,629,422
Issuance of long-term borrowings, net........... 1,081,389 94,536 475,798
Repayment of long-term borrowings............... (221,729) (32,535) (67,288)
Cash dividends paid............................. (674,219) (496,708) (399,936)
Sales of branch offices:
Deposit liabilities assumed by purchasers..... (405,182) (52,318) (39,102)
Other, net.................................... 73,343 25,675 2,711
Purchase of treasury shares..................... (324,321) (336,453)
Other, net increase (decrease).................. 22,402 59,087 (33,889)
----------- ----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES............................... (118,383) 1,376,812 1,014,051
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents................................... 427,849 63,528 (429,798)
Cash and cash equivalents at January 1.......... 5,073,417 5,009,889 5,439,687
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT DECEMBER 31........ $ 5,501,266 $ 5,073,417 $ 5,009,889
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the
financial statements.
49
<PAGE> 39
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BANC ONE is one of the country's largest bank holding
companies offering a full range of financial services
through operating offices in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah,
West Virginia and Wisconsin. BANC ONE also engages in
credit card and merchant processing, consumer finance,
mortgage banking, insurance, trust and investment
management, brokerage, investment and merchant banking,
venture capital, equipment leasing and data processing
activities.
"The Corporation" is defined as parent company only.
"BANC ONE" is defined as the Corporation and all
significant majority-owned subsidiaries. The consolidated
financial statements include the accounts of the
Corporation and all significant majority-owned
subsidiaries (affiliates). See Note 2 for information
relative to affiliations, pending affiliations and
divestitures. Material intercompany transactions have been
eliminated. BANC ONE operates principally in a single
business segment.
For purposes of comparability, certain prior period
amounts have been reclassified to conform with current
year presentation.
The following is a summary of significant accounting
policies followed in the preparation of the financial
statements.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
Securities
On January 1, 1994, BANC ONE adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities"
(SFAS 115), which specifies the accounting for investments
in securities that have readily determinable fair values.
Securities that management has both the positive intent
and ability to hold to maturity are classified as
securities held to maturity and are carried at cost,
adjusted for amortization of premium or accretion of
discount using the interest method. Securities that may be
sold prior to maturity for asset/liability management
purposes, or that may be sold in response to changes in
interest rates, changes in prepayment risk, to increase
regulatory capital or other similar factors, are
classified as securities available for sale and carried at
fair value with any adjustments to fair value, after tax,
reported as a separate component of stockholders' equity.
Securities purchased for trading purposes are held in the
trading portfolio at market value, with market adjustments
included in non-interest income. In October 1995, the
Financial Accounting Standards Board (FASB) issued a
Special Report entitled "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in
Debt and Equity Securities," which provided for a one-time
transfer of investment securities prior to December 31,
1995. BANC ONE transferred the majority of securities in
its held to maturity portfolio to available for sale. The
securities were marked to market at the date of transfer
in accordance with SFAS 115.
Interest and dividends on securities, including the
amortization of premiums and the accretion of discounts,
are reported in interest and dividends on securities using
the interest method. Gains and losses on securities are
recorded on the trade date and are calculated based on the
security with the highest cost unless specific securities
are identified.
50
<PAGE> 40
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Loans
Loans are reported at the principal amount outstanding,
net of unearned income. Loans identified as held for sale
are carried at the lower of cost or market determined on
an aggregate basis.
Income earned is recognized principally on the accrual
method of accounting. Under this method, finance charges
are recognized in decreasing amounts each period which
provides a level rate of return on the outstanding
principal balance. Unearned income, which includes
deferred fees net of deferred direct incremental loan
origination costs, is amortized to interest income
generally over the contractual life of the loan using the
interest method or the straight-line method if not
materially different. Loan origination fees and costs on
demand loans are deferred and amortized into interest
income on a straight-line basis over a period which is
consistent with the understanding between BANC ONE and the
borrower or, if no understanding exists, over the
estimated loan term. Loan origination fees and costs on
credit card and other revolving loans are deferred and
amortized into interest or other income using a
straight-line method typically over one year.
Commercial loans are placed on non-accrual at the time
the loan is 90 days delinquent unless the credit is well
secured and in process of collection. Residential real
estate loans are typically placed on non-accrual at the
time the loan is 120 days delinquent. Credit card loans,
other unsecured personal credit lines and certain consumer
finance loans are typically charged-off no later than 180
days delinquent. Other consumer loans are charged-off at
120 days delinquent. In all cases, loans must be placed on
non-accrual or charged-off at an earlier date if
collection of principal or interest is considered
doubtful.
All interest accrued but not collected for loans that
are placed on non-accrual or charged-off is reversed
against interest income. The interest on these loans is
accounted for on the cash basis or cost recovery method,
until qualifying for return to accrual. Loans are returned
to accrual status when all the principal and interest
amounts contractually due are reasonably assured of
repayment within a reasonable time frame and when the
borrower has demonstrated payment performance of cash or
cash equivalents for a minimum of six months.
A loan is considered restructured when BANC ONE allows
certain concessions to a financially troubled debtor that
would not normally be considered.
On January 1, 1995, BANC ONE adopted SFAS No. 122,
"Accounting for Mortgage Servicing Rights" which amends
SFAS No. 65, "Accounting for Certain Mortgage Banking
Activities." This statement requires that a mortgage
banking enterprise recognize as separate assets the rights
to service mortgage loans for others, however those rights
are acquired. The impact on BANC ONE's financial position
and results of operations for the year ended December 31,
1995 was not material.
Leases
The leasing operations of the affiliates consist of the
leasing of automobiles (carried in consumer loans) and
various types of equipment under leases principally
classified as direct financing leases. Income, net of
initial direct costs, is deferred and reported in amounts
over the term of the lease so as to provide a constant
yield on the outstanding net investment.
Leases are charged-off at the earlier of 120 days
delinquent or when collection is in doubt.
51
<PAGE> 41
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Provision for Credit Losses
The provision for credit losses charged to expense is
based upon each affiliate's past credit loss experience
and an evaluation of potential losses in the current loan
and lease portfolios. In management's opinion, the
provision is sufficient to maintain the allowance for
credit losses at a level that adequately provides for
potential losses.
BANC ONE adopted SFAS No.'s 114 and 118 (collectively,
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. The adoption of SFAS 114 did not result in
additional provisions for credit losses primarily because
the majority of impaired loan valuations continue to be
based on the fair value of collateral.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less
accumulated depreciation. Depreciation is provided
principally on the straight-line method over the estimated
useful lives of the assets. Upon the sale or other
disposal of assets, the cost and related accumulated
depreciation are retired and the resulting gain or loss is
recognized. Maintenance and repairs are charged to expense
as incurred, while renewals and betterments are
capitalized. Software costs for internally developed
systems are expensed as incurred. Software costs related
to externally developed systems are capitalized and
include systems intended for internal and external use.
In March 1995, the FASB issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets 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.
Other Real Estate Owned
Other real estate owned primarily represents properties
acquired by the Corporation's affiliates through customer
loan defaults and owned properties no longer used in the
banking business. The real estate is stated at an amount
equal to the lesser of the loan balance prior to
foreclosure, plus certain costs incurred for improvements
to the property, or fair value less estimated selling
costs of the property.
Purchase Method of Accounting
Net assets of organizations acquired in purchase
transactions are recorded at fair value at date of
acquisition. The excess of cost over net assets of
affiliates purchased is being amortized using the
straight-line and accelerated methods over terms ranging
from five to 40 years. Core deposits and other
identifiable intangible assets are typically amortized on
an accelerated basis.
Off-Balance Sheet Investment Products
BANC ONE enters into a variety of off-balance sheet
investment products as part of its interest rate risk
management strategy and in its customer service and
trading activities. The most frequently used off-balance
sheet investment products are various types of interest
rate swaps. However, interest rate floors, options, swap
options, caps, forward rate agreements and currency swaps
are also utilized. Off-balance sheet investment products
are typically classified as synthetic alterations,
anticipatory hedges or matched book agreements. The
52
<PAGE> 42
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
criteria that must be satisfied for each of these methods
is as follows: Synthetic Alteration -- (1) The asset or
liability to be converted exposes BANC ONE to interest
rate risk and (2) The off-balance sheet investment product
is designated and effective as a synthetic alteration of
the balance sheet item. Anticipatory Hedge -- (1) The
transaction to be hedged exposes BANC ONE to interest rate
risk; (2) The off-balance sheet investment product acts to
reduce the interest rate risk by moving closer to being
insensitive to interest rate changes; (3) The off-balance
sheet investment product is designated and effective as a
hedge of the transaction; (4) The significant
characteristics and expected terms of the anticipated
transaction must be identified; and (5) It must be
probable that the anticipated transaction will occur.
Matched Book -- There must be separate agreements that
have offsetting payment streams and the same maturity,
repricing dates and notional amounts.
In order for off-balance sheet investment products with
forward start dates to be accounted for as a synthetic
alteration, they must satisfy the appropriate criteria
above as well as the following additional criteria: (1)
The start date of the off-balance sheet investment product
must not extend beyond that point in time at which BANC
ONE believes its modeling systems produce reliable
interest rate sensitivity information; and (2) The related
balance sheet item must, from trade date to final
maturity, have sufficient balances for alteration. If the
initial assignment is changed, or should sufficient
balances not be available, the excess portion of the
off-balance sheet investment product must be marked to
market.
Accrual accounting is applied for off-balance sheet
investment products classified as described above and
income and expense are recorded in the same category as
that of the related balance sheet item. The related
balance sheet item is generally a pool of similar
products. For matched book transactions, income and
expense are recorded in non-interest income. Fees related
to these off-balance sheet investment products are
amortized on the interest method over the life of the
off-balance sheet investment products. If the balance of
the related balance sheet item falls below that of the
related off-balance sheet investment product, the excess
portion of the off-balance sheet investment product is
marked to market and the resulting gain or loss included
in income. If an off-balance sheet investment product is
terminated, the gain or loss is deferred and amortized
over the remaining life of the off-balance sheet
investment product.
Off-balance sheet investment products that do not
satisfy the criteria above, including those used in
trading activities, are carried at market value. Any
changes in market value are recognized in non-interest
income.
Investment in Majority-Owned Affiliates (Parent Company
Only)
The Corporation's investment in affiliates represents the
total equity of majority-owned consolidated subsidiaries,
using the equity method of accounting for investments.
Statement of Cash Flows
For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks.
53
<PAGE> 43
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Net Income Per Common Share
Net income per common share is calculated by dividing net
income available to common stockholders (net income less
preferred dividends) by the average number of common
shares outstanding (total shares issued less treasury
shares) and any dilutive common stock equivalents for the
period.
Stock Dividend
All per share and average share information has been
restated for the 10% common stock dividend payable March
6, 1996 to shareholders of record on February 21, 1996.
Stock Compensation
In October 1995, the FASB issued SFAS No. 123
"Accounting for Stock-Based Compensation", which defines
a fair value based method of accounting for employee
stock options or similar equity instruments granted after
December 31, 1994. However, it also allows an entity to
continue to account for these plans according to
Accounting Principles Board Opinion No. 25 (APB 25),
provided pro forma disclosures of net income and earnings
per share are made as if the fair value based method of
accounting defined by SFAS No. 123 had been applied. BANC
ONE anticipates electing to continue to measure
compensation cost related to employee stock purchase
options using APB 25, and will provide pro forma
disclosures as required in the 1996 Annual Report.
- --------------------------------------------------------------------------------
NOTE 2: AFFILIATIONS, PENDING AFFILIATIONS AND
DIVESTITURES
The Corporation was a party to business combinations and
divestitures with various entities as detailed below.
On January 2, 1996, the Corporation acquired all of the
outstanding shares of Premier Bancorp, Inc. (Premier) of
Baton Rouge, Louisiana, in exchange for 24 million shares
of the Corporation's treasury stock (adjusted for the 10%
common stock dividend payable March 6, 1996 to
shareholders of record on February 21, 1996) valued at
$711 million. The acquisition was accounted for as a
purchase. Premier had assets of $6.3 billion at December
31, 1995. No effects of this acquisition are included in
the accompanying financial statements.
On September 28, 1995, the Corporation signed a
definitive agreement for the sale of Bank One, Pikeville,
NA. The Pikeville bank had assets of $224 million at
December 31, 1995. The sale is expected to close in the
first quarter of 1996 and is expected to result in a gain
of approximately $9 million.
On March 10, 1995, the Corporation acquired all of the
outstanding shares of 1st*Bank of Coppell, Texas, in
exchange for 550,000 (adjusted for the 10% common stock
dividend payable March 6, 1996 to shareholders of record
on February 21, 1996) shares of the Corporation's common
stock. 1st*Bank had total assets of approximately $143
million at February 28, 1995. The acquisition of 1st*Bank
was accounted for as a pooling of interests; however,
financial statements prior to the acquisition date have
not been restated because the transaction was not material
to BANC ONE.
On February 28, 1995, the Corporation completed the
sale of its four Michigan banks which had combined assets
of $614 million as of December 31, 1994. The sale resulted
in the recognition of a gain of $47 million during the
first quarter of 1995.
54
<PAGE> 44
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 3: SECURITIES AND INVESTMENT PRODUCTS
Following are the fair value and amortized cost of
securities by type and the estimated maturities and
weighted average rates of securities.
<TABLE>
<CAPTION>
ENDING
BALANCES
AT
MATURITIES OF SECURITIES AT DECEMBER 31, 1995(1) DECEMBER
------------------------------------------------------------------------ 31,
2001- -------
$(MILLIONS) 1996 1997 1998 1999 2000 2005 2006+ 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
SECURITIES HELD TO MATURITY(4)
Tax-exempt
Amortized cost...................... $ 260 $ 162 $ 116 $ 85 $ 107 $ 138 $ 41 $ 909
Fair value.......................... 263 170 122 91 117 146 44 953
Weighted average yield(2)........... 5.77% 7.64% 6.95% 6.70% 7.41% 6.50% 5.55% 6.63%
Other
Amortized cost...................... 36 23 25 20 3 65 7 179
Fair value.......................... 37 23 24 21 3 68 7 183
Weighted average yield.............. 6.03% 6.62% 6.85% 7.10% 6.32% 6.25% 5.12% 6.38%
Total amortized cost.................... $ 296 $ 185 $ 141 $ 105 $ 110 $ 203 $ 48 $ 1,088
====== ====== ====== ====== ====== ====== ====== =======
Total fair value........................ $ 300 $ 193 $ 146 $ 112 $ 120 $ 214 $ 51 $ 1,136
====== ====== ====== ====== ====== ====== ====== =======
SECURITIES AVAILABLE FOR SALE(3)(4)
United States treasury and agencies
Amortized cost...................... $1,051 $ 606 $ 619 $ 202 $ 206 $ 328 $ 17 $ 3,029
Fair value.......................... 1,051 613 631 205 214 329 17 3,060
Weighted average yield.............. 5.80% 6.21% 6.02% 5.99% 6.53% 6.37% 8.34% 6.06%
Mortgage and asset-backed securities
Government
Amortized cost.................. 252 536 1,245 2,690 343 1,440 47 6,553
Fair value...................... 252 539 1,268 2,739 350 1,465 47 6,660
Weighted average yield.......... 8.09% 6.77% 7.07% 6.98% 7.10% 7.03% 8.33% 7.05%
Other
Amortized cost.................. 491 788 536 472 700 551 57 3,595
Fair value...................... 491 789 536 468 710 536 57 3,587
Weighted average yield.......... 5.68% 6.58% 6.23% 6.06% 6.92% 6.67% 7.61% 6.43%
Tax-exempt
Amortized cost...................... 48 128 95 107 115 316 4 813
Fair value.......................... 48 130 96 109 116 322 4 825
Weighted average yield(2)........... 5.24% 5.17% 4.94% 4.98% 4.82% 5.00% 8.06% 5.02%
Other
Amortized cost...................... 38 12 25 51 47 106 207 486
Fair value.......................... 38 12 25 51 47 106 209 488
Weighted average yield.............. 8.40% 6.36% 10.46% 11.94% 11.96% 8.22% 5.58% 7.93%
Total amortized cost.................... $1,880 $2,070 $2,520 $3,522 $1,411 $2,741 $ 332 $14,476
====== ====== ====== ====== ====== ====== ====== =======
Total fair value........................ $1,880 $2,083 $2,556 $3,572 $1,437 $2,758 $ 334 $14,620
====== ====== ====== ====== ====== ====== ====== =======
<CAPTION>
$(MILLIONS) 1994
<S> <C<C>
- ----------------------------------------
SECURITIES HELD TO MATURITY(4)
Tax-exempt
Amortized cost...................... $ 2,182
Fair value.......................... 2,167
Weighted average yield(2)...........
Other
Amortized cost...................... 2,652
Fair value.......................... 2,623
Weighted average yield..............
Total amortized cost.................... $ 4,834
=======
Total fair value........................ $ 4,790
=======
SECURITIES AVAILABLE FOR SALE(3)(4)
United States treasury and agencies
Amortized cost...................... $ 3,700
Fair value.......................... 3,693
Weighted average yield..............
Mortgage and asset-backed securities
Government
Amortized cost.................. 3,312
Fair value...................... 3,206
Weighted average yield..........
Other
Amortized cost.................. 3,144
Fair value...................... 3,072
Weighted average yield..........
Tax-exempt
Amortized cost...................... 34
Fair value.......................... 34
Weighted average yield(2)...........
Other
Amortized cost...................... 306
Fair value.......................... 313
Weighted average yield..............
Total amortized cost.................... $10,496
=======
Total fair value........................ $10,318
=======
</TABLE>
(1) Reflects estimated maturity.
(2) Weighted average yields on tax-exempt securities are not reflected on a tax
equivalent basis.
(3) Weighted average yields for available-for-sale securities are based on
amortized historical cost.
(4) BANC ONE reclassified $2.9 billion in held-to-maturity securities, with a
fair value of $2.9 billion, to available-for-sale in December 1995.
55
<PAGE> 45
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
The following are net realized gains and losses on
securities sold or called and unrealized gains or losses
on securities held:
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) DURING 1995
---------------------------------------------------------------------------
NET
REALIZED
AMORTIZED REALIZED REALIZED GAIN
$(MILLIONS) COST PROCEEDS GAINS LOSSES (LOSS)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Securities held to maturity:
Tax-exempt............................. $ 95 $ 96 $ 1 $ 1
Other.................................. 24 28 6 $ (2) 4
Securities available for sale:
United States treasury and federal
agencies.............................. 635 636 7 (6) 1
Mortgage and asset-backed securities:
Government.......................... 591 585 1 (7) (6)
Other............................... 1,209 1,204 3 (8) (5)
Tax-exempt.............................
Other.................................. 108 141 33 33
----------- ----------- ----------- ----------- -----------
Total..................................... $ 2,662 $ 2,690 $ 51 $ (23) $ 28
============ ============ ============ ============ ============
<CAPTION>
UNREALIZED GAIN (LOSS)
-------------------------------------------
NET
UNREALIZED
UNREALIZED UNREALIZED GAIN
$(MILLIONS) GAINS LOSSES (LOSS)
<S> <<C> <C> <C>
- ------------------------------------------
Securities held to maturity:
Tax-exempt............................. $ 51 $ (7) $ 44
Other.................................. 6 (2) 4
Securities available for sale:
United States treasury and federal
agencies.............................. 33 (2) 31
Mortgage and asset-backed securities:
Government.......................... 117 (10) 107
Other............................... 25 (33) (8)
Tax-exempt............................. 16 (4) 12
Other.................................. 3 (1) 2
----------- ----------- -----------
Total..................................... $ 251 $ (59) $ 192
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) DURING 1994
---------------------------------------------------------------------------
NET
REALIZED
AMORTIZED REALIZED REALIZED GAIN
$(MILLIONS) COST PROCEEDS GAINS LOSSES (LOSS)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Securities held to maturity:
Tax-exempt............................. $ 55 $ 56 $ 2 $ (1) $ 1
Other.................................. 45 46 4 (3) 1
Securities available for sale:
United States treasury and federal
agencies.............................. 10,556 10,271 140 (425) (285)
Mortgage and asset-backed securities:
Government.......................... 104 103 (1) (1)
Other............................... 563 562 1 (2) (1)
Tax-exempt and other................... 64 88 27 (3) 24
----------- ----------- ----------- ----------- -----------
Total..................................... $ 11,387 $ 11,126 $ 174 $ (435) $ (261)
============ ============ ============ ============ ============
<CAPTION>
UNREALIZED GAIN (LOSS)
-------------------------------------------
NET
UNREALIZED
UNREALIZED UNREALIZED GAIN
$(MILLIONS) GAINS LOSSES (LOSS)
<S> <<C> <C> <C>
- ------------------------------------------
Securities held to maturity:
Tax-exempt............................. $ 51 $ (66) $ (15)
Other.................................. 31 (60) (29)
Securities available for sale:
United States treasury and federal
agencies.............................. 5 (12) (7)
Mortgage and asset-backed securities:
Government.......................... (106) (106)
Other............................... 26 (98) (72)
Tax-exempt and other................... 8 (1) 7
----------- ----------- -----------
Total..................................... $ 121 $ (343) $ (222)
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) DURING 1993
---------------------------------------------------------------------------
NET
AMORTIZED REALIZED REALIZED REALIZED
$(MILLIONS) COST PROCEEDS GAINS LOSSES GAIN
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Securities held to maturity:
United States treasury and agencies.... $ 82 $ 85 $ 3 $ 3
Mortgage and asset-backed securities:
Government.......................... 5 5
Other...............................
Tax-exempt............................. 99 100 2 (1) 1
Other.................................. 99 110 12 (1) 11
Securities held for sale.................. 715 717 4 (2) 2
----------- ----------- ----------- ----------- -----------
Total..................................... $ 1,000 $ 1,017 $ 21 $ (4) $ 17
============ ============ ============ ============ ============
<CAPTION>
UNREALIZED GAIN (LOSS)
-------------------------------------------
NET
UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) GAINS LOSSES GAIN
<S> <<C> <C> <C>
- ------------------------------------------
Securities held to maturity:
United States treasury and agencies.... $ 130 $ (14) $ 116
Mortgage and asset-backed securities:
Government.......................... 36 (8) 28
Other............................... 27 (7) 20
Tax-exempt............................. 136 (5) 131
Other.................................. 35 (4) 31
Securities held for sale.................. 45 45
----------- ----------- -----------
Total..................................... $ 409 $ (38) $ 371
============ ============ ============
</TABLE>
56
<PAGE> 46
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Off-Balance Sheet Investment Products
Information is provided below for each significant type of
off-balance sheet investment product. The off-balance
sheet investment products BANC ONE utilizes are primarily
interest rate swaps. Interest rate swap agreements
generally involve the exchange of fixed and floating rate
interest payments without the exchange of the underlying
notional amount on which the interest payments are
calculated. BANC ONE has entered into interest rate swap
agreements that synthetically alter assets and liabilities
as part of its program to manage the impact of fluctuating
interest rates.
The notional amounts of generic swaps do not change for
the life of the contract. The notional amounts and lives
of amortizing swaps change based on certain interest rate
indices. Generally, as rates fall the notional amounts of
amortizing swaps decline more rapidly and as rates
increase notional amounts decline more slowly. A key
assumption in the maturity information below is that
future variable rates move as indicated by the forward
interest rate curve in existence at December 31, 1995. To
the extent that rates move in a fashion other than
indicated by the forward interest rate curve the maturity
information will change. Basis swaps are contracts under
which BANC ONE receives amounts based on LIBOR, typically
subject to certain defined caps, and pays amounts based on
prime. Accrual of interest on forward starting swaps
commences at a predetermined future date.
Purchased caps require the payment of a fee for the
right to receive interest payments on the contract
notional amount when a floating rate (typically LIBOR)
rises above a strike rate. The impact on net interest
income is the excess of the floating rate over the strike
rate less the periodic amortization of the premium paid.
The notional amounts shown below represent agreed upon
amounts on which calculations of interest payments to be
exchanged are based. Notional amounts do not represent
direct credit exposures. BANC ONE's direct credit
exposure is limited to the net difference between the
calculated pay and receive amounts on each transaction,
which is generally netted and paid or received quarterly,
and the ability of the counterparty to perform its
payment obligation under the agreement. BANC ONE has very
stringent policies governing off-balance sheet investment
product activities and collateral is typically exchanged
with the counter-parties to further minimize credit
risk. The methods used to determine counterparties and
credit lines are formally reviewed and approved annually.
There were $23 million and $49 million of net deferred
items primarily representing premiums paid at December 31,
1995 and 1994, respectively. There were no past due
payments, nor were there any reserves for credit losses on
off-balance sheet investment products, as of these dates.
BANC ONE's trading and dealer activities are not material
and thus not separately disclosed. The following are the
estimated maturities and weighted average fixed rates of
off-balance sheet investment products by type at December
31, 1995.
57
<PAGE> 47
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITIES OF OFF-BALANCE SHEET INVESTMENT PRODUCTS AT DECEMBER 31,
1995(1)(2) ENDING BALANCES AT
------------------------------------------------------------------------ DECEMBER 31,
2001- -------------------
$(MILLIONS) 1996 1997 1998 1999 2000 2005 2006+ 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Receive fixed swaps:
Notional value................. $1,785 $4,553 $1,500 $ 45 $ 760 $ 846 $ 300 $ 9,789 $ 6,995
Weighted average receive
rate......................... 6.06% 5.41% 5.82% 8.82% 6.32% 6.70% 7.23% 5.85%
Receive fixed amortizing swaps:
Notional value................. 6,508 1,351 68 19 7,946 15,442
Weighted average receive
rate......................... 5.27% 5.27% 7.48% 7.26% 5.29%
Pay fixed swaps:
Notional value................. 2,455 95 110 6 7 2,673 5,548
Weighted average pay rate...... 5.62% 8.54% 6.22% 8.69% 8.17% 5.76%
Purchased caps:
Notional value................. 4,712 503 4 4 4 26 5,253 6,186
------ ------ ------ ------ ------ ------ ------ ------- -------
Net receive fixed position....... $1,126 $5,306 $1,454 $ 54 $ 749 $ 820 $ 300 $ 9,809 $10,703
Basis swaps:
Notional value................. 4,268 3,730 306 8,304 8,102
Other:(3)
Notional value................. $2,612 $ 440 $1,000 $ 4,052 $ 2,191
</TABLE>
(1) Maturities are based on estimated future interest rates from the forward
interest rate curve at December 31, 1995.
(2) Variable receive and pay interest rates, which are based primarily on three
month LIBOR or prime, are not included in the table.
(3) Other off-balance sheet investment products include forward starting
contracts ($1.4 billion at December 31, 1995), floors, futures, options,
swap options, forward rate agreements, currency swaps and anticipatory
hedges. Customer transactions of $1.2 billion and $.6 billion at December
31, 1995 and December 31, 1994, respectively, and the related offsetting
transactions are excluded.
Unrealized gains and losses in off-balance sheet
investment products at December 31, 1995 and 1994 are
summarized as follows:
<TABLE>
<CAPTION>
UNREALIZED GAIN (LOSS) AS OF DECEMBER 31, 1995
-------------------------------------------------------
NET
NOTIONAL UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) AMOUNT GAINS LOSSES GAIN (LOSS)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Receive fixed swaps......... $ 9,789 $ 147 $ (11) $ 136
Receive fixed amortizing.... 7,946 16 (29) (13)
Pay fixed swaps............. 2,673 3 (16) (13)
Purchased caps.............. 5,253 (18) (18)
Basis swaps................. 8,304 (37) (37)
Forward starting and
other..................... 4,052 (8) (8)
-------- ---------- ---------- ------------
Total....................... $ 38,017 $ 166 $ (119) $ 47
======= ========= ========= =============
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED GAIN (LOSS) AS OF DECEMBER 31, 1994
-------------------------------------------------------
NET
NOTIONAL UNREALIZED UNREALIZED UNREALIZED
$(MILLIONS) AMOUNT GAINS LOSSES GAIN (LOSS)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Receive fixed swaps......... $ 6,995 $ 1 $ (154) $ (153)
Receive fixed amortizing.... 15,442 1 (989) (988)
Pay fixed swaps............. 5,548 91 (5) 86
Purchased caps.............. 6,186 83 (2) 81
Basis swaps................. 8,102 (342) (342)
Forward starting and
other..................... 2,191 44 (34) 10
-------- ---------- ---------- ------------
Total....................... $ 44,464 $ 220 $ (1,526) $ (1,306)
======= ========= ========= =============
</TABLE>
58
<PAGE> 48
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 4: LOANS AND LEASES
The composition of the loan and lease portfolio at
December 31, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
$ (THOUSANDS) 1995 1994
<S> <C> <C>
-----------------------------------------------------------------------------------
Commercial, financial and agricultural.............. $ 17,903,692 $16,619,186
Real estate:
Commercial........................................ 5,667,826 5,571,296
Construction...................................... 2,692,587 2,195,003
Residential....................................... 11,259,495 11,273,689
Consumer (net of unearned income of $487,147 and
$423,024
at December 31, 1995 and 1994, respectively)...... 18,407,595 19,070,286
Credit card......................................... 7,665,274 5,924,383
Leases (net of unearned income of $491,684 and
$379,679 at December 31, 1995 and 1994,
respectively)..................................... 1,732,196 1,339,069
------------- -----------
Total loans and leases.............................. $ 65,328,665 $61,992,912
=========== ===========
</TABLE>
Mortgage loans held for sale were $503 million and $356
million at December 31, 1995 and 1994, respectively. Such
loans are carried at the lower of cost or market
determined on an aggregate basis.
In the normal course of business, BANC ONE issues
commitments to extend credit, standby letters of credit,
and commercial and other letters of credit to meet the
financing needs of its customers. These instruments
involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in
the balance sheet. The contract amounts of these
instruments are shown below.
<TABLE>
<CAPTION>
$ (MILLIONS) 1995 1994
<S> <C> <C>
------------------------------------------------------------------------------
Commitments to extend credit.......................... $ 79,436 $ 60,185
Standby letters of credit............................. 3,493 3,003
Commercial and other letters of credit................ 278 260
</TABLE>
Commitments to extend credit are agreements to lend to
a customer provided there is not a violation of any
condition established in the contract. Non-credit card
commitments generally have fixed expiration dates, may
require payment of a fee and contain termination and other
clauses that provide for relief from funding in the event
that there is a significant deterioration in the credit
quality of the customer. Since many of the commitments are
expected to or typically expire without being drawn upon,
the total commitment amount does not necessarily represent
future cash requirements. At December 31, 1995, BANC ONE
had $79.4 billion of loan commitments outstanding,
including approximately $61.7 billion of credit card
commitments expiring in two years or less and $9.3 billion
of other loan commitments expiring within one year. The
same amounts for 1994 were $60.2 billion, $42.6 billion
and $8.3 billion, respectively. The exposure to credit
loss in the event of nonperformance by the other party to
these commitments is represented by the contractual
amount. BANC ONE applies the same credit policies in
making commitments as it does for on-balance sheet
instruments, mainly by evaluating each customer's
creditworthiness on a case by case basis. The amount of
collateral obtained, if deemed necessary by BANC ONE upon
extension of credit, is based on management's credit
evaluation of the borrower. The collateral varies, but may
include residential real estate, accounts receivable,
inventories, investments, property, plant and equipment
and income-producing commercial properties.
59
<PAGE> 49
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Letters of credit are conditional commitments issued by
BANC ONE guaranteeing payment on drafts drawn in
accordance with the terms of the documents. Commercial
letters of credit are used to facilitate trade or commerce
with the drafts being drawn when the underlying
transaction is consummated. Standby letters of credit
guarantee the performance of a customer to a third party.
These guarantees are primarily issued to support public
and private borrowing arrangements, including commercial
paper, bond financing and similar transactions. The credit
risk involved in issuing letters of credit is essentially
the same as that involved in making loan commitments to
customers. BANC ONE uses the same credit policies in
providing these conditional obligations as it does for
on-balance sheet instruments. Collateral for those
commitments when deemed necessary varies, but may include
accounts receivable, inventories, investments and real
estate. Except for short-term guarantees that expire
within one year, most guarantees extend for more than five
years and expire in decreasing amounts through the year
2029.
BANC ONE has sold loans with servicing retained. The
risk associated with these transactions is limited to
certain on-balance sheet receivables (approximately $295
million). The remaining market and credit risks are
transferred to the investors and the third party
institutions providing credit enhancement.
At December 31, 1995 and 1994, respectively, BANC ONE
had $6.2 billion and $5.5 billion of loans to real estate
operators, managers and developers and construction
contractors which represented 9.47% and 8.79% of total
loans and leases. There were no other significant
concentrations.
BANC ONE's real estate loans and loan commitments are
primarily for properties located throughout the Midwest
and Southwest. Repayment of these loans is dependent in
part upon the economic conditions in those regions. BANC
ONE evaluates each customer's
creditworthiness on an individual basis and requires
collateral on real estate loans consisting primarily of
residential and income-producing properties.
BANC ONE's credit card loans, consumer loans and
related loan commitments are located throughout the United
States. Repayment of these loans is dependent in part upon
regional and national economic factors. BANC ONE has
approximately 10.7 million managed Visa and Mastercard
accounts with an average outstanding balance of $852 and
6.0 million private label accounts with an average
outstanding balance of $299. The average unfunded
commitments for all credit card accounts is $3,707 per
account. BANC ONE does not require collateral on credit
card loans because of the low average balance of each
loan. The average balance per consumer loan is $7,647.
Collateral typically required for consumer loans includes
automobiles and other equipment.
- --------------------------------------------------------------------------------
NOTE 5: ALLOWANCE FOR CREDIT LOSSES
The following summarizes activity in the allowance for
credit losses for 1995, 1994 and 1993.
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
<S> <C> <C> <C>
------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD................. $ 897,180 $ 967,254 $ 952,174
Allowance associated with loans acquired and
other...................................... (3,888) 4,526 16,289
Provision for credit losses.................. 457,499 242,269 388,261
Charge-offs.................................. (603,994) (521,169) (590,558)
Recoveries................................... 191,211 204,300 201,088
----------- ---------- ----------
Net charge-offs.............................. (412,783) (316,869) (389,470)
----------- ---------- ----------
BALANCE, END OF PERIOD....................... $ 938,008 $ 897,180 $ 967,254
========= ========= =========
</TABLE>
60
<PAGE> 50
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
The provision for credit losses charged to expense is
based upon each affiliate's credit loss experience and an
evaluation of potential losses in the current loan and
lease portfolio, including the evaluation of impaired
loans under SFAS 114. A loan is considered to be impaired
when, based upon current information and events, it is
probable that BANC ONE will be unable to collect all
amounts due according to the contractual terms of the
loan. Impairment is primarily measured based on the fair
value of the loan's collateral. Impairment losses are
included in the provision for credit losses. SFAS 114 does
not apply to large groups of smaller balance homogeneous
loans that are collectively evaluated for impairment,
except for those loans restructured under a troubled debt
restructuring. Loans collectively evaluated for impairment
include certain smaller balance commercial loans, consumer
loans, residential real estate loans and credit card
loans, and are included in the following summary of
impaired loans, only if restructured.
The following table summarizes impaired loan information.
<TABLE>
<CAPTION>
DECEMBER 31,
$(THOUSANDS) 1995
<S> <C>
---------------------------------------------------------------------------------
Impaired loans................................................. $217,161
Impaired loans with related allowance calculated under SFAS
114.......................................................... 141,467
Allowance on impaired loans calculated under SFAS 114.......... 41,119
Impaired loans with no related allowance calculated under SFAS
114.......................................................... 75,694
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
$(THOUSANDS) DECEMBER 31, 1995
<S> <C>
---------------------------------------------------------------
Average impaired loans......................................... $219,962
Interest income recognized on impaired loans................... 6,706
Cash basis interest income recognized on impaired loans........ 3,698
</TABLE>
Interest payments on impaired loans are typically
applied to principal unless collectibility of the
principal amount is fully assured, in which case interest
is recognized on the cash basis. Interest may be
recognized on the accrual basis for certain troubled debt
restructurings which are included in the impaired loan
data above.
- --------------------------------------------------------------------------------
NOTE 6: BANK PREMISES, EQUIPMENT AND LEASES
The major categories of banking premises and equipment and
accumulated depreciation at December 31, 1995 and 1994 are
summarized as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994
<S> <C> <C>
------------------------------------------------------
Land.................................................. $ 208,164 $ 213,461
Building.............................................. 1,040,104 1,008,394
Equipment............................................. 1,498,789 1,393,807
Leasehold improvements................................ 274,618 258,230
------------ ----------
3,021,675 2,873,892
Less accumulated depreciation and amortization........ 1,462,999 1,356,245
------------ ----------
Bank premises and equipment, net...................... $ 1,558,676 $1,517,647
========== ==========
</TABLE>
As of December 31, 1995, the future minimum rental
payments required under noncancelable operating leases
with initial terms in excess of one year are $102 million,
$94 million, $82 million, $69 million and $56 million for
each of the years 1996 through 2000, respectively and $362
million thereafter. Rental expense under operating leases
approximated $160 million in 1995, $175 million in 1994
and $149 million in 1993.
61
<PAGE> 51
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 7: SHORT-TERM BORROWINGS
Information pertaining to BANC ONE's short-term borrowings
for 1995, 1994 and 1993 is summarized below:
<TABLE>
<CAPTION>
FEDERAL
COMMERCIAL FUNDS REPURCHASE
$(THOUSANDS) PAPER(1) PURCHASED(2) AGREEMENTS(2 OTHER(3)
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
1995:
Ending balance................ $ 652,801 $3,229,938 $3,031,071 $2,863,390
Highest month-end balance..... 1,469,476 3,229,938 3,883,409 3,738,168
Average daily balance......... 1,278,631 2,767,037 3,012,345 2,244,224
Weighted average interest
rate:
As of year-end.............. 5.72% 5.43% 4.91% 5.73%
Paid during year............ 6.16 5.93 4.94 5.66
1994:
Ending balance................ $1,272,660 $2,114,015 $3,072,512 $3,162,582
Highest month-end balance..... 1,272,660 3,522,126 6,199,725 3,962,375
Average daily balance......... 1,047,795 2,836,104 4,359,420 2,568,300
Weighted average interest
rate:
As of year-end.............. 5.61% 6.01% 4.62% 5.02%
Paid during year............ 4.61 4.46 3.55 4.42
1993:
Ending balance................ $1,119,760 $3,185,538 $3,780,088 971,814
Highest month-end balance..... 1,374,047 3,185,538 3,780,088 971,814
Average daily balance......... 1,087,393 2,157,458 2,905,051 330,345
Weighted average interest
rate:
As of year-end.............. 3.21% 3.11% 2.84% 2.84%
Paid during year............ 3.48 3.32 2.68 2.86
</TABLE>
(1) The commercial paper of the Corporation and certain
affiliates is supported by a $2 billion line of credit
of the Corporation maturing in the year 2000 with
unaffiliated banks and carrying an annual commitment
fee of .10%.
(2) Federal funds purchased and repurchase agreements
represent primarily overnight borrowings.
(3) Other includes demand notes - U.S. Treasury,
short-term bank notes and other notes. Short-term bank
notes were $2.4 billion at December 31, 1995 and 1994.
62
<PAGE> 52
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 8: LONG-TERM BORROWINGS
Long-term borrowings are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
STATED EFFECTIVE MATURITY -----------------------
$(THOUSANDS) RATE RATE(1) DATE 1995 1994
<S> <C> <C> <C> <C> <C> <C>
-------------
Corporation: Subordinated Notes(2)(3) 7.25% 5.94% 2002 $ 346,337 $ 345,781
Subordinated Notes(2) 8.74 8.74 2003 169,881 169,866
Subordinated Notes(2) 10.00 10.25 2010 197,369 197,285
Subordinated Notes(2) 9.88 10.11 2009 196,012 195,712
Subordinated Notes(2) 7.75 6.63 2025 294,272
Subordinated Notes(2) 7.00 6.30 2005 296,155
Affiliates: Subordinated Notes(4) Various Various Various 598,580 599,244
Notes(5) Various Various Various 522,006 227,565
Capital leases and other Various Various Various 99,761 130,995
---------- ----------
Total.................................................. $2,720,373 $1,866,448
=========== ===========
</TABLE>
(1) The effective rate includes amortization of premium or
discount. Interest rate swap agreements have been
entered into by BANC ONE that have altered the stated
interest rate for certain of the borrowings to
variable interest rates. The effective rates include
the impact of these swap agreements at December 31,
1995. The terms to maturity of the swaps are shorter
than the altered borrowings.
(2) These notes are not subject to redemption and impose
certain limitations relating to funded debt, liens and
the sale or issuance of capital stock of significant
bank subsidiaries.
(3) In January 1996, the related interest rate swap was
called by the counterparty.
(4) These notes have stated rates ranging from 6.0% to
7.38%. The effective rates range from 5.35% to 6.77%.
The notes mature between 2002 and 2005, and are not
subject to early redemption.
(5) Notes have stated or variable rates ranging from 5.64%
to 9.88%, effective rates ranging from 5.47% to 9.90%,
and mature between 1996 and 2016. Notes of $80 million
are subject to early redemption at the option of the
affiliate beginning in 1996, and commencing in 2002,
mandatory annual payments in the amount of $4 million
are required to be made to a sinking fund to repay
these notes. Notes of $23 million were called on
January 1, 1996, at a call price of 102.
On December 31, 1995, the aggregate annual repayments
of long-term borrowings for BANC ONE affiliates (excluding
the Corporation) are $365 million, $118 million, $19
million, $14 million and $10 million for each of the years
1996 through 2000, respectively and $695 million
thereafter. All long-term borrowings of the Corporation
are due after the year 2000.
- --------------------------------------------------------------------------------
NOTE 9: STOCK DIVIDENDS AND CONVERTIBLE PREFERRED STOCK
On January 23, 1996 and January 25, 1994, the Corporation
declared 10% common stock dividends to stockholders of
record on February 21, 1996 and February 10, 1994,
respectively. On July 20, 1993, the Corporation declared a
five-shares-for-four-shares common stock split, effective
August 31, 1993. Accordingly, certain common stock share
data have been adjusted to include the effect of the stock
split and stock dividends.
On April 21, 1993, the Corporation called all of the
outstanding shares of the Class B preferred stock for
redemption. All but a minor amount of Class B preferred
shares were converted to common stock.
Each of the Series C preferred shares can be converted
into 1.928982 shares of the Corporation's common stock and
provides for cumulative quarterly dividends at an annual
rate of $3.50 per share. The Series C preferred shares
have a stated liquidation value of $50 per share plus an
amount per share equal to all dividends cumulating or
accrued and unpaid thereon to the date of such
liquidation. The Series C preferred shares are redeemable
by BANC ONE beginning April 15, 1995 at an initial call
price of $52.10 per share, declining to $50.00 per share
on and after March 31, 2001.
63
<PAGE> 53
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 10: DIVIDEND AND CAPITAL RESTRICTIONS (ALSO SEE
NOTE 8)
Payment of dividends by the bank affiliates and certain
other non-bank affiliates is subject to various national
and/or state regulatory restrictions. The amount of
dividends available from the non-bank affiliates that are
subject to dividend restrictions is regulated by the
governing agency to which they report.
At December 31, 1995, total stockholders' equity of the
banking affiliates approximated $7.6 billion, of which
$1.1 billion was available for payment of dividends
without approval by the applicable regulatory authority.
Regulatory capital requirements specify certain minimum
capital levels. Applicable minimums for BANC ONE's Tier I
and total capital to "risk weighted" assets, as defined by
bank regulations are 4% and 8%, respectively. BANC ONE's
Tier I and total risk adjusted capital ratios at December
31, 1995 were 10.05% and 14.05%, respectively. BANC ONE's
leverage ratio at December 31, 1995 was 8.87%.
- --------------------------------------------------------------------------------
NOTE 11: INCOME TAXES
The Corporation and its affiliates file a consolidated
Federal income tax return and income tax expense is
apportioned among all affiliates based upon their taxable
income or loss and tax credits.
The effective income tax rate is below the statutory rate
due to the following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
Statutory tax rate................. $ 668,599 35.0% $531,598 35.0% $619,750 35.0%
Increase (reduction) in tax rate
resulting from:
State income taxes, net of
federal income tax benefit... 50,844 2.7 49,155 3.2 41,557 2.3
Tax exempt interest............ (50,853) (2.7) (59,273) (3.9) (65,229) (3.7)
Issuance of IRS regulations
relating to acquisitions of
troubled financial
institutions................. (22,265) (1.2)
Other, net..................... (13,906) (.7) (7,737) (.5) 2,531 .2
---------- ---- -------- ---- -------- ----
Actual tax rate.................... $ 632,419 33.1% $513,743 33.8% $598,609 33.8%
========= ===== ========= ===== ========= =====
</TABLE>
BANC ONE adopted Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes," effective
January 1, 1993.
Components of the provision for income taxes follow:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
Deferred federal tax........................... $ 154,409 $ 146,287 $ 21,385
Federal amount currently payable............... 399,788 290,722 513,291
Deferred state tax............................. 17,625 26,803 7,164
State amount currently payable................. 60,597 49,931 56,769
------------ ---------- ----------
Total provision for income taxes............... $ 632,419 $ 513,743 $ 598,609
=========== =========== ===========
</TABLE>
64
<PAGE> 54
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Deferred tax assets and liabilities at December 31, 1995
and 1994 consisted of the following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994
<S> <C> <C>
-----------------------------------------------------------------------------------------
Deferred tax assets
Loan loss reserve....................................... $ 341,080 $ 338,917
Accrued liabilities..................................... 93,426 86,533
Unrealized holding loss on securities available for
sale.................................................. 66,366
Other................................................... 54,901 7,785
------------ ----------
489,407 499,601
=========== ===========
Deferred tax liabilities:
Leased assets and depreciation.......................... (646,894) (520,279)
Unrealized holding gain on securities available for
sale.................................................. (52,289)
Other................................................... (160,245) (58,670)
------------ ----------
(859,428) (578,949)
------------ ----------
Net deferred tax liability.................................. $ (370,021) $ (79,348)
=========== ===========
</TABLE>
Deferred income taxes are determined separately for each
taxable entity of BANC ONE in each tax jurisdiction. For
each separate tax paying component, all deferred tax
assets and liabilities are netted and presented in a
single amount, which is included in other assets or other
liabilities on the balance sheet, as follows:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994
<S> <C> <C>
------------------------------------------------------------------------------------------
Other assets:
State deferred tax assets................................ $ 5,388
----------
Other liabilities:
Federal deferred tax liabilities......................... $ (313,328) (49,280)
State deferred tax liabilities........................... (56,693) (35,456)
------------ ----------
(370,021) (84,736)
------------ ----------
Net deferred tax liability................................... $ (370,021) $ (79,348)
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
NOTE 12: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
INSTRUMENTS
The table below summarizes the information required by
SFAS No. 107, "Disclosures About Fair Values of Financial
Instruments".
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------
1995 1994
----------------------- ----------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
$(MILLIONS) AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
FINANCIAL ASSETS:
Cash and short-term investments... $ 5,956 $ 5,956 $ 8,613 $ 8,613
Securities - held to maturity..... 1,088 1,136 4,834 4,790
Securities - available/held for
sale(1)......................... 14,622 14,622 10,291 10,291
Loans, net(2)..................... 60,025 62,453 57,841 58,753
FINANCIAL LIABILITIES:
Deposits.......................... $ 67,320 $ 67,400 $68,090 $ 67,615
Short-term borrowings............. 9,777 9,777 9,622 9,622
Long-term borrowings.............. 2,720 3,002 1,866 1,869
OFF-BALANCE SHEET INVESTMENT
PRODUCTS............................ 35 82 64 (1,242)
</TABLE>
(1) The carrying amount and fair value of securities
available for sale do not include the related fair
value of off-balance sheet investment products, a $2
million loss and a $27 million gain at December 31,
1995 and 1994, respectively.
(2) Excludes net leases with a carrying amount of $4,366
million and $3,255 million at December 31, 1995 and
1994, respectively.
Fair value amounts represent estimates of value at a
point in time. Significant assumptions regarding economic
conditions, loss experience, risk characteristics
associated with particular
65
<PAGE> 55
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
financial instruments and other factors were used for the
purposes of this disclosure. These assumptions are
subjective in nature and involve matters of judgment.
Therefore, they cannot be determined with precision.
Changes in the assumptions could have a material impact on
the amounts estimated.
While these estimated fair value amounts are designed
to represent estimates of the amounts at which these
instruments could be exchanged in a current transaction
between willing parties (excluding the value of customer
relationships), many of BANC ONE's financial instruments
lack an available trading market as characterized by
willing parties engaged in an exchange transaction. In
addition, it is BANC ONE's intent to hold most of its
financial instruments to maturity, therefore, it is not
probable that the fair values shown will be realized in a
current transaction. The estimated fair values disclosed
do not reflect the value of assets and liabilities that
are not considered financial instruments. In addition, the
value of long-term relationships with depositors (core
deposit intangibles) and other customers (e.g. credit card
intangibles) are not reflected. The value of these items
is significant.
Because of the wide range of valuation techniques and
the numerous estimates which must be made, it may be
difficult to make reasonable comparisons of BANC ONE's
fair value information to that of other financial
institutions. It is important that the many uncertainties
discussed above be considered when using the estimated
fair value disclosures and to realize that because of
these uncertainties, the aggregate fair value amount
should in no way be construed as representative of the
underlying value of BANC ONE.
The following describes the methodology and assumptions
used to estimate fair value of financial instruments
required by SFAS 107.
CASH AND SHORT-TERM INVESTMENTS. Cash and short-term
investments are by definition short-term and do not
present any unanticipated credit issues. Therefore, the
carrying amount is a reasonable estimate of fair value.
SECURITIES. The estimated fair values of securities by
type are provided in Note 3 to the financial statements.
These are based on quoted market prices, when available.
If a quoted market price is not available, fair value is
estimated using quoted market prices for similar
securities.
LOANS. The loan portfolio was segmented based on loan
type, credit quality and repricing characteristics. For
certain variable rate loans with no significant credit
concerns and frequent repricings, estimated fair values
are based on the carrying values. The fair values of other
loans are estimated using discounted cash flow analyses.
The discount rates used in these analyses are generally
based on BANC ONE's funding cost plus a spread. The spread
incorporates the impact of credit quality, servicing costs
and the cost of embedded options such as prepayments and
caps. Maturity estimates are based on historical
experience with prepayments and current economic and
lending conditions. The estimated fair value of credit
card receivables is based on the present value of cash
flows arising from receivables outstanding and does not
include the value associated with the relationships BANC
ONE has with its credit card customers. Therefore, it
reflects neither the value associated with new receivables
created by customers nor the value associated with the fee
income from credit card relationships. These values are
significant.
66
<PAGE> 56
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
DEPOSITS. Under SFAS 107, the fair value of deposits
with no stated maturity is equal to the amount payable on
demand. Therefore, the fair value estimates for these
products do not reflect the benefits that BANC ONE
receives from the low-cost, long-term funding they
provide. These benefits are significant. The estimated
fair value of fixed rate time deposits are based on
discounted cash flow analyses. The discount rates used in
these analyses are based on market rates of alternative
funding sources currently available for similar remaining
maturities, adjusted for servicing and deposit insurance
costs.
SHORT-TERM BORROWINGS. Short-term borrowings reprice
frequently, therefore, the carrying amount is a reasonable
estimate of fair value.
LONG-TERM BORROWINGS. For publicly traded debt,
estimated fair values are based on quoted market prices.
Where such prices are not available, fair value is
estimated using quoted market prices for similar
instruments or by discounted cash flow analysis.
OFF-BALANCE SHEET INVESTMENT PRODUCTS. Carrying values
for off-balance sheet investment products represent
deferred amounts arising from these financial instruments.
Where possible, the fair values are based upon quoted
market prices. Where such prices do not exist, these
values are based on dealer quotes and generally represent
an estimate of the amount that BANC ONE would receive or
pay to terminate the agreement at the reporting date,
taking into account current interest rates and the current
creditworthiness of the counterparties.
COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT
AND LETTERS OF CREDIT. Pricing of these financial
instruments is based on the credit quality and
relationship, fees, interest rates, probability of
funding, compensating balances and other covenants or
requirements. Non-credit card commitments generally have
fixed expiration dates, are variable rate and contain
termination and other clauses which provide for relief
from funding in the event that there is a significant
deterioration in the credit quality of the customer. Many
loan commitments are expected to, and typically do, expire
without being drawn upon. Approximately 78% of BANC ONE's
commitments to lend relate to credit cards which expire
within two years. Of the remaining commitments,
approximately 53% expire within one year. The rates and
terms of BANC ONE's commitments to lend, standby letters
of credit and letters of credit are competitive with
others in the various markets in which BANC ONE operates.
The carrying amounts are reasonable estimates of the fair
value of these financial instruments. Carrying amounts
which are comprised of the unamortized fee income and,
where necessary, reserves for any expected credit losses
from these financial instruments, are immaterial.
67
<PAGE> 57
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 13: PLEDGED SECURITIES AND CONTINGENT LIABILITIES
As of December 31, 1995, investment securities having a
book value of $8.1 billion were pledged as collateral for
repurchase agreements sold, off-balance sheet investment
products and as collateral for governmental and trust
department deposits in accordance with federal and state
requirements.
The Corporation's bank affiliates are required to
maintain average balances with the Federal Reserve Bank.
The average required reserve balances were $.8 billion and
$1.1 billion for 1995 and 1994, respectively.
In 1992, Bank One, Columbus, N.A. ("Columbus") was
named a defendant in a purported class action lawsuit in
Pennsylvania challenging whether Columbus can impose
various types of fees, allowed by the state of Ohio, on
credit cardholders residing in Pennsylvania (the "Suit").
The Suit seeks unquantified compensatory and triple
damages and other equitable relief. The Suit is one of
many similar class action lawsuits brought against credit
card issuing banks throughout the United States. The
dismissal of the Suit by the Court of Common Pleas of
Philadelphia County, Pennsylvania, which had been upheld
by a panel of the Pennsylvania Superior Court, was
reversed by the entire Pennsylvania Superior Court in
December 1994. Columbus has appealed the decision to the
Pennsylvania Supreme Court, which has postponed oral
argument pending a decision by the United States Supreme
Court in a similar action entitled Smiley v. Citibank, in
which the California Supreme Court has affirmed the lower
court's decision in favor of the bank. Legal counsel
believes that the decision by the entire Pennsylvania
Superior Court is contrary to the decisions of most state
and federal courts outside Pennsylvania that have
considered the issue, which have held that national banks
may use the rates and fees of the bank's home state in
contracts with cardholders from other states. There can be
no assurance that bank affiliates of BANC ONE will not be
named as defendants in future similar lawsuits.
The Corporation and certain of its affiliates have been
named as defendants in various other legal proceedings.
Management believes that liabilities arising from the Suit
and these other proceedings, if any, will not have a
material adverse effect on the consolidated financial
position, liquidity or results of operations of BANC ONE.
- --------------------------------------------------------------------------------
NOTE 14: EMPLOYEE BENEFIT PLANS
BANC ONE sponsors noncontributory pension plans covering
substantially all employees. The retirement benefits are
based on length of service and the employee's highest five
years of compensation during the last 10 years of service.
BANC ONE's funding policy is to contribute amounts
necessary to meet the funding requirements set forth in
the Employee Retirement Income Security Act of 1974.
The following table sets forth the plans' funded status.
Accrued pension cost at December 31, 1995 and 1994
includes $23 million and $16 million, respectively, for
BANC ONE's non-qualified, unfunded supplemental pension
plans.
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994
<S> <C> <C>
-------------------------------------------------------------------------------------------
Accumulated benefit obligation, including vested benefits of
$469,995 and $368,934 in 1995 and 1994, respectively......... $ (492,522) $ (389,005)
=========== ===========
Projected benefit obligation for service rendered to date...... $ (711,900) $ (611,527)
Plan assets at fair value...................................... 678,811 498,563
---------- ----------
Projected benefit obligation in excess of plan assets.......... (33,089) (112,964)
Unrecognized net loss from past experience different from that
assumed and effects of changes in assumptions................ 24,248 53,416
Unrecognized prior service cost................................ 11,605 3,281
Unrecognized net transition asset.............................. (13,969) (16,649)
---------- ----------
Accrued pension cost........................................... $ (11,205) $ (72,916)
=========== ===========
</TABLE>
68
<PAGE> 58
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Plan assets primarily consist of U.S. Treasury and
Federal Agency securities and mutual funds. Plan assets
include 927,836 shares of the Corporation's common stock
at December 31, 1995 and 927,402 shares at December 31,
1994. The fair value of the Corporation's common stock
held as plan assets was $32 million and $21 million at
December 31, 1995 and 1994, respectively. During 1994,
31,610 shares of the Corporation's common stock were sold
primarily to comply with generally accepted fiduciary
responsibilities that allow no more than a certain level
of employer securities in comparison to other investments.
No shares of the Corporation's common stock were sold
during 1995. Dividends received by the plans on the
Corporation's common stock totaled $1 million in 1995 and
1994. All share amounts are adjusted for the 10% stock
dividend payable March 6, 1996 to shareholders of record
on February 21, 1996.
Net periodic pension cost for BANC ONE for 1995, 1994 and
1993 included the following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------
Service cost - benefits earned during the
period................................... $ 41,641 $ 45,921 $ 43,553
Interest cost on projected benefit
obligation............................... 46,367 43,284 41,724
Actual (return) loss on plan assets........ (101,875) 29,024 (30,965)
Net amortization and deferral.............. 43,810 (82,897) (13,294)
--------- -------------- --------------
Net periodic pension costs................. $ 29,943 $ 35,332 $ 41,018
========== =============== ===============
Actuarial assumptions:
Weighted average discount rate for
projected benefit obligation............. 7.50% 7.90% to 8.50% 7.00% to 8.75%
Weighted average rate of compensation
increase................................. 6.00% 4.50% to 6.25% 4.50% to 6.00%
Expected long-term rate of return on plan
assets................................... 9.00% 9.50% to 9.75% 7.00% to 9.75%
</TABLE>
Postretirement Benefits Other Than Pension
BANC ONE currently sponsors a defined benefit
postretirement plan that covers salaried employees. The
plan provides medical, dental and life insurance benefits.
Benefits are available to retired employees with more than
10 years of service who retire under the normal or early
retirement provisions of the BANC ONE Retirement Plan. The
medical and dental benefits are contributory, while the
life insurance is non-contributory.
Prior to 1993, BANC ONE accounted for post retirement
benefits other than pensions on a cash basis. BANC ONE is
amortizing the unrecognized transition obligation existing
at January 1, 1993 when the accrual method of accounting
for these benefits was adopted over a 20-year period. BANC
ONE funds retiree medical benefits to the extent such
benefits are deductible for federal income tax purposes;
however, these assets are not restricted as to use for
such benefits and therefore do not meet the definition of
plan assets.
The following table sets forth the status of BANC ONE's
postretirement benefit obligation at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................ $(64,149) $(49,883)
Fully eligible active plan participants............. (19,323) (24,940)
Other active plan participants...................... (33,900) (26,682)
-------- --------
Accumulated postretirement benefit obligation in
excess of plan assets............................... (117,372) (101,505)
Unrecognized net gain................................. (20,137) (33,094)
Unrecognized transition obligation.................... 95,681 101,309
-------- --------
Accrued postretirement benefit cost................... $(41,828) $(33,290)
======== ========
</TABLE>
69
<PAGE> 59
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
Net periodic cost for postretirement health care and life
insurance benefits during 1995, 1994 and 1993 include the
following:
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost -- benefits earned during the
period..................................... $ 2,954 $ 3,591 $ 3,840
Interest cost on accumulated postretirement
benefit obligation......................... 8,595 8,602 9,582
Amortization of unrecognized transition
obligation................................. 5,628 5,629 5,670
Amortization of unrecognized net gain........ (1,097)
------- ------- -------
Net periodic postretirement benefit cost..... $16,080 $17,822 $19,092
======= ======= =======
</TABLE>
The weighted average discount rates used in determining
the accumulated postretirement benefit obligation at
December 31, 1995, 1994 and 1993 were 7.50%, 8.75% and
7.50%, respectively.
For measurement purposes, a 9.0% annual rate of
increase in the cost of covered health care benefits was
assumed for 1996; the rate was assumed to decrease
gradually to 5.0% in the year 2000 and thereafter. A
one-percentage point increase in the health care cost
trend rate in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1995
by $12.1 million, or 10.3%, and would increase the
aggregate of the service cost and interest cost components
of net periodic postretirement benefit cost for 1995 by
$1.1 million or 9.2%.
BANC ONE sponsors various 401(k) plans which include
substantially all of its employees. BANC ONE is required
to make contributions to the plans in varying amounts. For
1995, 1994 and 1993, the expense related to these plans
was $8 million, $12 million and $32 million, respectively.
- --------------------------------------------------------------------------------
NOTE 15: STOCK COMPENSATION
On April 18, 1995, the Corporation adopted the 1995 Stock
Incentive Plan which provides for the granting of
incentive and non-qualified stock options and stock awards
to the Corporation's directors and certain key BANC ONE
employees for up to an aggregate of one percent of the
outstanding common stock of the Corporation as reported in
BANC ONE's Annual Report on Form 10-K for the year ending
immediately prior to such years; further, the total number
of shares available for grants of stock awards in any year
shall not exceed one fourth of one percent of the
Corporation's outstanding common stock as so reported.
Based on December 31, 1994 outstanding shares, 4,498,842
shares of the Corporation's common stock were available
for grant in 1995. In 1995, 626,410 shares were granted as
stock awards. Under the 1995 Stock Incentive Plan, the
awards vest over a period of years and expense is
recognized over the vesting period. Options are not
exercisable for at least one year from the date of grant
and are thereafter exercisable for such periods as the
Board of Directors, or a committee thereof, specify (which
may not exceed 10 years for incentive stock options or 20
years for non-qualified stock options), provided that the
optionee has remained in the employment of the Corporation
or its affiliates. The Board or the committee may
accelerate the exercise period for an option upon the
optionee's disability, retirement, or death. All options
expire at the end of the exercise period.
70
<PAGE> 60
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
On April 18, 1989, the Corporation adopted the 1989
Stock Incentive Plan (as amended April 21, 1992) (which
was in addition to a stock option plan approved by its
shareholders on April 24, 1984, and amended December 16,
1986), which provided incentive and non-qualified options
and stock awards to the Corporation's directors and
certain key BANC ONE employees for up to 6,930,000 common
shares of the Corporation. The 1989 Stock Incentive Plan
was terminated by the Corporation's board of directors
effective April 17, 1995. Outstanding awards under the
1989 Stock Incentive Plan remain in effect under the terms
of their respective awards. Cumulatively, 1,751,815 shares
were granted as stock awards under the plan. The awards
vest over a period of years and expense is recognized over
the vesting period.
BANC ONE does not recognize options on the balance
sheet until such options are exercised and no amounts
applicable thereto are reflected in net income. All
options were granted at 100% of fair market value and
reflect the effect of the 10% common stock dividend
payable March 6, 1996 to shareholders of record on
February 21, 1996. Options of acquired entities are
converted to BANC ONE options at the time of acquisition.
These shares are included in the amounts shown below.
Outstanding stock options have been considered as common
stock equivalents in the computation of earnings per
share.
Stock option activity in BANC ONE's various stock
option plans for 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
NUMBER OF NUMBER OF
SHARES OPTION PRICE SHARES OPTION PRICE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of
year............................ 7,286,296 $ 5.65-38.02 5,829,915 $ 4.07-38.02
Granted......................... 2,522,635 25.57-34.55 2,200,001 25.45-31.03
Exercised....................... (1,160,919) 6.45-29.32 (471,706) 4.07-28.60
Cancelled....................... (514,615) 17.51-38.02 (271,914) 12.02-38.02
---------- ----------
Outstanding at end of year........ 8,133,397 5.65-38.02 7,286,296 5.65-38.02
=========== ============
Exercisable at end of year........ 1,839,962 5.65-38.02 2,180,176 5.65-38.02
=========== ============
</TABLE>
- --------------------------------------------------------------------------------
NOTE 16: RELATED PARTY TRANSACTIONS
Certain BANC ONE executive officers, directors and their
related interests are loan customers of the Corporation's
affiliates. The Securities and Exchange Commission (SEC)
has determined with respect to the Corporation and four
significant subsidiaries (as defined by the SEC)
disclosure of borrowings by directors and executive
officers and certain of their related interests should be
made, if the loans are greater than 5% of stockholders'
equity, in the aggregate. These loans in aggregate were
not greater than 5% of stockholders' equity at December
31, 1995 or 1994.
71
<PAGE> 61
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
NOTE 17: SUPPLEMENTAL DISCLOSURES FOR STATEMENT OF CASH
FLOWS
<TABLE>
<CAPTION>
$(THOUSANDS) 1995 1994 1993
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock issued in purchase
acquisitions......................... $ 9,518
==========
Transfer from loans to other real
estate owned (OREO).................. $ 91,163 $ 68,806 $ 140,963
========== ========== ==========
Securitization of mortgage loans....... $1,426,766
==========
Reclassification of private placement
securities from loans to
securities........................... $ 533,057
==========
Reclassification of held to maturity
securities to available for sale, at
amortized cost (fair value
$2,943,526).......................... $2,883,654
==========
Net increase in securities trades
not settled.......................... $ 185,009 $ 139,346 $ 156,803
========== ========== ==========
Loans issued to facilitate the sale
of OREO properties................... $ 7,220 $ 26,287 $ 37,353
========== ========== ==========
Additional disclosures:
Interest paid........................ $2,908,562 $2,140,363 $1,815,831
========== ========== ==========
Income taxes paid.................... $ 351,392 $ 412,727 $ 534,543
========== ========== ==========
Dividends declared but not paid
at year end....................... $ 123,925 $ 105,884
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
NOTE 18: PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DECEMBER 31,
BALANCE SHEET ----------------------------
$(THOUSANDS) 1995 1994
<S> <C> <C>
---------------------------------------------------------------------------------
ASSETS:
Cash and due from banks......................... $ 25,002 $ 9,941
Short-term investments.......................... 72,710 537,030
Securities available for sale, at fair value.... 41,115 20,123
Investment in majority-owned affiliates:
Banking...................................... 7,791,232 7,344,770
Non-banking.................................. 483,615 399,135
Advances due from affiliates:
Banking...................................... 191,000 197,000
Non-banking.................................. 1,498,104 997,319
Amounts due from Premier Bancorp, Inc........... 65,000 65,000
Excess of cost over net assets of affiliates
purchased.................................... 8,543 9,907
Other assets.................................... 268,016 195,110
------------- ----------
TOTAL ASSETS................................. $ 10,444,337 $9,775,335
=========== ==========
LIABILITIES:
Commercial paper and other short-term
borrowings................................... $ 560,360 $1,145,200
Notes payable to non-banking affiliates......... 53,896 45,974
Long-term borrowings............................ 1,500,026 908,644
Other liabilities............................... 132,577 110,657
------------- ----------
TOTAL LIABILITIES............................ 2,246,859 2,210,475
------------- ----------
TOTAL STOCKHOLDERS' EQUITY................... 8,197,478 7,564,860
------------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY... $ 10,444,337 $9,775,335
=========== ==========
</TABLE>
72
<PAGE> 62
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF INCOME
for the three years ended December 31,
$(THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1993
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------
INCOME:
Dividends from affiliates:
Banking......................................... $ 1,129,400 $ 614,617 $ 662,868
Non-banking..................................... 12,086 19,049
Management and other fees from affiliates......... 116,623 118,577 108,063
Interest.......................................... 128,155 100,063 89,665
Securities gains.................................. 669 11,343 152
Other............................................. 8,248 16,942 6,375
------------ ---------- ----------
TOTAL INCOME 1,383,095 873,628 886,172
------------ ---------- ----------
EXPENSE:
Interest.......................................... 183,452 129,302 104,391
Salaries and related costs........................ 69,036 67,351 57,255
Professional fees and services.................... 47,358 60,260 61,319
Marketing and development......................... 37,596 37,866 43,418
Other............................................. 57,398 22,407 30,637
------------ ---------- ----------
TOTAL EXPENSE................................... 394,840 317,186 297,020
------------ ---------- ----------
Income before income taxes and equity in
undistributed earnings of consolidated
affiliates........................................ 988,255 556,442 589,152
Income tax (provision) benefit:
Income excluding securities transactions.......... 55,256 35,599 29,373
Securities transactions........................... (234) (3,970) (53)
------------ ---------- ----------
Income before equity in undistributed earnings
of consolidated affiliates........................ 1,043,277 588,071 618,472
Equity in undistributed earnings of consolidated
affiliates........................................ 234,586 417,038 573,022
------------ ---------- ----------
NET INCOME...................................... $ 1,277,863 $1,005,109 $1,191,494
=========== =========== ===========
NET INCOME PER COMMON SHARE (AMOUNTS REFLECT
THE 10% COMMON STOCK DIVIDEND PAYABLE MARCH 6,
1996 TO SHAREHOLDERS OF RECORD ON FEBRUARY 21,
1996.):
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE............................ $ 2.91 $ 2.20 $ 2.62
Cumulative effect of change in method of
accounting for income taxes................... .04
------------ ---------- ----------
NET INCOME PER COMMON SHARE......................... $ 2.91 $ 2.20 $ 2.66
=========== =========== ===========
Weighted average shares outstanding (000)........... 433,323 448,118 441,351
=========== =========== ===========
</TABLE>
73
<PAGE> 63
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
for the three years ended December 31,
$(THOUSANDS) 1995 1994 1993
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME.................................... $ 1,277,863 $ 1,005,109 $1,191,494
Adjustments:
Equity in undistributed earnings of
consolidated affiliates................ (234,586) (417,038) (573,022)
Noncash dividends received................ (54,649) (10,160) (170,001)
Depreciation and amortization............. 13,346 11,818 10,786
Securities (gains) losses................. (669) (11,343) (152)
Net change in trading account portfolio... (20,974) 936 (19,777)
Net change in other assets................ (23,757) (42,127) (16,503)
Net change in other liabilities........... 20,346 (12,730) 49,436
------------ ----------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES............................. 976,920 524,465 472,261
------------ ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in short-term
investments................................. 464,320 (208,988) 250,820
Purchases of investment securities............ (32,111) (14,884)
Proceeds from sales and maturities of
investment securities....................... 33,000 37,766 35,890
Net (increase) decrease in loans.............. (498,366) 768,948 (826,216)
Additions to premises and equipment........... (81,038) (23,378) (4,585)
Net increase in investment in majority-owned
affiliates.................................. (12,145) (19,321) (27,000)
All other investing activities, net........... (2,598) 494 519
------------ ----------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES............................. (128,938) 555,521 (585,456)
------------ ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in commercial paper... (623,432) 151,722 92,751
Net increase (decrease) in short-term
notes payable............................... 52,545 (437,681) 463,780
Proceeds from the issuance of long-term
borrowings.................................. 590,179
Cash dividends paid........................... (550,294) (504,710) (405,959)
Purchase of treasury shares................... (324,321) (336,453)
Exercise of stock options, net of shares
purchased................................... (5,460) (5,659) (47,634)
All other financing activities, net........... 27,862 60,627 11,187
------------ ----------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES............................. (832,921) (1,072,154) 114,125
------------ ----------- ----------
Increase in cash and cash equivalents..... 15,061 7,832 930
Cash and cash equivalents at January 1,....... 9,941 2,109 1,179
------------ ----------- ----------
CASH AND CASH EQUIVALENTS AT DECEMBER 31,..... $ 25,002 $ 9,941 $ 2,109
=========== ============ ===========
</TABLE>
74
<PAGE> 64
BANC ONE CORPORATION and Subsidiaries
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and the Board of Directors
BANC ONE CORPORATION
We have audited the accompanying consolidated balance
sheets of BANC ONE CORPORATION and Subsidiaries as of
December 31, 1995 and 1994, and the related statements of
income, changes in stockholders' equity and cash flows for
each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of BANC ONE CORPORATION and
Subsidiaries at December 31, 1995 and 1994 and the results
of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted
accounting principles.
As disclosed in Note 1, effective January 1, 1994, BANC
ONE CORPORATION changed its method of accounting for
certain investment securities. As discussed in Note 11 and
Note 14, effective January 1, 1993, BANC ONE CORPORATION
changed its method of accounting for income taxes and
postretirement benefits other than pensions.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
February 21, 1996
75
<PAGE> 65
BANKING OFFICES IN:
Arizona Ohio
Colorado Oklahoma
Illinois Texas
Indiana Utah
Kentucky West Virginia
Louisiana Wisconsin
SUBSIDIARIES
Banc One Capital Corporation
Banc One Commercial Loan Origination Corporation
Banc One Community Development Corporation
Banc One Credit Card Services Company
Banc One Financial Card Services Corporation
Banc One Financial Services Corporation
Banc One Funds Management Company
Banc One Insurance Services Corporation
Banc One Investment Advisors Corporation
Banc One Management and Consulting Corporation
Banc One Mortgage Corporation
Banc One POS Services Company
Banc One Private Label Credit Services
Banc One Securities Corporation
Banc One Services Corporation
Banc One Trust companies
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/95)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
- -------------------------- --------------- ---------
<S> <C> <C>
BANC ONE ARIZONA CORPORATION Arizona Corporation SAME
BANC ONE ARIZONA INVESTMENT CORPORATION Arizona Corporation " "
BANK ONE, ARIZONA, NATIONAL ASSOCIATION National Bank " "
ARIZONA TRUST DEED CORPORATION (Unknown) " "
BANC ONE ARIZONA INVESTMENT SERVICES CORPORATION Arizona Corporation " "
BANC ONE ARIZONA LEASING CORPORATION Arizona Corporation " "
BANC ONE OPERATIONS SERVICES CORPORATION Arizona Corporation " "
SUN COUNTRY LEASING CORPORATION Arizona Corporation " "
VALLEY BANK BUILDING, INC. Arizona Corporation " "
VALLEY NATIONAL FINANCIAL SERVICES COMPANY Arizona Corporation " "
VALLEY NATIONAL INVESTORS, INC. Arizona Corporation " "
WASHINGTON STREET FOODS, INC. Arizona Corporation " "
BANK ONE, UTAH, NATIONAL ASSOCIATION National Bank " "
50 WEST BROADWAY ASSOCIATES (50%) Utah Corporation " "
SUN COUNTRY FINANCIAL SERVICES OF UTAH, INC. Utah Corporation " "
BANC ONE BETA CORPORATION Ohio Corporation " "
BANC ONE CAPITAL HOLDINGS CORPORATION Ohio Corporation " "
AFFILIATED BANKSHARES INSURANCE AGENCY, INC. Colorado Corporation " "
AMERICAN INSURANCE AGENCY, INC. Arizona Corporation " "
BANC ONE CAPITAL CORPORATION Ohio Corporation " "
BANC ONE CAPITAL PARTNERS CORPORATION Texas Corporation " "
BANC ONE CAPITAL SERVICES CORPORATION Ohio Corporation " "
BANC ONE LIFE INSURANCE COMPANY Arizona Corporation " "
BANC ONE SECURITIES CORPORATION Ohio Corporation " "
BOCP HOLDINGS CORPORATION Ohio Corporation " "
BANC ONE CAPITAL PARTNERS, L.P. Ohio L.P. " "
BANC ONE CAPITAL PARTNERS II, LTD. Ohio L.L.C. " "
BANC ONE CAPITAL PARTNERS II LIMITED PARTNERSHIP (80%) Delaware L.P. " "
BANC ONE CAPITAL PARTNERS III, LIMITED PARTNERSHIP (80%) Ohio Partnership " "
BANC ONE CAPITAL PARTNERS IV, LIMITED PARTNERSHIP (80%) Delaware L.P. " "
BANC ONE CAPITAL PARTNERS V, LTD. Ohio Partnership " "
BANC ONE CAPITAL PARTNERS VI, LTD. Ohio L.L.C. " "
BOCC FUNDING CORPORATION Ohio Corporation " "
BANC ONE CARD SERVICES CORPORATION Texas Corporation " "
BANC ONE COLORADO CORPORATION Colorado Corporation " "
AFFILIATED BANKS BUILDING CO. Colorado Corporation " "
BANK ONE, COLORADO, NATIONAL ASSOCIATION National Bank " "
BANC ONE BOULDER LEASING SERVICES CORPORATION Colorado Corporation " "
BANC ONE COLORADO SPRINGS LEASING SERVICES CORPORATION Colorado Corporation " "
BANC ONE DENVER LEASING SERVICES CORPORATION Colorado Corporation " "
BANC ONE COMMERCIAL LOAN ORIGINATION CORPORATION Ohio Corporation " "
BANC ONE COMMUNITY DEVELOPMENT CORPORATION Ohio Corporation " "
BANC ONE COMMUNITY DEVELOPMENT/WISCONSIN CORPORATION Ohio Corporation " "
BANC ONE FOREIGN INVESTMENT HOLDING CORPORATION Ohio Corporation " "
BANC ONE ILLINOIS CORPORATION Illinois Corporation " "
BANK ONE, BLOOMINGTON-NORMAL Illinois Bank " "
</TABLE>
PAGE 1
<PAGE> 2
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/95)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
- -------------------------- --------------- ---------
<S> <C> <C>
BANK ONE, CHICAGO, NATIONAL ASSOCIATION National Bank " "
LAZARUS PROPERTIES, INC. Illinois Corporation " "
BANK ONE, PEORIA Illinois Bank " "
BANK ONE, QUAD CITIES, NATIONAL ASSOCIATION National Bank " "
BANK ONE, ROCKFORD, NATIONAL ASSOCIATION National Bank " "
FIRST ROCKFORD COMMUNITY DEVELOPMENT CORPORATION Illinois Corporation " "
NORTHERN ILLINOIS DEVELOPMENT CORPORATION (30%) Illinois Corporation " "
BANK ONE, SPRINGFIELD Illinois Bank " "
MCU CORPORATION Illinois Corporation " "
BANK ONE, CHAMPAIGN-URBANA Illinois Bank " "
BANC ONE INDIANA CORPORATION Indiana Corporation " "
AMERICAN FLETCHER REALTY CORPORATION Indiana Corporation " "
BANK ONE, BLOOMINGTON, NATIONAL ASSOCIATION National Bank " "
BANK ONE, CRAWFORDSVILLE, NATIONAL ASSOCIATION National Bank " "
BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION National Bank " "
BANC ONE EQUIPMENT FINANCE, INC. Indiana Corporation " "
BANC ONE INDIANAPOLIS AUTO LEASE, INC. Indiana Corporation " "
BANK SERVICE CORPORATION OF INDIANA (33-1/3%) Indiana Corporation " "
BIL INTERNATIONAL HOLDINGS, INC. Indiana Corporation " "
BO-UA FSC, INC. Indiana Corporation " "
BO-FE FSC, INC. Indiana Corporation " "
BO-LKEUA, INC. Virgin Islands Corporation " "
BANK ONE, LAFAYETTE, NATIONAL ASSOCIATION National Bank " "
BANK ONE, MARION, INDIANA, NATIONAL ASSOCIATION National Bank " "
BANK ONE, MERRILLVILLE, NATIONAL ASSOCIATION National Bank " "
BANK ONE, RENSSELAER, NATIONAL ASSOCIATION National Bank " "
BANK ONE, RICHMOND, NATIONAL ASSOCIATION National Bank " "
BOI LEASING CORPORATION Indiana Corporation " "
BANC ONE INTERIM CORPORATION Ohio Corporation " "
BANC ONE KENTUCKY CORPORATION Kentucky Corporation " "
BANK ONE, KENTUCKY, NATIONAL ASSOCIATION National Bank " "
FINANCIAL DOMINION BANKCARD SERVICES, INC. Kentucky Corporation " "
LIBERTY LEASING CORPORATION Kentucky Corporation " "
LIBERTY NATIONAL LEASING COMPANY Kentucky Corporation " "
LIBERTY PAYMENT SERVICES, INC. Kentucky Corporation " "
LIBERTY PROPERTIES INCORPORATED Kentucky Corporation " "
LIBERTY VEHICLE LEASING COMPANY Kentucky Corporation " "
LNB LIFE INSURANCE COMPANY Kentucky Corporation " "
MONEY CARD, INC. Kentucky Corporation " "
BANK ONE, LEXINGTON, NATIONAL ASSOCIATION National Bank " "
FIRST PROPERTY DEVELOPMENT COMPANY Kentucky Corporation " "
FS FINANCIAL SERVICES CORPORATION OF KENTUCKY Kentucky Corporation " "
SECURITY PROPERTY DEVELOPMENT COMPANY Kentucky Corporation " "
BANK ONE, PIKEVILLE, NATIONAL ASSOCIATION National Bank " "
BANK ONE, SOUTHERN INDIANA, NATIONAL ASSOCIATION National Bank " "
FIRST B.C. REALTY CORPORATION Indiana Corporation " "
BANK ONE, WESTERN KENTUCKY, NATIONAL ASSOCIATION National Bank " "
LIBERTY FINANCIAL SERVICES, INCORPORATED Kentucky Corporation " "
BANC ONE MANAGEMENT AND CONSULTING CORPORATION Ohio Corporation " "
BANC ONE BETA ASSET MANAGEMENT CORPORATION Ohio Corporation " "
</TABLE>
PAGE 2
<PAGE> 3
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/95)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
- -------------------------- --------------- ---------
<S> <C> <C>
BANC ONE NEW HAMPSHIRE ASSET MANAGEMENT CORPORATION Ohio Corporation " "
BONNET RESOURCES CORPORATION Ohio Corporation " "
PINE VALLEY RESOURCES CORPORATION Ohio Corporation " "
JR-1, INC. Texas Corporation " "
JR-2, INC. Texas Corporation " "
FAMCO SERVICES, INC. Texas Corporation " "
FAMCO SERVICES II, INC. Texas Corporation " "
FAMCO SERVICES III, INC. Texas Corporation " "
SUBSIDIARY CONSULTANTS, INC. Texas Corporation " "
BANC ONE MORTGAGE CORPORATION Delaware Corporation " "
BANC ONE OHIO CORPORATION Ohio Corporation " "
BANK ONE, AKRON, NATIONAL ASSOCIATION National Bank " "
BANC ONE AKRON SERVICE CORPORATION Ohio Corporation " "
BANK ONE, ATHENS, NATIONAL ASSOCIATION National Bank " "
ATHENS SERVICE CORPORATION West Virginia Corpor " "
BANK ONE, CAMBRIDGE, NATIONAL ASSOCIATION National Bank " "
BANK ONE, CINCINNATI, NATIONAL ASSOCIATION National Bank " "
BANC ONE CINCINNATI AUTOLEASE CORPORATION Ohio Corporation " "
BANK ONE, CLEVELAND, NATIONAL ASSOCIATION National Bank " "
BANC ONE CLEVELAND FINANCIAL SERVICES CORPORATION Ohio Corporation " "
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION National Bank " "
BANC ONE ACCEPTANCE CORPORATION Ohio Corporation " "
BOX LEASING CORPORATION Ohio Corporation " "
BANC ONE COMPENSATION SERVICES CORPORATION (80%) Ohio Corporation " "
BANC ONE INVESTMENT ADVISORS CORPORATION Ohio Corporation " "
BANC ONE VEHICLE FINANCE CORPORATION Ohio Corporation " "
BOC REALTY, INC. Ohio Corporation " "
BOC AFFILIATES, INC. Ohio Corporation " "
BOC FLORIDA, INC. Ohio Corporation " "
BOC MIDWEST, INC. Ohio Corporation " "
BOC SOUTHERN, INC. Ohio Corporation " "
BOC TOLEDO, INC. Ohio Corporation " "
GULF SHORES CONDOMINIUMS, INC. Ohio Corporation " "
ICF INVESTMENT CORPORATION Ohio Corporation " "
MARIETTA HOTEL COMPANY Ohio Corporation " "
MAUMEE RIVER HOTEL CORPORATION Ohio Corporation " "
29160 CENTER RIDGE COMPANY, INC. Ohio Corporation " "
BANK ONE, COSHOCTON, NATIONAL ASSOCIATION National Bank " "
BANK ONE, DAYTON, NATIONAL ASSOCIATION National Bank " "
BANC ONE DAYTON SERVICE CORPORATION Ohio Corporation " "
BANK ONE, DOVER, NATIONAL ASSOCIATION National Bank " "
BANK ONE, FREMONT, NATIONAL ASSOCIATION National Bank " "
BANK ONE LIMA, NATIONAL ASSOCIATION National Bank " "
BANC ONE WAPAKONETA SERVICE CORPORATION Indiana Corporation " "
BANK ONE, MANSFIELD Ohio Bank " "
BANC ONE TRAVEL CORPORATION Ohio Corporation " "
BANK ONE, MARIETTA, NATIONAL ASSOCIATION (99.99%) National Bank " "
BANK ONE, MARION Ohio Bank " "
BANK ONE, PORTSMOUTH, NATIONAL ASSOCIATION National Bank " "
BANK ONE, SIDNEY, NATIONAL ASSOCIATION National Bank " "
BANK ONE, STEUBENVILLE, NATIONAL ASSOCIATION National Bank " "
BANC ONE LOAN SERVICES CORPORATION Pennsylvania Corporation " "
</TABLE>
PAGE 3
<PAGE> 4
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/95)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
- -------------------------- --------------- ---------
<S> <C> <C>
BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION National Bank " "
BANK ONE, YOUNGSTOWN, NATIONAL ASSOCIATION National Bank " "
BANC ONE, YOUNGSTOWN FINANCIAL SERVICES CORPORATION Pennsylvania Corporation " "
BANC ONE OKLAHOMA CORPORATION Oklahoma Corporation " "
BANK ONE, OKLAHOMA CITY Oklahoma Bank " "
BANC ONE POS SERVICES CORPORATION (1) Ohio Corporation " "
BANC ONE REALTY COLUMBUS CORPORATION Ohio Corporation " "
BANC ONE SERVICES CORPORATION Ohio Corporation " "
BANC ONE FINANCIAL CARD SERVICES CORPORATION Ohio Corporation " "
BANC ONE SERVICES FSC-I, INC. Virgin Islands Corporation " "
ELECTRONIC PAYMENT SERVICES, INC. (31.01%) Delaware Corporation " "
ELECTRONIC PAYMENT SERVICES 1, INC. (80.62%) Delaware Corporation " "
ELECTRONIC PAYMENT SERVICES 2, INC. (80.00%) Delaware Corporation " "
ELECTRONIC PAYMENT SERVICE CORPORATION Delaware Corporation " "
BUYPASS CORPORATION Georgia Corporation " "
BUYPASS ELECTRONIC TRANSACTION SYSTEM, INC. Georgia Corporation " "
BUYPASS INCO CORP Delaware Corporation " "
BUYPASS PETROLEUM SYSTEMS, INC. Georgia Corporation " "
DATA NOW NATIONAL SERVICES, INC. Georgia Corporation " "
EPS NETWORK CORPORATION Georgia Corporation " "
MONEY ACCESS SERVICE, INC. Delaware Corporation " "
MAS INCO CORPORATION Delaware Corporation " "
METROTELLER SECURITY CORPORATION Delaware Corporation " "
MONEY ACCESS SERVICE CORP. Delaware Corporation " "
BANC ONE STUDENT LOAN FUNDING CORPORATION Ohio Corporation " "
BANC ONE TEXAS CORPORATION Ohio Corporation " "
BANC ONE TEXAS SERVICE CORPORATION Ohio Corporation " "
BANK ONE, TEXAS, NATIONAL ASSOCIATION National Bank " "
12603 SOUTHWEST FREEWAY, INC. Texas Corporation " "
BANC ONE TEXAS LEASING CORPORATION Texas Corporation " "
BAY OPERATING COMPANY, INC. Texas Corporation " "
FREER PROPERTIES, INC. Texas Corporation " "
GP HOLDER, INC. Texas Corporation " "
INDIAN PRODUCTION COMPANY, INC. Texas Corporation " "
METROPOLITAN HOLDINGS, INC. Texas Corporation " "
POST OAK OPERATING, INC. Texas Corporation " "
PSB LAND COMPANY, INC. Texas Corporation " "
SOUTHMORE-TATAR CORPORATION Texas Corporation " "
TAB ASSETS CORPORATION Texas Corporation " "
TEAM BANK SERVICES, INC. Texas Corporation " "
TEAM BROKERAGE, INC. Texas Corporation " "
TEAM LIFE INSURANCE COMPANY Texas Corporation " "
TEAMVEST, INC. Texas Corporation " "
TEXAS ASSET ACQUISITION CORPORATION Texas Corporation " "
TEXAS INVESTMENT HOLDING CORPORATION Texas Corporation " "
TEXAS LYRIC CORPORATION Texas Corporation " "
WEST U21, INC. Texas Corporation " "
</TABLE>
PAGE 4
<PAGE> 5
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/95)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
- -------------------------- --------------- -------------
<S> <C> <C>
BANC ONE WEST VIRGINIA CORPORATION West Virginia Corporation " "
BANK ONE, WEST VIRGINIA, NATIONAL ASSOCIATION National Bank " "
CHARLESTON NATIONAL PLAZA COMPANY West Virginia Corporation " "
BANK ONE, WEST VIRGINIA, NEW MARTINSVILLE, NATIONAL ASSOCIATION National Bank " "
BANK ONE, WEST VIRGINIA, WHEELING, NATIONAL ASSOCIATION National Bank " "
FIRST NATIONAL REALTY CO., INC. West Virginia Corporation " "
HOBBS REALTY CORPORATION, INC. West Virginia Corporation " "
RELIABLE MORTGAGE CO. West Virginia Corporation " "
BANC ONE WISCONSIN CORPORATION Wisconsin Corporation " "
BANC ONE BUILDING MANAGEMENT CORPORATION Wisconsin Corporation " "
BANC ONE INTERNATIONAL SERVICES CORPORATION Wisconsin Corporation " "
BANK ONE, ANTIGO Wisconsin Bank " "
ANTIGO INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, APPLETON, NATIONAL ASSOCIATION National Bank " "
APPLETON INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, BEAVER DAM Wisconsin Bank " "
BEAVER DAM INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, ELKHORN, NATIONAL ASSOCIATION National Bank " "
ELKHORN INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, FOND DU LAC Wisconsin Bank " "
FOND DU LAC INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, GREEN BAY Wisconsin Bank " "
GREEN BAY INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, JANESVILLE, NATIONAL ASSOCIATION National Bank " "
JANESVILLE INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, MADISON Wisconsin Bank " "
MADISON INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, MILWAUKEE, NATIONAL ASSOCIATION National Bank " "
BANC ONE VENTURE CORPORATION Wisconsin Corporation " "
BANC ONE WISCONSIN BANKCARD CORPORATION Wisconsin Corporation " "
BANC ONE WISCONSIN INVESTMENT SERVICES CORPORATION Wisconsin Corporation " "
BANC ONE WISCONSIN LEASING CORPORATION Wisconsin Corporation " "
BOMOREO, INC. Wisconsin Corporation " "
CROGHAN & ASSOCIATES, INC. Colorado Corporation System One, Inc.
MILWAUKEE INVESTMENT HOLDING COMPANY Nevada Corporation SAME
BANK ONE, MONROE Wisconsin Bank " "
MONROE INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, OSHKOSH, NATIONAL ASSOCIATION (99.53%) National Bank " "
OSHKOSH INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE, STEVENS POINT, NATIONAL ASSOCIATION National Bank " "
STEVENS POINT INVESTMENT HOLDING CORPORATION Nevada Corporation " "
BANK ONE, WEST BEND Wisconsin Bank " "
BANC ONE INSURANCE SERVICES CORPORATION Wisconsin Corporation " "
HIGHWAY "P" MOTEL, INC. Wisconsin Corporation " "
WEST BEND INVESTMENT HOLDING CORPORATION Nevada Corporation " "
BANK ONE, WISCONSIN, NATIONAL ASSOCIATION National Bank " "
WISCONSIN INVESTMENT HOLDING COMPANY Nevada Corporation " "
BANK ONE WISCONSIN TRUST COMPANY, NATIONAL ASSOCIATION National Bank " "
WITRUST INVESTMENT HOLDING COMPANY Wisconsin Corporation " "
FINANCE ONE CORPORATION Ohio Corporation " "
BANC ONE FINANCIAL SERVICES, INC. Indiana Corporation " "
BANC ONE CONSUMER DISCOUNT COMPANY, A NON-BANKING
</TABLE>
PAGE 5
<PAGE> 6
EXHIBIT 21
SUBSIDIARIES OF BANC ONE CORPORATION (AS OF 12/31/95)
(100% OWNERSHIP UNLESS OTHERWISE INDICATED)
<TABLE>
<CAPTION>
JURISDICTION OF NAME IN WHICH
INCORPORATION BUSINESS IS
NAME OF SUBSIDIARY OR ORGANIZATION CONDUCTED
- ------------------------------- --------------- -------------
<S> <C> <C>
AFFILIATE OF BANC ONE CORPORATION Indiana Corporation " "
BANC ONE FINANCIAL SERVICES OF MINNESOTA, INC. Minnesota Corporation " "
BANC ONE FINANCIAL SERVICES OF TENNESSEE, INC. Tennessee Corporation " "
BANC ONE FINANCIAL SERVICES OF WEST VIRGINIA, INC. West Virginia Corporation " "
GUARDIAN AGENCY, INC. Indiana Corporation " "
BENEFICIAL INSURANCE AGENCY, INC. Indiana Corporation " "
GUARDIAN AGENCY OF BLOOMINGTON, INC. Indiana Corporation " "
GUARDIAN AGENCY OF DELPHI, INC. Indiana Corporation " "
GUARDIAN AGENCY OF FORT WAYNE, INC. Indiana Corporation " "
GUARDIAN AGENCY OF GREENCASTLE, INC. Indiana Corporation " "
GUARDIAN AGENCY OF LEBANON, INC. Indiana Corporation " "
GUARDIAN AGENCY OF RUSHVILLE, INC. Indiana Corporation " "
GUARDIAN AGENCY OF VALPARAISO, INC. Indiana Corporation " "
BANC ONE LEASING CORPORATION Ohio Corporation " "
BANC ONE FLORIDA CORPORATION Ohio Corporation " "
BANC ONE LEASING COMPANY OF FLORIDA Ohio Corporation " "
FM LEASING CORPORATION Colorado Corporation " "
PREMIER ACQUISITION CORPORATION Ohio Corporation " "
STERLING ASSURANCE COMPANY Ohio Corporation " "
- ---------------
<FN>
(1) This bank service corporation is 100% owned by BANC ONE subsidiary banks with Bank One, Arizona, N.A.
owning 30.890%; Bank One, Columbus, N.A. 9.289%; Bank One, Akron, N.A. 6.503%; Bank One, Indianapolis, N.A.
9.360%; Bank One, Milwaukee, N.A. 9.225%; and Bank One, Texas, N.A. 9.678%. All other BANC ONE banks own
less than 5%.
REV. 3/6/96
</TABLE>
PAGE 6
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
listed below of BANC ONE CORPORATION of our report dated February 21, 1996 on
our audits of the consolidated financial statements of BANC ONE CORPORATION and
Subsidiaries, which includes an explanatory paragraph regarding the change in
method of accounting for certain investment securities in 1994 and the change in
method of accounting for income taxes and post-retirement benefits other than
pensions in 1993, as of December 31, 1995 and 1994, and for the years ended
December 31, 1995, 1994, and 1993, included in BANC ONE CORPORATION's annual
report on form 10-k for the year ended December 31, 1995.
Registration Statements on form S-8
Registration numbers:
..33-14475 ..33-55172
..33-10822 ..33-55174
..33-18277 ..33-54100
..33-27849 ..33-61760
..33-34294 ..33-61758
..33-37400 ..33-60424
..33-20890 ..33-50117
..33-20990 ..33-55149
..33-40041 ..33-55315
..33-45473 ..33-58923
..33-46189 .333-00445
..33-53752
Registration Statements on Form S-3
Registration Numbers:
..33-64195
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,501,266
<INT-BEARING-DEPOSITS> 1,603
<FED-FUNDS-SOLD> 434,398
<TRADING-ASSETS> 243,400
<INVESTMENTS-HELD-FOR-SALE> 14,620,334
<INVESTMENTS-CARRYING> 1,087,654
<INVESTMENTS-MARKET> 1,135,954
<LOANS> 65,328,665
<ALLOWANCE> 938,008
<TOTAL-ASSETS> 90,453,963
<DEPOSITS> 67,320,150
<SHORT-TERM> 9,777,200
<LIABILITIES-OTHER> 2,438,762
<LONG-TERM> 2,720,373
<COMMON> 2,258,705
0
249,635
<OTHER-SE> 5,689,138
<TOTAL-LIABILITIES-AND-EQUITY> 90,453,963
<INTEREST-LOAN> 6,094,335
<INTEREST-INVEST> 950,452
<INTEREST-OTHER> 56,131
<INTEREST-TOTAL> 7,100,918
<INTEREST-DEPOSIT> 2,290,094
<INTEREST-EXPENSE> 2,971,468
<INTEREST-INCOME-NET> 4,129,450
<LOAN-LOSSES> 457,499
<SECURITIES-GAINS> 27,847
<EXPENSE-OTHER> 3,631,639
<INCOME-PRETAX> 1,910,282
<INCOME-PRE-EXTRAORDINARY> 1,277,863
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,277,863
<EPS-PRIMARY> 2.91
<EPS-DILUTED> 2.89
<YIELD-ACTUAL> 5.37
<LOANS-NON> 349,084
<LOANS-PAST> 254,417
<LOANS-TROUBLED> 5,211
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 897,180
<CHARGE-OFFS> 603,994
<RECOVERIES> 191,211
<ALLOWANCE-CLOSE> 938,008
<ALLOWANCE-DOMESTIC> 709,351
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 228,657
</TABLE>
