UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-7931
FIRST COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0701203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
210 Baronne Street 70112
New Orleans, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (504) 561-1371
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 the number of shares outstanding of each of the Registrant's
classes of common stock as of the last practicable date.
Class Outstanding as of May 10, 1994
- - -------------------------------- --------------------------------
Common Stock, $5.00 par value 26,157,004
<PAGE>
Part I
Item 1. Financial Statements.
The information called for by this item is included in
First Commerce Corporation's (FCC's) 1994 First Quarter
Report to Stockholders filed as Exhibit 19 herewith and
incorporated herein.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information called for by this item is included in
FCC's 1994 First Quarter Report to Stockholders filed
as Exhibit 19 herewith and incorporated herein.
<PAGE>
Part II
Item 1. Legal Proceedings.
Legal proceedings involving FCC were previously
reported in its Annual Report on Form 10-K for the
year ended December 31, 1993. The only change since
that time is related to a lawsuit that was previously
reported. Robert J. Guidry v. Bank of LaPlace,
Patrick Guidry, ABC Insurance Company and First
National Bank of Commerce, No. 89-8267(N). Civil
District Court, Parish of Orleans, Louisiana. The
precedessor federal suit in this matter (subsequently
dismissed) was previously reported in registrant's
Form 10-Q for the quarter ended March 31, 1989.
On April 22, 1994, a jury found that registrant's
wholly-owned subsidiary, First National Bank of
Commerce (FNBC), had breached a state law duty to
plaintiff and found it partially responsible for
plaintiff's loss, which it determined to be $4.54
million, plus interest from April 17, 1989. On May 3,
1994, the court entered judgement against FNBC for
$681,000 plus interest from April 17, 1989. It is
expected that the plaintiff will seek to modify the
judgment or appeal seeking a higher monetary award.
FNBC intends to appeal and believes that it had no
duty to the plaintiff.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
None.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
4.1 - Indenture between FCC and Republic Bank
Dallas, N.A. (now NationsBank of Texas, N.A.),
Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series A
included as Exhibit 4.1 to FCC's Annual Report
on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
4.2 - Indenture between FCC and Republic Bank
Dallas, N.A. (now NationsBank of Texas, N.A.),
Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series B
included as Exhibit 4.2 to FCC's Annual Report
on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
11 - Computation of Earnings Per Share
19 - 1994 First Quarter Report to Stockholders of
First Commerce Corporation
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
First Commerce Corporation
Date May 12, 1994 /s/Thomas L. Callicutt, Jr.
Thomas L. Callicutt, Jr.
Senior Vice President, Controller
and Principal Accounting Officer
EXHIBIT 11
FIRST COMMERCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
1994 1993
------------ ------------
<S> <C> <C>
Primary earnings per share
- - ----------------------------------------------
Weighted average number of common shares
outstanding 26,131,101 24,540,543
Shares from assumed exercise of options,
net of treasury stock method 171,019 274,249
Less shares held in treasury - -
------------ ------------
26,302,120 24,814,792
============ ============
Net income (in thousands) $26,132 $22,415
Preferred dividend requirements 1,087 1,087
------------ ------------
Income applicable to common shares $25,045 $21,328
============ ============
Per common share $ .95 $ .85
============ ============
Fully diluted earnings per share
- - ----------------------------------------------
Weighted average number of shares
outstanding, net of shares held in treasury 26,131,101 24,540,543
Shares from assumed exercise of options,
net of treasury stock method 171,038 284,756
Shares from assumed conversion of dilutive
convertible notes and debentures:
Preferred stock 2,794,064 2,794,149
Convertible debentures 3,148,791 3,154,296
------------ ------------
32,244,994 30,773,744
============ ============
Income applicable to common shares $25,045 $21,328
Expenses that would not have been incurred
if assumed conversions occurred:
Preferred dividend requirements 1,087 1,087
Interest expense, net of tax 1,740 1,769
------------ ------------
Income applicable to common shares plus
expenses that would not have been incurred
if assumed conversions occurred $27,872 $24,184
============ ============
Per common share $.86 $.78
============ ============
</TABLE>
EXHIBIT 19
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- - ----------------------------------------------------------------------------------------------
First Quarter
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(dollars in thousands except per common share data) 1994 1993 % Change
(Restated)***<F3>
- - ----------------------------------------------------------------------------------------------
INCOME DATA
Net income $ 26,132 $ 23,127 13 %
Net interest income (FTE)*<F1> 64,204 64,589 (1)%
- - ----------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Net income - primary $ 0.95 $ 0.85 12 %
Net income - fully diluted 0.86 0.78 10 %
Book value (end of period) 17.14 15.22 13 %
Tangible book value (end of period) 16.55 14.52 14 %
Cash dividends 0.25 0.20 25 %
- - ----------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEET DATA
Securities $ 3,287,273 $ 3,067,975 7 %
Loans and leases**<F2> 2,633,335 2,294,602 15 %
Earning assets 6,011,953 5,715,968 5 %
Total assets 6,597,863 6,230,743 6 %
Deposits 5,276,203 5,212,500 1 %
Stockholders' equity 518,026 439,743 18 %
- - ----------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 1.61 % 1.51 %
Return on average total equity 20.46 % 21.33 %
Return on average common equity 22.17 % 23.54 %
Net interest margin 4.30 % 4.56 %
Efficiency ratio 61.66 % 58.91 %
Overhead ratio 1.96 % 1.98 %
Allowance for loan losses to loans and leases**<F2> 2.40 % 3.45 %
Equity ratio 7.96 % 7.30 %
Leverage ratio 7.81 % 7.00 %
- - ----------------------------------------------------------------------------------------------
<F1>* Based on a 34% tax rate for 1993 and a 35% tax rate for 1994.
<F2>** Net of unearned income
<F3>*** First Commerce Corporation's financial information for 1993 has been restated to
include First Acadiana National Bancshares, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (dollars in thousands except per share data)
1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
(Restated) (Restated) (Restated) (Restated)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 6,597,863 $ 6,487,017 $ 6,379,762 $ 6,269,647 $ 6,230,743
Earning assets 6,011,953 5,946,367 5,855,578 5,750,800 5,715,968
Loans and leases*<F1> 2,633,335 2,552,923 2,437,291 2,350,167 2,294,602
Securities 3,287,273 3,221,279 3,053,247 3,105,153 3,067,975
Deposits 5,276,203 5,181,477 5,159,238 5,183,694 5,212,500
Long-term debt 89,694 94,354 95,453 95,519 95,636
Stockholders' equity 518,026 499,463 480,591 460,115 439,743
- - ------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA
Total interest income $ 97,183 $ 97,608 $ 98,709 $ 97,956 $ 99,061
Net interest income 62,746 61,882 62,102 62,934 63,092
Net interest income (FTE) 64,204 63,359 63,710 64,391 64,589
Provision for loan losses (3,832) (600) (2,233) (2,259) 588
Other income (exclusive of securities transactions) 27,379 26,171 25,087 26,997 24,589
Securities transactions 1,122 (926) 229 73 201
Operating expense 56,472 59,370 54,589 54,585 52,536
Net income 26,132 22,829 23,870 25,388 23,127
- - ------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 1.61 % 1.40 % 1.48 % 1.62 % 1.51 %
Return on average total equity 20.46 % 18.13 % 19.71 % 22.13 % 21.33 %
Return on average common equity 22.17 % 19.63 % 21.49 % 24.36 % 23.54 %
Net interest margin 4.30 % 4.24 % 4.33 % 4.49 % 4.56 %
Overhead ratio 1.96 % 2.22 % 2.00 % 1.92 % 1.98 %
Allowance for loan losses to loans and leases*<F1> 2.40 % 2.55 % 2.82 % 3.18 % 3.45 %
Nonperforming assets to loans and leases*<F1>
plus foreclosed assets 0.98 % 1.22 % 1.57 % 2.09 % 2.56 %
Allowance for loan losses to nonperforming loans 311.07 % 268.26 % 256.67 % 230.69 % 203.38 %
Equity ratio 7.96 % 7.65 % 7.29 % 7.36 % 7.30 %
Leverage ratio 7.81 % 7.63 % 7.49 % 7.30 % 7.00 %
- - ------------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
EARNINGS PER SHARE
Primary $ 0.95 $ 0.83 $ 0.87 $ 0.93 $ 0.85
Fully diluted $ 0.86 $ 0.76 $ 0.80 $ 0.84 $ 0.78
COMMON DIVIDENDS
Cash dividends $ 0.25 $ 0.25 $ 0.20 $ 0.20 $ 0.20
Dividend payout ratio 26.32 % 30.12 % 22.99 % 21.51 % 23.53 %
BOOK VALUES (End of period)
Book value $ 17.14 $ 17.28 $ 16.69 $ 15.98 $ 15.22
Tangible book value $ 16.55 $ 16.66 $ 16.05 $ 15.31 $ 14.52
COMMON STOCK DATA
High stock price $ 28.50 $ 31.80 $ 31.80 $ 32.20 $ 31.00
Low stock price $ 24.00 $ 23.90 $ 28.40 $ 25.40 $ 25.33
Closing stock price $ 24.00 $ 25.13 $ 30.00 $ 29.60 $ 30.00
Trading volume 12,340,097 8,516,265 2,935,716 4,424,135 3,686,304
Number of stockholders (end of period) 7,508 7,604 7,507 7,526 7,528
AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Primary 26,302 26,191 26,171 26,125 26,039
Fully diluted 32,245 32,199 32,181 32,141 32,064
NUMBER OF EMPLOYEES 3,460 3,400 3,343 3,309 3,224
- - ------------------------------------------------------------------------------------------------------------------------------
<F1> *Net of unearned income
</TABLE>
<PAGE>
FINANCIAL REVIEW
FIRST QUARTER IN REVIEW
First Commerce Corporation's (FCOM's) net income for the first
quarter of 1994 was $26.1 million, a 13% increase over 1993's first
quarter and 14% higher than in the fourth quarter of 1993. Fully
diluted earnings per common share were $.86 in the current quarter,
$.78 in 1993's first quarter and $.76 in the fourth quarter.
The $3.0 million increase in net income from the first quarter
of 1993 was primarily due to a $4.4 million swing in the provision
for loan losses, from a positive $.6 million to a negative $3.8
million. Additional contributors to the increase were a $1.1
million net gain on the sale of 30-year mortgage loans and $1.1
million of gains on securities transactions. The higher level of
noninterest income was more than offset by an increase in operating
expenses.
Net income was up $3.3 million (14%) this quarter from the
fourth quarter of last year. The main reason for that increase was
a $3.2 million change in the provision for loan losses, from a
negative $.6 million last quarter to a negative $3.8 million this
quarter. A net gain of $1.1 million on the sale of 30-year
mortgage loans, a $2.0 million increase in net gains on securities
transactions, and lower operating expenses also contributed to the
improvement. Higher income tax expense, due to the fourth
quarter's $3.5 million settlement with the Internal Revenue Service
which reduced tax expense, partially offset these increases in net
income from the fourth quarter to the first quarter.
On January 1, 1994, FCOM adopted SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities." Accordingly,
certain securities were identified as Available for Sale and marked
to market, with the unrealized gain or loss reflected in the equity
section of the consolidated balance sheet, net of tax effects. As
of March 31, 1994, FCOM's unrealized net loss on securities
available for sale, net of the tax effect, was $22.2 million. The
effect of marking to market certain securities required by SFAS 115
has been eliminated from all average securities and earning assets
totals and the calculation of the following ratios: securities
yield, earning asset yield, net interest margin, net interest
spread and overhead ratio.
A more detailed review of FCOM's financial condition and
earnings for the first quarter follows. This review should be read
in conjunction with the consolidated financial statements of First
Commerce Corporation and Subsidiaries, which follows this review
and the Financial Review in the 1993 Annual Report.
EARNINGS ANALYSIS
Net Interest Income
Net interest income (FTE) for the first quarter was $64.2
million, a decline of $385,000 (less than 1%) this quarter from the
same quarter in 1993 but an increase of $845,000 (1%) from the
fourth quarter.
The slight decrease in net interest income from the first
quarter of 1993 was primarily due to a decline in the earning asset
yield of 48 basis points, while the cost of funds fell only 22
basis points. The effect of the decline of yields was partially
offset by higher earning asset levels, mostly in securities and
loans. Loans increased 15% over 1993's first quarter, and were 44%
of earning assets, compared to 40% in the same period of 1993.
Increasing loan demand is a trend that is expected to continue
throughout 1994 and contribute to a more favorable earning asset
mix. Although loan volume increased over 1993's first quarter, new
loans had lower yields than maturing and prepaying loans, which
contributed to the decline in the earning asset yield.
Securities continue to be the largest component of earning
assets and were 55% of earning assets in the current quarter,
compared to 54% in 1993's first quarter. The securities yield
declined 80 basis points from last year's first quarter due to the
reinvestment of maturing securities into lower-yielding ones.
Money market investments declined from 6% of earning assets in the
first quarter of 1993 to 1% in the current quarter. Management
began to deleverage the balance sheet during the first quarter of
1994, resulting in a lower level of money market investments at
quarter end, to reduce dependence on short-term borrowings in a
rising rate environment. The cost of funds declined 22 basis
points from 1993's first quarter due to overall lower interest
rates and the repricing of time deposits. The net interest margin
declined 26 basis points from the first quarter of 1993 to 4.30%
this quarter, reflecting the pressure on the margin during the last
year due to the significant volume of securities reinvestments and
the impact of lower interest rates on loan yields.
<PAGE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME (FTE)*<F1> AND INTEREST RATES
- - -----------------------------------------------------------------------------------------------------------------------------------
First Quarter 1994 First Quarter 1993 Fourth Quarter 1993
(Restated) (Restated)
- - -----------------------------------------------------------------------------------------------------------------------------------
Average Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases**<F2> $ 2,633,335 $ 56,414 8.67 % $2,294,602 $ 52,642 9.29 % $2,552,923 $55,580 8.64 %
Securities
Taxable 3,187,819 38,769 4.90 2,961,158 41,402 5.57 3,113,408 39,075 5.00
Tax-exempt 99,454 2,709 10.90 106,817 3,403 12.74 107,871 2,980 11.05
- - -----------------------------------------------------------------------------------------------------------------------------------
Total securities 3,287,273 41,478 5.08 3,067,975 44,805 5.88 3,221,279 42,055 5.20
- - -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks 21,760 186 3.47 101,919 853 3.39 73,954 617 3.31
Foreign banks***<F3> 51,391 415 3.28 230,879 2,061 3.62 85,984 719 3.32
Federal funds sold and securities purchased
under resale agreements 16,445 125 3.29 16,215 126 3.15 10,610 96 3.59
Trading account securities 1,749 23 5.26 4,378 71 6.59 1,617 18 4.42
- - -----------------------------------------------------------------------------------------------------------------------------------
Total money market investments 91,345 749 3.36 353,391 3,111 3.57 172,165 1,450 3.34
- - -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 6,011,953 $ 98,641 6.63 % 5,715,968 $100,558 7.11 % 5,946,367 $99,085 6.63 %
- - -----------------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Other assets **** <F4> 653,663 594,246 611,045
Allowance for loan losses (67,753) (79,471) (70,395)
- - -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 6,597,863 $6,230,743 $6,487,017
===================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 900,853 $ 3,055 1.38 % $ 871,537 $ 3,113 1.45 % $ 840,065 $ 2,848 1.35 %
Money market investment deposits 745,405 3,606 1.96 793,944 4,124 2.11 775,281 4,224 2.16
Savings and other consumer time deposits 2,035,100 16,921 3.37 2,113,802 19,803 3.80 2,034,845 17,970 3.50
Time deposits $100,000 and over 376,949 3,170 3.41 345,772 3,105 3.64 346,634 3,034 3.47
Foreign branch time deposits 5,718 39 2.77 9,116 60 2.67 10,019 65 2.57
- - -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,064,025 26,791 2.67 4,134,171 30,205 2.96 4,006,844 28,141 2.79
- - -----------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 650,212 4,838 3.02 421,499 2,835 2.73 642,167 4,669 2.88
Long-term debt 89,694 2,808 12.70 95,636 2,929 12.42 94,354 2,916 12.26
- - -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 4,803,931 $ 34,437 2.91 % 4,651,306 $ 35,969 3.14 % 4,743,365 $35,726 2.99 %
- - -----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,212,178 1,078,329 1,174,633
Other liabilities 63,728 61,365 69,556
Stockholders' equity 518,026 439,743 499,463
- - -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities & stockholders' equity $ 6,597,863 $6,230,743 $6,487,017
===================================================================================================================================
Net interest income (FTE)*<F1> and margin $ 64,204 4.30 % $ 64,589 4.56 % $63,359 4.24 %
===================================================================================================================================
Net earning assets and spread $ 1,208,022 3.72 % $1,064,662 3.97 % $1,203,002 3.64 %
===================================================================================================================================
<F1> *Based on a 34% tax rate for periods ended prior to June 30, 1993 and
a 35% tax rate for periods ended after June 30, 1993.
<F2> **Net of unearned income, prior to deduction of allowance for loan losses and including nonaccrual loans.
<F3> ***Principally foreign branches of foreign and domestic banks; other foreign assets and revenues are insignificant
and have therefore not been separately disclosed in this schedule.
<F4>****First quarter 1994 includes mark-to-market adjustment on securities available for sale.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 2. SUMMARY OF CHANGES IN NET INTEREST INCOME (FTE)*<F1>
- - ---------------------------------------------------------------------------------------------------------------------
First Quarter 1994 First Quarter 1994
Compared to First Quarter 1993 Compared to Fourth Quarter 1993
- - ---------------------------------------------------------------------------------------------------------------------
Total Due to Due to Total Due to Due to
Increase Change in Change in Increase Change in Change in
(in thousands) (Decrease) Volume Rate (Decrease) Volume Rate
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Loans and leases $ 3,772 $ 7,416 $ (3,644) $ 834 $ 1,732 $ (898)
Securities
Taxable (2,633) 3,016 (5,649) (306) 921 (1,227)
Tax-exempt (694) (224) (470) (271) (230) (41)
- - ---------------------------------------------------------------------------------------------------------------------
Total securities (3,327) 2,792 (6,119) (577) 691 (1,268)
- - ---------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks (667) (685) 18 (431) (446) 15
Foreign banks (1,646) (1,466) (180) (304) (280) (24)
Federal funds sold and securities purchased
under resale agreements (1) 2 (3) 29 46 (17)
Trading account securities (48) (37) (11) 5 2 3
- - ---------------------------------------------------------------------------------------------------------------------
Total money market investments (2,362) (2,186) (176) (701) (678) (23)
- - ---------------------------------------------------------------------------------------------------------------------
Total interest income $ (1,917) $ 8,022 $ (9,939) $ (444) $ 1,745 $ (2,189)
=====================================================================================================================
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ (58) $ 103 $ (161) $ 207 $ 206 $ 1
Money market investment deposits (518) (244) (274) (618) (158) (460)
Savings and other consumer time deposits (2,882) (717) (2,165) (1,049) 2 (1,051)
Time deposits $100,000 and over 65 270 (205) 136 258 (122)
Foreign branch time deposits (21) (23) 2 (26) (29) 3
- - ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits (3,414) (611) (2,803) (1,350) 279 (1,629)
- - ---------------------------------------------------------------------------------------------------------------------
Short-term borrowings 2,003 1,675 328 169 59 110
Long-term debt (121) (185) 64 (108) (145) 37
- - ---------------------------------------------------------------------------------------------------------------------
Total interest expense $ (1,532) $ 879 $ (2,411) $ (1,289) $ 193 $ (1,482)
- - ---------------------------------------------------------------------------------------------------------------------
Change in net interest income (FTE)*<F1> $ (385) $ 7,143 $ (7,528) $ 845 $ 1,552 $ (707)
=====================================================================================================================
<F1>*Based on a 34% tax rate for periods ended prior to June 30, 1993 and
a 35% tax rate for periods ended after June 30, 1993.
</TABLE>
Net interest income (FTE) increased 1% from the fourth quarter
of 1993, and the net interest margin increased by six basis points
to 4.30%. The primary reasons for the increase in net interest
income were the higher volume of loans and the lower cost of
deposits. Loans increased 3% over 1993's fourth quarter.
Increases in loans and securities were funded by decreases in
lower-yielding money market investments. The yield on earning
assets remained stable between these two quarters, while the cost
of funds declined six basis points due to efforts to stabilize
deposit costs in the rising rate environment of the first quarter
of 1994.
Table 1 presents the average balance sheets, net interest
income (FTE) and interest rates for the first quarters of 1994 and
1993 and the fourth quarter of 1993. Table 2 analyzes the
components of changes in net interest income between these same
periods.
<PAGE>
Provision For Loan Losses
The provision for loan losses was a negative $3.8 million this
quarter, a positive $588,000 in the first quarter of 1993 and a
negative $600,000 in the fourth quarter of 1993. Fewer
nonperforming assets and watch list loans and lower charge-offs
resulted in the significant reduction in the provision for the
current quarter.
A continuation of negative provisions in future quarters
similar in size to the first quarter is unlikely since, among other
things, loan growth is expected to continue. However, if loan
quality improvements similar to the first quarter's continue, the
provision is expected to be minimal or negative for the remainder
of 1994.
For discussion of the allowance for loan losses, net charge-
offs and nonperforming assets, see the Credit Risk Management
section of this Financial Review.
Other Income
Other income was $28.5 million in the first quarter,
representing 15% and 13% increases from the first and fourth
quarters of 1993, respectively. These increases were due primarily
to securities transactions and a gain on the sale of 30-year
mortgage loans.
During the current quarter, FCOM sold the securities portfolio of
First Acadiana National Bancshares, Inc. (FANB) as planned. This
quarter's earnings included a one-time net gain of $1.1 million from
the sales of these securities. Additional securities were sold at a
small net loss in order to decrease funding dependence on short-term
borrowings in a rising rate environment. Total securities transactions
resulted in a net gain of $1.1 million in the first quarter, a gain of
$201,000 in last year's first quarter and a loss of $926,000 in the
fourth quarter.
The current quarter includes a one-time net gain of $1.1
million from the sale of approximately $55 million of 30-year, 1-
4 family mortgage loans to FNMA from the permanent loan portfolio
to accomplish asset/liability management objectives.
Excluding all securities transactions and the gain on the sale
of mortgage loans, other income was $26.3 million in the current
quarter. This improvement of $1.7 million, when compared to the first
quarter of 1993, was due to increases in trust fees ($686,000),
credit card income ($461,000) and ATM fees ($432,000). Trust fees
increased primarily from employee benefit plans and bond
trusteeships related to a higher volume of trust accounts. Credit
card income increased primarily due to higher merchant volumes in
1994 and to a price increase implemented in the second quarter of
1993. ATM fees increased from the prior year due to a new ATM
usage charge to non-customers implemented in the fourth quarter of
1993 plus higher volumes resulting from additional ATMs in service.
Excluding securities transactions for both periods and the
gain on the sale of mortgage loans in the first quarter, other
income was less than 1% higher than in the fourth quarter.
Increases in trust and broker/dealer income were offset by
decreases in service charges on deposit accounts and credit card
income. Trust fees increased 22% primarily on employee benefit
plans and bond trusteeships due to a higher volume of accounts.
Broker/dealer revenue increased 12% primarily due to increased
sales of government securities. Deposit fees and service charges
decreased 4%, due to lower volumes of overdraft charges and
personal account fees. Credit card income decreased 11%, due to
seasonally lower volumes.
In March, 1994, FCOM discontinued sales of annuities through
its brokerage subsidiary due to a recent appellate court decision
classifying annuities as a form of insurance, which cannot be sold
by FCOM. Commissions earned on sales of annuities have been
included in broker/dealer revenue. For 1993, these commissions
were $821,000 and were a major contributor to the increase in
broker/dealer revenue during 1993. During the first quarter of
1994, FCOM earned $153,000 in commissions on the sales of
annuities. A final determination is expected from the Supreme
Court on this issue. However, an unfavorable outcome will not have
a material impact on FCOM's consolidated financial statements in
future periods.
<PAGE>
Operating Expense
Operating expense was $56.5 million in the current quarter,
$52.5 million in the first quarter of 1993 and $59.4 million in the
fourth quarter.
There was an increase of $3.9 million (7%) in operating expense
from the first quarter of 1993 compared to the current quarter. The
largest increase was in personnel expense, which rose $2.9 million
(10%) due to an 7% increase in the number of employees, plus the
effects of merit raises effective March 1, 1993. New employees were
added to improve service levels to support increased volumes. The
$877,000 increase in professional fees was primarily due to consultant
fees related to corporate-wide revenue initiatives. As would be
expected with improved asset quality and reductions in nonperforming
assets, nonperforming assets expense declined $917,000 between the two
quarters.
Operating expense decreased $2.9 million from the fourth
quarter. Of this decrease, $2.0 million was due to one-time
acquisition-related charges in the fourth quarter for FANB. The
remainder of the decrease was due primarily to reduced professional
fees this quarter.
Income Taxes
Income tax expense was $12.5 million this quarter, $11.6 million
in 1993's first quarter and $5.5 million in the fourth quarter. The
increase from the first quarter of 1993 was due to an increase in
pretax income of $3.8 million and an increase in the marginal federal
income tax rate. The $6.9 million (126%) increase from the fourth
quarter was primarily due to the favorable tax settlement of $3.5
million in that quarter and an increase in pretax income from the
fourth to the first quarter of $10.3 million.
See Note 12 of Notes to Consolidated Financial Statements for
additional information on FCOM's effective tax rates and the
composition of changes in income tax expense for the three months
ended March 31, 1994 and 1993.
FINANCIAL CONDITION ANALYSIS
Investments
Upon implementation of SFAS 115 on January 1, 1994, FCOM
classified a substantial portion of its securities portfolio to the
Available for Sale portfolio from the Held to Maturity and Held for
Sale portfolios.
During the quarter, FCOM sold $104.6 million in securities
held by FANB to conform with FCOM's interest rate risk policies.
In addition, securities were sold out of the Available for Sale
portfolio in order to decrease dependence on short-term borrowings
in a rising rate environment and to deleverage the balance sheet.
Securities Held to Maturity
Securities Held to Maturity were $446.7 million at March 31,
1994, compared to $1.5 billion at December 31, 1993 and $2.6
billion a year ago. As of January 1, 1994, $659.2 million of
securities previously classified as Held to Maturity were
reclassified as Available for Sale.
At March 31, 1994, there was a net unrealized gain of $1.5
million, including gross gains of $1.5 million and gross losses of
$3,000, in the securities Held to Maturity portfolio. See Note 3
of Notes to Consolidated Financial Statements for additional
information regarding the Held to Maturity portfolio.
Securities Available for Sale
Securities Available for Sale were $2.6 billion as of March
31, 1994, stated at fair value. At March 31, 1994, there was a net
unrealized loss of $34.2 million, including gross losses of $49.2
million and gross gains of $15.0 million. The net unrealized loss
of $34.2 million had a $22.2 million after-tax impact on
stockholders' equity at the end of the quarter. The unrealized
loss resulted from the increase in interest rates late in the first
quarter, causing a decline in the market values of these
securities.
See Note 4 of Notes to Consolidated Financial Statements for
additional information regarding the Securities Available for Sale.
<PAGE>
Loans
Loans and leases, net of unearned income, were $2.7 billion as of
March 31, 1994, less than 1% lower than year-end. This decline, mainly
in residential mortgage loans, was the result of the sale of $55
million in 30-year residential mortgages to FNMA during the quarter.
These loans were sold at a gain of $1.1 million in the first quarter
for asset/liability management considerations. FCOM will continue to
sell conforming 30-year residential mortgage loans in the future as
they are originated. The decline in credit card loans was due to
seasonality. Compared to December 31, 1993, commercial loans were up
4%, and consumer auto loans increased 10%.
Average loans were 3% and 15% higher than in the fourth quarter
and 1993's first quarter, respectively. These positive trends in loan
demand are expected to continue throughout 1994 as the Louisiana
economy continues to generate quality commercial and consumer loan
demand.
Money Market Investments
As of March 31, 1994, money market investments were $197.8
million. Average money market investments during the first quarter
were $91.3 million, $353.4 million in the first quarter of 1993 and
$172.2 million in the fourth quarter. Money market investments
continue to decline due to the lower rates earned than in prior
periods. Liquidity needs can be served through sales of Securities
Available for Sale, which provide a higher return until funds are
needed.
Deposits
At March 31, 1994, deposits were $5.3 billion. Average
deposits for the first quarter were also $5.3 billion, of which 93%
were core deposits and 7% were time deposits $100,000 and over.
The volume and mix did not change significantly during the quarter
compared to fourth quarter of 1993 or to the first quarter of 1993.
Short-Term Borrowings
During the first quarter, short-term borrowings averaged
$650.2 million, compared to $642.2 million in the fourth quarter
of 1993 and $421.5 million in the first quarter of 1993. As a
percent of average interest-bearing liabilities, short-term
borrowings were 14% in both the first quarter of 1994 and the
fourth quarter of 1993 and 9% in the first quarter of 1993.
Management has begun to deleverage the balance sheet by selling
securities and reducing the level of short-term borrowings. As of
March 31, 1994, short-term borrowings were $407.9 million. During
1994's first quarter, interest rates began to rise. By decreasing
FCOM's usage of short-term borrowings, the cost of funds should be
less variable within this rising interest rate environment.
Asset/Liability Management
Off-Balance Sheet Instruments
Derivative products, which are used to reduce overall interest
rate risk and not for speculative purposes, increased net interest
income by $688,000 this quarter, compared to $452,000 in the fourth
quarter and $345,000 in the first quarter of 1993. Table 3
summarizes the impact of FCOM's derivative products on net interest
income for the first quarter of 1994. All of these interest rate
contracts hedge specific assets or liabilities and qualify for
deferral accounting. Table 4 summarizes the changes in FCOM's
derivative products by type during the current quarter.
See Note 9 of Notes to Consolidated Financial Statements for
additional information regarding off-balance sheet instruments.
<PAGE>
<TABLE>
<CAPTION>
TABLE 3: ANALYSIS OF DERIVATIVE PRODUCT INCOME (EXPENSE)
- - ------------------------------------------------------------------------------------
Option Interest Amortizing
Three months ended March 31, 1994 Based Rate Interest/
(in thousands) Instruments Swaps Callable Swaps Total
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income (expense) accrued $ 300 $ (99) $ 629 $ 830
Premium amortization (142) - - (142)
- - ------------------------------------------------------------------------------------
Interest income (expense) $ 158 $ (99) $ 629 $ 688
- - ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TABLE 4. CHANGES IN DERIVATIVE PRODUCTS (NOTIONAL AMOUNTS)
- - -----------------------------------------------------------------------------------------
Option Interest Amortizing
Based Rate Interest/
(in thousands) Instruments Swaps Callable Swaps Total
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $ 755,000 $ 13,000 $ 250,000 $ 1,018,000
Maturities (200,000) (5,000) - (205,000)
- - -----------------------------------------------------------------------------------------
Balance, March 31, 1994 $ 555,000 $ 8,000 $ 250,000 $ 813,000
- - -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Credit Risk Management
Nonperforming Assets
Nonperforming assets declined $6.7 million, or 20%, during the
quarter. Nonperforming assets were $26.0 million at March 31,
1994, compared to $32.7 million at 1993's year-end and $58.9
million at March 31, 1993. As a percent of loans and foreclosed
assets, nonperforming assets were .98% at quarter-end, 1.22% at
year-end and 2.56% a year ago. Positive trends in nonperforming
assets in 1993 continued into the first quarter of 1994, as shown
in Table 5. Table 6 presents the detail of the changes in
nonperforming assets during the first quarter. The largest
decrease in nonperforming loans during the quarter was primarily
due to full repayments of nonaccrual commercial mortgage loans.
77% of nonperforming loans were contractually current or no more
than 30 days past due at the end of 1994's first quarter, compared
to 73% at year-end. During the quarter, FCOM recovered $912,000
of interest on nonaccrual loans, which was recorded as interest
income.
<TABLE>
<CAPTION>
TABLE 5. NONPERFORMING ASSETS
- - --------------------------------------------------------------------------------------------------------------------------
March 31 December 31
(dollars in thousands) 1994 1993 1993
(Restated)
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans by type
Loans to individuals-residential mortgages $ 4,368 $ 8,416 $ 4,998
Loans to individuals-other 920 1,269 866
Commercial, financial and agricultural 2,256 8,732 3,761
Real estate-commercial mortgages 12,804 19,865 15,613
Real estate-other 176 305 223
Other - 29 -
- - --------------------------------------------------------------------------------------------------------------------------
20,524 38,616 25,461
- - --------------------------------------------------------------------------------------------------------------------------
Foreclosed assets
Other real estate 10,014 28,968 12,667
Other foreclosed assets 120 91 96
Allowance for losses on foreclosed assets (4,616) (8,753) (5,515)
- - --------------------------------------------------------------------------------------------------------------------------
5,518 20,306 7,248
- - --------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 26,042 $ 58,922 $ 32,709
- - --------------------------------------------------------------------------------------------------------------------------
Loans past due 90 days or more and not on nonaccrual status $ 14,902 $ 15,148 $ 12,523
- - --------------------------------------------------------------------------------------------------------------------------
End of period ratios
Nonperforming assets as a percent of loans and leases*<F1> plus foreclosed assets 0.98 % 2.56 % 1.22 %
Allowance for loan losses as a percent of nonperforming loans 311.07 % 203.38 % 268.26 %
Loans and leases past due 90 days or more and not on nonaccrual status
as a percent of loans and leases *<F1> 0.56 % 0.66 % 0.47 %
- - --------------------------------------------------------------------------------------------------------------------------
<F1>*Net of unearned income
</TABLE>
<TABLE>
<CAPTION>
TABLE 6. CHANGES IN NONPERFORMING ASSETS
- - -------------------------------------------------------
(in thousands)
- - -------------------------------------------------------
<S> <C>
Balance at January 1, 1994 $ 32,709
Additions 2,324
Payments and sales (7,969)
Writedowns, charge-offs and foreclosed
assets provisions 85
Loans returned to accrual status (1,107)
- - -------------------------------------------------------
Net change (6,667)
- - -------------------------------------------------------
Balance at March 31, 1994 $ 26,042
- - -------------------------------------------------------
</TABLE>
<PAGE>
Loans and leases past due 90 days or more and not on
nonaccrual status were $14.9 million at March 31, 1994, a $2.4
million increase from year-end related to government-guaranteed
student loans. Watch list loans and foreclosed assets declined 3%
during the first quarter to $152.8 million as of March 31, 1994.
Allowance for Loan Losses
The allowance for loan losses was $63.8 million as of March
31, 1994, a $4.5 million decline since 1993's year-end. As a
percent of loans and leases, the allowance was 2.40% at the end of
this quarter, compared to 2.55% at December 31, 1993 and 3.45% as
of March 31, 1993. Management believes that the allowance is
adequate to cover possible losses in the loan portfolio.
The decrease in net charge-offs from the first and fourth
quarters of 1993 was primarily reflected in net recoveries on
commercial loans. Net charge-offs on credit card loans remain
stable at around 2% of average credit card loans. Table 7 presents
the activity for the first quarters of 1994 and 1993.
<TABLE>
<CAPTION>
TABLE 7. SUMMARY OF LOAN AND LEASE LOSS EXPERIENCE
- - -------------------------------------------------------------------------------------------
Three Months Ended
March 31
- - -------------------------------------------------------------------------------------------
(dollars in thousands) 1994 1993
(Restated)
- - -------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $ 68,302 $ 79,919
Provision for loan losses (3,832) 588
Loans and leases charged to the allowance
Loans to individuals-residential mortgages 78 216
Loans to individuals-other 521 590
Commercial, financial and agricultural 181 1,066
Real estate-commercial mortgages 53 73
Real estate-other - 28
Credit card loans 2,503 2,640
- - -------------------------------------------------------------------------------------------
Total charge-offs 3,336 4,613
- - -------------------------------------------------------------------------------------------
Recoveries on loans and leases previously charged to the allowance
Loans to individuals-residential mortgages 492 230
Loans to individuals-other 369 413
Commercial, financial and agricultural 1,030 885
Real estate-commercial mortgages 233 286
Real estate-other 17 14
Credit card loans 562 491
Other 7 326
- - -------------------------------------------------------------------------------------------
Total recoveries 2,710 2,645
- - -------------------------------------------------------------------------------------------
Net charge-offs 626 1,968
- - -------------------------------------------------------------------------------------------
Balance at end of period $ 63,844 $ 78,539
===========================================================================================
Gross charge-offs as a percent of average loans and leases*<F1> 0.51 % 0.80 %
Recoveries as a percent of gross charge-offs 81.24 % 57.34 %
Net charge-offs as a percent of average loans and leases*<F1> 0.10 % 0.34 %
Allowance for loan losses as a percent of loans and leases*<F1>
at end of period 2.40 % 3.45 %
- - -------------------------------------------------------------------------------------------
<F1>*Net of unearned income
</TABLE>
As discussed in the Nonperforming Assets section above,
favorable loan quality trends have continued into 1994 and resulted
in a negative provision for loan losses in the current quarter.
A negative provision similar in size to this quarter's is unlikely,
since loan growth is expected to continue. However, if loan
quality improvements similar to this quarter's recurred, the
provision could be expected to be minimal or negative in 1994's
remaining quarters.
<PAGE>
Capital and Dividends
With the implementation of SFAS 115 on January 1, 1994,
securities classified as Available for Sale were marked to market,
with the net unrealized gain or loss reflected in the equity
section of the consolidated balance sheets, net of the tax effect.
The effect on equity at the end of the first quarter was an
unrealized loss of $22.2 million, a 4% reduction of equity. The
ratios affected by the SFAS 115 adjustment are return on equity and
the equity ratio, which were reduced 38 and 35 basis points,
respectively, due to this adjustment.
As of March 31, 1994, total stockholders' equity was 7.96% of
assets, and the regulatory leverage ratio was 7.81%, compared to
stockholders' equity of 7.65% and a leverage ratio of 7.63% at
December 31, 1993. Table 8 presents FCOM's risk-based and capital
ratios as of March 31, 1994 and 1993 and December 31, 1993. All
risk-based and capital ratios improved from year-end and remain
well above regulatory minimums.
<TABLE>
<CAPTION>
TABLE 8. RISK-BASED CAPITAL AND CAPITAL RATIOS
- - ---------------------------------------------------------------------------------------
March 31 December 31
(dollars in thousands) 1994 1993 1993
(Restated)
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier 1 capital $ 514,217 $ 434,694 $ 493,529
Tier 2 capital 121,343 123,610 121,921
- - ---------------------------------------------------------------------------------------
Total capital $ 635,560 $ 558,304 $ 615,450
- - ---------------------------------------------------------------------------------------
Risk-weighted assets $ 2,937,319 $ 2,560,564 $ 3,005,545
- - ---------------------------------------------------------------------------------------
Ratios at end of period
Tier 1 capital 17.38 % 16.40 % 16.42 %
Total capital 21.48 % 21.06 % 20.48 %
Stockholders' equity 7.96 % 7.30 % 7.65 %
Tangible stockholders' equity 7.74 % 7.02 % 7.43 %
Leverage ratio 7.81 % 7.00 % 7.63 %
- - ---------------------------------------------------------------------------------------
</TABLE>
The Parent Company's sources of funds to pay dividends are its
net working capital and the dividends it receives from the Banks.
At March 31, 1994, the Parent Company had net working capital of
$54.0 million. The Parent Company could receive dividends, without
prior regulatory approval, of $170.1 million from the Banks, plus
an amount equal to the Banks' adjusted net profits for the
remainder of the year.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (dollars in thousands)
March 31 December 31
- - ---------------------------------------------------------------------------------------------------------------------
1994 1993 1993
(Restated)
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 303,760 $ 265,630 $ 387,548
Interest-bearing deposits in other banks 90,430 275,746 55,422
Securities
Held to maturity (market value $448,231, $2,613,110
and $1,547,086, respectively) 446,697 2,575,647 1,523,638
Available for sale, at market 2,560,192 - -
Held for sale, at lower of aggregate amortized cost or market - 614,497 1,779,927
Trading account securities 466 82 482
Federal funds sold and securities purchased under resale agreements 106,900 11,000 28,600
Loans and leases, net of unearned income of $8,968, $16,962
and $11,822, respectively 2,658,134 2,278,964 2,674,697
Allowance for loan losses (63,844) (78,539) (68,302)
- - ---------------------------------------------------------------------------------------------------------------------
Net loans and leases 2,594,290 2,200,425 2,606,395
- - ---------------------------------------------------------------------------------------------------------------------
Premises and equipment 106,832 97,930 102,230
Accrued interest receivable 54,026 48,669 55,197
Other real estate 5,423 19,914 7,177
Goodwill and other intangibles 15,494 18,177 16,143
Other assets 88,614 78,359 97,526
- - ---------------------------------------------------------------------------------------------------------------------
Total assets $ 6,373,124 $ 6,206,076 $ 6,660,285
=====================================================================================================================
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,287,217 $ 1,106,623 $ 1,196,259
Interest-bearing deposits 4,005,366 4,077,602 4,107,813
Foreign branch interest-bearing deposits 4,979 16,181 5,787
- - ---------------------------------------------------------------------------------------------------------------------
Total deposits 5,297,562 5,200,406 5,309,859
- - ---------------------------------------------------------------------------------------------------------------------
Short-term borrowings 407,868 288,001 678,316
Accrued interest payable 19,261 19,023 16,844
Accounts payable and other accrued liabilities 51,283 150,162 55,890
Long-term debt 89,682 95,613 89,704
- - ---------------------------------------------------------------------------------------------------------------------
Total liabilities 5,865,656 5,753,205 6,150,613
- - ---------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized
Series 1992, 7.25% cumulative convertible, $25 stated value
Issued--2,399,170, 2,399,996 and 2,399,170 shares, respectively 59,979 59,979 59,979
Common stock, $5 par value
Authorized--100,000,000, 30,000,000 and 100,000,000 shares, respectively
Issued--26,144,036, 20,952,067 and 26,062,067 shares, respectively 130,720 104,767 130,311
Capital surplus 137,406 132,744 135,911
Retained earnings 202,797 157,440 184,288
Unearned restricted stock compensation (1,191) (2,059) (817)
Unrealized (loss) on securities available for sale (22,243) - -
- - ---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 507,468 452,871 509,672
- - ---------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 6,373,124 $ 6,206,076 $ 6,660,285
=====================================================================================================================
<F1>The accompanying Notes to Consolidated Financial Statements are an integral part of these
Consolidated Balance Sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands except share amounts)
Three Months Ended
March 31
- - -----------------------------------------------------------------------------------------------
1994 1993
(Restated)
- - -----------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $ 55,890 $ 52,156
Interest on tax-exempt securities 1,883 2,420
Interest and dividends on other taxable securities 38,664 41,380
Interest on money market investments 746 3,105
- - -----------------------------------------------------------------------------------------------
Total interest income 97,183 99,061
- - -----------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 26,791 30,205
Interest on short-term borrowings 4,838 2,835
Interest on long-term debt 2,808 2,929
- - -----------------------------------------------------------------------------------------------
Total interest expense 34,437 35,969
- - -----------------------------------------------------------------------------------------------
NET INTEREST INCOME 62,746 63,092
PROVISION FOR LOAN LOSSES (3,832) 588
- - -----------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 66,578 62,504
- - -----------------------------------------------------------------------------------------------
OTHER INCOME
Deposit fees and service charges 10,642 10,507
Credit card income 5,459 4,998
Trust fee income 3,483 2,797
Broker/dealer revenue 2,202 2,302
Other operating revenue 5,593 3,985
Securities transactions 1,122 201
- - -----------------------------------------------------------------------------------------------
Total other income 28,501 24,790
- - -----------------------------------------------------------------------------------------------
95,079 87,294
OPERATING EXPENSE
Salary expense 25,880 22,683
Employee benefits 5,566 5,829
- - -----------------------------------------------------------------------------------------------
Total personnel expense 31,446 28,512
Net occupancy expense 4,065 3,728
Equipment expense 3,463 2,928
FDIC insurance expense 2,890 2,961
Other operating expense 14,608 14,407
- - -----------------------------------------------------------------------------------------------
Total operating expense 56,472 52,536
- - -----------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX EXPENSE 38,607 34,758
INCOME TAX EXPENSE 12,475 11,631
- - -----------------------------------------------------------------------------------------------
NET INCOME 26,132 23,127
PREFERRED DIVIDEND REQUIREMENTS 1,087 1,087
- - -----------------------------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON SHARES $ 25,045 $ 22,040
===============================================================================================
EARNINGS PER SHARE
Primary $ 0.95 $ 0.85
Fully diluted $ 0.86 $ 0.78
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 26,302,120 26,039,469
Fully diluted 32,244,994 32,063,889
- - -----------------------------------------------------------------------------------------------
<F1>The accompanying Notes to Consolidated Financial Statements are an integral part of these
Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (dollars in thousands except per share data)
- - -----------------------------------------------------------------------------------------------------------------------------------
Unrealized
Unearned (Loss) on
Preferred Restricted Securities
Stock Common Capital Retained Stock Available
Series 1992 Stock Surplus Earnings Compensation for Sale Total
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 (Restated) $59,991 $103,882 $129,758 $ 140,315 $ (606) $ - $ 433,340
Net income - - - 23,127 - - 23,127
Cash dividends:
Series 1992 preferred stock ($.45 per share) - - - (1,087) - - (1,087)
Common stock ($.20 per share) - - - (4,915) - - (4,915)
Conversion of 470 shares of preferred stock
into 437 shares of common stock (12) 2 10 - - - -
Common stock issuances:
FANB Convertible Debt - 65,877 shares - 329 301 - - - 630
Tax-Deferred Savings Plan - 23,409 shares - 117 711 - - - 828
Dividend and Interest Reinvestment and
Stock Purchase Plan - 12,930 shares - 64 334 - - - 398
Stock options exercised, net of shares surrendered
in payment and tax benefit - 36,422 shares - 182 11 - - - 193
Restricted stock issued - 38,255 shares - 191 1,157 - (1,348) - -
Amortization of unearned restricted stock compensation - - - - 357 - 357
Change in estimated restricted stock value - - 462 - (462) - -
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1993 (Restated) $59,979 $104,767 $132,744 $ 157,440 $ (2,059) $ - $ 452,871
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1994 $59,979 $130,311 $135,911 $ 184,288 $ (817) $ - $ 509,672
Net income - - - 26,132 - - 26,132
Cash dividends:
Series 1992 preferred stock ($.45 per share) - - - (1,087) - - (1,087)
Common stock ($.25 per share) - - - (6,536) - - (6,536)
Common stock issuances:
Tax-Deferred Savings Plan - 12,152 shares - 59 249 - - - 308
Dividend and Interest Reinvestment and
Stock Purchase Plan - 20,400 shares - 102 384 - - - 486
Stock options exercised, net of shares surrendered
in payment and tax benefit - 39,835 shares - 199 392 - - - 591
Restricted stock issued - 9,792 shares - 49 222 - (271) - -
Amortization of unearned restricted stock compensation - - - - 145 - 145
Change in estimated restricted stock value - - 248 - (248) - -
Unrealized (loss) on securities - - - - - (22,243) (22,243)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1994 $59,979 $130,720 $137,406 $ 202,797 $ (1,191) $ (22,243) $ 507,468
- - -----------------------------------------------------------------------------------------------------------------------------------
<F1>The accompanying Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands)
- - ------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31
- - ------------------------------------------------------------------------------------------------------------------------
1994 1993
(Restated)
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 26,132 $ 23,127
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses (3,832) 588
Depreciation and amortization 3,085 2,611
Amortization of intangibles 650 726
Deferred income taxes 1,888 322
(Gains) on securities transactions (1,122) (201)
(Gains) on loan sales (1,087) -
Decrease in trading account securities 16 2,294
Decrease in accrued interest receivable 1,171 8,254
Decrease in other assets 19,013 2,967
Increase (decrease) in accrued interest payable 2,417 (13,618)
Increase (decrease) in accounts payable and other accrued liabilities (6,689) 10,177
Other, net (237) 521
- - ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 41,405 37,768
- - ------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits in other banks (35,008) 107,927
Proceeds from sales and calls of securities held to maturity and held for sale 60 41,376
Proceeds from maturities of securities held to maturity and held for sale 321,895 215,983
Purchases of securities held to maturity and held for sale - (285,323)
Proceeds from sales and calls of securities available for sale 449,188 -
Proceeds from maturities of securities available for sale 97,408 -
Purchases of securities available for sale (602,997) -
Net (increase) decrease in federal funds sold and securities purchased
under resale agreements (78,300) 10,423
Net decrease in loans 16,572 50,433
Purchases of premises and equipment (7,781) (4,542)
Proceeds from sales of foreclosed assets 2,571 1,427
Other, net 100 (21)
- - ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 163,708 137,683
- - ------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, NOW accounts,
money market accounts and savings accounts 26,096 (52,475)
Net (decrease) in domestic and foreign time deposits (38,393) (23,853)
Net (decrease) in short-term borrowings (270,448) (192,485)
Payments on long-term debt (22) (61)
Proceeds from sales of common stock 1,150 847
Cash dividends (7,284) (5,971)
- - ------------------------------------------------------------------------------------------------------------------------
NET CASH (USED) BY FINANCING ACTIVITIES (288,901) (273,998)
- - ------------------------------------------------------------------------------------------------------------------------
(DECREASE) IN CASH AND CASH EQUIVALENTS (83,788) (98,547)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 387,548 364,177
- - ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 303,760 $ 265,630
- - ------------------------------------------------------------------------------------------------------------------------
<F1>The accompanying Notes to Consolidated Financial Statements are an integral part of these
Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTE 1
Summary of Significant Accounting Policies
The consolidated financial statements include the
accounts of First Commerce Corporation (FCC) and all of
its subsidiaries. All significant intercompany accounts and
transactions are eliminated.
The consolidated financial statements reflect all
adjustments which are, in the opinion of management,
necessary for a fair presentation of the consolidated
financial condition, results of operations and cash flows for
the interim periods. Adjustments included herein are of a
normal recurring nature and include appropriate estimated
provisions. The consolidated financial statements for the
interim periods have not been independently audited.
However, the interim consolidated financial statements have
been reviewed by FCC's independent public accountants in
accordance with standards for such reviews established by
the American Institute of Certified Public Accountants, and
their review report is included herein.
Certain prior year amounts have been reclassified to
conform with current year financial statement presentation.
The Notes to Consolidated Financial Statements included
herein should be read in conjunction with the Notes to
Consolidated Financial Statements included in FCC's 1993
Annual Report to Stockholders.
Change in Accounting Principle - Debt and Equity Securities
The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 115 (SFAS No.
115), "Accounting for Certain Investments in Debt and Equity
Securities." FCC adopted SFAS No. 115 effective January 1, 1994.
This standard addresses the accounting and reporting for
investments in equity securities that have readily determinable
fair values and for all investments in debt securities. Those
securities classified as Available for Sale will be marked to
market each reporting period, with the net unrealized gain or
loss reflected in the equity section of the consolidated balance
sheets, net of the tax effect.
Change in Accounting Principle - Postemployment Benefits
FASB issued SFAS No. 112. "Employers' Accounting for
Postemployment Benefits." The statement, which FCC adopted
prospectively beginning January 1, 1994, requires the accrual of
expected costs of postemployment benefits during the years that
an eligible employee renders service to an employer.
NOTE 2
Acquisitions
Effective January 1, 1994, First Acadiana National
Bancshares, Inc. (FANB), the parent company of First Acadiana
National Bank, was acquired by FCC for 1,290,145 shares of
common stock. First Acadiana National Bank was merged with
the First National Bank of Lafayette, a wholly owned
subsidiary of FCC. The acquisition was accounted for as a
pooling-of-interests.
All 1993 financial information reported reflects the
pooling-of-interests with FANB. Financial information prior
to 1993 was not restated, since the effect would be immaterial.
NOTE 3
Securities Held to Maturity
An analysis of securities held to maturity follows (in thousands):
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
- - --------------------------------------------------------------------------------------
March 31, 1994
- - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities $ 437,575 $ 1,535 $ - $ 439,110
Obligations of U.S.
agencies and
corporations 55 - (3) 52
Obligations of states and
political subdivisions 260 2 - 262
Equity securities 8,307 - - 8,307
Foreign debt securities 500 - - 500
- - --------------------------------------------------------------------------------------
Total securities held
to maturity $ 446,697 $ 1,537 $ (3) $ 448,231
- - --------------------------------------------------------------------------------------
March 31, 1993 (Restated)
- - --------------------------------------------------------------------------------------
U.S treasury securities $ 1,388,530 $ 20,270 $ - $1,408,800
Obligations of U.S.
agencies and
corporations 1,083,525 9,255 (4,426) 1,088,354
Obligations of states and
political subdivisions 66,041 12,658 - 78,699
Other bonds, notes,
debentures and stock 37,551 64 (358) 37,257
- - --------------------------------------------------------------------------------------
Total securities held
to maturity $ 2,575,647 $ 42,247 $(4,784) $2,613,110
- - --------------------------------------------------------------------------------------
</TABLE>
During the current quarter, proceeds from the calls of securities
held to maturity were $59,822, resulting in gross realized gains
of $5,000.
An analysis of the amortized cost and fair values of the securities held to
maturity by contractual maturity periods follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (LOSSES) Value
- - --------------------------------------------------------------------------------------
March 31, 1994
- - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 437,705 $ 1,533 $ - $ 439,238
One to five years 186 2 (3) 185
Five to ten years 500 - - 500
After ten years 8,306 2 - 8,308
- - --------------------------------------------------------------------------------------
Total securities held
to maturity $ 446,697 $ 1,537 $ (3) $ 448,231
- - --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE 4
Securities Available for Sale
An analysis of securities available for sale follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
- - ---------------------------------------------------------------------------------
March 31, 1994
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities $ 1,072,441 $ 2,611 $ (16,591) $1,058,461
Obligations of U.S.
agencies and
corporations 8,400 112 (11) 8,501
Obligations of states and
political subdivisions 92,403 11,849 (287) 103,965
Mortgage-backed securities 1,391,309 420 (31,476) 1,360,253
Equity securities 29,859 - (847) 29,012
- - ---------------------------------------------------------------------------------
Total securities
available for sale $ 2,594,412 $ 14,992 $ (49,212) $2,560,192
- - ---------------------------------------------------------------------------------
</TABLE>
During the current quarter, proceeds from the sales and calls of securities
available for sale were $449,188,344, resulting in gross realized gains of
$2,455,000 and gross realized losses of $1,338,000. The net holding loss on
available for sale securities included as a separate component of equity was
$22,243,000 at March 31, 1994. The fair value of securities available for sale
is the market value. The market value was determined from quoted prices or
quoted prices of similar securities of comparable risk and maturity where no
quoted market price exists.
An analysis of the amortized cost and fair values of the securities
available for sale by contractual maturity periods follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
- - ---------------------------------------------------------------------------------
March 31, 1994
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 160,442 $ 247 $ (589) $ 160,100
One to five years 940,831 3,468 (16,116) 928,183
Five to ten years 314,270 849 (7,673) 307,446
After ten years 1,178,869 10,428 (24,834) 1,164,463
- - ---------------------------------------------------------------------------------
Total securities
available for sale $ 2,594,412 $ 14,992 $ (49,212) $2,560,192
- - ---------------------------------------------------------------------------------
</TABLE>
NOTE 5
Loans and Leases
The composition of loans and leases was as follows (in thousands):
<TABLE>
<CAPTION>
March 31 December 31
=====================================================================
1994 1993 1993
(Restated)
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
Domestic
Loans to individuals -
Residential mortgages
First lien $ 438,455 $ 284,458 $ 448,054
Junior lien 67,210 69,312 73,308
Loans to individuals - other 691,985 524,838 663,364
Commercial, financial
and agricultural 500,407 450,777 482,677
Real estate 522,835 500,517 521,283
Credit card loans 358,695 362,343 383,932
Other loans 84,424 98,239 106,465
- - ---------------------------------------------------------------------
Total domestic loans
and leases 2,664,011 2,290,484 2,679,083
International
In domestic offices 3,091 5,442 7,436
- - ---------------------------------------------------------------------
Total loans and leases 2,667,102 2,295,926 2,686,519
Unearned income (8,968) (16,962) (11,822)
- - ---------------------------------------------------------------------
Loans and leases, net
of unearned income $ 2,658,134 $ 2,278,964 $ 2,674,697
=====================================================================
</TABLE>
<PAGE>
NOTE 6
Allowance for Loan Losses
A summary analysis of the transactions in the allowance for loan
losses follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31
=========================================================================
1994 1993
(Restated)
- - -------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $ 68,302 $ 79,919
Provision for loan losses (3,832) 588
Loans and leases charged to the allowance (3,336) (4,613)
Recoveries on loans and leases previously
charged to the allowance 2,710 2,645
- - -------------------------------------------------------------------------
Net charge-offs (626) (1,968)
- - -------------------------------------------------------------------------
Balance at end of period $ 63,844 $ 78,539
- - -------------------------------------------------------------------------
Net charge-offs as a percent of
average loans and leases*<F1> 0.10 % 0.34 %
Allowance for loan losses as a percent of
loans and leases*<F1> at end of period 2.40 % 3.45 %
=========================================================================
<F1>*Net of unearned income.
</TABLE>
NOTE 7
Debt
Total cash payments for interest expense on deposits, short-term
borrowings and long-term debt were $32,020,000 and $33,158,000
for the quarters ended March 31, 1994 and 1993, respectively.
NOTE 8
Stockholders' Equity
FCC has a Stock Incentive Plan under which 79,978 options
and 239,935 stock appreciation rights were granted on
February 22, 1994 at a price of $27.50 per share. FCC also
issued 9,792 shares of restricted stock at $27.50 per share on
February 22, 1994 under this plan. Performance-based restricted
stock equal to 50% of restricted stock awarded was also awarded
on February 22, 1994. The restricted stock and related
performance shares will only be earned if certain performance
goals and other conditions are met over the three-year
performance period.
NOTE 9
Off-Balance Sheet Instruments
A summary of obligations under financial instruments which are not
reflected in the Consolidated Balance Sheets follows (in thousands):
<TABLE>
<CAPTION>
March 31
========================================================================
1994 1993
(Restated)
- - ------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit for loans and
leases (excluding credit card plans) $ 745,356 $ 633,268
Commitments to extend credit for credit
card plans $1,233,554 $ 949,441
Commercial letters of credit $ 2,242 $ 3,511
Financial letters of credit $ 43,289 $ 52,932
Performance letters of credit $ 17,474 $ 12,181
Foreign exchange contracts
Commitments to purchase $ 1,323 $ 679
Commitments to sell $ 1,386 $ 8,945
When-issued securities
Commitments to purchase $ 1,900 $ -
Interest rate contracts*<F1>
Cap corridors $ 550,000 $ 100,000
Caps $ 5,000 $ 5,000
Floors $ - $ 300,000
Swaps, including amortizing interest
rate swaps $ 258,000 $ 113,000
Swaptions $ - $ 50,000
- - ------------------------------------------------------------------------
<F1>*Notional principal amounts
</TABLE>
NOTE 10
Contingencies
FCC and its subsidiaries have been named as
defendents in various legal actions arising from normal
business activities in which damages in various amounts
are claimed. The amount, if any, of ultimate liability with
respect to such matters cannot be determined. However,
after consulting with legal counsel, management believes
any such liability will not have a material effect on FCC's
consolidated financial condition or results of operations.
NOTE 11
Employee Benefit Plans
Postretirement Benefits - Certain of FCC's subsidiaries
provide postretirement medical and life insurance to certain
groups of employees who retired in prior years. The estimated
accumulated postretirement benefit obligation (APBO) was
$1,276,600 as of December 31, 1993. The current APBO and
annual expenses calculations assume a 7% discount rate. The
health care cost trend rate assumed in the current calculation
begins at 10% and declines in future periods, with an
underlying inflation rate of 4%. An increase in the health
care cost trend rate of 1% would result in an increase in the
APBO of approximately 7% from $1,276,600 to $1,362,800. FCC's
postretirement benefit expense was $92,000 for the first
quarter of 1994, including expense related to the transition
obligation which is being amortized over 20 years.
Postemployment Benefits - In November 1992, FASB issued SFAS
No. 112, "Employers' Accounting for Postemployment Benefits."
The statement, which FCC adopted prospectively beginning
January 1, 1994, requires the accrual of the expected costs of
postemployment benefits during the years that an eligible
employee renders service to the employer. The estimated
accumulated postemployment benefit obligation (APBO) was
$2,521,400 as of December 31, 1993. The APBO and annual
expense calculations assume a 7% discount rate. FCC's
postemployment benefit expense was $84,000 for the first
quarter of 1994.
<PAGE>
NOTE 12
Income Taxes
Deferred income taxes reflect the tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. There was a net deferred tax asset of $34.32
million and $15.20 million on March 31, 1994 and 1993,
respectively. The major temporary differences which created
deferred tax assets and liabilities as of March 31, 1994 and
1993 are as follows (in thousands):
<TABLE>
<CAPTION>
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
- - ------------------------------------------------------------------------------------------------
1994 1993
(Restated)
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for loan losses $ 22,474 $ - $ 25,491 $ -
Unrealized loss on securities 11,977 - - -
Amortization of intangibles 3,599 - - -
Allowance for losses on foreclosed assets 3,249 - 4,275 -
Nonaccrual loan interest 2,624 - 3,281 -
Employee benefits 1,826 - 1,489 -
Accumulated depreciation - 4,058 - 12,667
Bond accretion - 4,039 - 4,220
Accrued liabilities - 3,947 - 3,432
Other 3,338 2,725 3,335 2,349
- - ------------------------------------------------------------------------------------------------
Total deferred taxes $ 49,087 $ 14,769 $ 37,871 $ 22,668
- - ------------------------------------------------------------------------------------------------
</TABLE>
Current income taxes payable were $9.00 million and $10.53 million on March
31, 1994 and 1993, respectively.
The components of income tax expense under the liability method in the
consolidated statements of income for the three month periods ended March 31
were as follows (in thousands):
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------
1994 1993
(Restated)
- - -------------------------------------------------------------------
<S> <C> <C>
Current $ 10,587 $ 11,398
Deferred 1,888 233
- - -------------------------------------------------------------------
Total $ 12,475 $ 11,631
===================================================================
</TABLE>
Income tax expense related to securities transactions and state and
foreign income taxes are included above and were insignificant in all periods
presented.
The statutory federal income tax rate was increased to 35% from 34% on
August 10, 1993. This increase was made retroactive to January 1, 1993. The
additional income tax expense resulting from this rate change was not recorded
until the quarter ended September 30, 1993. Total income tax expense for the
three months ended March 31, 1994 and 1993 was different from the amount
computed by applying the statutory federal income tax rates to pretax income
as follows (in percentages):
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------
1994 1993
(Restated)
- - ----------------------------------------------------------------------
<S> <C> <C>
Federal income tax expense 35.00 % 34.00 %
Increase (decrease) resulting from:
Benefits attributable to
tax-exempt interest (2.28) (3.04)
Effect of adopting SFAS 109 - 1.75
Nondeductible expenses 0.39 0.68
Other items, net (0.80) 0.07
- - ----------------------------------------------------------------------
Actual income tax expense 32.31 % 33.46 %
- - ----------------------------------------------------------------------
</TABLE>
FCC's cash payments for federal income tax liabilities were $11.22
million and $1.32 million for the three months ended March 31, 1994 and 1993,
respectively.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders
and Board of Directors of
First Commerce Corporation:
We have reviewed the accompanying consolidated balance sheets of
FIRST COMMERCE CORPORATION (a Louisiana corporation) and subsidiaries
as of March 31, 1994 and 1993, and the realted consolidated statements
of income for the three-month periods ended March 31, 1994 and 1993,
and the consolidated statements of changes in stockholders' equity and
cash flows for the three-month periods ended March 31, 1994 and 1993.
These fiancial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the consolidated financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated financial statements referred
to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of First Commerce
Corporation and subsidiaries as of December 31, 1993 and the related
statements of income, changes in stockholders' equity and cash flows
for the year then ended (not presented herein) and, in our report dated
January 12, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of December 31,
1993 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana,
April 13, 1994
