<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
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 Identification No.)
incorporation or organization)
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 November 9, 1994
----- ----------------------------------
Common Stock, $5.00 par value 26,178,643
____________________________
<PAGE>
Part I
Item 1. Financial Statements.
The information called for by this item is included in First Commerce
Corporation's (FCC) 1994 Third Quarter Report to Stockholders on
pages 14 through 21 and is 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
Third Quarter report to Stockholders on pages 5 through 12 and is
incorporated herein.
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 and
on Form 10-Q for the quarter ended March 31, 1994 and for the
quarter ended June 30, 1994. There have been no material
developments since these filings.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
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
13 - 1994 Third Quarter Report to Stockholders of First
Commerce Corporation
27 - Financial Data Schedule
(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: November 10, 1994 /s/Thomas L. Callicutt, Jr.
------------------- -----------------------------
Thomas L. Callicutt, Jr.
Senior Vice President,
Controller and Principal
Accounting Officer
FIRST COMMERCE CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------- -------------------------
1994 1993 1994 1993
(Restated)* (Restated)*
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Primary earnings per share
- ----------------------------------
Weighted average number of common shares
outstanding 26,162,932 25,933,807 26,151,607 25,860,062
Shares from assumed exercise of options,
net of treasury stock method 157,976 237,629 165,682 252,411
Less shares held in treasury - - - -
-------------- ------------ ------------ ------------
26,320,908 26,171,436 26,317,289 26,112,473
============== ============ ============ ============
Net income (in thousands) $9,423 $23,870 $54,634 $72,385
Preferred dividend requirements 1,086 1,087 $3,260 $3,261
-------------- ------------ ------------ ------------
Income applicable to common shares $8,337 $22,783 $51,374 $69,124
============== ============ ============ ============
Per common share $ .32 $ .87 $1.95 $2.65
============== ============ ============ ============
Fully diluted earnings per share**
- ----------------------------------
Weighted average number of shares
outstanding, net of shares held in treasury 26,162,932 25,999,274 26,151,607 25,925,528
Shares from assumed exercise of options,
net of treasury stock method 157,976 238,495 167,556 260,563
Shares from assumed conversion of dilutive
convertible notes and debentures:
Preferred stock - 2,794,065 2,793,412 2,794,093
Convertible debentures - 3,148,791 3,136,181 3,151,385
-------------- ------------ ------------ ------------
26,320,908 32,180,625 32,248,756 32,131,569
============== ============ ============ ============
Income applicable to common shares $8,337 $22,783 $51,374 $69,124
Expenses that would not have been incurred
if assumed conversions occurred:
Preferred dividend requirements - 1,087 3,260 3,261
Interest expense, net of tax - 1,739 5,196 5,222
-------------- ------------ ------------ ------------
Income applicable to common shares plus
expenses that would not have been incurred
if assumed conversions occurred $8,337 $25,609 $59,830 $77,607
============== ============ ============ ============
Per common share $ .32 $ .80 $1.86 $2.42
============== ============ ============ ============
* 1993 data has been restated to reflect the effect of First Acadiana National
Bancshares, Inc.
** For the third quarter of 1994, convertible items were antidilutive;
therefore, the primary and fully diluted eps computations are the same.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended
Third Quarter September 30
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1993 % Change 1994 1993 % Change
(dollars in thousands except per common share data) (Restated)****<F4> (Restated)****<F4>
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME DATA
Net income $ 9,423 $ 23,870 (61)% $ 54,634 $ 72,385 (25)%
Net interest income (FTE)*<F1> 65,951 63,710 4 % 193,504 192,690 - %
- -----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Net income - primary $ 0.32 $ 0.87 (63)% $ 1.95 $ 2.65 (26)%
Net income - fully diluted 0.32 0.80 (60)% 1.86 2.42 (23)%
Book value (end of period) 16.56 16.72 (1)% 16.56 16.72 (1)%
Tangible book value (end of period) 16.01 16.07 - % 16.01 16.07 - %
Cash dividends 0.30 0.20 50 % 0.80 0.60 33 %
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEET DATA
Securities $ 2,954,486 $ 3,053,247 (3)% $ 3,085,178 $ 3,075,256 - %
Loans and leases**<F2> 2,891,730 2,437,291 19 % 2,745,368 2,361,198 16 %
Earning assets 5,871,663 5,855,578 - % 5,890,143 5,774,467 2 %
Total assets 6,374,842 6,379,762 - % 6,432,566 6,293,998 2 %
Deposits 5,184,315 5,159,238 - % 5,219,772 5,184,864 1 %
Stockholders' equity 495,874 480,591 3 % 505,900 460,405 10 %
- -----------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 0.59 % 1.48 % 1.14 % 1.54 %
Return on average total equity 7.54 % 19.71 % 14.44 % 21.02 %
Return on average common equity 6.85 % 21.49 % 14.63 % 23.08 %
Net interest margin 4.47 % 4.33 % 4.39 % 4.46 %
Equity ratio *** <F3> 64.58 % 61.48 % 63.80 % 60.03 %
Overhead ratio *** <F3> 2.23 % 2.00 % 2.13 % 1.97 %
Allowance for loan losses to loans and leases**<F2> 1.87 % 2.82 % 1.87 % 2.82 %
Equity ratio 7.62 % 7.30 % 7.62 % 7.30 %
Leverage ratio 8.24 % 7.50 % 8.24 % 7.50 %
- -----------------------------------------------------------------------------------------------------------------------------------
<F1>* Based on a 35% tax rate.
<F2>** Net of unearned income.
<F3>*** Exclusive of securities transactions.
<F4>**** 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
- --------------------------------------------------------------------------------------------------------------------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
(Restated) (Restated)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 6,374,842 $ 6,320,118 $ 6,597,863 $ 6,487,017 $ 6,379,762
Earning assets 5,871,663 5,788,051 6,011,953 5,946,367 5,855,578
Loans and leases*<F1> 2,891,730 2,707,502 2,633,335 2,552,923 2,437,291
Securities 2,954,486 3,017,831 3,287,273 3,221,279 3,053,247
Deposits 5,184,315 5,201,291 5,276,203 5,181,477 5,159,238
Long-term debt 89,039 89,349 89,694 94,354 95,453
Stockholders' equity 495,874 496,635 518,026 499,463 480,591
- --------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA
Total interest income $ 102,914 $ 96,708 $ 97,183 $ 97,608 $ 98,709
Net interest income 64,516 61,990 62,746 61,882 62,102
Net interest income (FTE) 65,951 63,349 64,204 63,359 63,710
Provision for loan losses (2,550) (4,832) (3,832) (600) (2,233)
Other income (exclusive of securities transactions) 26,979 27,231 27,379 26,171 25,087
Securities transactions (20,576) (6,683) 1,122 (926) 229
Operating expense 60,014 59,011 56,472 59,370 54,589
Net income 9,423 19,079 26,132 22,829 23,870
- --------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 0.59 % 1.21 % 1.61 % 1.40 % 1.48 %
Return on average total equity 7.54 % 15.41 % 20.46 % 18.13 % 19.71 %
Return on average common equity 6.85 % 15.35 % 22.17 % 19.63 % 21.49 %
Net interest margin 4.47 % 4.38 % 4.30 % 4.24 % 4.33 %
Overhead ratio 2.23 % 2.20 % 1.96 % 2.22 % 2.00 %
Allowance for loan losses to loans and leases*<F1> 1.87 % 2.09 % 2.40 % 2.55 % 2.82 %
Nonperforming assets to loans and leases*<F1>
plus foreclosed assets 0.70 % 0.84 % 0.98 % 1.22 % 1.57 %
Allowance for loan losses to nonperforming loans 342.33 % 324.05 % 311.07 % 268.26 % 256.66 %
Equity ratio 7.62 % 7.80 % 7.96 % 7.65 % 7.30 %
Leverage ratio 8.24 % 8.31 % 7.81 % 7.63 % 7.50 %
- --------------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
EARNINGS PER SHARE
Primary $ 0.32 $ 0.68 $ 0.95 $ 0.83 $ 0.87
Fully diluted $ 0.32 $ 0.65 $ 0.86 $ 0.76 $ 0.80
COMMON DIVIDENDS
Cash dividends $ 0.30 $ 0.25 $ 0.25 $ 0.25 $ 0.20
Dividend payout ratio 93.75 % 36.76 % 26.32 % 30.12 % 22.99 %
BOOK VALUES (end of period)
Book value $ 16.56 $ 16.56 $ 17.14 $ 17.28 $ 16.72
Tangible book value $ 16.01 $ 15.99 $ 16.55 $ 16.66 $ 16.07
COMMON STOCK DATA
High stock price $ 28.75 $ 30.00 $ 28.50 $ 31.80 $ 31.80
Low stock price $ 25.75 $ 23.50 $ 24.00 $ 23.90 $ 28.40
Closing stock price $ 26.75 $ 28.25 $ 24.00 $ 25.13 $ 30.00
Trading volume 4,667,900 7,274,300 12,340,097 8,516,265 2,935,716
Number of stockholders (end of period) 7,620 7,607 7,508 7,604 7,507
AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Primary 26,321 26,329 26,302 26,191 26,171
Fully diluted 26,321 32,260 32,245 32,199 32,181
NUMBER OF EMPLOYEES (end of period) 3,467 3,545 3,460 3,400 3,343
- --------------------------------------------------------------------------------------------------------------------------------
<F1> *Net of unearned income.
</TABLE>
<PAGE>
THIRD QUARTER IN REVIEW
First Commerce Corporation's (FCC) net income for the third
quarter of 1994 was $9.4 million. The most significant factor
affecting the third quarter's net income was a $13.3 million loss,
after tax, on the sale of $500 million of Treasury securities. Net
income was $23.9 million in the third quarter of 1993 and $19.1
million in the second quarter of 1994.
Earnings per common share were $.32 on both a primary and
fully diluted basis in the third quarter. Fully diluted earnings
per common share were $.80 and $.65 in last year's third quarter
and the second quarter of 1994, respectively. Primary earnings per
common share were $.87 in 1993's third quarter and $.68 in the
second quarter of this year. Return on average assets was .59% in
this quarter, and return on average total equity was 7.54%.
At the end of the third quarter, FCC sold $500 million in
Treasury securities and purchased a similar amount of Treasury
securities with a 219 basis point higher yield. The resultant
$13.3 million after tax loss on securities transactions will be
recaptured through higher net interest income within 24 months.
Securities transactions resulted in a $.41 negative impact on fully
diluted earnings per share this quarter. During 1994's second
quarter, FCC sold $490 million in Treasury securities and
repurchased a like amount of higher yielding Treasury securities.
These transactions resulted in a $4.3 million after tax loss on
securities transactions during the second quarter.
Net interest income (FTE) was $66.0 million in the third
quarter, 4% higher than in both 1993's third quarter and the second
quarter of this year. FCC's net interest margin increased 14 basis
points from last year and was up 9 basis points from the second
quarter of 1994. Loan growth was the primary contributor to the
improvements from both periods. Average loans were up 19% from
1993's third quarter and increased 7% from the prior quarter.
Additional factors contributing to the increase from the same
period last year were an increase in the yield on securities and a
9% increase in average interest-free funds from the third quarter
of 1993. Increased securities yields, primarily due to the
securities sales during the second quarter, also contributed to the
increase from the second quarter of 1994.
Improving loan quality again resulted in a negative provision
for loan losses. The provision for loan losses was a negative $2.6
million, compared to a negative $2.2 million in 1993's third
quarter and last quarter's negative $4.8 million.
Other income, excluding losses on securities transactions and
a $1.1 million unrealized loss in the current quarter on mortgage
loans held for sale, increased over both prior periods. Higher
volumes of transactions and accounts were the primary causes of the
increases from both periods.
Operating expense increased from both last year's third
quarter and the prior quarter. Investments in personnel and
initiatives for future revenue growth continued, resulting in
higher personnel, equipment and professional fees expenses.
A more detailed review of FCC's financial condition and
earnings for the third 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 third quarter was $66.0
million, 4% higher than in both 1993's third quarter and the second
quarter of 1994. For the first nine months, net interest income
was $193.5 million, an increase of $814,000 (less than 1%) from
1993's first nine months.
Net interest income increased $2.2 million from the third
quarter of 1993. The net interest spread was 3.77%, up 4 basis
points from last year's third quarter, and the net interest margin
was 4.47% this quarter, a 14 basis point improvement over the third
quarter of 1993. These increases were primarily due to a 19%
increase in average loans. Loans were 49% of average earning
assets in the third quarter of 1994, compared to 42% in the same
period of last year. Increasing loan demand, which contributes to
a more favorable earning asset mix, is a trend expected to continue
throughout 1994. Additional factors contributing to the increase
in net interest income were a 7 basis point increase in the yield
on the securities portfolio and a 9% increase in average interest-
free funds. Partially offsetting these favorable trends were a
decrease in the yield on loans and a 134 basis point increase in
the rate on short-term borrowings due to the current quarter's
higher interest rate environment. Although loan volume increased
over 1993's third quarter, new loans had lower yields than maturing
and prepaying loans.
In comparing the second and third quarters of 1994, net
interest income increased $2.6 million this quarter. The net
interest spread was 4 basis points higher than last quarter's and
the net interest margin increased 9 basis points this quarter. The
principal causes of these improvements were a 7% increase in
average loans and higher yields on loans and securities, partially
offset by the repricing of interest-bearing deposits in an
increasing rate environment. The cost of interest-bearing deposits
increased 20 basis points from the prior quarter.
For the nine months, net interest income was $193.5 million,
an $814,000 increase from the comparable 1993 period. The effects
of the 16% growth of average loans and the improved funding mix
were partially offset by lower yields on earning assets. Interest-
free funds grew 11% and funded 21% of average earning assets,
compared to 19% last year. The net interest margin was 4.39% for
the first nine months of 1994, a 7 basis point decrease from the
same period of 1993. The yield on earning assets was 12 basis
points lower due to the impact of lower interest rates on the
repricing of loans and the reinvestment of securities, while the
cost of interest-bearing liabilities increased 1 basis point.
<PAGE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME (FTE)*<F1> AND INTEREST RATES
- ------------------------------------------------------------------------------------------------------------------------------------
Third Quarter 1994 Second Quarter 1994 Third Quarter 1993
(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> $ 2,891,730 $ 62,952 8.65 % $2,707,502 $ 57,605 8.53 %$2,437,291 $55,382 9.02 %
Securities
Taxable 2,858,114 38,511 5.37 2,924,451 37,361 5.12 2,942,865 38,665 5.23
Tax-exempt 96,372 2,605 10.81 93,380 2,551 10.93 110,382 3,222 11.68
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities 2,954,486 41,116 5.54 3,017,831 39,912 5.30 3,053,247 41,887 5.47
- ------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks 1,869 16 3.40 8,611 75 3.49 87,478 742 3.37
Foreign banks***<F3> 11,583 117 4.01 46,659 390 3.35 263,253 2,189 3.30
Federal funds sold and securities purchased
under resale agreements 10,583 120 4.17 5,984 65 4.36 10,310 77 2.95
Trading account securities 1,412 28 7.88 1,464 20 5.55 3,999 40 3.98
- ------------------------------------------------------------------------------------------------------------------------------------
Total money market investments 25,447 281 4.02 62,718 550 3.52 365,040 3,048 3.31
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets 5,871,663 $104,349 7.06 % 5,788,051 $ 98,067 6.79 % 5,855,578 $100,317 6.81 %
- ------------------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Other assets **** <F4> 560,360 594,523 597,731
Allowance for loan losses (57,181) (62,456) (73,547)
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 6,374,842 $6,320,118 $6,379,762
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 813,877 $ 3,024 1.47 % $ 844,015 $ 2,951 1.40 %$ 847,643 $ 2,996 1.40 %
Money market investment deposits 720,226 3,679 2.03 734,624 3,526 1.93 799,983 4,658 2.31
Savings and other consumer time deposits 2,070,091 19,196 3.68 2,035,207 17,506 3.45 2,058,436 18,774 3.62
Time deposits $100,000 and over 391,116 3,834 3.89 375,314 3,364 3.60 327,320 2,860 3.47
Foreign branch time deposits 4,713 49 4.12 5,527 49 3.56 10,027 66 2.61
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,000,023 29,782 2.95 3,994,687 27,396 2.75 4,043,409 29,354 2.88
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 537,546 5,808 4.29 465,089 4,554 3.93 578,344 4,295 2.95
Long-term debt 89,039 2,808 12.51 89,349 2,768 12.43 95,453 2,958 12.29
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 4,626,608 $ 38,398 3.29 % 4,549,125 $ 34,718 3.06 % 4,717,206 $36,607 3.08 %
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,184,292 1,206,604 1,115,829
Other liabilities 68,068 67,754 66,136
Stockholders' equity 495,874 496,635 480,591
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities & stockholders' equity $ 6,374,842 $6,320,118 $6,379,762
====================================================================================================================================
Net interest income (FTE)*<F1> and margin $ 65,951 4.47 % $ 63,349 4.38 % $63,710 4.33 %
====================================================================================================================================
Net earning assets and spread $ 1,245,055 3.77 % $1,238,926 3.73 %$1,138,372 3.73 %
====================================================================================================================================
<F1>* Based on a 35% tax rate.
<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>****All 1994 periods presented include mark-to-market adjustments on securities available for sale.
</TABLE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME (FTE)*<F1> AND INTEREST RATES
- ------------------------------------------------------------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 1994 September 30, 1993 (Restated)
- ------------------------------------------------------------------------------------------------------------------------
Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases**<F2> $ 2,745,368 $ 176,971 8.61 % $ 2,361,198 $ 161,131 9.12 %
Securities
Taxable 2,988,799 114,641 5.12 2,967,332 120,560 6.69
Tax-exempt 96,379 7,865 10.88 107,924 9,972 12.32
- ------------------------------------------------------------------------------------------------------------------------
Total securities 3,085,178 122,506 5.30 3,075,256 130,532 5.67
- ------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks 10,674 277 3.47 90,809 2,281 3.36
Foreign banks***<F3> 36,399 922 3.39 231,157 5,934 3.43
Federal funds sold and securities purchased
under resale agreements 10,983 310 3.80 12,736 281 2.95
Trading account securities 1,541 71 6.16 3,311 129 5.20
- ------------------------------------------------------------------------------------------------------------------------
Total money market investments 59,597 1,580 3.52 338,013 8,625 3.41
- ------------------------------------------------------------------------------------------------------------------------
Total earning assets 5,890,143 $301,057 6.83 % 5,774,467 $300,288 6.95 %
- ------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Other assets **** <F4> 604,663 596,288
Allowance for loan losses (62,240) (76,757)
- ------------------------------------------------------------------------------------------------------------------------
Total assets $ 6,432,566 $ 6,293,998
========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 852,597 $ 9,030 1.42 % $ 858,987 $ 8,923 1.39 %
Money market investment deposits 733,325 10,811 1.97 792,589 12,772 2.15
Savings and other consumer time deposits 2,046,928 53,623 3.50 2,086,550 57,531 3.69
Time deposits $100,000 and over 381,179 10,368 3.64 337,233 8,984 3.56
Foreign branch time deposits 5,316 137 3.45 10,123 198 2.61
- ------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,019,345 83,969 2.79 4,085,482 88,408 2.89
- ------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 550,548 15,200 3.69 489,320 10,378 2.83
Long-term debt 89,359 8,384 12.54 95,536 8,812 12.33
- ------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 4,659,252 $107,553 3.09 % 4,670,338 $107,598 3.08 %
- ------------------------------------------------------------------------------------------------------------------------
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,200,427 1,099,382
Other liabilities 66,987 63,873
Stockholders' equity 505,900 460,405
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities & stockholders' equity $ 6,432,566 $ 6,293,998
========================================================================================================================
Net interest income (FTE)*<F1> and margin $ 193,504 4.39 % $192,690 4.46 %
========================================================================================================================
Net earning assets and spread $ 1,230,891 3.74 % $ 1,104,129 3.87 %
========================================================================================================================
<F1>* Based on a 35% tax rate.
<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>****All 1994 periods presented include mark-to-market adjustments on securities available for sale.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 2. SUMMARY OF CHANGES IN NET INTEREST INCOME (FTE)*<F1>
- --------------------------------------------------------------------------------------------------------------------------
Third Quarter 1994 Third Quarter 1994
Compared to Second Quarter 1994 Compared to Third Quarter 1993 (Restated)
- --------------------------------------------------------------------------------------------------------------------------
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 $ 5,347 $ 3,987 $ 1,360 $ 7,570 $ 9,973 $ (2,403)
Securities
Taxable 1,150 (861) 2,011 (154) (1,129) 975
Tax-exempt 54 81 (27) (617) (390) (227)
- --------------------------------------------------------------------------------------------------------------------------
Total securities 1,204 (780) 1,984 (771) (1,519) 748
- --------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks (59) (58) (1) (726) (733) 7
Foreign banks (273) (341) 68 (2,072) (2,460) 388
Federal funds sold and securities purchased
under resale agreements 55 52 3 43 2 41
Trading account securities 8 (1) 9 (12) (36) 24
- --------------------------------------------------------------------------------------------------------------------------
Total money market investments (269) (348) 79 (2,767) (3,227) 460
- --------------------------------------------------------------------------------------------------------------------------
Total interest income $ 6,282 $ 2,859 $ 3,423 $ 4,032 $ 5,227 $ (1,195)
==========================================================================================================================
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 73 $ (108) $ 181 $ 28 $ (122) $ 150
Money market investment deposits 153 (70) 223 (979) (439) (540)
Savings and other consumer time deposits 1,690 304 1,386 422 107 315
Time deposits $100,000 and over 470 146 324 974 599 375
Foreign branch time deposits - (8) 8 (17) (45) 28
- --------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 2,386 264 2,122 428 100 328
- --------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 1,254 754 500 1,513 (321) 1,834
Long-term debt 40 (10) 50 (150) (202) 52
- --------------------------------------------------------------------------------------------------------------------------
Total interest expense $ 3,680 $ 1,008 $ 2,672 $ 1,791 $ (423) $ 2,214
- --------------------------------------------------------------------------------------------------------------------------
Change in net interest income (FTE)*<F1> $ 2,602 $ 1,851 $ 751 $ 2,241 $ 5,650 $ (3,409)
==========================================================================================================================
<F1>* Based on a 35% tax rate.
</TABLE>
<TABLE>
<CAPTION>
TABLE 2. SUMMARY OF CHANGES IN NET INTEREST INCOME (FTE)*<F1>
- -----------------------------------------------------------------------------------
Nine Months Ended September 30, 1994
Compared to Nine Months Ended
September 30, 1993 (Restated)
- -----------------------------------------------------------------------------------
Total Due to Due to
Increase Change in Change in
(in thousands) (Decrease) Volume Rate
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
EARNING ASSETS
Loans and leases $ 15,840 $ 25,133 $ (9,293)
Securities
Taxable (5,919) 867 (6,786)
Tax-exempt (2,107) (1,007) (1,100)
- -----------------------------------------------------------------------------------
Total securities (8,026) (140) (7,886)
- -----------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks (2,004) (2,077) 73
Foreign banks (5,012) (4,934) (78)
Federal funds sold and securities purchased
under resale agreements 29 (42) 71
Trading account securities (58) (78) 20
- -----------------------------------------------------------------------------------
Total money market investments (7,045) (7,131) 86
- -----------------------------------------------------------------------------------
Total interest income $ 769 $ 17,862 $(17,093)
===================================================================================
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 107 $ (67) $ 174
Money market investment deposits (1,961) (917) (1,044)
Savings and other consumer time deposits (3,908) (1,077) (2,831)
Time deposits $100,000 and over 1,384 1,192 192
Foreign branch time deposits (61) (112) 51
- -----------------------------------------------------------------------------------
Total interest-bearing deposits (4,439) (981) (3,458)
- -----------------------------------------------------------------------------------
Short-term borrowings 4,822 1,413 3,409
Long-term debt (428) (577) 149
- -----------------------------------------------------------------------------------
Total interest expense $ (45) $ (145) $ 100
- -----------------------------------------------------------------------------------
Change in net interest income (FTE)*<F1> $ 814 $ 18,007 $(17,193)
===================================================================================
<F1>* Based on a 35% tax rate.
</TABLE>
Table 1 presents the average balance sheets, net interest
income (FTE) and interest rates for the third quarter of 1994 and
1993, the second quarter of 1994 and the first nine months of 1994
and 1993. Table 2 analyzes the components of changes in net
interest income between these same periods.
Provision For Loan Losses
Loan quality improvements continued this quarter and led to
another negative provision for loan losses and a corresponding
reduction in the allowance for loan losses. Fewer nonperforming
assets and watch list loans and lower net charge-offs, primarily
due to net recoveries on commercial loans, resulted in a negative
$2.6 million provision for loan losses in the current quarter and
a negative $11.2 million in the first nine months of 1994. The
provision for loan losses was a negative $2.2 million in 1993's
third quarter and a negative $3.9 million in the first nine months
of 1993. In the second quarter of 1994, the negative provision was
$4.8 million. The $2.2 million reduction in the negative provision
compared to the second quarter resulted from continued loan growth.
A continuation of negative provisions in future quarters
similar in size to the third quarter is unlikely, since, among
other things, loan growth is expected to continue. However, the
provision may be minimal or negative for the fourth quarter of
1994.
For a discussion of the allowance for loan losses, net charge-
offs and nonperforming assets, see the Credit Risk Management
section of this Financial Review.
<PAGE>
Other Income
Other income, excluding losses on securities transactions of
$20.6 million, was $27.0 million in the third quarter, an 8%
increase over 1993's third quarter and 1% lower than in the second
quarter of 1994.
The 8% improvement over 1993's third quarter was due to
increases in ATM fees related to a new ATM usage charge to non-
customers implemented in the fourth quarter of 1993, plus income from
higher volumes associated with additional machines, credit card
income due to increased merchant fees and new products ($639,000),
trust fees from additional accounts ($633,000) and the
absence of unrealized losses on off-balance sheet interest rate
contracts ($662,000 in 1993's third quarter). Partially offsetting
these increases was a $1.1 million unrealized loss in the current
quarter on mortgage loans held for sale.
Excluding securities transactions and the unrealized loss on
mortgage loans held for sale, other income increased 3% from the
prior quarter. Higher deposit fees and ATM fees were the primary
causes of the increase. Lower trust fees were primarily related to
the receipt of seasonal tax preparation fees in the prior quarter.
For the nine-month period, other income, excluding securities
transactions, was $81.6 million, 6% higher than in 1993. ATM fees
increased $2.6 million from the prior year due to new ATM usage
charges, plus higher volumes resulting from additional machines.
Trust fee income increased $1.9 million, primarily from a higher
volume of bond trusteeships and employee benefit plans. Increased
credit card income resulted from higher merchant volumes and late
charge fee income, plus income related to new products.
Broker/dealer revenue declined $1.2 million due to lower sales
volumes reflecting customers' uncertainty in a rising interest rate
environment. For the nine months, the $1.1 million unrealized loss
on mortgage loans held for sale was offset by $1.3 million in
realized gains on sales of mortgage loans earlier in the year.
Securities transactions resulted in a $20.6 million loss in
the third quarter of 1994 compared to a $229,000 gain in 1993's
third quarter and a $6.7 million loss in the second quarter of
1994. For the nine-month period, securities transactions for 1994
and 1993 were a $26.1 million loss and a $503,000 gain,
respectively.
Operating Expense
Operating expense was $60.0 million for the third quarter, a
10% increase over the same period of 1993 and 2% higher than in the
second quarter of this year. For the nine-month period, operating
expense was $175.5 million, 9% higher than in the same period of
1993.
Compared to the third quarter of 1993, the increase in
operating expense was principally related to increases in personnel
expense ($2.9 million), professional fees ($1.1 million) and
equipment expense ($812,000). A 4% increase in the number of
employees to improve service levels and to staff future revenue-
producing initiatives, as well as 1994 merit increases for existing
employees, caused the higher level of personnel expense. The
increase in professional fees was primarily the result of FCC's
initiative to improve profitability. Increased equipment expense
was primarily related to the branch automation project.
Operating expense in the third quarter rose $1.0 million from
the second quarter of this year due to increased incentive
compensation, a 1% increase in the average number of employees
during the third quarter and higher equipment expense. A decrease
in other operating expense was due to 1994's second quarter
$308,000 loss related to the early termination of several interest
rate contracts.
For the nine-month period, operating expense was $13.8 million
higher than last year primarily due to additional employees, 1994
merit raises for existing employees, higher equipment expense and
professional fees. These increases were partially offset by lower
nonperforming assets expense.
FINANCIAL CONDITION ANALYSIS
Investments
At the end of the third quarter, $500 million of Treasury
securities were sold and replaced with higher-yielding Treasury
securities. These transactions increased the average yield on the
$500 million by 219 basis points while extending the average
maturity on these securities by four months. The average maturity
of the total securities portfolio was extended by less than one
month, to 3.6 years, as a result of these transactions. These
transactions continue FCC's strategy of keeping its securities
portfolio income stream close to a current market yield and follow
similar transactions involving $490 million of Treasury securities
during the prior quarter.
<PAGE>
Investments were 50% of earning assets in the third quarter,
compared to 52% in 1994's second quarter. This decline reflects
continued growth in loans.
Securities Available for Sale
Securities Available for Sale were $2.8 billion, stated at
fair value, at September 30, 1994, compared to $2.6 billion at June
30, 1994. At September 30, 1994, there was a net unrealized loss
of $76.0 million, including gross losses of $88.0 million and gross
gains of $12.0 million, compared to a net unrealized loss of $75.3
million at June 30, 1994. The net unrealized loss of $76.0 million
reduced stockholders' equity by $49.4 million after tax at the end
of the quarter. The unrealized loss resulted from increases in
interest rates beginning late in the first quarter, causing a
decline in the market values of these securities. The unrealized
loss was virtually unchanged from the June 30, 1994 level with the
realized loss recorded on the current quarter's securities sale
offset by the effect of increases in interest rates during the
third quarter.
See Note 4 of Notes to Consolidated Financial Statements for
additional information regarding Securities Available for Sale.
Securities Held to Maturity
Securities Held to Maturity were $112.0 million at September
30, 1994, compared to $314.5 million at June 30, 1994 and $1.6
billion at September 30, 1993. As of January 1, 1994, $757 million
of securities previously classified as Held to Maturity were
reclassified as Available for Sale, which resulted in the decrease
in this securities category when compared to last year. This
reclassification was the result of the implementation of Statement
of Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities." The
decline from June 30, 1994 was related to the reinvestment of
proceeds from maturities of securities in the Held to Maturity
category into the Available for Sale classification.
At September 30, 1994, there was a net unrealized gain of
$70,000, including gross gains of $107,000 and gross losses of
$37,000, 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.
Loans
Loans and leases, net of unearned income, were $3.0 billion as
of September 30, 1994, a 20% increase from one year ago and 6%
higher than June 30. Average loans increased 19% from 1993's third
quarter and were up 7% from the second quarter. Strong loan
growth, across all sectors of the portfolio, is expected to
continue throughout 1994.
The strongest loan growth was in commercial, residential
mortgage and consumer loans from the second quarter to the third
quarter. The increase in consumer loans reflected growth in
automobile and student loans. The increase in automobile loans was
primarily related to consumers' anticipation of higher interest
rates, while student loans reflected seasonal increases.
Commercial loan growth came from all industry categories.
Average loans in the current quarter were higher than in last
year's third quarter with increases in most categories of loans.
The most significant increases were in residential mortgage,
automobile and commercial loans. Strong demand for residential
mortgage and automobile loans was primarily the result of
consumers' anticipation of higher interest rates. Commercial loan
growth was in virtually all industries, including energy, services
and wholesale.
Money Market Investments
As of September 30, 1994, money market investments were $8.3
million. Average money market investments were $25.4 million in the
third quarter of 1994, $365.0 million in the third quarter of 1993
and $62.7 million last quarter. Money market investments decreased
from last year 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.
The decline from 1994's second quarter partially funded the higher
level of loans in the third quarter.
Deposits
At September 30, 1994, deposits were $5.2 billion. Average
deposits for the third quarter were also $5.2 billion, of which 92%
were core deposits and 8% were time deposits $100,000 and over.
The volume and mix did not change significantly during the quarter
compared to the third quarter of 1993 or to the second quarter of
1994.
Short-Term Borrowings
As of September 30, 1994, short-term borrowings were $650.1
million. During the third quarter, short-term borrowings averaged
$537.5 million compared to $578.3 million in the third quarter of
1993 and $465.1 million in 1994's second quarter. The increase in
short-term borrowings as compared to the prior quarter partially
funded the growth in loans experienced in 1994's third quarter.
<PAGE>
<TABLE>
<CAPTION>
TABLE 3: ANALYSIS OF DERIVATIVE PRODUCT INTEREST INCOME (EXPENSE)
- --------------------------------------------------------------------------------------
Option Interest Amortizing
Three months ended September 30, 1994 Based Rate Interest/
(in thousands) Instruments Swaps Callable Swaps Total
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income (expense) $ 123 $ 218 $ (175) $ 166
Premium amortization (7) - - (7)
- --------------------------------------------------------------------------------------
Interest income (expense) $ 116 $ 218 $ (175) $ 159
======================================================================================
Option Interest Amortizing
Nine months ended September 30, 1994 Based Rate Interest/
(in thousands) Instruments Swaps Callable Swaps Total
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 433 $ 103 $ 721 $ 1,257
Premium amortization (285) - - (285)
- --------------------------------------------------------------------------------------
Interest income $ 148 $ 103 $ 721 $ 972
- --------------------------------------------------------------------------------------
</TABLE>
Off-Balance Sheet Investments
Derivative products are used only to reduce overall interest
rate risk. All of these interest rate contracts hedge specific
assets and liabilities and qualify for deferral accounting. Net
interest income from interest rate contracts was $159,000 this
quarter, compared to $286,000 in last year's same quarter and
$125,000 in the second quarter of 1994. Table 3 summarizes the
impact of FCC's derivative products on net interest income for the
third quarter and the first nine months of 1994, while Table 4
summarizes the changes in FCC's derivative products by type during
1994.
See Note 8 of Notes to Consolidated Financial Statements for
additional information regarding off-balance sheet instruments.
Credit Risk Management
Nonperforming Assets
Nonperforming assets declined $2.7 million, or 12%, during the
third quarter. Nonperforming assets were $20.9 million at
September 30, 1994, compared to $39.3 million at September 30, 1993
and $23.7 million at June 30. As a percent of loans and foreclosed
assets, nonperforming assets were .70% at quarter-end, 1.57% at
September 30, 1993 and .84% at the end of the prior quarter.
1993's positive trends in nonperforming assets continued
throughout the first nine months of 1994, as shown in Table 5.
Table 6 presents the detail of the changes in nonperforming assets
during 1994. The decrease in nonperforming assets during the
quarter was primarily due to the repayment of nonaccrual
residential mortgage and commercial mortgage loans and payments on
other real estate. 68% of nonperforming loans were contractually
current or no more than 30 days past due at the end of 1994's third
quarter, unchanged from last quarter. During the quarter, FCC
recovered $456,000 of interest on nonaccrual loans, which was
recorded as interest income.
Loans and leases past due 90 days or more and not on
nonaccrual status were $10.7 million at September 30, 1994, a $1.8
million decrease from the prior quarter. Watch list loans and
foreclosed assets declined 9% during the third quarter to $120.9
million at September 30, 1994.
Allowance for Loan Losses
The allowance for loan losses was $55.9 million as of
September 30, 1994, a $14.4 million decline since September 30,
1993 and a $2.9 million decrease from the second quarter. The
decreases from both periods reflect negative provisions for loan
losses. As a percent of loans and leases, the allowance was 1.87%
at the end of this quarter, compared to 2.82% at September 30, 1993
and 2.09% at June 30, 1994. Management believes that the allowance
is adequate to cover possible losses in the loan portfolio.
Net charge-offs as a percent of average loans were .04% for
both the second and third quarters of 1994, compared to .31% in the
third quarter of 1993. The decline in net charge-offs from the
third quarter of 1993 primarily reflected net recoveries on
commercial loans of $794,000 in the current quarter, compared to
net charge-offs of $228,000 last year. For the nine-month period, of 1994
net recoveries on commercial loans were $2.5 million. Net charge-
offs on credit card loans remain stable at slightly less than 2% of
average credit card loans. Table 7 presents the activity for the
third quarter and the first nine months of 1994 and 1993.
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 1994's third quarter and
first nine-month period.
<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, January 1, 1994 $ 755,000 $ 13,000 $ 250,000 $ 1,018,000
Purchases - 110,000 - 110,000
Maturities (200,000) (5,000) - (205,000)
Sales (455,000) (8,000) - (463,000)
- -----------------------------------------------------------------------------------------
Balance, September 30, 1994 $ 100,000 $ 110,000 $ 250,000 $ 460,000
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 5. NONPERFORMING ASSETS
- --------------------------------------------------------------------------------------------------------------------------
September 30 December 31
(dollars in thousands) 1994 1993 1993
(Restated)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans by type
Loans to individuals-residential mortgages $ 3,322 $ 6,033 $ 4,998
Loans to individuals-other 1,210 903 866
Commercial, financial and agricultural 1,988 5,242 3,761
Real estate-commercial mortgages 9,651 14,932 15,613
Real estate-other 159 275 223
- --------------------------------------------------------------------------------------------------------------------------
16,330 27,385 25,461
- --------------------------------------------------------------------------------------------------------------------------
Foreclosed assets
Other real estate 8,101 18,962 12,667
Other foreclosed assets 99 156 96
Allowance for losses on foreclosed assets (3,600) (7,217) (5,515)
- --------------------------------------------------------------------------------------------------------------------------
4,600 11,901 7,248
- --------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 20,930 $ 39,286 $ 32,709
- --------------------------------------------------------------------------------------------------------------------------
Loans past due 90 days or more and not on nonaccrual status $ 10,715 $ 15,427 $ 12,523
- --------------------------------------------------------------------------------------------------------------------------
End of period ratios
Nonperforming assets as a percent of loans and leases*<F1> plus foreclosed assets 0.70 % 1.57 % 1.22 %
Allowance for loan losses as a percent of nonperforming loans 342.33 % 256.66 % 268.26 %
Loans and leases past due 90 days or more and not on nonaccrual status
as a percent of loans and leases *<F1> 0.36 % 0.62 % 0.47 %
- --------------------------------------------------------------------------------------------------------------------------
<F1>*Net of unearned income.
</TABLE>
Capital and Dividends
Stockholders' equity was $492.7 million at September 30, 1994,
compared to $492.6 million at June 30. With the implementation of
SFAS 115 on January 1, 1994, securities classified as Available for
Sale were marked to market. This adjustment is reflected in
stockholders' equity, net of the tax effect. The effect on equity
was a $49.4 million unrealized loss at September 30, 1994 and a
$48.9 million unrealized loss at June 30, 1994.
The regulatory leverage and risk-based capital ratios do not
include the effect of the accounting required by SFAS 115. Return
on total equity and the equity ratio were affected by the SFAS 115
adjustment. Return on total equity was increased 65 basis points
for the nine-month period and the equity ratio was 70 basis points
lower at quarter-end, due to the SFAS 115 adjustment.
As of September 30, 1994, the equity ratio was 7.62% of
assets, and the regulatory leverage ratio was 8.24%, compared to an
equity ratio of 7.80% and a leverage ratio of 8.31% at June 30,
1994. Table 8 presents FCC's risk-based and capital ratios as of
September 30, 1994 and 1993 and December 31, 1993. All risk-based
and capital ratios remain well above regulatory minimums.
The Parent Company's sources of funds to pay dividends are its
net working capital and the dividends it receives from the Banks.
At September 30, 1994, the Parent Company had net working capital
of $48.8 million. The Parent Company could receive dividends,
without prior regulatory approval, of $183.4 million from the Banks
plus an amount equal to the Banks' adjusted net profits for the
remainder of the year.
PENDING ACQUISITIONS
FCC has three acquisitions pending in its Lafayette, Lake
Charles and New Orleans market areas. These acquisitions would
increase assets by approximately $500 million. The mergers are
subject to regulatory approval and certain other conditions. If
all conditions are met, it is expected that the mergers would be
completed in the first quarter of 1995.
<TABLE>
<CAPTION>
TABLE 6: CHANGES IN NONPERFORMING ASSETS
- ---------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
(in thousands) September 30, 1994 September 30, 1994
- ---------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $ 23,677 $ 32,709
Additions 3,123 8,234
Payments and sales (5,428) (17,942)
Writedowns, charge-offs and foreclosed
assets provisions (317) (566)
Loans returned to accrual status (125) (1,505)
- ---------------------------------------------------------------------------------
Net change (2,747) (11,779)
- ---------------------------------------------------------------------------------
Balance at end of period $ 20,930 $ 20,930
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 7. SUMMARY OF LOAN AND LEASE LOSS EXPERIENCE
- ----------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
- ----------------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
(dollars in thousands) (Restated) (Restated)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 58,755 $ 74,436 $ 68,302 $ 79,919
Provision for loan losses (2,550) (2,233) (11,214) (3,904)
Loans and leases charged to the allowance
Loans to individuals-residential mortgages 105 177 190 556
Loans to individuals-other 549 522 1,623 1,577
Commercial, financial and agricultural 87 937 422 2,467
Real estate-commercial mortgages 81 133 143 467
Real estate-other - 15 - 43
Credit card loans 2,039 2,277 6,783 7,383
Other - 26 - 26
- ----------------------------------------------------------------------------------------------------------------------
Total charge-offs 2,861 4,087 9,161 12,519
- ----------------------------------------------------------------------------------------------------------------------
Recoveries on loans and leases previously charged to the allowance
Loans to individuals-residential mortgages 185 306 894 836
Loans to individuals-other 327 373 1,110 1,155
Commercial, financial and agricultural 881 709 2,878 2,242
Real estate-commercial mortgages 310 155 642 540
Real estate-other 171 18 543 70
Credit card loans 675 564 1,892 1,561
Other 10 46 17 387
- ----------------------------------------------------------------------------------------------------------------------
Total recoveries 2,559 2,171 7,976 6,791
- ----------------------------------------------------------------------------------------------------------------------
Net charge-offs 302 1,916 1,185 5,728
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period $ 55,903 $ 70,287 $ 55,903 $ 70,287
======================================================================================================================
Gross charge-offs as a percent of average loans and leases*<F1> 0.40 % 0.67 % 0.44 % 0.71 %
Recoveries as a percent of gross charge-offs 89.44 % 53.12 % 87.06 % 54.25 %
Net charge-offs as a percent of average loans and leases*<F1> 0.04 % 0.31 % 0.06 % 0.32 %
Allowance for loan losses as a percent of loans and leases*<F1>
at end of period 1.87 % 2.82 % 1.87 % 2.82 %
- ----------------------------------------------------------------------------------------------------------------------
<F1>*Net of unearned income.
</TABLE>
<TABLE>
<CAPTION>
TABLE 8. RISK-BASED CAPITAL AND CAPITAL RATIOS
- ---------------------------------------------------------------------------------------
September 30 December 31
(dollars in thousands) 1994 1993 1993
(Restated)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier 1 capital $ 527,697 $ 477,283 $ 493,529
Tier 2 capital 124,385 126,194 121,921
- ---------------------------------------------------------------------------------------
Total capital $ 652,082 $ 603,477 $ 615,450
- ---------------------------------------------------------------------------------------
Risk-weighted assets $ 3,262,862 $ 2,882,443 $ 3,005,545
- ---------------------------------------------------------------------------------------
Ratios at end of period
Tier 1 capital 16.17 % 16.56 % 16.42 %
Total capital 19.98 % 20.94 % 20.48 %
Equity ratio 7.62 % 7.30 % 7.65 %
Tangible equity ratio 7.41 % 7.07 % 7.43 %
Leverage ratio 8.24 % 7.50 % 7.63 %
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (dollars in thousands)
September 30 December 31
- ----------------------------------------------------------------------------------------------------------------------
1994 1993 1993
(Restated)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 336,527 $ 423,631 $ 387,548
Interest-bearing deposits in other banks 6,138 335,434 55,422
Securities
Held to maturity (market value $112,108, $1,645,319
and $1,547,086, respectively) 112,038 1,611,460 1,523,638
Available for sale, at market 2,794,904 - -
Held for sale, at lower of aggregate amortized cost or market - 1,717,614 1,779,927
Trading account securities 134 150 482
Federal funds sold and securities purchased under resale agreements 2,000 25,610 28,600
Loans and leases, net of unearned income of $5,828, $13,699
and $11,822, respectively) 2,985,840 2,488,104 2,674,697
Allowance for loan losses (55,903) (70,287) (68,302)
- ----------------------------------------------------------------------------------------------------------------------
Net loans and leases 2,929,937 2,417,817 2,606,395
- ----------------------------------------------------------------------------------------------------------------------
Premises and equipment 111,474 99,312 102,230
Accrued interest receivable 56,206 49,700 55,197
Other real estate 4,526 11,770 7,177
Goodwill and other intangibles 14,430 16,725 16,143
Other assets 98,128 54,099 97,526
- ----------------------------------------------------------------------------------------------------------------------
Total assets $ 6,466,442 $ 6,763,322 $ 6,660,285
======================================================================================================================
LIABILITIES
Domestic deposits
Noninterest-bearing deposits $ 1,185,871 $ 1,129,205 $ 1,196,259
Interest-bearing deposits 3,978,848 3,983,970 4,107,813
Foreign branch interest-bearing deposits 3,181 14,224 5,787
- ----------------------------------------------------------------------------------------------------------------------
Total deposits 5,167,900 5,127,399 5,309,859
- ----------------------------------------------------------------------------------------------------------------------
Short-term borrowings 650,091 778,577 678,316
Accrued interest payable 20,013 18,098 16,844
Accounts payable and other accrued liabilities 46,727 249,817 55,890
Long-term debt 89,010 95,423 89,704
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 5,973,741 6,269,314 6,150,613
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized
Series 1992, 7.25% cumulative convertible, $25 stated value
Issued--2,398,170, 2,399,170 and 2,399,170 shares, respectively 59,954 59,979 59,979
Common stock, $5 par value
Authorized--100,000,000 shares
Issued--26,162,932, 21,061,460 and 26,062,067 shares, respectively 130,815 105,310 130,311
Capital surplus 137,577 135,438 135,911
Retained earnings 214,702 194,649 184,288
Unearned restricted stock compensation (921) (1,368) (817)
Net unrealized (loss) on securities available for sale (49,426) - -
- ----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 492,701 494,008 509,672
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 6,466,442 $ 6,763,322 $ 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 per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
- --------------------------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
(Restated) (Restated)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $ 62,412 $ 54,843 $ 175,388 $ 159,593
Interest on tax-exempt securities 1,811 2,182 5,479 7,007
Interest and dividends on other taxable securities 38,414 38,638 114,366 120,510
Interest on money market investments 277 3,046 1,572 8,616
- --------------------------------------------------------------------------------------------------------------------------------
Total interest income 102,914 98,709 296,805 295,726
- --------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 29,782 29,354 83,969 88,408
Interest on short-term borrowings 5,808 4,295 15,200 10,378
Interest on long-term debt 2,808 2,958 8,384 8,812
- --------------------------------------------------------------------------------------------------------------------------------
Total interest expense 38,398 36,607 107,553 107,598
- --------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 64,516 62,102 189,252 188,128
PROVISION FOR LOAN LOSSES (2,550) (2,233) (11,214) (3,904)
- --------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 67,066 64,335 200,466 192,032
- --------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Deposit fees and service charges 11,382 11,012 32,820 32,462
Credit card fee income 6,231 5,592 17,885 16,274
Trust fee income 3,350 2,717 10,381 8,505
Broker/dealer revenue 1,754 2,135 5,631 6,803
Other operating revenue 4,262 3,631 14,872 12,629
Securities transactions (20,576) 229 (26,137) 503
- --------------------------------------------------------------------------------------------------------------------------------
Total other income 6,403 25,316 55,452 77,176
- --------------------------------------------------------------------------------------------------------------------------------
73,469 89,651 255,918 269,208
OPERATING EXPENSE
Salary expense 27,320 24,468 79,490 71,038
Employee benefits 5,503 5,418 16,793 16,723
- --------------------------------------------------------------------------------------------------------------------------------
Total personnel expense 32,823 29,886 96,283 87,761
Net occupancy expense 4,355 4,004 12,631 11,651
Equipment expense 4,154 3,342 11,543 9,439
FDIC insurance expense 2,909 2,892 8,689 8,814
Other operating expense 15,773 14,465 46,351 44,045
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expense 60,014 54,589 175,497 161,710
- --------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX EXPENSE 13,455 35,062 80,421 107,498
INCOME TAX EXPENSE 4,032 11,192 25,787 35,113
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME 9,423 23,870 54,634 72,385
PREFERRED DIVIDEND REQUIREMENTS 1,086 1,087 3,260 3,261
- --------------------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON SHARES $ 8,337 $ 22,783 $ 51,374 $ 69,124
================================================================================================================================
EARNINGS PER SHARE
Primary $ 0.32 $ 0.87 $ 1.95 $ 2.65
Fully diluted $ 0.32 $ 0.80 $ 1.86 $ 2.42
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 26,320,908 26,171,436 26,317,289 26,112,473
Fully diluted 26,320,908 32,180,625 32,248,756 32,131,569
- --------------------------------------------------------------------------------------------------------------------------------
<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)
- ------------------------------------------------------------------------------------------------------------------------------------
Net
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 - - - 72,385 - - 72,385
Cash dividends:
Series 1992 preferred stock ($1.36 per share) - - - (3,261) - - (3,261)
Common stock ($.60 per share) - - - (14,790) - - (14,790)
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-63,894 shares - 319 1,980 - - - 2,299
Dividend and Interest Reinvestment and
Stock Purchase Plan- 38,934 shares - 195 1,133 - - - 1,328
Stock options exercised, net of shares surrendered
in payment and tax benefit - 78,397 shares - 392 637 - - - 1,029
Restricted stock issued - 38,255 shares - 191 1,157 - (1,348) - -
Amortization of unearned restricted stock compensation - - - - 1,048 - 1,048
Change in estimated restricted stock value - - 462 - (462) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1993 (Restated) $59,979 $105,310 $135,438 $194,649 $ (1,368) $ - $494,008
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1994 $59,979 $130,311 $135,911 $184,288 $ (817) $ - $509,672
Net income - - - 54,634 - - 54,634
Cash dividends:
Series 1992 preferred stock ($1.36 per share) - - - (3,260) - - (3,260)
Common stock ($.80 per share) - - - (20,925) - - (20,925)
Conversion of 1,000 shares of preferred stock
into 1,164 shares of common stock (25) 6 19 - - - -
Common stock issuances:
Tax-Deferred Savings Plan- 12,152 shares - 59 249 - - - 308
Dividend and Interest Reinvestment and
Stock Purchase Plan- 20,400 shares - 102 385 (35) - - 452
Stock options exercised, net of shares surrendered
in payment and tax benefit- 57,567 shares - 288 533 - - - 821
Restricted stock issued- 9,792 shares - 49 222 - (271) - -
Amortization of unearned restricted stock compensation - - - - 425 - 425
Change in estimated restricted stock value - - 258 - (258) - -
Net unrealized (loss) on securities available for sale - - - - - (49,426) (49,426)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1994 $59,954 $130,815 $137,577 $214,702 $ (921) $(49,426) $492,701
- ------------------------------------------------------------------------------------------------------------------------------------
<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 (in thousands)
- ------------------------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30
- ------------------------------------------------------------------------------------------------------------------------
1994 1993
(Restated)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 54,634 $ 72,385
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses (11,214) (3,904)
Depreciation and amortization 10,314 8,167
Amortization of intangibles 1,713 2,178
Deferred income taxes 5,743 2,594
Net loss (gain) from securities transactions 26,137 (503)
Decrease in trading account securities 348 2,226
(Increase) decrease in accrued interest receivable (1,009) 7,286
Decrease in other assets 22,255 8,407
Increase in accrued interest payable 3,169 2,268
Increase (decrease) in accounts payable and other accrued liabilities (12,472) 10,462
Other, net 543 1,298
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 100,161 112,864
- ------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net decrease in interest-bearing deposits in other banks 49,284 48,246
Proceeds from sales and calls of securities held to maturity and held for sale 65 210,309
Proceeds from maturities of securities held to maturity and held for sale 656,404 850,097
Purchases of securities held to maturity and held for sale (14) (1,127,430)
Proceeds from sales and calls of securities available for sale 1,423,012 -
Proceeds from maturities of securities available for sale 200,208 -
Purchases of securities available for sale (1,986,318) -
Net (increase) decrease in federal funds sold and securities purchased
under resale agreements 26,600 (5,624)
Net (increase) in loans (313,836) (163,537)
Purchases of premises and equipment (20,002) (11,776)
Proceeds from sales of foreclosed assets 5,182 10,907
Other, net 427 38
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 41,012 (188,770)
- ------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net (decrease) in demand deposits, NOW accounts,
money market accounts and savings accounts (203,103) (40,585)
Net increase (decrease) in domestic and foreign time deposits 61,144 (108,904)
Net increase (decrease) in short-term borrowings (28,225) 299,454
Payments on long-term debt (694) (251)
Proceeds from sales of common stock 1,219 3,692
Cash dividends (22,535) (18,046)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (192,194) 135,360
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (51,021) 59,454
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 387,548 364,177
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 336,527 $ 423,631
- ------------------------------------------------------------------------------------------------------------------------
<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.
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
- ---------------------------------------------------------------------------------------------------
September 30, 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury and agency securities $ 103,028 $ (37) $ (37) $ 103,097
Obligations of states and
political subdivisions 191 - - 191
Equity securities 8,319 1 - 8,320
Other debt securities 500 - - 500
- ---------------------------------------------------------------------------------------------------
Total securities held
to maturity $ 112,038 $ 107 $ (37) $ 112,108
- ---------------------------------------------------------------------------------------------------
September 30, 1993 (Restated)
- ---------------------------------------------------------------------------------------------------
U.S treasury securities $ 830,725 $ 10,117 $ - $ 840,842
Obligations of U.S.
agencies and
corporations 692,289 10,984 (194) 703,079
Obligations of states and
political subdivisions 70,549 12,929 - 83,478
Other bonds, notes,
debentures and stock 17,897 39 (16) 17,920
- ---------------------------------------------------------------------------------------------------
Total securities held
to maturity $ 1,611,460 $ 34,069 $ (210) $ 1,645,319
- ---------------------------------------------------------------------------------------------------
</TABLE>
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
- ---------------------------------------------------------------------------------------------------
September 30, 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 103,063 $ 106 $ (34) $ 103,135
One to five years 156 - (3) 153
Five to ten years 500 - - 500
After ten years 8,319 1 - 8,320
- ---------------------------------------------------------------------------------------------------
Total securities held
to maturity $ 112,038 $ 107 $ (37) $ 112,108
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE 4
Securities Available for Sale
An analysis of securities held for sale follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
- -------------------------------------------------------------------------------------------------------
September 30, 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury and agency securities
(excluding mortgage-backed agencies $ 1,383,071 $ 1,185 $ (10,887) $ 1,373,369
Mortgage-backed securities 1,364,338 92 (75,540) 1,288,890
Obligations of states and
political subdivisions 97,023 10,706 (1,014) 106,715
Equity securities 26,512 0 (582) 25,930
- -------------------------------------------------------------------------------------------------------
Total securities
available for sale $ 2,870,944 $ 11,983 $ (88,023) $ 2,794,904
- -------------------------------------------------------------------------------------------------------
</TABLE>
During the current quarter, proceeds from the sales and calls of securities
available for sale were $486,041,000, resulting in gross realized losses of
$20,537,000. The net unrealized loss on available for sale securities, net of
the tax effect, included as a separate component of equity was $49,426,000 at
September 30, 1994. The fair value of securities available for sale is the
market value. The fair 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
- -------------------------------------------------------------------------------------------------------
September 30, 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 45,725 $ 483 $ (5) $ 46,203
One to five years 1,419,871 1,407 (12,641) 1,408,637
Five to ten years 243,498 1,002 (13,197) 231,303
After ten years 1,161,850 9,091 (62,180) 1,108,761
- -------------------------------------------------------------------------------------------------------
Total securities
available for sale $ 2,870,944 $ 11,983 $ (88,023) $ 2,794,904
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE 5
Loans and Leases
The composition of loans and leases was as follows (in thousands):
<TABLE>
<CAPTION>
September 30 December 31
=====================================================================
1994 1993 1993
(Restated)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Domestic
Loans to individuals -
Residential mortgages
First lien $ 500,090 $ 362,721 $ 448,054
Junior lien 70,475 85,453 73,308
Loans to individuals - other 821,330 625,478 663,364
Commercial, financial
and agricultural 593,047 474,231 482,677
Real estate 539,297 493,001 521,283
Credit card loans 385,303 364,427 383,932
Other loans 78,101 92,210 106,465
- ---------------------------------------------------------------------
Total domestic loans
and leases 2,987,643 2,497,521 2,679,083
International
In domestic offices 4,025 4,282 7,436
- ---------------------------------------------------------------------
Total loans and leases 2,991,668 2,501,803 2,686,519
Unearned income (5,828) (13,699) (11,822)
- ---------------------------------------------------------------------
Loans and leases, net
of unearned income $ 2,985,840 $ 2,488,104 $ 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
September 30
=============================================================================
1994 1993
(Restated)
- -----------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $ 58,755 $ 74,436
Provision for loan losses (2,550) (2,233)
Loans and leases charged to the allowance (2,861) (4,087)
Recoveries on loans and leases previously
charged to the allowance 2,559 2,171
- -----------------------------------------------------------------------------
Net charge-offs (302) (1,916)
- -----------------------------------------------------------------------------
Balance at end of period $ 55,903 $ 70,287
- -----------------------------------------------------------------------------
Net annualized charge-offs as a percent of
average loans and leases*<F1> 0.04 % 0.31 %
Allowance for loan losses as a percent of
loans and leases*<F1> at end of period 1.87 % 2.82 %
=============================================================================
<F1>*Net of unearned income.
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30
=============================================================================
1994 1993
(Restated)
- -----------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $ 68,302 $ 79,919
Provision for loan losses (11,214) (3,904)
Loans and leases charged to the allowance (9,161) (12,519)
Recoveries on loans and leases previously
charged to the allowance 7,976 6,791
- -----------------------------------------------------------------------------
Net charge-offs (1,185) (5,728)
- -----------------------------------------------------------------------------
Balance at end of period $ 55,903 $ 70,287
- -----------------------------------------------------------------------------
Net annualized charge-offs as a percent of
average loans and leases*<F1> 0.06 % 0.32 %
Allowance for loan losses as a percent of
loans and leases*<F1> at end of period 1.87 % 2.82 %
=============================================================================
<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 $104,384,000 and $105,712,000
for the nine-month periods ended September 30, 1994 and 1993,
respectively.
NOTE 8
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>
September 30
=======================================================================
1994 1993
(Restated)
- -----------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit for loans and
leases (excluding credit card plans) $ 918,275 $ 611,025
Commitments to extend credit for credit
card plans $1,305,800 $ 978,763
Commercial letters of credit $ 3,917 $ 4,445
Financial letters of credit $ 52,508 $ 48,882
Performance letters of credit $ 16,956 $ 15,882
Foreign exchange contracts
Commitments to purchase $ 572 $ 2,938
Commitments to sell $ 486 $ 2,863
When-issued securities
Commitments to purchase $ 25 $ -
Commitments to sell $ 25 $ -
Interest rate contracts*<F1>
Cap corridors $ 100,000 $ -
Caps $ - $ 5,000
Floors $ - $ 100,000
Swaps, including amortizing interest
rate swaps $ 360,000 $ 563,000
- -----------------------------------------------------------------------
<F1>*Notional principal amounts.
</TABLE>
NOTE 9
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.
<PAGE>
NOTE 10
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 were net deferred
tax assets of $45.10 million and $12.92 million on September 30, 1994 and 1993,
respectively. The major temporary differences which created deferred tax
assets and liabilities as of September 30, 1994 and 1993 are as follows (in
thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
September 30, 1994 September 30, 1993 (Restated)
- --------------------------------------------------------------------------------------------------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unrealized loss on securities $ 26,614 $ - $ - $ -
Allowance for loan losses 19,706 - 23,510 -
Alowance for losses on foreclosed assets 3,302 - 4,654 -
Amortization of intangibles 3,137 - - -
Nonaccrual loan interest 2,862 - 3,740 -
Employee benefits 2,087 - 1,670 -
Accumulated depreciation - 4,208 - 4,144
Bond accretion - 4,180 - 3,843
Accrued liabilities - 3,944 - 12,820
Other 3,906 4,181 2,860 2,709
- --------------------------------------------------------------------------------------------------------------------
Total deferred taxes $ 61,614 $ 16,513 $ 36,434 $ 23,516
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The components of income tax expense under the liability method in the
consolidated statements of income for the three and nine-month periods ended
September 30 were as follows (in thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
- ------------------------------------------------------------------------------------------------
1994 1993 1994 1993
(Restated) (Restated)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current $ 1,641 $ 10,545 $ 20,044 $ 32,519
Deferred 2,391 647 5,743 2,594
- ------------------------------------------------------------------------------------------------
Total $ 4,032 $ 11,192 $ 25,787 $ 35,113
- ------------------------------------------------------------------------------------------------
</TABLE>
Income tax expense related to 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 and nine-months ended September 30, 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>
- --------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
- --------------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
(Restated) (Restated)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal income tax expense 35.00 % 35.00 % 35.00 % 35.00 %
Increase (decrease) resulting from:
Benefits attributable to tax-exempt interest (6.47) (2.85) (3.22) (2.73)
Effect of change in tax rate for the six months
ended June 30, 1993 - 2.00 - -
Effect of change in tax rate on beginning
deferred items - (1.27) - (0.41)
Effect of adopting SFAS 109 - - - 0.55
Nondeductible expenses 1.83 0.49 0.83 0.45
Other items, net (0.39) (1.45) (0.54) (0.20)
- --------------------------------------------------------------------------------------------------------------------
Actual income tax expense 29.97 % 31.92 % 32.07 % 32.66 %
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
FCC's cash payments for federal income tax liabilities were $31.49 million
and $26.53 million for the nine months ended September 30, 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 September
30, 1994 and 1993, and the related consolidated statements of income for the
three-month and nine-month periods ended September 30, 1994 and 1993, and the
consolidated statements of changes in stockholders' equity and cash flows for
the nine-month periods ended September 30, 1994 and 1993. These financial
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 LLP
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
October 12, 1994
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 336,527
<INT-BEARING-DEPOSITS> 6,138
<FED-FUNDS-SOLD> 2,000
<TRADING-ASSETS> 134
<INVESTMENTS-HELD-FOR-SALE> 2,794,904
<INVESTMENTS-CARRYING> 112,038
<INVESTMENTS-MARKET> 112,108
<LOANS> 2,985,840
<ALLOWANCE> (55,903)
<TOTAL-ASSETS> 6,466,442
<DEPOSITS> 5,167,900
<SHORT-TERM> 650,091
<LIABILITIES-OTHER> 66,740
<LONG-TERM> 89,010
<COMMON> 130,815
0
59,954
<OTHER-SE> 301,932
<TOTAL-LIABILITIES-AND-EQUITY> 6,466,442
<INTEREST-LOAN> 175,388
<INTEREST-INVEST> 119,845
<INTEREST-OTHER> 1,572
<INTEREST-TOTAL> 296,805
<INTEREST-DEPOSIT> 83,969
<INTEREST-EXPENSE> 107,553
<INTEREST-INCOME-NET> 189,252
<LOAN-LOSSES> (11,214)
<SECURITIES-GAINS> (26,137)
<EXPENSE-OTHER> 175,497
<INCOME-PRETAX> 80,421
<INCOME-PRE-EXTRAORDINARY> 80,421
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,634
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.86
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
