UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994
_________________
[ ] 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 of incorporation) (I.R.S. Employer
Identification No.)
210 Baronne Street, New Orleans, Louisiana 70112
(address of principal executive offices and zip code)
Registrant's telephone number, including area code: (504) 561-1371
______________________
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Title of each class:
___________________
Common Stock, $5.00 par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
_____ _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
___________________________
State the aggregate market value of the voting stock held by nonaffiliates
of the Registrant as of February 24, 1995.
Approximately $694,149,348*
___________________________
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
Common Stock: $5.00 par value; 29,369,774 shares outstanding as of
February 24, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Documents Incorporated into which Incorporated
______________________ _______________________
Annual Report to Stockholders for Parts II and IV
the year ended December 31, 1994.
Definitive Proxy Statement Part III
_______________________________________________________________________________
* For the purposes of this computation, shares owned by directors and executive
officers have been excluded.
<PAGE>
PART I
Item 1
Description of Business
General
_______
First Commerce Corporation (FCC) is a multi-bank holding
company with five wholly-owned bank subsidiaries in Louisiana:
First National Bank of Commerce (FNBC) in New Orleans, City
National Bank of Baton Rouge (CNB), Rapides Bank & Trust Company
in Alexandria (RB&T), The First National Bank of Lafayette (FNBL)
and The First National Bank of Lake Charles (FNBLC).
Effective February 17, 1995, First Bancshares, Inc. (First),
the parent company of First Bank, Slidell, Louisiana, was
acquired by FCC for 2,705,220 shares of FCC common stock. First
Bank was merged with FNBC. The acquisition was accounted for as
a pooling-of-interests.
Also effective February 17, 1995, City Bancorp, Inc. (City),
the parent company of City Bank & Trust Company (City Bank),
New Iberia, Louisiana, was acquired by FCC for 516,252 shares of
FCC common stock. City Bank was merged with FNBL. The
acquisition was accounted for as a purchase.
The five banks accounted for 99.3% of the assets of FCC at
December 31, 1994, and substantially all of the net income for
1994. The banks offer customary services of banks of similar
size and similar markets, including numerous types of interest-
bearing and noninterest-bearing deposit accounts, commercial and
consumer loans, trust services, correspondent banking services
and safe deposit facilities. For further discussion of FCC's
operations, see the Financial Review section of FCC's 1994 Annual
Report, which is incorporated by reference into Item 7 of this
Annual Report on Form 10-K.
FCC has a number of non-bank subsidiaries none of which,
individually or in the aggregate with other non-bank subsidiaries
account for a significant amount of assets, revenues or earnings.
Regulation
__________
Like other bank holding companies in Louisiana, FCC is
subject to regulation by the Louisiana Commissioner of Financial
Institutions and the Federal Reserve Board. Under the terms of
the Bank Holding Company Act of 1956 (the "Act"), as amended, FCC
is restricted to only banking or bank-related activities
specifically allowed by the Act or the Federal Reserve Board.
The Act requires FCC to file required reports with the Federal
Reserve Board. Each of FCC's subsidiary banks is a member of the
Federal Reserve System and is subject to regulation by the
Federal Reserve Board and the FDIC. The four national bank
subsidiaries are also subject to regulation and supervision by
the Comptroller of the Currency, while the state-chartered bank
subsidiary is subject to regulation and supervision by the
Louisiana Commissioner of Financial Institutions.
Payment of Dividends
The primary source of funds for debt service obligations and
the dividends paid by FCC to its stockholders is the dividends it
receives from the bank subsidiaries. The payment of dividends by
FCC's national banks is regulated by the Comptroller of the
Currency. The payment of dividends by FCC's state bank is
regulated by the Louisiana Commissioner of Financial Institutions
and the Federal Reserve Board. Prior approval must be obtained
from the appropriate regulatory authorities before dividends can
be paid if the amount of defined capital, surplus and retained
earnings is below defined regulatory limits. Additionally, the
national bank subsidiaries may not pay dividends in excess of
their retained net profits (net income less dividends for the
current and prior two years) without prior regulatory approval.
The state bank subsidiary may not pay dividends in excess of
retained net profits (net income less dividends for the current
year and one prior year) without prior regulatory approval.
Under certain circumstances, regulatory authorities may prohibit
the payment of dividends by a bank or its parent holding company.
See Note 17 of Notes to Consolidated Financial Statements, which
is incorporated by reference into Item 8 of this Annual Report on
Form 10-K.
<PAGE>
Borrowings by the Company
Federal law prohibits FCC or any of its non-bank
subsidiaries from borrowing from its bank subsidiaries, unless
the borrowings are secured by specified amounts and types of
collateral. Additionally, such secured loans are generally
limited to 10% of each subsidiary bank's capital and surplus and,
in the aggregate with respect to FCC and all of its subsidiaries,
to 20% of each subsidiary bank's capital and surplus. Further,
a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with
any extension of credit, lease or sale of property or furnishing
of services.
Company Support of Bank Subsidiaries
The Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA") contains a "cross-guarantee" provision
which could result in any insured depository institution owned by
FCC (i.e., any bank subsidiary) being assessed for losses
incurred by the FDIC in connection with assistance provided to,
or the failure of, any other depository institution owned by FCC.
In addition, under Federal Reserve Board policy, FCC is expected
to act as a source of financial strength to each of its bank
subsidiaries and to commit resources to support each such bank in
circumstances in which such bank might need such outside support.
The Federal Deposit Insurance Corporation Improvement Act of
1991 (the "1991 Act") provides, among other things, that
undercapitalized institutions, as defined by regulatory
authorities, must submit recapitalization plans, and a parent
company of such an institution must either (i) guarantee the
institution's compliance with the capital plan, up to an amount
equal to the lesser of five percent of the institution's assets
at the time it becomes undercapitalized or the amount of the
capital deficiency when the institution fails to comply with the
plan, or (ii) suffer certain adverse consequences such as a
prohibition of dividends by the parent company to its
shareholders.
Prompt Corrective Action
The 1991 Act and implementing regulations classify banks
into five categories generally relating to their regulatory
capital ratios and institutes a system of supervisory actions
indexed to particular classification. Generally, banks that are
classified as "well capitalized" or "adequately capitalized" are
not subject to the supervisory actions specified in the 1991 Act
for prompt corrective action, but may be restricted from taking
certain actions that would lower their classification. Banks
classified as "undercapitalized", "significantly
undercapitalized" or "critically undercapitalized" are subject to
restrictions and supervisory actions of increasing stringency
based on the level of classification.
Under the present regulation, all five of FCC's Banks are
"well-capitalized". While such a classification would exclude
the Banks from the restrictions and actions envisioned by the
prompt corrective action provisions of the 1991 Act, the
regulatory agencies have broad powers under other provisions of
federal law that would permit them to place restrictions on the
Banks or take other supervisory action regardless of such
classification.
<PAGE>
Other Provisions of the 1991 Act
In general, the 1991 Act subjected banks and bank holding
companies to significantly increased regulation and supervision.
Other significant provisions of the 1991 Act require the federal
regulators to draft non-capital regulatory measures to assure
bank safety, including underwriting standards and minimum
earnings levels. The legislation further requires regulators to
perform annual on-site bank examinations, places limits on real
estate lending and tightens audit requirements. The 1991 Act and
implementing regulations also impose disclosure requirements
relating to fees charged and interest paid on checking and
deposit accounts.
Interstate Banking and Branching Efficiency Act
In 1994, the Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Act") was enacted. Among other things,
the Interstate Act (i) allows bank holding companies after
September, 1995 to acquire a bank located in any state, subject
to certain limitations that may be imposed by the state, (ii)
allows banks after June 1, 1997 (or earlier if permitted by state
law) to merge across state lines unless the home state has
enacted prior to June 1, 1997 a law opting out of interstate bank
mergers, and (iii) permits banks to establish branches outside
their state of domicile if expressly permitted by the law of the
state in which the branch is to be located. Registrant is unable
to predict at this time the effect of the Interstate Act on
competition or the extent to which the Louisiana legislature will
enact laws governing interstate bank acquisitions or branching.
Annual Insurance Assessment
FCC's bank subsidiaries are subject to deposit insurance
assessment by the FDIC. The FDIC is currently considering the
reduction of the deposit insurance premium; the timing and
amount of any reduction cannot be predicted.
Miscellaneous
Federal and Louisiana law provide for the enforcement of any
pro rata assessment of stockholders of a bank to cover impairment
of capital stock by sale, to the extent necessary, of the stock
of any assessed stockholder failing to pay the assessment. FCC,
as the stockholder of its bank subsidiaries, is subject to these
provisions.
Item 2
Properties
FCC's executive offices are located in leased facilities in
the Central Business District of New Orleans. Through its
subsidiaries, FCC also owns or leases its principal banking
facilities and offices in New Orleans, Baton Rouge, Alexandria,
Lafayette and Lake Charles. Of the 105 banking offices open at
the end of 1994, 63 are owned and 42 are leased.
Data processing services for FCC and each of its
subsidiaries are performed in a facility in the Metropolitan New
Orleans area, which is owned by a subsidiary of FCC.
Management considers all properties owned or leased to be
suitable and adequate for their intended purposes and considers
the leases to be fair and reasonable. For additional information
concerning premises and information concerning FCC's obligations
under long-term leases, see Note 10 of Notes to Consolidated
Financial Statements, which is incorporated by reference into
Item 8 of this Annual Report on Form 10-K.
<PAGE>
Item 3
Legal Proceedings
In the quarter ended March 31, 1989, suit was filed against
Registrant's wholly owned subsidiary, First National Bank of
Commerce (FNBC) in the matter entitled Guidrey v. Bank of LaPlace
and others, Civil Distric Court for the Parish of Orleans.
Plaintiff seeks to recover losses on certain investments,
claiming that the devendants breached duties owned to him. On
April 22, 1994, a jury found that FNBC had breached a state law
duty to plaintiff, Robert J. Guidry, and found it partially
responsible for plaintiff's loss, which it determined to be
$4.54 million, plus interest from April 17, 1989. On May 3, 1994,
the court entered judgment against FNBC for 15% of the damages
(approximately $681,000) plus interest from April 17, 1989. Both
the plaintiff and FNBC have since appealed to the Louisiana Court
of Appeals. Plaintiff seeks to hold FNBC responsible, jointly
with other devendants, for his damages up to $4.54 million plus
interest. FNBC has appealed on the basis that it is not
responsible to the plaintiff for any amount. In the opinion of
management, after consulting with counsel, the ultimate outcome of
the litigation will not result in a material adverse effect upon
the Registrant.
FCC and its subsidiaries have been named as defendants in
various other legal actions arising from normal business
activities in which damages of 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.
Item 4: Submission of Matters to a Vote of Securites
Holders, Not Applicable
PART II
Information required for Items 5 through 8
are included in First Commerce Corporation's 1994
Annual Report to stockholders filed as Exhibit 13
herewith and incorporated herein on the pages
indicated below.
Item 5: Market for the Registrant's Common Stock and
Related Stockholder Matters 36-38
Item 6: Selected Financial Data 36-38
Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations 16-35
Item 8: Financial Statements and Supplementary Data 39-60
Item 9: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure, Not
Applicable -
<PAGE>
PART III
Item 10: Directors and Executive Officers of the Registrant
Ian Arnof, 55--President, Chief Executive Officer and
Director of FCC since 1983.
R. Jeffrey Brooks, 46--Executive Vice President since 1993;
Director of Strategic Support of FCC from 1993 to 1994;
President and Chief Operating Officer of FNBL from 1992 to 1993;
Senior Vice President and Bankcard Group Manager of FNBC from
1986 to 1992.
Thomas L. Callicutt, Jr., 47--Senior Vice President,
Controller and Principal Accounting Officer of FCC since 1987.
Michael A. Flick, 46--Executive Vice President of FCC since
1985; Chief Administrative Officer of FCC since 1994; Chief
Credit Policy Officer of FCC from 1985 to 1994; Chief Financial
Officer from 1988 to 1992; Secretary to the Board of Directors
since 1987.
Howard C. Gaines, 54--Chairman of the Board of Directors of
FNBC since 1988; Chief Executive Officer of FNBC from 1988 to
1994.
Thomas C. Jaeger, 44--Executive Vice President and Chief
Financial Officer of FCC since 1994; Senior Vice President and
Chief Internal Auditor of FCC from 1989 to 1994. Mr. Jaeger
served as Senior Vice President and Chief Financial Officer of
FNBC from 1987 to 1989.
Kimberly Y. Lee, 34--Executive Vice President and Chief
Internal Auditor of FCC since 1994. Ms. Lee served as Senior
Vice President and Manager of Audit and Credit Review of FCC from
1992 to 1994, and served as a national bank examiner for the
Office of the Comptroller of the Currency from 1982 to 1992.
Ashton J. Ryan, Jr., 47--President of FNBC since 1991;
Chief Executive Officer of FNBC since 1994; Chief Operating
Officer of FNBC from 1991 to 1994; Senior Executive Vice
President of FCC since 1993. From 1981 to 1991, Mr. Ryan was a
partner with Arthur Andersen LLP, New Orleans, Louisiana.
E. Graham Thompson, 58--Executive Vice President, Chief
Credit Policy Officer and Director of Risk Management of FCC
since 1994; Chief Executive Officer of FNBL from 1992 to 1994;
Chairman of FNBL from 1993 to 1994; President of FNBL from 1992
to 1993; Chief Executive Officer of RBT from 1992 to 1994;
President and Chief Executive Officer of CNB from 1987 to 1992.
Joseph V. Wilson III, 45--Senior Executive Vice President of
FCC since 1993; Executive Vice President of FCC from 1989 to
1992; Executive Vice President--Retail Group of FNBC from 1984
to 1989.
The remaining information required under Item
10, and the information required by Items 11
through 13 is incorporated by reference to the
Registrant's definitive Proxy Statement for the
1995 Annual Meeting of Stockholders filed with
the Securities and Exchange Commission.
PART IV
Item 14: Exhibits, Financial Statement Schedules and
Reports on Form 8-K
(a) 1. Financial Statements - See Item 8.
2. Financial Statement Schedules - All
schedules are omitted, since they are
either not applicable or the required
information is shown in the financial
statements or notes thereto.
<PAGE>
Item 14.
(a) 3. Exhibits
2. Agreement and Plan of Merger dated May 27, 1994
between First Commerce Corporation and First
Bancshares, Inc., included as Exhibit 2 to First
Commerce Corporation's Registration Statement on
Form S-4 (Registration Number 33-54865) and
incorporated herein by referece.
3.1 Amended and Restated Articles of Incorporation of
First Commerce Corporation, included as Exhibit 3.1 to
First Commerce Corporation's Annual Report on Form 10-
K for the year ended December 31, 1993, and
incorporated herein by reference.
3.2 Amended By-laws of First Commerce Corporation,
included as Exhibit 3.2 to First Commerce
Corporation's Annual Report on Form 10-K for the year
ended December 31, 1993, and incorporated herein by
reference.
4.1 Indenture between First Commerce Corporation and
Republic Bank Dallas, N.A. (now NationsBank Texas, N.
A.), Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series A included as
Exhibit 4.1 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
4.2 Indenture between First Commerce Corporation and
Republic Bank Dallas, N.A. (now NationsBank Texas, N.
A.), Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series B included as
Exhibit 4.2 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended December
31, 1986 and incorporated herein by reference.
10.1 Amended and Restated First Commerce Corporation
Supplemental Tax-Deferred Savings Plan.
10.2 First Commerce Corporation Retirement Benefit
Restoration Plan.
10.3 Restatement of First Commerce Corporation Supplemental
Tax-Deferred Savings Trust Agreement.
10.4 First Commerce Corporation Amended and Restated 1992
Stock Incentive Plan, Form of Nonqualified Stock Option
Agreement and Form of Restricted Stock Agreement.
11 Statement Re: Computation of Earnings Per Share.
<PAGE>
13 First Commerce Corporation's 1994 Annual Report to
Stockholders.
21 Subsidiaries of First Commerce Corporation.
23 Consent of Arthur Andersen LLP.
24 Power of Attorney.
27 Financial Data Schedule.
(b) Reports on Form 8-K - The Registrant was
not required to file any reports on Form
8-K during the three-month period ended
December 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
First Commerce Corporation
(Registrant)
By /s/ Thomas L. Callicutt, Jr.
_________________________
Thomas L. Callicutt, Jr.
Senior Vice President,
Controller and Principal
Accounting Officer
Date March 20, 1995
_______________________
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities on the dates indicated.
Signatures Title
__________ _____
Ian Arnof President and Chief Executive Officer
Hermann Moyse, Jr. Chairman of the Board
Thomas C. Jaeger Executive Vice President and
Chief Financial Officer
James J. Bailey III Director
Sydney J. Besthoff III Director
Robert H. Bolton Director
Frances B. Davis Director
Laurance Eustis, Jr. Director
By /s/ Thomas L. Callicutt, Jr.
William P. Fuller Director ____________________________
Thomas L. Callicutt, Jr.
Arthur Hollins III Director Attorney-in-Fact
F. Ben James, Jr. Director
Erik F. Johnsen Director Date: March 20, 1995
J. Merrick Jones, Jr. Director
Edwin Lupberger Director
O. Miles Pollard, Jr. Director
G. Frank Purvis, Jr. Director
Edward M. Simmons Director
H. Leighton Steward Director
J. B. Storey Director
Robert A. Weigle Director
<PAGE>
EXHIBIT 10.1
FIRST COMMERCE CORPORATION
SUPPLEMENTAL TAX-DEFERRED SAVINGS PLAN
WHEREAS, First Commerce Corporation (the "Company")
maintains the First Commerce Corporation Tax-Deferred Savings
Plan (the "401(k) Plan") for the benefit of eligible employees of
the Company and of each of its subsidiaries and affiliates (each
such employer hereinafter included in the term "Employer"), under
which (1) eligible employees can agree to have contributions
("Tax-Deferred Contributions") made out of a portion of their
compensation, and (2) the Employers make "Matching Contributions"
equal to 50% of the first 5% of compensation contributed as Tax-
Deferred Contributions;
WHEREAS, the Company in 1989 established the Supplemental
Tax-Deferred Savings Plan ("the Plan"), a non-qualified deferred
compensation plan, in order to enable employees who are prevented
from making full use of the 401(k) Plan because of dollar
limitations under the Internal Revenue Code ("Code") to
contribute additional amounts on a tax-deferred basis, and to
provide for Employer matching contributions with respect to some
of those additional contributions;
WHEREAS, the Plan was amended July 31, 1991, and February
25, 1992, and was restated December 20, 1993; and
WHEREAS, the Company wishes to restate the Plan again, in
order to redefine "Compensation" with respect to commissions, to
redefine "Eligible Employee", to reformulate the methods by which
earnings are credited to contributions, and to remove a
limitation that applied during the first pay period in which a
contribution can be made under the Plan;
NOW, THEREFORE, First Commerce Corporation hereby amends and
restates the Plan, effective January 1, 1995, to read in its
entirety as follows:
I.
DEFINITIONS
1.1 The term "Compensation" shall mean all amounts treated as
"Base Compensation" under the 401(k) Plan (but without regard to
the dollar limit imposed by Code Section 401(a)(17), and without
deducting Supplemental Tax-Deferred Contributions under this
Plan), plus -- if an Eligible Employee was a participant during
the same calendar year in an unrelated employer's plan qualified
under Code Section 401(k) -- the amount of such Eligible
Employee's compensation with the unrelated employer taken into
account under the unrelated employer's plan. In the case of an
Eligible Employee who is compensated primarily with commissions,
however, "Compensation" shall not include any distributed
commissions (but shall include any amounts received as draws
against future commissions).
1.2 The term "Compensation Base" shall mean that portion of
Compensation for a calendar year that does not exceed $150,000,
adjusted after 1994 to reflect cost-of-living increases in the
same way as the compensation limit under Code Section 401(a)(17)
is adjusted after 1994.
1.3 The term "Eligible Employee" shall mean an employee of one
or more Employers who meets the requirements of Section 2.1.
II.
REGULAR PARTICIPATION
2.1 Eligibility. An employee of one or more Employers shall be
an Eligible Employee in a current year only if his Compensation
as of September 30 of the prior year, multiplied by 4/3, exceeds
the Compensation Base for the current year.
2.2 Participation. Participation must be elected separately for
each calendar year. In order to participate in the Plan in a
year, an Eligible Employee must sign a Supplemental Tax-Deferral
Agreement-Regular ("Agreement") prior to the beginning of the
year.
2.3 Participation in Subsequent Calendar Quarters. An Eligible
Employee who has elected to participate can modify his
participation for the year by signing an Agreement effective the
first day of the calendar quarter beginning after the signing of
the new Agreement. Any Agreement that is not modified remains
in effect through the end of the calendar year.
2.4 Revocation. An Agreement can be revoked at any time,
effective as of the first day of the pay period following receipt
of the revocation by the Plan Administrator. An Employee who
revokes his Agreement during a year will not be allowed to resume
participation until the next year.
An Agreement shall be automatically revoked as of any date
on which its implementation would disqualify the 401(k) Plan.
III.
REGULAR CONTRIBUTIONS
3.1 Supplemental Tax-Deferred Contributions. In his Agreement,
the Eligible Employee shall agree to reduce his Compensation by
an amount, known as a "Supplemental Tax-Deferred Contribution",
which can be any percentage of the Eligible Employee's
Compensation paid to him in each pay period during the year,
beginning with the pay period in which his Compensation for the
year first exceeds the Compensation Base for the year, provided
that the total of an Eligible Employee's Supplemental Tax-
Deferred Contributions under the Plan as of any date during the
year cannot exceed 10% of his Compensation for all completed pay
periods through that date beginning with the pay period in which
the first Supplemental Tax-Deferred Contribution is made for the
year. An Eligible Employee who has made Supplemental Tax-
Deferred Contributions shall be known as a "Participating
Employee".
3.2 Supplemental Matching Contributions. The Employers shall
make a Supplemental Matching Contribution for the account of
each Participating Employee equal to 50% of that portion of the
Participating Employee's Supplemental Tax-Deferred Contributions
for a pay period that does not exceed 5% of Compensation for the
pay period.
IV.
CONTRIBUTIONS OUT OF BONUSES
4.1 Eligibility. An Eligible Employee is also eligible to make
a contribution under this Plan out of any bonus paid for that
year.
4.2 Participation. The election to make a contribution out of
an Eligible Employee's bonus shall be made separately for each
calendar year. In order to contribute, an Eligible Employee must
elect to do so on a Supplemental Tax-Deferred Agreement-Bonus
("Bonus Agreement"), signed prior to the beginning of the
calendar year during which the bonus is earned. The Eligible
Employee can elect to defer any percentage, up to 100%, of the
bonus. The election shall apply whether the bonus is paid during
the year it is earned or is paid in the following year. No
Supplemental Matching Contributions shall be made with respect to
a Supplemental Tax-Deferred Contribution that comes out of a
bonus.
4.3 Irrevocability of Election. A Bonus Agreement shall be
irrevocable as of the first day of the year to which the Bonus
Agreement applies, unless the Eligible Employee elects to revoke
the Bonus Agreement and demonstrates to the satisfaction of the
Plan Administrator that he would suffer severe financial hardship
if the Bonus Agreement were not revoked. The Bonus Agreement is
also revoked by the death or termination of employment of the
Eligible Employee prior to the payment of the bonus.
V.
VESTING
5.1 Vesting. Supplemental Tax-Deferred Contributions shall be
100% vested at all times. Supplemental Matching Contributions
shall vest at the same rate as Matching Contributions under the
401(k) Plan.
VI.
FUNDING
6.1 Funding. Supplemental Tax-Deferred Contributions and
Supplemental Matching Contributions remain assets of the
Employers until such time as the benefits are paid to the
Participating Employees. The Employers may, however, deliver
some or all of the contributions to a trust ("Trust") whose
assets are ear-marked specifically for the payment of benefits
under this Plan. The assets of the Trust shall be subject to
claims of creditors of an Employer in the event of an Employer's
insolvency. Individual accounts may be established in the Trust,
to which amounts equal to the Participating Employees'
contributions are credited.
6.2 Accounting. The Plan Administrator shall establish and
maintain a separate Supplemental Tax-Deferred Savings Account and
Supplemental Matching Contribution Account for each Participating
Employee, to which shall be credited his Supplemental Tax-
Deferred Contributions and Supplemental Matching Contributions,
respectively.
Amounts credited to Supplemental Matching Contribution
Accounts shall be shown on the books of the Employers as common
stock of First Commerce Corporation ("Company Stock"). At the
time of any dividend on Company Stock additional shares shall be
added to the Participating Employee's account equivalent to the
number of shares that the dividend on the shares in his account
would have purchased.
Earnings and losses on the Supplemental Tax-Deferred
Accounts shall be as determined by the Participating Employee.
Each Participating Employee shall elect to have his or her
Supplemental Tax-Deferred Contributions credited to hypothetical
accounts in the investment funds that are then available under
the 401(k) Plan. Such investment will be deemed to have occurred
five business days after the end of the pay period in which the
Supplemental Deferral takes place. If the Company chooses to
contribute the amount to a Trust and chooses to have the funds
invested in investment funds in the same proportions as the
hypothetical investment funds, and does so more quickly than five
business days after the end of the pay period, then the
hypothetical investment earnings shall be determined from the
date of the actual investment in the Trust. The Participating
Employee's Supplemental Tax-Deferred Account shall thereafter be
adjusted as if the contributions were actually invested in the
investment funds selected by the Participating Employee. The
Participating Employee can elect to modify his hypothetical
investment choices as of the last day of each calendar quarter
or, after July 1, 1995, as of the close of business on the date
on which the election is made.
Nothing in this Plan document, however, shall be interpreted
as imposing a legal obligation on the Company, any of the
Employers, the Plan Administrator, or the Trustee to either
deliver any of the contributions to a Trust, or to invest any
funds in the Trust in the same manner as a Participating Employee
has elected to have his hypothetical investment determined.
The insolvency or bankruptcy of an Employer shall not affect
the allocation of gains and losses of the elected funds to a
Participating Employee's accounts, even though no amounts are
actually delivered to the Trust, or the continued allocation of
gains or losses of such funds even if Trust assets are depleted
as a result of payments made to an Employer's creditors.
VII.
PLAN ADMINISTRATION
7.1 Plan Administrator. The Plan Administrator shall be the
Company's Director of Human Resources, who shall make all
decisions in connection with the administration of the Plan.
including decisions concerning eligibility, amounts of
contributions, and payment of benefits. The Plan Administrator
shall have the sole authority to interpret the Plan and all of
his or her decisions shall be final and binding on all persons
affected thereby.
7.2 Reporting. As soon as practicable after each calendar
quarter, the Plan Administrator shall furnish each Participating
Employee with a statement indicating the total amount allocated
to his accounts under the Plan.
7.3 Payment of Expenses. The Company shall pay, or reimburse
the Plan Administrator for, any expenses reasonably incurred in
the administration of the Plan.
VIII.
DISTRIBUTIONS
8.1 Termination Benefit. Upon the termination of a
Participating Employee's employment with all Employers (other
than by death), the Participating Employee shall be entitled to
payment of his vested Plan account balances. Such payment shall
be made in one lump sum, as soon as administratively convenient
after the termination of employment. Any unvested portion shall
be forfeited and shall belong to the Participating Employee's
Employer.
8.2 Death Benefit. If a Participating Employee dies while
employed, his Plan accounts shall be 100% vested and shall be
distributed to his Beneficiary. He may designate a Beneficiary
on a form provided by the Plan Administrator. In the absence of
a designated Beneficiary the Beneficiary shall be the
Participating Employee's estate.
8.3 Form of Distribution. Distributions shall be made in the
form of Company Stock to the extent the Participating Employee's
Trust accounts are invested in Company Stock. The balance of the
benefit shall be in cash.
IX.
MISCELLANEOUS
9.1 Assignment. To the extent a Participating Employee or any
other person acquires a contractual right to receive payments
pursuant to the Plan, such right shall not be subject to
assignment, pledge (including collateral for a loan or security
for the performance of an obligation), encumbrance or transfer.
Any attempt to assign, pledge, encumber or transfer such right
shall not be recognized.
9.2 Amendment. The Company, through its board of directors,
shall have the right to amend the Plan, including discontinuing
contributions hereunder, provided that no such amendment shall
reduce a Participating Employee's account or reduce the vesting
of the account and provided that if any such amendment requires
shareholder approval to meet the requirements of Rule 16b-3 under
the Securities Exchange Act of 1934 or any successor rule, such
amendment shall be subject to approval of the Company's
shareholders.
9.3 Governing Law. The Plan shall be governed by the laws of
the State of Louisiana.
X.
DEMAND FOR BENEFITS
10.1 Demand for Benefits. Benefits upon termination of
employment shall ordinarily be paid to a Participating Employee
without the need for demand, and to a Beneficiary upon receipt of
the Beneficiary's address and Social Security number.
Nevertheless, a Participating Employee or a person claiming to be
a Beneficiary who claims entitlement to a benefit under Paragraph
8.1 or 8.2 can file a claim for benefits with the Plan
Administrator. The Plan Administrator shall accept or reject the
claim within 30 days of its receipt. If the claim is denied, the
Plan Administrator shall give the reason for denial in a written
notice calculated to be understood by the claimant, referring to
the Plan provisions that form the basis of the denial. If any
additional information or material is necessary to perfect the
claim, the Plan Administrator will identify these items and
explain why such additional material is necessary. If the Plan
Administrator neither accepts nor rejects the claim within 30
days, the claim shall be deemed to be denied. Upon the denial of
a claim, the claim may file a written appeal of the denied claim
to the Plan Administrator within 60 days of the denial. The
claimant shall have the opportunity to be represented by counsel
and to be heard at a hearing. The claimant shall have the
opportunity to review pertinent documents and the opportunity to
submit issues and argue against the denial in writing. The
decision upon the appeal must be made no later than the later of
(a) 60 days after receipt of the request for review, or (b) 30
days after the hearing. The Plan Administrator must set a date
for such a hearing within 30 days after receipt of the appeal.
In no event shall the date of the hearing be set later than 60
days after receipt of the notice. If the appeal is denied, the
denial shall be in writing. If an initial claim is denied, all
subsequent reasonable attorney's fees and costs of the successful
claims, including the filing of the appeal with the Plan
Administrator, and any subsequent litigation, shall be paid by
the Employer unless the failure of the Employer to pay is caused
by reasons beyond its control, such as insolvency or bankruptcy.
THUS DONE AND SIGNED on this _____ day of February, 1995, in
the presence of the undersigned competent witnesses.
WITNESSES: FIRST COMMERCE CORPORATION
_______________________________ BY:____________________________
_______________________________ TITLE:_________________________
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, personally came
and appeared: _____________________________________, who being by
me duly sworn did depose and state that he signed the foregoing
restatement of the First Commerce Corporation Supplemental Tax-
Deferred Savings Plan as a free act and deed on behalf of First
Commerce Corporation for the purposes therein set forth.
____________________________________
Sworn to and subscribed before me
this ____ day of February, 1995.
_________________________________
NOTARY PUBLIC
EXHIBIT 10.2
FIRST COMMERCE CORPORATION
RETIREMENT BENEFIT RESTORATION PLAN
WHEREAS, First Commerce Corporation (the "Company")
established effective January 1, 1986, as a successor to prior
defined-benefit plans, a defined benefit plan known as the
Retirement Plan for Employees of First Commerce Corporation (the
"Retirement Plan"), designed to qualify under Internal Revenue
Code Section 401(a);
WHEREAS, the Retirement Plan provides benefits for employees
of the Company and each of its subsidiaries and affiliates (each
such employer hereinafter included in the term "Employer");
WHEREAS, for purposes of calculating the benefit of a
participant in the Retirement Plan (a "Retirement Plan
Participant"), since 1989 Internal Revenue Code Section
401(a)(17) has forbidden the Retirement Plan to take into account
earnings in excess of a dollar limit, which limit began at
$200,000 was adjusted upward each year from 1989 to 1993 to
reflect cost-of-living increases and was reduced to $150,000 for
1994;
WHEREAS, Section 415 of the Code limits the amount of
benefit that can accrue for a participant in the Retirement Plan;
WHEREAS, a few Retirement Plan Participants are affected by
the limitations under Code Sections 401(a)(17) and 415, and
accordingly their retirement benefits constitute a smaller
percentage of their earnings than similarly situated participants
who have less earnings;
WHEREAS, the Board of Directors of the Company at its
December 20, 1993, meeting authorized the establishment of a plan
to pay the difference between (1) the benefit the Retirement Plan
Participant would receive under the Retirement Plan if his total
earnings (other than the portion of any bonus in excess of 30% of
base pay) were taken into account and there were no limits under
Code Section 415, and (2) the benefit he actually receives under
the Retirement Plan;
NOW, THEREFORE, effective January 1, 1994, the Company
adopts the First Commerce Corporation Retirement Benefit
Restoration Plan (the "Plan") having the following terms and
conditions:
Section 1.Definitions.
a. An "Employee" is any person employed by an Employer.
b. An Employee's "Retirement Plan Compensation" for a year
shall be the same as his Compensation for that year under the
Retirement Plan as then written.
c. An Employee's "Total Compensation" for a year shall be
the same as his Retirement Plan Compensation for that year,
except that (1) the portion (if any) of an Employee's bonus for
the year in excess of 30% of base pay for the year shall not be
included, and (2) the dollar limitation required by Internal
Revenue Code Section 401(a)(17) to be imposed on Retirement Plan
Compensation shall be ignored.
d. An Employee's "Excess Compensation" for any year shall
be the difference between his Total Compensation and his
Retirement Plan Compensation for that year.
Any capitalized term used in this Plan document that is not
defined herein but is defined in the Retirement Plan document, as
amended, shall have the same meaning as is given to it in the
Retirement Plan document, as amended.
Section 2.Participation.
Every Retirement Plan Participant who in 1993 or any year
thereafter receives Excess Compensation of $1,000 or more shall
become a Participant in the Plan upon such person's Entry Date if
still an Employee on that date. A person's "Entry Date" is the
latest of (a) January 1, 1994, (b) the last day of the year in
which such person becomes fully vested under the Retirement Plan,
or (c) the last day of the first year in which such person has
Excess Compensation of $1,000 or more.
Section 3.Payment of Benefit.
The benefit payable under the Plan shall be known as the
"Restoration Benefit". The Restoration Benefit shall be paid in
the same form and at the same time as the benefit paid to the
Participant under the Retirement Plan.
Section 4.Amount of the Benefit.
The amount of the Restoration Benefit shall be equal to A
minus B, where
"A" = The benefit that the Participant would have
received under the Retirement Plan if (1) Total
Compensation rather than Retirement Plan Compensation
were used to calculate his Accrued Benefit with respect
to each year of participation in the Retirement Plan
after 1988, and (2) the annual benefit limitations
under Code Section 415 did not apply.
"B" = The benefit that the Participant actually
receives under the Retirement Plan.
Section 5.Survivor Benefit.
Upon a Participant's death no benefit shall be paid under
the Plan unless a benefit is payable to a surviving annuitant or
beneficiary under the Retirement Plan. The amount of the benefit
payable to the beneficiary or surviving annuitant under the Plan
shall be equal to the difference between the benefit that would
have been paid under the Retirement Plan if Total Compensation
had been taken into account and there were no annual benefit
limit, and the benefit actually paid under the Retirement Plan.
The benefit shall be paid to the same person, in the same form,
and for the same term as the benefit under the Retirement Plan.
Section 6.Company's Obligation
The Company and the Participant's Employer or Employers
shall be responsible to pay the benefits provided for in this
Plan.
Section 7.Plan Administration.
a. The First Commerce Corporation Employee Benefits
Committee shall be the Plan Administrator.
b. The Plan Administer may appoint such agents, attorneys,
accounts, and actuaries as may be required to administer the
Plan.
c. The Plan Administrator shall make all decisions in
connection with the administration of the Plan, including
decisions concerning eligibility to participate and amounts of
benefits. The Plan Administrator shall have the sole authority
to interpret the Plan, and all of its decisions shall be final
and binding on all persons affected thereby.
Section 8.Assignment.
To the extent that a Participant, survivor annuitant or
beneficiary acquires a contractual right to receive a Restoration
Benefit, such right shall not be subject to assignment, pledge
(including collateral for a loan or security for the performance
of an obligation), encumbrance or transfer. Any attempt to
assign, pledge, encumber or transfer such rights shall not be
recognized.
Section 9.Amendment and Termination.
The Company, through its Board of Directors or any person to
whom it has delegated the power, reserves the right to amend the
Plan, including discontinuing further accrual of benefits
hereunder, provided that no such amendment shall reduce a
Participant's already accrued Restoration Benefit or affect the
vesting of the Restoration Benefit. The Company also reserves
the right to terminate the Plan at any time and distribute to all
Participants the Actuarial Equivalent of their Restoration
Benefit earned to that date.
Section 10.Governing Law.
The Plan shall be governed by the laws of the State of
Louisiana.
Section 11.Funding.
Participants, surviving annuitants and beneficiaries have
only an unsecured right to receive their Restoration Benefits, as
general creditors of their Employers and the Company. The
company, however, has undertaken to fund its obligations through
a Retirement Benefit Restoration Trust, to which it may make
contributions from time to time. Assets of the Trust are subject
to the payment of claims of general creditors of the Company oir
any Employer upon the Company's or Employer's insolvency. The
Company's and Employers' obligations under the Plan are not
limited to the amount in the Trust.
Section 12.Demand for Benefit.
Benefits upon termination of employment shall ordinarily be
paid to a Participant without the need for demand, and to a
surviving annuitant or beneficiary upon receipt of the surviving
annuitant or beneficiary's address and Social Security number
(and evidence of death, if needed). Nevertheless, a Participant
or a person claiming to be a surviving annuitant or beneficiary
can file a claim for benefits with the Committee. The Committee
shall accept or reject the claim within 30 days of its receipt.
If the claim is denied, the Committee shall give the reason for
denial in a written notice calculated to be understood by the
claimant, referring to the Plan provisions that form the basis of
the denial. If any additional information or material is
necessary to perfect the claim, the Committee will identify these
items and explain why such additional material is necessary. If
the Committee neither accepts nor rejects the claim within 30
days, the claim shall be deemed to be denied. Upon the denial of
a claim, the claimant may file a written appeal of the denied
claim to the Committee within 60 days of the denial. The
claimant shall have the opportunity to be represented by counsel
and to be heard at a hearing. The claimant shall have the
opportunity to review pertinent documents and the opportunity to
submit issues and argue against the denial in writing. The
decision upon the appeal must be made no later than the later of
(a) 60 days after receipt of the request for review, or (b) 30
days after the hearing. The Committee must set a date for such a
hearing within 30 days after receipt of the appeal. In no event
shall the date of the hearing be set later than 60 days after
receipt of the notice. If the appeal is denied, the denial shall
be in writing. If an initial claim is denied, and the claimant
is ultimately successful, all subsequent reasonable attorney's
fees and costs of claimant, including the filing of the appeal
with the Committee, and any subsequent litigation, shall be paid
by the Employer unless the failure of the Employer to pay is
caused by reasons beyond its control, such as insolvency or
bankruptcy.
Thus done and signed on this ___ day of June, 1994, in the
presence of the undersigned competent witnesses.
WITNESSES: FIRST COMMERCE CORPORATION
______________________ By: _________________________
Title: ______________________
______________________
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, personally came
and appeared ______________, who being by me sworn did depose and
state that he signed the foregoing Retirement Benefit Restoration
Plan document as a free act and deed on behalf of First Commerce
Corporation for the purpose therein set forth.
_____________________________
SWORN TO AND SUBSCRIBED
BEFORE ME THIS __ DAY
OF JUNE, 1994
______________________________
Notary Public
EXHIBIT 10.3
RESTATEMENT OF
FIRST COMMERCE CORPORATION
SUPPLEMENTAL TAX-DEFERRED SAVINGS TRUST AGREEMENT
(a) This Restatement of Trust Agreement made this 21st day
of February, 1995, by First Commerce Corporation ("Company");
(b) WHEREAS, Company has adopted a nonqualified deferred
compensation plan known as the First Commerce Corporation Tax-
Deferred Savings Plan ("Plan");
(c) WHEREAS, the employers (including the Company) that
participate in the Plan (the "Employers") expect to incur
liability under the terms of the Plan with respect to their
employees who participate in the Plan ("Participating
Employees"), as well as the surviving Beneficiaries of deceased
Participating Employees;
(d) WHEREAS, Company, together with First National Bank of
Commerce ("Trustee") established on March 27, 1989, a trust,
known as the First Commerce Corporation Tax-Deferred Savings
Trust (hereafter referred to as the "Trust"), to which the
Employers can contribute assets that are held therein, subject to
the claims of each Employer's creditors in the event of the
Employer's Insolvency, as herein defined, until paid to
Participating Employees and Beneficiaries in such manner and at
such times as specified in the Plan;
(e) WHEREAS, it is the intention of the parties that the
Trust constitute an unfunded arrangement that does not affect the
status of the Plan as an unfunded plan maintained for the purpose
of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title
I of the Employee Retirement Income Security Act of 1974;
(f) WHEREAS, it is the intention of the Employers that they
will continue to make contributions to the Trust to provide
themselves with a source of funds to assist them in meeting their
liabilities under the Plan; and
(g) WHEREAS, the Company, having reserved the power to
amend the Trust, now desires to amend and restate the Trust in
order to follow more closely the wording of the IRS model form of
rabbi trust published at Rev. Proc. 92-64;
NOW, THEREFORE, the Company, pursuant to its reserved power
to amend the Trust, and acting through its undersigned authorized
officer by authority of the Board of Directors of the Company,
hereby amends and restates the Trust to read in its entirety as
follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) This Trust Agreement, as amended hereafter, shall
contain all of the operative provisions of the Trust. Trustee
agrees to hold all the current assets of the Trust and all future
contributions under the terms and conditions of this Trust
Agreement, as it may be amended in the future.
(b) The Trust is irrevocable. For purposes of La. R.S.
9:1801, every Employer under the Plan is a beneficiary of the
Trust.
(c) The Company intends that the Trust be a grantor trust,
of which the Employers are the grantors -- within the meaning of
subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended -- and this Trust
Agreement shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of the
Employers, and shall be used exclusively for the uses and
purposes of Participating Employees and their Beneficiaries, and
the general creditors of the Employers, as herein set forth.
Participating Employees and their Beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under the Plan and this
Trust Agreement shall be mere unsecured contractual rights of
Participating Employees and their Beneficiaries against the
Employers. The assets of the Trust will be subject to the claims
of an Employer's general creditors under federal and state law in
the event of the Employer's Insolvency, as defined in Section
3(a) herein.
(e) The Employers, in their sole discretion, may at any
time, or from time to time, make additional deposits of cash or
other property in trust with Trustee, to augment the principal to
be held, administered and disposed of by Trustee as provided in
this Trust Agreement. Neither Trustee nor any Participating
Employee or Beneficiary shall have any right to compel such
additional deposits.
SECTION 2. PAYMENTS TO PARTICIPATING EMPLOYEES AND THEIR
BENEFICIARIES.
(a) From time to time the Company's Director of Human
Resources ("Plan Administrator") shall deliver to Trustee a
schedule (the "Payment Schedule") that indicates the amounts
payable in respect of each Participating Employee and
Beneficiary, that provides a formula or other instructions
acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or
available under the Plan), and the time of commencement for
payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to Participating Employees and
Beneficiaries in accordance with such Payment Schedule. The
amount credited to an account under Section 4 to fund the
Employers' obligations under the Plan to a specific Participating
Employee shall be debited from the account only if the Plan
Administrator indicates on the Payment Schedule that the payment
is to be made to that Participating Employee or his Beneficiary.
Trustee shall make provision for the reporting and withholding of
any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts
have been reported, withheld and paid by the Employers.
(b) The entitlement of a Participating Employee or
Beneficiary to benefits under the Plan shall be determined by the
Plan Administrator, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) An Employer may make payment of benefits directly to
Participating Employees and Beneficiaries as they become due
under the terms of the Plan. The Company shall notify Trustee of
any such direct payments of benefits prior to the time the
benefits are payable. In addition, if the assets of the Trust,
including any earnings, are not sufficient to make payments of
benefits in accordance with the terms of the Plan, the Employers
shall remain liable under the Plan to make the balance of each
such payment as it falls due. Trustee shall notify the Company
when the assets of the Trust are not sufficient to make currently
due payments.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO
TRUST BENEFICIARY WHEN EMPLOYER IS INSOLVENT.
(a) Trustee shall cease payment of benefits to
Participating Employees and their Beneficiaries if any Employer
is Insolvent. An Employer shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) the Employer is unable to
pay its debts as they become due, or (ii) the Employer is subject
to a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of each
Employer under federal and state law as set forth below.
(c) The Board of Directors and the Chief Executive Officer
of the Company shall have the duty to inform Trustee in writing
of an Employer's Insolvency. If a person claiming to be a
creditor of an Employer alleges in writing to Trustee that the
Employer has become Insolvent, Trustee shall determine whether
the Employer is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Participating
Employees and Beneficiaries out of the Trust.
(d) Unless Trustee has actual knowledge of an Employer's
Insolvency, or has received notice from the Employer or a person
claiming to be a creditor alleging that Employer is Insolvent,
Trustee shall have no duty to inquire whether the Employer is
Insolvent. Trustee may in all events rely on such evidence
concerning the Employer's solvency as may be furnished to Trustee
and that provides Trustee with a reasonable basis for making a
determination concerning the Employer's solvency.
(e) If at any time Trustee has determined that an Employer
is Insolvent, Trustee shall discontinue payments to Participating
Employees and Beneficiaries and shall hold the assets of the
Trust for the benefit of the general creditors of the Insolvent
Employer. Nothing in this Trust Agreement shall in any way
diminish any rights of Participating Employees and Beneficiaries
to pursue their rights as general creditors of the Employer with
respect to benefits due under the Plan or otherwise.
(f) Trustee shall resume the payment of benefits to
Participating Employees and Beneficiaries out of the Trust in
accordance with Section 2 of this Trust Agreement only after
Trustee has determined that the Employer is not Insolvent (or is
no longer Insolvent).
(g) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Participating Employees
and Beneficiaries under the terms of the Plan for the period of
such discontinuance, less the aggregate amount of any payments
made to those Participating Employees and Beneficiaries by any
Employer in lieu of the payments provided for hereunder during
the period of discontinuance.
SECTION 4.PAYMENTS TO EMPLOYERS.
Except as provided in Section 3 hereof, no Employer shall
have the right or power to direct Trustee to return to the
Employer or to divert to others any of the Trust assets before
all payment benefits have been paid to Participating Employees
and Beneficiaries pursuant to the terms of the Plan.
SECTION 5. INVESTMENTS.
(a) In no event may Trustee acquire any policy of insurance
on the life of any individual. Otherwise, Trustee can invest in
any assets that are permitted for Louisiana trustees to invest
in, including stock or obligations of the Company. All rights
associated with assets of the Trust (including the right to vote
Company stock) shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or
rest with Participating Employees or Beneficiaries. The Company,
acting through its board of directors or the board's delegate,
shall have the right at any time and from time to time, in its
sole discretion, to substitute assets of equal fair market value
for any asset held in the Trust. This right is exercisable by
the Company in a nonfiduciary capacity without the approval or
consent of any person in a fiduciary capacity.
(b) An account shall be kept by the Trustee in the name of
each Participating Employee under the Plan, to which shall be
credited that portion of each contribution which is identified by
the Employers as funding their liability under the Plan to that
Participating Employee.
(c) The Trustee may register the assets comprising the
Trust in the name of the Trustee or the Trustee's nominee.
Further, the Trustee may hold any security in bearer form.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between the Plan Administrator and
Trustee. Within thirty days following each Valuation Date under
the First Commerce Corporation Tax-Deferred Savings Plan ("401(k)
Plan") and within thirty days after the removal or resignation of
Trustee, Trustee shall deliver to the Plan Administrator a
written account of its administration of the Trust since the
preceding Valuation Date, setting forth all investments,
receipts, disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust and in each account as of the
Valuation Date or the date of such removal or resignation, as the
case may be. To the greatest extent practical, the same
accounting and valuation methods shall be used to recalculate
account balances as are used for the 401(k) Plan.
SECTION 8. RESPONSIBILITIES OF TRUSTEE.
(a) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties
or obligations hereunder.
(b) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(c) Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly
provided otherwise herein.
(d) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
The Company shall pay all administrative and Trustee's fees
and expenses. If not so paid, the fees and expenses shall be
paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to the
Company's chief executive officer, which shall be effective
thirty days after receipt of such notice unless the chief
executive officer and Trustee agree otherwise.
(b) Trustee may be removed by the Company's chief executive
officer on thirty days notice or upon shorter notice accepted by
the Trustee.
(c) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within thirty days after receipt of notice of
resignation, removal or transfer, unless the Company's chief
executive officer extends the time limit.
(d) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) or (b) of this
section. If no such appointment has been made, Trustee may apply
to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed, in accordance with
Section 10(a) or (b) hereof, the Company's chief executive
officer shall have the power to appoint a successor Trustee,
which appointment shall be effective when accepted in writing by
the new Trustee, who shall have all of the rights and powers of
the former Trustee, including ownership rights in the Trust
assets. The former Trustee shall execute any instrument
necessary or reasonable requested by the Company or the successor
Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing
Trust assets, subject to Sections 7 and 8 hereof. The successor
Trustee shall not be responsible for and Company shall indemnify
and defend the Successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or
from any other past event, or any condition existing at the time
it becomes successor Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written
instrument approved by the Company's board of directors and
executed by its chief executive officer, and accepted by Trustee.
Notwithstanding the foregoing, no such amendment shall conflict
with the terms of the Plan or make the Trust revocable.
(b) Although the Company intends to continue the Trust in
operation indefinitely, the Company nevertheless expressly
reserves the right, through its board of directors, to terminate
the Trust in whole or in part or discontinue contributions. Upon
such a termination, the assets of the Trust shall be distributed
to Participating Employees and Beneficiaries as directed by the
Plan Administrator, provided that the provisions of Section 3 of
this Trust Agreement are not applicable at that time. Any assets
remaining after payment of all amounts owed under the Plan and
Trust to Participating Employees and Beneficiaries and payment of
all Trustee fees and expenses shall be delivered to the Company.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Participating Employees and
Beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana.
SECTION 14. EFFECTIVE DATE.
This restated Trust Agreement shall be effective
immediately.
WITNESSES: FIRST COMMERCE CORPORATION
_____________________________ BY:__________________________
_____________________________ TITLE:_______________________
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, personally came
and appeared _____________________________, who being by me sworn
did depose and state that he signed the foregoing restated
Supplemental Tax-Deferred Savings Trust Agreement as a free act
and deed on behalf of First Commerce Corporation, for the
purposes therein set forth.
_________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
THIS _____ DAY OF _________, 1995.
________________________________
NOTARY PUBLIC
EXHIBIT 10.4
FIRST COMMERCE CORPORATION
AMENDED AND RESTATED
1992 STOCK INCENTIVE PLAN
Section 1. Purpose. The purpose of the First Commerce
Corporation 1992 Stock Incentive Plan (the "Plan") is to increase
shareholder value and to advance the interests of First Commerce
Corporation ("FCC") and its subsidiaries (collectively, the
"Company") by granting stock options, stock appreciation rights,
stock awards, restricted stock and performance share awards (the
"Incentives") to key officers of the Company in order to attract,
retain and motivate these officers.
Section 2. Administration.
Section 2.1 Composition. The Plan shall be
administered by the Compensation Committee (the "Committee")
of the Board of Directors of FCC. The Committee shall
consist of not fewer than two members of the Board of
Directors, all of whom shall (a) to the extent required,
qualify to administer the Plan under Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") as
currently in effect or any successor rule, and (b) beginning
on the date of the Company's 1995 annual meeting of
shareholders, qualify as "outside directors" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").
Section 2.2 Authority. The Committee shall have
plenary authority to award Incentives under the Plan, to set
the terms of such Incentives, to interpret the Plan, to
establish any rules or regulations relating to the Plan that
it determines to be appropriate, and to make any other
determination that it believes necessary or advisable for
the proper administration of the Plan. Its decisions in
matters relating to the Plan shall be final and conclusive
on the Company and participants. The Committee may delegate
its authority hereunder to the extent provided elsewhere
herein.
Section 3. Eligible Participants. Employees of the
Company holding the position of assistant vice-president or above
(including directors who also hold positions of assistant vice-
president or above) who, in the opinion of the Committee have
significant responsibility for the continued growth, development
and financial success of the Company shall become eligible to
receive Incentives under the Plan when designated by the
Committee. Participants may be designated individually or by
groups or categories as the Committee deems appropriate. With
respect to participants not subject to Section 16 of the Exchange
Act and not covered employees under Section 162(m) of the Code,
the Committee may delegate to the Chief Executive Officer of FCC
its authority to designate participants, to determine the size
and type of Incentive to be received by those participants and to
determine or modify performance objectives for those
participants, subject to ratification by the Committee.
Section 4. Types of Incentives. Incentives may be granted
under the Plan in any of the following forms, either individually
or in combination, (a) incentive stock options and non-qualified
stock options; (b) stock appreciation rights ("SARs"); (c) stock
awards; (d) restricted stock and (e) performance shares.
Section 5. Shares Subject to the Plan.
Section 5.1 Number of Shares. Subject to adjustment
as provided in Section 11.5, the total number of shares of
FCC common stock, $5.00 par value per share (the "Common
Stock"), with respect to which Incentives may be granted
under the Plan shall not exceed ten percent of the total
number of outstanding shares of Common Stock during the
effectiveness of the Plan. In addition, Incentives that may
be paid in shares of Common Stock granted in any one year
shall not exceed one percent of the total number of shares
outstanding and the aggregate of Incentives that may be paid
in shares of Common Stock and Incentives that must be paid
in cash granted in one year shall not exceed five percent of
the total number of shares outstanding. Incentives with
respect to no more than 100,000 shares of Common Stock may
be granted through the Plan to a single participant in one
calendar year. If and to the extent that an Incentive is
paid in cash rather than shares of Common Stock, the total
number of shares available for issuance during the
effectiveness of the Plan hereunder shall be credited with
the appropriate number of shares represented by the cash
payment of the Incentive, as determined in the sole
discretion of the Committee.
Section 5.2 Cancellation. If a stock option or stock
appreciation right granted hereunder expires or is
terminated or cancelled as to any shares of Common Stock,
such shares may again be issued under the Plan. If shares
of Common Stock are issued as restricted stock or as stock
awards and thereafter are forfeited or reacquired by the
Company pursuant to rights reserved upon issuance thereof,
such forfeited and reacquired shares may again be issued
under the Plan, if such issuance does not result in a
violation of Rule 16-3 under the Act or any successor rule.
The Committee may also determine to cancel, and agree to the
cancellation of, stock options and stock appreciation rights
in order to grant new stock options or stock appreciation
rights to the same participant at a lower price than the
options or stock appreciation rights to be cancelled.
Section 5.3 Type of Common Stock. Common Stock
issued under the Plan in connection with Incentives may be
authorized and unissued shares or issued shares held as
treasury shares.
Section 5.4 Reinvestment of Dividends. Shares of
Common Stock that are delivered to a participant in the Plan
as a result of the reinvestment of dividends in conjunction
with restricted stock shall be applied against the maximum
number of shares provided in Section 5.1.
Section 6. Stock Options. A stock option is a right to
purchase shares of Common Stock from the Company. Each stock
option granted by the Committee under the Plan shall be subject
to the following terms and conditions:
Section 6.1 Price. The option price per share shall
be equal to the Fair Market Value (as defined in Section
11.11) of a share of Common Stock on the date of grant,
subject to adjustment under Section 11.5.
Section 6.2 Number. The number of shares of Common
Stock subject to the option shall be determined by the
Committee, subject to adjustment as provided in Section
11.5.
Section 6.3 Duration and Time for Exercise. The term
of each option shall be determined by the Committee. Each
option shall become exercisable at such time or times during
its term as shall be determined by the Committee and as
provided in Section 11.10; provided, however, that, except
as provided in Section 11.10, no stock option shall be
exercisable within the six month period immediately
following the date of grant and, unless otherwise provided
in the stock option agreement, all stock options shall
expire (a) 12 months from the date of termination of
employment as the result of death or disability, (b) six
months and one day after termination of employment as a
result of retirement and (c) immediately if employment
terminates for any other reason, including resignation and
termination for cause. The Committee may in its discretion
extend the term of options which would otherwise expire as a
result of resignation or termination for cause. The
Committee may also impose such terms and conditions to the
exercise of each option as it deems advisable and may
accelerate the exercisability of any outstanding option at
any time in its sole discretion.
Section 6.4 Repurchase. Upon approval of the
Committee, the Company may repurchase a previously granted
stock option from a participant by mutual agreement before
such option has been exercised by payment to the participant
of the amount per share by which: (a) the Fair Market Value
of the Common Stock subject to the option on the date of
purchase exceeds (b) the option price.
Section 6.5 Manner of Exercise. A stock option may
be exercised, in whole or in part, by giving written notice
to the Company, specifying the number of shares of Common
Stock to be purchased. The exercise notice shall be
accompanied by the full purchase price for such shares. The
option price shall be payable in United States dollars and
may be paid (a) by cash, uncertified or certified check or
bank draft, (b) by delivery of shares of Common Stock held
by the optionee for at least six months in payment of all or
any part of the option price, which shares shall be valued
for this purpose at the Fair Market Value on the date such
option is exercised, (c) by delivering a properly executed
exercise notice together with irrevocable instructions to a
broker approved by the Company (with a copy to the Company)
to promptly deliver to the Company the amount of sale or
loan proceeds to pay the exercise price or (d) in such other
manner as may be authorized from time to time by the
Committee. Shares of Common Stock delivered in payment of
the exercise price that were acquired upon the exercise of a
stock option are deemed to have been held from the date of
grant of the stock option. In the case of delivery of an
uncertified check or bank draft upon exercise of a stock
option, no shares shall be issued until the check or draft
has been paid in full. Prior to the issuance of shares of
Common Stock upon the exercise of a stock option, a
participant shall have no rights as a stockholder.
Section 6.6 Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, the following
additional provisions shall apply to the grant of stock
options that are intended to qualify as incentive stock
options (as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"):
(a) Any incentive stock option authorized under
the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events
be consistent with and contain or be deemed to contain
all provisions required in order to qualify the options
as incentive stock options;
(b) All incentive stock options must be granted
within ten years from the date on which this Plan was
adopted by the Board of Directors;
(c) Unless sooner exercised, all incentive stock
options shall expire no later than ten years after the
date of grant;
(d) No incentive stock option shall be granted to
any participant who, at the time such option is
granted, would own (within the meaning of Section 422
of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of
the employer corporation or of its parent or subsidiary
corporation; and
(e) The aggregate Fair Market Value (determined
with respect to each incentive stock option as of the
time such incentive stock option is granted) of the
Common Stock with respect to which incentive stock
options are exercisable for the first time by a
participant during any calendar year (under the Plan or
any other plan of the Company) shall not exceed
$100,000. To the extent that such limitation is
exceeded, such options shall not be treated, for
federal income tax purposes, as incentive stock
options.
Section 6.7 Non-Transferability of Options. Options
granted under the Plan shall not be transferable otherwise
than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined
by the Code, and options may be exercised during the
lifetime of a participant only by the participant or by the
participant's guardian or legal representative. Any
attempted assignment, transfer, pledge, hypothecation or
other disposition of an option, or levy of attachment or
similar process upon the option not specifically permitted
herein shall be null and void and without effect.
Section 7. Restricted Stock
Section 7.1 Grant of Restricted Stock. The Committee
may award shares of restricted stock to such key employees
as the Committee determines to be eligible pursuant to the
terms of Section 3. An award of restricted stock may be
subject to the attainment of specified performance goals or
targets, restrictions on transfer, forfeitability provisions
and on such other terms and conditions as the Committee may
determine, subject to the provisions of the Plan. To the
extent restricted stock is intended to qualify as
performance based compensation under Section 162(m) of the
Code, it must meet the additional requirements imposed
thereby.
Section 7.2 Award and Delivery of Restricted Stock.
At the time an award of restricted stock is made, the
Committee shall establish a period of time (the "Restricted
Period") applicable to such an award. Each award of
restricted stock may have a different Restricted Period.
The Committee may, in its sole discretion, prescribe
conditions for the lapse of restrictions upon death,
disability, retirement or other termination of employment or
for the lapse or termination of restrictions upon the
satisfaction of other conditions in addition to or other
than the expiration of the Restricted Period with respect to
all or any portion of the shares of restricted stock. In
addition, any participant subject to Section 16 of the
Exchange Act shall be prohibited from selling shares of
restricted stock for a period of six months from the grant
thereof. The Committee shall have the power to accelerate
the expiration of the Restricted Period with respect to all
or any part of the shares awarded to a participant and the
expiration of the Restricted Period shall automatically
occur under the conditions described in Section 11.10
hereof.
Section 7.3 Escrow. In order to enforce the
restrictions imposed by the Committee pursuant to this
Section 7, the participant receiving restricted stock shall
enter into an agreement with the Company setting forth the
conditions of the grant. Certificates representing shares
of restricted stock shall be registered in the name of the
participant and deposited with the Company, together with a
stock power endorsed in blank by the participant. Each such
certificate shall bear a legend in substantially the
following form:
The transferability of this certificate and the
shares of Common Stock represented by it are
subject to the terms and conditions (including
conditions of forfeiture) contained in the First
Commerce Corporation 1992 Stock Incentive Plan
(the "Plan"), and an agreement entered into
between the registered owner and First Commerce
Corporation. Copies of the Plan and the agreement
are on file at the principal office of the
Company.
Section 7.4 Dividends on Restricted Stock. Any and
all cash and stock dividends paid with respect to the shares
of restricted stock shall be subject to any restrictions on
transfer, forfeitability provisions or reinvestment
requirements as the Committee may, in its discretion,
determine.
Section 7.5 Forfeiture. Upon the forfeiture of any
restricted stock (including any additional shares of
restricted stock that may result from the reinvestment of
cash and stock dividends in accordance with such rules as
the Committee may establish pursuant to Section 7.4), such
forfeited shares shall be surrendered. The participants
shall have the same rights and privileges, and be subject to
the same forfeiture provisions with respect to any
additional shares received pursuant to Section 11.5 due to a
recapitalization, merger or other change in capitalization.
Section 7.6 Expiration of Restricted Period. Upon the
expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided for in Section
7.2 and in the restricted stock agreement, the restrictions
applicable to the restricted stock shall lapse and a stock
certificate for the number of shares of restricted stock
with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, except any that
may be imposed by law, to the participant or the
participant's estate, as the case may be.
Section 7.7 Rights as a Stockholder. Subject to the
terms and conditions of the Plan and subject to any
restrictions on the receipt of dividends that may be imposed
by the Committee, each participant receiving restricted
stock shall have all the rights of a stockholder with
respect to shares of stock during any period in which such
shares are subject to forfeiture and restrictions on
transfer, including without limitation, the right to vote
such shares. Unless otherwise restricted by the Committee,
dividends paid in cash or property, other than Common Stock
with respect to shares of restricted stock, shall be paid to
the participant currently.
Section 8. Stock Appreciation Rights. A SAR is a right to
receive, without payment to the Company, a number of shares of
Common Stock, cash or any combination thereof, the amount of
which is determined pursuant to the formula set forth in Section
8.4. A SAR may be granted (a) with respect to any stock option
granted under the Plan, either concurrently with the grant of
such stock option or at such later time as determined by the
Committee (as to all or any portion of the shares of Common Stock
subject to the stock option), or (b) alone, without reference to
any related stock option. Each SAR granted by the Committee
under the Plan shall be subject to the following terms and
conditions:
Section 8.1 Number. Each SAR granted to any
participant shall relate to such number of shares of Common
Stock as shall be determined by the Committee, subject to
adjustment as provided in Section 11.5. In the case of a
SAR granted with respect to a stock option, the number of
shares of Common Stock to which the SAR pertains shall be
reduced in the same proportion that the holder of the option
exercises the related stock option.
Section 8.2 Duration. The term of each SAR shall be
determined by the Committee. Unless otherwise provided by
the Committee, each SAR shall become exercisable at such
time or times, to such extent and upon such conditions as
the stock option, if any, to which it relates is
exercisable. No SAR granted to an officer subject to
Section 16 of the Exchange Act may be exercised during the
first six months of its term. Notwithstanding the
foregoing, the Committee may in its discretion accelerate
the exercisability of any SAR.
Section 8.3 Exercise. A SAR may be exercised, in
whole or in part, by giving written notice to the Company,
specifying the number of SARs that the holder wishes to
exercise. The date that the Company receives such written
notice shall be referred to herein as the "Exercise Date."
The Company shall, within 30 days of an Exercise Date,
deliver to the exercising holder certificates for the shares
of Common Stock or cash or both, as determined by the
Committee, to which the holder is entitled pursuant to
Section 8.4.
Section 8.4 Payment. Subject to the right of the
Committee to deliver cash in lieu of shares of Common Stock,
the number of shares of Common Stock that shall be issuable
upon the exercise of an SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to
which the SAR is exercised multiplied by the amount of
the appreciation in such shares (for this purpose, the
"appreciation" shall be the amount by which the Fair
Market Value of the shares of Common Stock subject to
the SAR on the Exercise Date exceeds (1) in the case of
a SAR related to a stock option, the purchase price of
the shares of Common Stock under the stock option or
(2) in the case of a SAR granted alone, without
reference to a related stock option, an amount equal to
the Fair Market Value of a share of Common Stock on the
date of grant, which shall be determined by the
Committee at the time of grant, subject to adjustment
under Section 11.5); by
(b) the Fair Market Value of a share of Common
Stock on the Exercise Date.
In lieu of issuing shares of Common Stock upon the
exercise of a SAR, the Committee may elect to pay the holder
of the SAR cash equal to the Fair Market Value on the
Exercise Date of any or all of the shares which would
otherwise be issuable. No fractional shares of Common Stock
shall be issued upon the exercise of a SAR; instead, the
holder of a SAR shall be entitled to receive a cash
adjustment equal to the same fraction of the Fair Market
Value of a share of Common Stock on the Exercise Date or to
purchase the portion necessary to make a whole share at its
Fair Market Value on the Exercise Date.
Section 9.Stock Awards. A stock award consists of the
transfer by the Company to a participant of shares of Common
Stock, without other payment therefor, as additional compensation
for services previously provided to the Company. The number of
shares to be transferred by the Company to a participant pursuant
to a stock award shall be determined by the Committee. To the
extent a stock award is intended to qualify as performance based
compensation under Section 162(m) it must meet the additional
requirements imposed thereby.
Section 10.Performance Shares. A performance share consists
of an award that may be paid in shares of Common Stock or in
cash, as described below. The award of performance shares shall
be subject to such terms and conditions as the Committee deems
appropriate, including the following:
Section 10.1 Performance Objectives. Each
performance share will be subject to performance objectives
for the Company or one of its subsidiaries or departments to
be achieved by the end of a specified period. The number of
performance shares awarded shall be determined by the
Committee and may be subject to such terms and conditions,
as the Committee shall determine. If the performance
objectives are achieved, each participant will be paid (a) a
number of shares of Common Stock equal to the number of
performance shares initially granted to that participant;
(b) a cash payment equal to the Fair Market Value of such
number of shares of Common Stock on the date the performance
objectives are met or such other date as may be provided by
the Committee or (c) a combination of shares of Common Stock
and cash, as may be provided by the Committee. If such
objectives are not met, each award of performance shares may
provide for lesser payments in accordance with the
established formula. To the extent a performance share is
intended to qualify as performance based compensation under
Section 162(m) of the Code, it must meet the additional
requirements imposed thereby.
Section 10.2 Not a Shareholder. The award of
performance shares to a participant shall not create any
rights in such participant as a shareholder of the Company,
until the payment of shares of Common Stock with respect to
an award.
Section 10.3 Dividend Equivalent Payments. A
performance share award may be granted by the Committee in
conjunction with dividend equivalent payment rights or other
such rights. If so granted, an adjustment shall be made in
performance shares awarded on account of cash dividends that
may be paid or other rights that may be issued to the
holders of Common Stock prior to the end of any period for
which performance objectives were established.
Section 10.4 Non-transferability of Performance
Shares. No performance share may be transferred, pledged or
assigned by the holder thereof (except, in the event of the
holder's death, by will or the laws of descent and
distribution) and the Company shall not be required to
recognize any attempted assignment of such performance share
by any participant.
Section 11. General.
Section 11.1 Duration. The Plan shall remain in
effect until all Incentives granted under the Plan have
either been satisfied by the issuance of shares of Common
Stock or the payment of cash or been terminated under the
terms of the Plan and all restrictions imposed on shares of
restricted stock in connection with their issuance under the
Plan have lapsed.
Section 11.2 Effect of Termination of Employment or
Death. If a participant ceases to be an employee of the
Company for any reason, including death, any Incentives may
be exercised or shall expire as provided herein or as may be
determined by the Committee in the Incentive Agreement.
Section 11.3 Legal and Other Requirements. The
obligation of the Company to sell and deliver Common Stock
under the Plan shall be subject to all applicable laws,
regulations, rules and approvals, including, but not by way
of limitation, the effectiveness of a registration statement
under the Securities Act of 1933 if deemed necessary or
appropriate by the Company.
Section 11.4 Non-transferability of Common Stock.
Any shares of Common Stock awarded to a participant subject
to Section 16 of the Exchange Act through a stock award, as
restricted stock or in payment of a performance share award
must be held for a period of six months from the date of
grant, unless otherwise permitted to be transferred and
still be in compliance with Rule 16b-3 under the Exchange
Act.
Section 11.5 Adjustment. In the event of any merger,
consolidation or reorganization of the Company with any
other corporation or corporations, there shall be
substituted for each of the shares of Common Stock then
subject to the Plan, including shares subject to
restrictions, options, or achievement of performance share
objectives, the number and kind of shares of stock or other
securities to which the holders of the shares of Common
Stock will be entitled pursuant to the transaction. In the
event of any recapitalization, stock dividend, stock split,
combination of shares or other change in the Common Stock,
the number of shares of Common Stock then subject to the
Plan, including shares subject to restrictions, options or
achievement of performance share objectives, shall be
adjusted in proportion to the change in outstanding shares
of Common Stock. In the event of any such adjustments, the
purchase price of any option, the performance objectives of
any Incentive, and the shares of Common Stock issuable
pursuant to any Incentive shall be adjusted as and to the
extent appropriate, in the reasonable discretion of the
Committee, to provide participants with the same relative
rights before and after such adjustment.
Section 11.6 Incentive Agreements. The terms of each
Incentive shall be stated in an agreement approved by the
Committee. The Committee may also determine to enter into
agreements with holders of options to reclassify or convert
certain outstanding options, within the terms of the Plan,
as incentive stock options or as non-qualified stock options
with respect to all or part of such options and any other
previously issued options. Notwithstanding anything to the
contrary contained in the Plan, the Company is under no
obligation to grant an Incentive to a participant or
continue an Incentive in force unless the participant
executes all appropriate agreements with respect to such
Incentives in such form as the Committee may determine from
time to time.
Section 11.7 Withholding. At any time that a
participant is required to pay to the Company an amount
required to be withheld under the applicable income tax laws
in connection with the issuance of shares of Common Stock
under the Plan or upon the lapse of restrictions on shares
of restricted stock, the participant may, subject to the
Committee's right of disapproval, satisfy this obligation in
whole or in part by electing (the "Election") to have the
Company withhold from the distribution shares of Common
Stock having a value equal to the amount required to be
withheld. The value of the shares withheld shall be based
on the Fair Market Value of the Common Stock on the date
that the amount of tax to be withheld shall be determined
(the "Tax Date").
Each Election must be made prior to the Tax Date. The
Committee may disapprove of any Election or may suspend or
terminate the right to make Elections. If a participant
makes an election under Section 83(b) of the Internal
Revenue Code with respect to shares of restricted stock, an
Election is not permitted to be made.
If a participant is an officer of the Company within
the meaning of Section 16 of the Exchange Act, then the
exemption provided by Rule 16b-3(e) under the Exchange Act
for the stock withholding transaction will only be available
if the Election meets the following additional provisions:
(a) No Election shall be effective for a Tax Date
that occurs within six months of the grant of the
option or restricted stock.
(b) The Election must be made either (i) six
months prior to the Tax Date or (ii) during a period
beginning on the third business day following the date
of release for publication of the Company's quarterly
or annual summary statements of earnings and ending on
the twelfth business day following such date (a "window
period"). If the Election is made under (b)(ii) hereof
and relates to the exercise of an option, the exercise
must also occur during a window period.
(c) The Election is irrevocable except upon six
months' advance written notice to the Company.
A participant may also satisfy his or her total tax
liability related to the Incentive by delivering shares of
Common Stock that have been owned by the participant for at
least six months. Satisfaction of the tax obligation
through the use of previously owned shares does not require
compliance with the procedures described above applicable to
an Election to have shares withheld from the shares
otherwise issuable under the Incentive. The value of the
shares delivered shall be based on the Fair Market Value of
the Common Stock on the Tax Date.
Section 11.8 No Continued Employment. No participant
in the Plan shall have any right, because of his or her
participation, to continue in the employ of the Company for
any period of time or to any right to continue his or her
present or any other rate of compensation.
Section 11.9 Amendment of the Plan. The Board may
amend or discontinue the Plan at any time; provided,
however, that no such amendment or discontinuance shall
change or impair, without the consent of the recipient, an
Incentive previously granted and; further provided that if
any such amendment requires shareholder approval to meet the
requirements of Rule 16b-3 under the Exchange Act or any
successor rule such amendment shall be subject to the
approval of the shareholders of FCC.
Section 11.10 Immediate Acceleration of Incentives.
Notwithstanding any provision in this Plan or in any
Incentive Agreement to the contrary, except a provision in
an Incentive Agreement that provides that an Incentive will
in no case be earned unless the prescribed performance goals
are met and no acceleration of vesting will occur under the
terms of this provision, (a) the restrictions on all shares
of restricted stock awarded shall lapse immediately and (b)
all outstanding options and SARs shall become exercisable
immediately and (c) all performance goals established with
respect to any Incentives will be deemed to be met and
payment made immediately, if any of the following events
occur, unless otherwise determined by the Board of Directors
and a majority of the Continuing Directors (as defined
below):
(a) any person or group of persons, other than
any employee benefit plan of the Company, or related
trust, initially becomes the beneficial owner of
securities representing 40% or more of the total voting
power of FCC;
(b) a majority of the members of the Board of
Directors of FCC is replaced within any period of less
than two years by directors not nominated and approved
by the Board of Directors; or
(c) the stockholders of FCC approve a
reorganization, merger or consolidation, in each case,
with respect to which the individuals and entities who
were the respective beneficial owners of the Common
Stock and other voting securities of FCC immediately
prior to such reorganization, merger, or consolidation
do not, following such reorganization, merger or
consolidation, beneficially own, directly or
indirectly, more than 80% of, respectively, the then
outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of
directors, as the case may be, of the corporation
resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution
of FCC or the sale or other disposition of all or
substantially all of the assets of FCC;
provided that, if a participant directs the Committee
in writing prior to the occurrence of any such event
(an "Acceleration Notice") then the restrictions on
that participant's shares shall lapse and the stock
options held by that participant shall become
exercisable only to the extent specified in the
Acceleration Notice.
For the purposes of this Section 11.10, beneficial
ownership by a person or group of persons shall be
determined in accordance with Regulation 13D (or any similar
successor regulation) promulgated by the Securities and
Exchange Commission under the Exchange Act. Beneficial
ownership of securities representing more than 30% of the
total voting power may be established by any reasonable
method, but shall be presumed conclusively as to any person
who files a Schedule 13D report with the Securities and
Exchange Commission reporting such ownership. If the
restrictions and non-exercisability periods are eliminated
by reason of provision (a), the limitations of this Plan
shall not become applicable again should the person or group
cease to own securities representing 30% or more of the
voting power of FCC.
For purposes of this Section 11.10, "Continuing
Directors" are directors (i) who were in office prior to the
time any of provisions (a), (b) or (c) occurred or any
person publicly announced an intention to acquire securities
representing 20% or more of the voting power of FCC, (ii)
directors in office for a period of more than two years, and
(iii) directors nominated and approved by the Continuing
Directors.
Section 11.11 Definition of Fair Market Value. "Fair
Market Value" of the Common Stock on any date shall be
deemed to be the final closing sale price per share of
Common Stock on the trading day immediately prior to such
date. If the Common Stock is listed upon an established
stock exchange or exchanges or any automated quotation
system that provides sale quotations, such fair market value
shall be deemed to be the closing price of the Common Stock
on such exchange or quotation system, or if no sale of the
Common Stock shall have been made on that day, on the next
preceding day on which there was a sale of such stock. If
the Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published,
such fair market value shall be the mean between the quoted
bid and asked price on the day the option is granted, and if
bid and asked quotations are not available on such day, on
the latest preceding day. If the Common Stock is not
actively traded, or quoted, such fair market value shall be
established by the Committee based upon a good faith effort
to value the Common Stock.
Section 11.12 Deferral Permitted. Payment of cash or
distribution of any shares of Common Stock to which a
participant is entitled under any Incentive shall be made as
provided in the Incentive Agreement. Payment may be
deferred at the option of the participant if provided in the
Incentive Agreement.
Section 11.13 Loans. In order to assist a participant
to acquire shares of Common Stock pursuant to an Incentive
granted under the Plan and to assist a participant to
satisfy his tax liabilities arising in connection with such
Incentive, the Committee may authorize, at either the time
of the grant of the Incentive, at the time of the
acquisition of Common Stock pursuant to the Incentive, or at
the time of the lapse of restrictions on shares of
restricted stock granted under the Plan, the extension of a
loan to the participant by the Company. The terms of any
loans, including the interest rate, collateral and terms of
repayment, will be subject to the discretion of the
Committee. The maximum credit available hereunder shall be
the purchase price, if any, of the Common Stock acquired
pursuant to the Incentive, plus the maximum tax liability
that may be incurred in connection with the acquisition.
Approved by shareholders on April 18, 1994.
EXHIBIT 11
FIRST COMMERCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended
December 31
--------------------------------------
(dollars in thousands except per share data) 1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Primary earnings per share
- ----------------------------------
Weighted average number of common shares
outstanding 26,160,191 25,893,194 23,398,079
Shares from assumed exercise of options,
net of treasury stock method 157,051 239,017 330,461
------------ ------------ ------------
26,317,242 26,132,211 23,728,540
============ ============ ============
Net income $63,684 $95,214 $72,475
Preferred dividend requirements 4,347 4,348 4,076
------------ ------------ ------------
Income applicable to common shares $59,337 $90,866 $68,399
============ ============ ============
Per common share $2.25 $3.48 $2.88
Fully diluted earnings per share
- ----------------------------------
Weighted average number of shares
outstanding, net of shares held in treasury 26,160,191 25,893,194 23,398,079
Shares from assumed exercise of options,
net of treasury stock method 158,147 221,106 370,560
Shares from assumed conversion of dilutive
convertible notes and debentures:
Preferred stock 2,793,283 2,794,085 2,626,806
Convertible debentures - 3,216,618 3,172,920
------------ ------------ ------------
29,111,621 32,125,003 29,568,365
============ ============ ============
Income applicable to common shares $59,337 $90,866 $68,399
Expenses that would not have been incurred
if assumed conversions occurred:
Preferred dividend requirements 4,347 4,348 4,076
Interest expense, net of tax - 6,962 7,121
------------ ------------ ------------
Income applicable to common shares plus
expenses that would not have been incurred
if assumed conversions occurred $63,684 $102,176 $79,596
============ ============ ============
Per common share $2.19 $3.18 $2.70
</TABLE>
EXHIBIT 13
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
=============================================================================================
(dollars in thousands except per share data) 1994 1993 % Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME DATA
Net income $ 63,684 $ 95,214 (33)%
Operating income 91,990 95,489 (4)%
Net interest income (FTE) 261,913 256,049 2 %
- ---------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Net income - primary $ 2.25 $ 3.48 (35)%
Net income - fully diluted 2.19 3.18 (31)%
Operating income - primary 3.33 3.50 (5)%
Operating income - fully diluted 3.07 3.20 (4)%
Book value (end of period) 15.71 17.28 (9)%
Tangible book value (end of period) 15.13 16.66 (9)%
Cash dividends 1.10 0.85 29 %
- ---------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEET DATA
Securities $ 3,038,747 $ 3,110,544 (2)%
Loans and leases <FN1> 2,823,061 2,407,231 17 %
Earning assets 5,924,892 5,812,761 2 %
Total assets 6,453,841 6,335,669 2 %
Deposits 5,220,425 5,176,873 1 %
Stockholders' equity 500,240 469,694 7 %
- ---------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets
Net income 0.99 % 1.50 %
Operating income 1.43 % 1.51 %
Return on average total equity
Net income 12.73 % 20.27 %
Operating income 18.39 % 20.33 %
Return on average common equity
Net income 13.48 % 22.18 %
Operating income 19.91 % 22.25 %
Net interest margin 4.42 % 4.40 %
Efficiency ratio <FN2> 64.82 % 61.60 %
Overhead ratio <FN2> 2.21 % 2.03 %
Allowance for loan losses to loans and leases <FN1> 1.66 % 2.55 %
Equity to assets 7.18 % 7.65 %
Leverage ratio 8.04 % 7.63 %
=============================================================================================
<FN1> Net of unearned income.
<FN2> Exclusive of securities transactions.
</TABLE>
Earnings Per Share
operating income - fully diluted
The graph inserted shows operating income divided by the
weighted average number of common shares and all contigently
issuable shares from 1990 - 1994.
The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR $ 0.94 1.55 2.69 3.2 3.07
Operating Return on Total Equity
The graph inserted shows operating income divided by
average total equity from 1990 to 1994. The plot points
are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR % 9.21 14.38 20.33 20.33 18.39
Operating Return on Assets
The graph inserted shows operating income divided by average
total assets from 1990 to 1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR % 0.49 0.72 1.26 1.51 1.43
Operating Return on Common Equity
The graph inserted shows operating income divided by
average common equity from 1990 to 1994. The plot points
are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR % 9.09 14.38 22.79 22.25 19.91
<PAGE>
FINANCIAL REVIEW
1994 IN REVIEW
First Commerce Corporation's (FCC's) net income for
1994 was $63.7 million, compared to $95.2 million in
1993. The most significant factor contributing to the
decrease from 1993 was a $28.3 million loss, after tax,
on securities transactions in 1994. Excluding securities
transactions, operating income was $92.0 million in 1994,
a 4% decrease from 1993's $95.5 million.
Primary earnings per common share were $2.25 in 1994
and $3.48 in 1993. Fully diluted earnings per share were
$2.19 and $3.18 in 1994 and 1993, respectively.
Excluding the effect of securities transactions, primary
and fully diluted earnings per share were $3.33 and
$3.07, respectively, for 1994, and $3.50 and $3.20,
respectively, for 1993.
Return on average assets and return on average
equity were .99% and 12.73% for 1994. For 1993, return
on average assets was 1.50% and return on average equity
was 20.27%. Operating income as a percent of average
assets was 1.43% in 1994 compared to 1.51% in 1993. For
1994, operating income as a percent of average equity was
18.39% versus 20.33% in 1993.
The Federal Reserve Board's actions to push up
interest rates in 1994 caused depreciation of the market
value of FCC's securities portfolio. In order to improve
its securities portfolio income stream during a period of
rising interest rates, FCC acted to replace a portion of
the securities portfolio during 1994. Sales of $1.8
billion of securities resulted in a $28.3 million after
tax realized loss in 1994. The proceeds were primarily
used to reinvest in higher-yielding securities. FCC's
ongoing earnings level was improved by these
transactions; the losses on the sales of securities in
1994 will be more than recovered in future years through
higher interest income from both the higher-yielding
securities purchased and from the investment of the tax
savings resulting from the losses on securities sales.
Operating Income (millions)
The graph inserted shows operating income from 1990 to 1994.
The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 22.002 33.858 72.304 95.489 91.99
Several factors impacted operating income in 1994,
which declined $3.5 million from 1993. Revenue grew in
1994 with increases in both net interest income and other
income, excluding securities transactions. The negative
provision for loan losses was $11.6 million in 1994,
compared to a negative $4.5 million in 1993. These
positive factors were offset by expense growth of 9% and
a $3.0 million increase from the prior year's income tax
expense due to one-time adjustments in 1993. The
increase in operating expense was primarily related to
strategic and customer service initiatives.
Revenue growth in 1994 came from several sources.
Loan growth of 17% over 1993 was the primary contributor
to a 2% increase in net interest income and a two basis
point improvement in the net interest margin.
Additionally, yields on securities increased in the
latter part of 1994 as a result of the securities
transactions previously discussed. Higher volumes of
transactions and accounts were the principal causes of
1994's 7% increase in fee income.
During 1994, FCC announced three pending
acquisitions in its Lafayette, Lake Charles and New
Orleans markets, which would increase assets by
approximately $500 million. Mergers with First
Bancshares, Inc., Slidell, Louisiana, and City Bancorp,
Inc., New Iberia, Louisiana, were completed on February
17, 1995. FCC's proposed merger with Lakeside
Bancshares, Inc. , Lake Charles, Louisiana, is expected
to be completed in the first half of 1995.
<PAGE>
FCC's financial results for 1993 include the
earnings of First Acadiana National Bancshares, Inc.
(FANB), a $208 million bank acquisition accounted for as
a pooling-of-interests. Financial information prior to
1993 does not include FANB, since FANB's results were not
material to FCC's.
A more detailed review of FCC's financial condition
and earnings for 1994 follows, with comparisons to 1993
and 1992. This review should be read in conjunction with
the Consolidated Financial Statements and Notes which
follow this Financial Review.
EARNINGS ANALYSIS
Net Interest Income
Net interest income, fully taxable equivalent (FTE),
for 1994 was $261.9 million, 2% higher than 1993's $256.1
million. The net interest margin was 4.42% for 1994, two
basis points higher than 1993. These improvements
primarily reflected broad-based growth in loans and
higher levels of interest-free funds, partially offset by
the negative effects of a rising interest rate
environment on FCC's liability-sensitive balance sheet.
Average earning assets of $5.9 billion were 2%
higher in 1994 than in 1993. The growth in earning
assets was primarily funded by an increase in interest-
free funds. Average interest-free funds grew 9% in 1994
and funded 21% of average earning assets, compared to 19%
in the prior year. Average interest-bearing liabilities
of $4.7 billion in 1994 were virtually unchanged from the
1993 level. A 1% decline in interest-bearing deposits
was offset by increased short-term borrowings.
Average loans increased $415.8 million, or 17%,
during 1994. As a percent of earning assets, average
loans increased from 41% in 1993 to 48% in 1994.
Increasing loan demand, which contributes to a more
favorable earning asset mix, is a trend that is expected
to continue in 1995. Securities were 51% of average
earning assets, compared to 54% in the prior year. Money
market investments decreased from 5% of average earning
assets to 1% in 1994.
The negative effects of the changes in the interest
rate environment are shown by the decline in the net
interest spread from 3.81% in 1993 to 3.74% in 1994. The
seven basis point decline reflected an 11 basis point
increase in the earning asset yield, while the cost of
interest-bearing liabilities rose 18 basis points. The
increase in the yield on earning assets was due to an
improved earning asset mix.
The yields on both loans and securities declined in
1994. Although loan yields dropped 36 basis points, with
new loans having lower yields than maturing and prepaying
loans, they began to rise in the third quarter of 1994
reflecting the rising interest rate environment. The
securities yield decreased six basis points in 1994;
however, FCC's active management of the portfolio has
resulted in three consecutive quarters of improvement.
FCC sold $1.8 billion in securities of 1994, primarily
reinvesting the proceeds and tax savings in higher-
yielding securities. For the fourth quarter of 1994, the
yield on the total securities portfolio was 6.11%, a 91
basis point increase from 1993's fourth quarter. For
further information concerning FCC's securities portfolio
management, see the Securities section of this Financial
Review.
The cost of both short-term borrowings and interest-
bearing deposits rose in 1994. The rate on short-term
borrowings increased 119 basis points due to the rising
interest rate environment. However, FCC's efforts to
manage deposit costs in that environment held the
increase in the cost of interest-bearing deposits to only
five basis points.
From 1992 to 1993, net interest income increased 6%
due to a higher volume of earning assets and interest-
free funds, partially offset by lower earning asset
yields. Of the $14.2 million increase in net interest
income (FTE) for the year, FANB contributed $9.9 million.
Average earning assets were $5.8 billion in 1993, 10%
higher than in 1992, with increases in both securities
and loans. The growth in earning assets was funded by
increases in short-term borrowings and interest-free
funding sources. Interest-bearing liabilities averaged
$4.7 billion in 1993, 7% higher than in 1992. Interest-
free funds increased 26% and short-term borrowings
increased $258.5 million, or 96%, from 1992.
<PAGE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME(FTE) <FN1>
AND INTEREST RATES
====================================================================================================
1994 1993
- ----------------------------------------------------------------------------------------------------
Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases <FN2> $ 2,823,061 $ 244,035 8.64 % $ 2,407,231 $ 216,711 9.00 %
Securities
Taxable 2,942,148 156,512 5.32 3,002,802 159,635 5.32
Tax-exempt 96,599 10,467 10.83 107,742 12,952 12.02
- ----------------------------------------------------------------------------------------------------
Total securities 3,038,747 166,979 5.49 3,110,544 172,587 5.55
- ----------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks 8,007 279 3.48 86,519 2,906 3.36
Foreign banks <FN3> 28,262 972 3.44 194,580 6,645 3.42
Federal funds sold and
securities purchased
under resale agreements 24,312 1,218 5.02 11,001 377 3.42
Trading account securities 2,503 173 6.92 2,886 147 5.09
- ----------------------------------------------------------------------------------------------------
Total money market investments 63,084 2,642 4.17 294,986 10,075 3.42
- ----------------------------------------------------------------------------------------------------
Total earning assets 5,924,892 $ 413,656 6.98 % 5,812,761 $ 399,373 6.87 %
- ----------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Other assets <FN4> 589,288 598,382
Allowance for loan losses (60,339) (75,474)
- ----------------------------------------------------------------------------------------------------
Total assets $ 6,453,841 $ 6,335,669
====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 841,644 $ 12,335 1.47 % $ 856,370 $ 11,771 1.37 %
Money market investment
deposits 718,621 14,237 1.98 787,003 16,996 2.16
Savings and other consumer
time deposits 2,059,011 75,000 3.64 2,069,367 75,501 3.65
Time deposits $100,000
and over 402,909 15,700 3.90 345,746 12,281 3.55
- ----------------------------------------------------------------------------------------------------
Total interest-bearing
deposits 4,022,185 117,272 2.92 4,058,486 116,549 2.87
- ----------------------------------------------------------------------------------------------------
Short-term borrowings 576,829 23,283 4.04 527,838 15,047 2.85
Long-term debt 89,266 11,188 12.53 95,238 11,728 12.31
- ----------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 4,688,280 $ 151,743 3.24 % 4,681,562 $ 143,324 3.06 %
- ----------------------------------------------------------------------------------------------------
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,198,240 1,118,387
Other liabilities 67,081 66,026
Stockholders' equity 500,240 469,694
- ----------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 6,453,841 $ 6,335,669
====================================================================================================
Net interest income
(FTE) <FN1> and margin $ 261,913 4.42 % $ 256,049 4.40 %
====================================================================================================
Net earning assets and
spread $ 1,236,612 3.74 % $ 1,131,199 3.81 %
====================================================================================================
Total cost of funds 2.56 % 2.47 %
====================================================================================================
<FN1>Based on a 35% tax rate for 1994 and 1993, and a 34% tax rate for 1992.
<FN2>Net of unearned income, prior to deduction of allowance for loan losses and including nonaccrual loans.
<FN3>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.
<FN4>1994 presentation includes mark-to-market adjustment on securities available for sale.
</TABLE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME(FTE)<FN1>
AND INTEREST RATES
======================================================================================
1992
- --------------------------------------------------------------------------------------
Average
(dollars in thousands) Balance Interest Rate
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases <FN2> $2,184,584 $ 214,405 9.81 %
Securities
Taxable 2,619,640 159,811 6.10
Tax-exempt 115,285 14,434 12.53
- --------------------------------------------------------------------------------------
Total securities 2,734,925 174,245 6.37
- --------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks 86,807 3,661 4.22
Foreign banks <FN3> 183,005 9,589 5.24
Federal funds sold and securities
purchased under resale agreements 86,182 3,090 3.59
Trading account securities 4,844 231 4.77
- --------------------------------------------------------------------------------------
Total money market investments 360,838 16,571 4.59
- --------------------------------------------------------------------------------------
Total earning assets 5,280,347 $ 405,221 7.68 %
- --------------------------------------------------------------------------------------
NONEARNING ASSETS
Other assets <FN4> 538,397
Allowance for loan losses (77,345)
- --------------------------------------------------------------------------------------
Total assets $5,741,399
======================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 734,667 $ 13,737 1.87 %
Money market investment deposits 831,610 22,922 2.76
Savings and other consumer time
deposits 2,099,727 91,929 4.38
Time deposits $100,000 and over 351,202 15,010 4.27
- --------------------------------------------------------------------------------------
Total interest-bearing deposits 4,017,206 143,598 3.57
- --------------------------------------------------------------------------------------
Short-term borrowings 269,313 7,897 2.93
Long-term debt 97,154 11,853 12.20
- --------------------------------------------------------------------------------------
Total interest-bearing
liabilities 4,383,673 $ 163,348 3.73 %
- --------------------------------------------------------------------------------------
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 936,366
Other liabilities 65,644
Stockholders' equity 355,716
- --------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $5,741,399
======================================================================================
Net interest income
(FTE) <FN1> and margin $ 241,873 4.58 %
======================================================================================
Net earning assets and
spread $ 896,674 3.95 %
======================================================================================
Total cost of funds 3.10 %
======================================================================================
<FN1> Based on a 35% tax rate for 1994 and 1993, and a 34% tax rate for 1992.
<FN2>Net of unearned income, prior to deduction of allowance for loan losses and including nonaccrual loans.
<FN3>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.
<FN4>1994 presentation includes mark-to-market adjustment on securities available for sale.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 2. SUMMARY OF CHANGES IN NET INTEREST INCOME (FTE) <FN1>
===============================================================================================
1994 Compared to 1993 1993 Compared to 1992
- ---------------------------------------------------------------------------------------------------
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 $27,324 $ 36,225 (8,901) $ 2,306 $20,854 $(18,548)
Securities
Taxable (3,123) (3,227) 104 (176) 21,775 (21,951)
Tax-exempt (2,485) (1,272) (1,213) (1,482) (921) (561)
- ---------------------------------------------------------------------------------------------------
Total securities (5,608) (4,499) (1,109) (1,658) 20,854 (22,512)
- ---------------------------------------------------------------------------------------------------
Interest-bearing deposits in
Domestic banks (2,627) (2,732) 105 (755) (12) (743)
Foreign banks (5,673) (5,720) 47 (2,944) 574 (3,518)
Federal funds sold and securities
purchased under resale
agreements 841 609 232 (2,713) (2,582) (131)
Trading account securities 26 (21) 47 (84) (99) 15
- ---------------------------------------------------------------------------------------------------
Total money market investments (7,433) (7,864) 431 (6,496) (2,119) (4,377)
- ---------------------------------------------------------------------------------------------------
Total interest income $14,283 $23,862 $(9,579) $ (5,848) $39,589 $(45,437)
===================================================================================================
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $ 564 (205) 769 $ (1,966) $ 2,044 $ (4,010)
Money market investment deposits (2,759) (1,414) (1,345) (5,926) (1,177) (4,749)
Savings and other consumer time
deposits (501) (377) (124) (16,428) (1,312) (15,116)
Time deposits $100,000 and over 3,419 2,155 1,264 (2,729) (249) (2,480)
- ---------------------------------------------------------------------------------------------------
Total interest-bearing deposits 723 159 564 (27,049) (694) (26,355)
- ---------------------------------------------------------------------------------------------------
Short-term borrowings 8,236 1,503 6,733 7,150 7,376 (226)
Long-term debt (540) (746) 206 (125) (235) 110
- ---------------------------------------------------------------------------------------------------
Total interest expense $ 8,419 916 7,503 $(20,024) $ 6,447 $(26,471)
- ---------------------------------------------------------------------------------------------------
Change in net interest income
(FTE) $ 5,864 $22,946 (17,082) $ 14,176 $33,142 $(18,966)
===================================================================================================
<FN1>Based on a 35% tax rate for 1994 and 1993, and a 34% tax rate for 1992.
</TABLE>
The net interest spread narrowed 14 basis points
from 1992 to 3.81% in 1993. The net interest margin was
4.40% in 1993, a decline of 18 basis points from 1992.
The margin and spread declined because yields on earning
assets fell 81 basis points, while the cost of interest-
bearing liabilities decreased only 67 basis points. The
reinvestment of maturing and prepaying securities at
lower yields was the primary cause of the decline in the
earning asset yield during 1993. Additionally, although
loan volume increased 10% during 1993, new loans had
lower yields than maturing and prepaying loans.
Table 1 presents the average balance sheets, net
interest income (FTE) and interest rates for 1994, 1993
and 1992. The effect of marking to market securities
available for sale has been eliminated from all average
securities and earning asset totals and the calculation
of the following ratios: securities yield, earning asset
yield, net interest margin and net interest spread.
Table 2 provides the components of changes in net
interest income.
Net Interest Income (FTE) (millions)
The graph inserted shows net interest income (FTE) from
1990 to 1994. Net interest income (FTE) is net income
which has been adjusted by increasing tax - exempt income
to a level that would yield the same after tax income
had that income been subject to taxation. The plot points
are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 176.4 199.6 241.9 256.0 261.9
<PAGE>
Provision for Loan Losses
Loan quality improvements continued in 1994 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 $11.6 million
provision for loan losses in 1994. The provision was a
negative $4.5 million in 1993 and a positive $22.0
million in 1992. The $26.5 million decrease from 1992 to
1993 was also due to lower levels of nonperforming
assets, watch list loans and net charge-offs.
A return to positive provisions in 1995 is likely,
since, among other things, loan growth is expected to
continue. However, the provision in 1995 is expected to
be low in comparison to historical levels.
For discussion of the allowance for loan losses, net
charge-offs and nonperforming assets, see the Credit Risk
Management section of this Financial Review.
Provision for Loan Losses (millions)
The graph inserted shows provision from 1990 to 1994. The
plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 47.425 43.734 22.040 -4.504 -11.568
Other Income
Other income, excluding securities transactions, was
$110.4 million in 1994, compared to $102.8 million in
1993, an increase of 7%. This improvement can be
attributed largely to increases in automated teller
machines (ATM) fee income, credit card income and trust
fees.
ATM fee income rose $3.3 million to $5.4 million in
1994, primarily due to a new ATM usage charge for non-
customers implemented in the fourth quarter of 1993, plus
income from higher volumes associated with the addition
of 58 ATMs during 1994. Credit card income increased 11%
from $22.4 million in 1993 to $24.8 million in 1994,
reflecting higher merchant volumes and late charge fee
income combined with income related to new products.
Trust fees of $13.7 million were 21% higher in 1994 than
in 1993 due to new trust business. Broker/dealer revenue
declined $1.4 million, or 16%, from 1993, reflecting
decreased sales volume of mutual funds.
Other income, excluding securities transactions,
increased $6.5 million from 1992 to 1993. FANB's other
income was $2.1 million in 1993, of which deposit fees
and service charges were $1.5 million, or 71%.
The 7% rise in deposit fees and service charges,
including FANB, was primarily due to higher volumes of
overdraft charges and commercial account fees. Trust
fees rose 20% because of higher fee income from bond
trusteeships and employee benefit plans. Broker/dealer
revenues increased 21% from the prior year due to
increased trading activity as customers looked for
higher-yielding investments. Other operating revenue
decreased 10% from 1992, primarily due to a one-time
payment in 1992 from the Resolution Trust Corporation
related to the Pelican acquisition plus lower loan
origination fees in 1993.
Securities transactions resulted in pretax net
losses of $43.5 million and $423,000 in 1994 and 1993,
respectively, and pretax net gains of $258,000 in 1992.
These transactions are more fully described in the
Securities section of this Financial Review.
Other Income (millions)
Excluding securities transactions
The graph inserted shows other income excluding
securities transactions from 1990 to 1994. The plot
points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 73.213 83.419 96.369 102.844 110.434
Operating Expense
Operating expense was $241.4 million in 1994, 9%
higher than the prior year. The primary factors in the
increase were personnel expense, equipment expense and
professional fees.
Personnel expense increased 11%, to $132.0 million,
from 1993, primarily due to annual raises and a 5%
increase in employees was to improve service levels and
to staff future revenue-producing initiatives.
Additionally, 1994's personnel expense was impacted by a
$2.3 million charge for severance expense related to
delivery system redesign and other strategic initiatives.
Equipment expense was $16.1 million, an increase of
25% from the prior year. Professional fees were 20%
higher than 1993, at $13.8 million for 1994. The
increases in both categories were primarily related to
strategic and customer service initiatives, including
branch automation.
From 1992 to 1993, operating expense rose 8%,
primarily due to increased personnel expense and
professional fees, partially offset by an 82% decrease in
nonperforming assets expense and by deferrals of loan
origination costs. FANB had operating expense for 1993
of $9.2 million, of which $3.9 million, or 42%, was
personnel expense. Personnel expense, including FANB,
increased 17% primarily reflecting increased staff and
incentive compensation for above-plan performance. The
increase in staff was related to the FANB acquisition and
the hiring of new employees in response to increased
volumes. The 34% increase in professional fees was
principally due to strategic initiatives. Nonperforming
assets expense decreased due to lower provisions for
losses on foreclosed property. The initiation of the
deferral of loan origination costs in 1993 reduced
operating expense $8.0 million.
1995's operating expense is expected to be
impacted by charges related to the ongoing delivery
system redesign and other strategic initiatives.
Additionally, one-time charges of $1.0 to $3.0 million
are anticipated in connection with acquisitions completed
in February 1995. Excluding these two items, the growth
in ongoing operating expense should moderate in 1995,
versus the growth in 1994, reflecting the implementation
of strategic initiatives undertaken by FCC and an
increased emphasis on expense control.
Refer to Note 21 of the Notes to Consolidated
Financial Statements for additional details.
Personnel Expense (millions)
The graph inserted shows personnel expense from 1990 to
1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 78.095 87.557 102.111 119.387 132.016
Operating Expense (millions)
Other than personnel expense
The graph inserted shows operating expense excluding
personnel expense from 1990 to 1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 87.230 98.406 101.670 101.693 109.346
Income Taxes
Income tax expense was $29.7 million in 1994, $40.6
million in 1993 and $32.8 million for 1992. The $10.9
million decrease from 1993 to 1994 was primarily due to
a decrease in pretax income of $42.5 million, partially
offset by one-time adjustments in 1993. Income tax
expense in 1993 was reduced $3.5 million due to a
favorable tax settlement with the Internal Revenue
Service related to the deductibility of the amortization
of intangible assets called "depositor relationships" or
"borrower relationships" recorded in connection with
certain acquisitions. The reduction due to the IRS
settlement was partially offset by an increase in income
tax expense in 1993 of $590,000 from the effect of
adopting a new standard requiring the asset and liability
method of accounting for income taxes (SFAS No. 109).
The increase from 1992 to 1993 was primarily due to an
increase in pretax income, an increase in the marginal
federal income tax rate to 35% from 34% and the increase
from adopting the new standard of accounting for income
taxes, partially offset by the one-time adjustment for
the IRS settlement.
<PAGE>
FCC's income tax expense as a percent of pretax
income (32% for 1994, 30% in 1993 and 31% in 1992) is
lower than the respective federal statutory tax rates
(35% in 1994 and 1993 and 34% in 1992) primarily because
a portion of FCC's net income is from the financing of
state and local governments. Interest income from
government financing is generally exempt from federal
income tax. Louisiana does not assess income tax on
commercial banks; rather, banks pay property tax based on
the value of their capital stock.
For additional information on FCC's effective tax
rates and the composition of changes in income tax
expense for all periods, see Note 22.
FINANCIAL CONDITION ANALYSIS
Securities
The securities portfolio totaled $2.5 billion at
December 31, 1994, compared to $3.3 billion at December
31, 1993. Average securities were $3.0 billion for 1994
and $3.1 billion for 1993. The lower level of securities
as of December 31, 1994, compared to one year ago was
related to significant loan growth in 1994 and the
reduction of short-term borrowings.
Accounting Change
FCC adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", effective
January 1, 1994. This standard requires that all
securities be classified as available for sale, held to
maturity or trading. Upon adoption, FCC classified 85%
of its securities portfolio as available for sale, which
are marked to market each month with an after-tax
adjustment to equity for net unrealized gains or losses.
The majority of the securities initially classified as
held to maturity, which are carried at amortized cost,
had remaining maturities of less than one year.
As of December 31, 1994, 99.6% of FCC's $2.5 billion
securities portfolio was classified as available for
sale. Management's decision to classify virtually all of
the securities portfolio as available for sale provides
the most flexibility to actively manage the portfolio,
which represented 43% of earning assets as of December
31, 1994 and 54% as of December 31, 1993. Classifying
securities as held to maturity restricts management's
ability to sell those securities in response to changing
conditions. Notes 5 and 6 contain additional information
on securities held to maturity and available for sale.
FCC's approach to the adoption of SFAS No. 115 was
significantly different from most of its peers in that
very few other financial institutions classified
substantially all of their securities as available for
sale. A significant factor in FCC's approach to the new
accounting standard was the desire to maintain the
flexibility to actively manage the portfolio,
particularly in periods of rising interest rates. The
size of the portfolio doubled when FCC's deposits grew by
$1.5 billion between June 30, 1991 and February 1, 1992
due to transfers from other institutions by depositors
concerned about the safety of their deposits and the
acquisition of deposits of the failed Pelican Homestead.
With little loan demand at that time and interest rates
hitting cyclical lows, these new deposits were invested
in the securities portfolio, primarily two to three year
Treasury notes, causing securities as a percent of
earning assets to rise as high as 54% in 1992.
<PAGE>
Portfolio Management
During 1994, the interest rate environment changed
significantly from the prior year as the Federal Reserve
Board pushed up interest rates 250 basis points. This
resulted in a decline in the market value of all fixed
income securities. The adoption SFAS No. 115 resulted in
a reduction in stockholders' equity to reflect the
depreciation of FCC's available for sale securities
portfolio, net of the tax effect.
FCC actively managed the portfolio, rather than
holding the securities to maturity and maintaining an
earnings stream significantly below the current market
yield. FCC was able to improve the income stream on its
securities, moving the yield closer to the market yield
and mitigating the impact on the spread between the
securities yield and the cost of funds.
Securities classified as available for sale were
sold in all four quarters of 1994. The loss realized for
the year was $28.3 million after tax on the sale of $1.8
billion of securities. The proceeds from $1.3 billion of
these sales were reinvested in higher-yielding
securities. The remaining $500 million of proceeds were
used to reduce the level of short-term borrowings in both
the first and fourth quarters.
The loss on the sales of securities in 1994 will be
more than offset in future years by additional interest
income from the higher-yielding securities purchased and
from the investment of the tax savings resulting from the
loss on the sale. For banks, losses on securities
transactions are treated as ordinary losses not capital
losses.
Several events in 1994, including the securities
transactions, lengthened the average maturity of the
total securities portfolio from 3.03 years as of December
31, 1993 to 3.83 years at December 31, 1994. The average
duration increased from 2.23 years to 2.86 years. Tables
3 and 4 provide information on the maturities and yields
of securities held on December 31, 1994. Other events
causing the portfolio maturity to lengthen were the
decrease in the size of the portfolio, particularly in
shorter-term Treasury securities, and rising interest
rates, which lengthened the average expected maturities
of mortgage-backed securities.
In 1995, FCC is likely to continue selling
securities, incurring losses, in order to improve the
portfolio's income stream, fund loan growth, or reduce
short-term borrowings. The maturities and types of new
securities purchased are likely to change in subsequent
purchases depending upon further changes in the interest
rate environment. Additionally, some of the new
purchases may be classified as held to maturity. The
timing and amount of future sales is uncertain, with many
factors to consider, including market conditions, tax and
accounting issues, and available investment
opportunities.
<TABLE>
<CAPTION>
TABLE 3. SECURITIES AVAILABLE FOR SALE--MATURITIES AND YIELDS <FN1>
==================================================================================================================================
December 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) Maturity
- ----------------------------------------------------------------------------------------------------------------------------------
Total Carrying
Within 1 Year 1-5 Years 5-10 Years After 10 Years Value
- ----------------------------------------------------------------------------------------------------------------------------------
FTE FTE FTE FTE FTE
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. treasury securities $26,688 7.30 % $1,199,816 6.33 % $ - - % $ - - % $1,226,504 6.36 %
U.S. agency securities
U.S. agency notes - fixed 977 4.72 113,784 8.05 - - 1,089 7.15 115,850 8.01
U.S. agency notes - floating - - 43 6.44 - - 1,787 6.36 1,830 6.36
Mortgage-backed agencies - fixed - - 155,684 5.21 20,923 6.32 337,375 5.90 513,982 5.72
Mortgage-backed agencies - floating - - - - - - 483,748 5.52 483,748 5.52
Obligations of states and
political subdivisions 3,777 7.79 15,234 10.08 16,922 10.26 66,253 10.88 102,186 10.54
Other debt securities - - 308 8.78 - - 2,207 6.14 2,515 6.46
Equity securities - - - - - - 11,828 3.16 11,828 3.16
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities avaiable
for sale $31,442 7.28 % $1,484,869 6.38 % $ 37,845 8.00 % $904,287 5.98 % $2,458,443 6.26 %
==================================================================================================================================
<FN1> Fully taxable equivalent based on a 35% tax rate. Maturities are based on the contractual maturities of the securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 4. SECURITIES HELD TO MATURITY--MATURITIES AND YIELDS <FN1>
================================================================================================================================
December 31, 1994
- --------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) Maturity
- --------------------------------------------------------------------------------------------------------------------------------
Total Carrying
Within 1 Year 1-5 Years 5-10 Years After 10 Years Value
- --------------------------------------------------------------------------------------------------------------------------------
FTE FTE FTE FTE FTE
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Obligations of states and
political subdivisions $ 61 12.38 % $ 91 12.69 % $ - - % $ - - % $ 152 12.56 %
Other debt securities - - 250 6.75 250 6.75 - - 500 6.75
Equity securities - - - - - - 8,148 5.54 8,148 5.54
- --------------------------------------------------------------------------------------------------------------------------------
Total securities held
to maturity $ 61 12.38 % $ 341 8.33 % $ 250 6.75 % $ 8,148 5.54 % $ 8,800 5.73 %
================================================================================================================================
<FN1> Fully taxable equivalent based on a 35% tax rate. Maturities are based on the contractual maturities of the securities.
</TABLE>
Securities Available for Sale
As of December 31, 1994, securities available for
sale were $2.5 billion. The unrealized loss, net of tax,
reflected as a reduction of stockholders' equity was
$71.8 million at year-end. This unrealized loss resulted
almost wholly from interest rate fluctuations and does
not represent a permanent impairment of value. Gross
unrealized losses were $117.5 million and gross realized
gains were $7.1 million. Almost all of FCC's mortgage-
backed securities are U. S. agency securities. At
December 31, 1994, the weighted average stated
maturity of these securities was 22 years,
compared to an average expected maturity of five years.
During 1994, $202.0 million of mortgage-backed securities
were paid out prior to maturity. Changes in interest
rates affect the rate of prepayment on mortgage-backed
securities. If market interest rates fall below coupon
rates, the likelihood of prepayment is increased. Market
interest rates above coupon rates decrease the likelihood
of prepayments, increasing the expected maturity of these
securities.
Securities Held to Maturity
As of December 31, 1994, securities held to maturity
totaled $8.8 million. Gross unrealized gains were
$1,000; there were no gross unrealized losses.
Money Market Investments
Money market investments include interest-bearing
deposits in other banks, federal funds sold, securities
purchased under resale agreements and trading account
securities. Money market investments are used to meet
liquidity needs and as a temporary investment until
longer-term investments can be made.
As of December 31, 1994, money market investments
totaled $47.3 million, and averaged $63.1 million for
1994. This was a decrease from the $84.5 million at
December 31, 1993 and the $295.0 million average for
1993. The decrease in money market investments was the
result of the reduction of short-term borrowings early in
1994. As a percent of average earning assets, money
market investments declined from 5% in 1993 to 1% in
1994.
<PAGE>
<TABLE>
<CAPTION>
TABLE 5. LOANS AND LEASES OUTSTANDING BY TYPE
============================================================================================================================
December 31
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands) 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans to individuals - residential mortgages $ 597,060 $ 521,362 $ 323,641 $ 313,810 $ 338,056
Loans to individuals - other 860,490 663,364 493,468 470,250 465,086
Commercial, financial and agricultural 709,529 482,677 473,411 590,780 631,890
Real estate-commercial mortgages 489,527 466,228 417,113 359,690 364,502
Real estate-other 72,448 55,055 62,258 72,795 101,223
Credit card loans 426,224 383,932 385,604 403,557 392,717
Other 86,432 113,901 100,375 88,910 101,423
- ----------------------------------------------------------------------------------------------------------------------------
Total loans and leases 3,241,710 2,686,519 2,255,870 2,299,792 2,394,897
============================================================================================================================
</TABLE>
Loans
Loans and leases, net of unearned income, were $3.2
billion as of December 31, 1994, a 21% increase from
1993's year-end amount of $2.7 billion. Loans averaged
$2.8 billion in 1994, a 17% increase from 1993. Loan
growth was across all sectors of the portfolio and is
expected to continue in 1995.
As shown in Table 5, the largest segment of the loan
portfolio continues to be loans to individuals. All
types of loans, except other loans, increased from year-
end 1993 to year-end 1994. The strongest loan growth was
in loans to individuals and commercial loans. Note 7
contains additional information on loan concentrations.
The pie chart on this page presents data on the loan
portfolio by borrowers' industry, excluding consumer
loans. Table 6 provides information on maturities and
rate sensitivities by loan type.
Consumer loans include loans to individuals and
credit card loans. Loans to individuals were $1.5
billion at the end of 1994 and were 23% higher than the
prior year-end. There were increases in most categories
of loans to individuals with the most significant
increases in automobile, primarily indirect, and first
lien residential mortgage loans. The increase in
automobile loans was primarily due to increased consumer
demand while the rise in residential mortgage loans
reflected consumers' anticipation of higher interest
rates. Loans to individuals were 45% of total loans, a
slight increase from 44% at the end of 1993. As of
December 31, 1994, credit card loans were $426.2 million,
or 13% of total loans, and were 11% higher than at 1993's
year-end. Credit card loans were relatively flat during
most of 1994, but increased significantly during the
fourth quarter, consistent with seasonal consumer
spending patterns.
In December 1994, FCC announced a nationwide
expansion of its credit card services to the military.
FCC was awarded, on a competitive bid basis, an exclusive
contract to administer the U.S. Air Force's Commercial
and Proprietary Club Card Program throughout the United
States. The expanded contract has the potential to
generate approximately $230.0 million in additional
average credit card outstandings within 15 to 18 months.
<PAGE>
<TABLE>
<CAPTION>
TABLE 6. LOAN MATURITIES AND RATE SENSITIVITIES BY TYPE
==================================================================================================
December 31, 1994
Maturing
Within One to After
(in thousands) One Year Five Years Five Years Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed
Loans to individuals - residential mortgages $ 28,109 $ 241,386 $ 278,759 $ 548,254
Loans to individuals - other 67,053 568,938 11,580 647,571
Commercial, financial and agricultural 78,231 115,140 11,676 205,047
Real estate-commercial mortgage 38,454 189,633 67,202 295,289
Real estate-other 24,425 23,957 3,848 52,230
Credit card loans 303,422 0 0 303,422
Other 16,712 18,838 12,477 48,027
- --------------------------------------------------------------------------------------------------
Total fixed loans and leases 556,406 1,157,892 385,542 2,099,840
- --------------------------------------------------------------------------------------------------
Floating
Loans to individuals - residential mortgages 37,281 8,854 2,671 48,806
Loans to individuals - other 87,435 46,216 79,268 212,919
Commercial, financial and agricultural 360,547 110,055 33,880 504,482
Real estate-commercial mortgage 79,465 83,590 31,183 194,238
Real estate-other 13,016 5,211 1,991 20,218
Credit card loans 122,802 0 0 122,802
Other 29,914 8,241 250 38,405
- --------------------------------------------------------------------------------------------------
Total floating loans and leases 730,460 262,167 149,243 1,141,870
- --------------------------------------------------------------------------------------------------
Total loans and leases $1,286,866 $1,420,059 $ 534,785 $3,241,710
==================================================================================================
</TABLE>
Commercial loans were $709.5 million as of December
31, 1994, or 22% of total loans, compared to $482.7
million at the end of 1993, or 18% of total loans. The
three largest industries were services with $197.5
million, mining with $89.7 million and transportation
with $70.1 million. The remainder of commercial loans
were diversified among a wide array of industries. The
growth in commercial loans was in virtually all industry
segments. The most significant increases were in the
services and mining industries. At year-end 1994, loans
related to the gaming industry were $64.9 million, or 2%
of total loans.
Real estate loans are comprised of loans secured by
commercial properties, construction and land development
loans, loans secured by multi-family properties and
farmland loans. Commercial real estate loans are the
most significant component of real estate loans and were
$489.5 million at year-end 1994, or 15% of total loans.
This compares to $466.2 million, or 17% of total loans,
at year-end 1993. Approximately 28% of the properties
are owner-occupied, with the remainder held as investment
properties. Construction and land development loans were
$47.6 million at year-end, 1% of total loans.
Loans and Leases (billions)
Average loans and leases, net of unearned income
The graph inserted shows average loans and leases, net of
unearned income, from 1990 to 1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR BILLIONS 2.403 2.323 2.185 2.407 2.823
Loan portifolio by Industry
(excluding consumer loans)
The pie chart inserted presents data on the loan portifolio
by borrowers' industry, excluding consumer loans as of
December 31, 1994. The plot points are (in percentages):
BORROWERS INDUSTRY AMOUNT
- ------------------ ------
Health 9.6%
Other Services 15.1%
Finance 8.7%
Real Estate 9.9%
Construction 5.2%
Mining 7.3%
Manufacturing 7.3%
Retail 7.0%
Wholesale 6.6%
Transportation 15.5%
Other 2.7%
Professional 5.1%
<TABLE>
<CAPTION>
TABLE 7. AVERAGE DEPOSITS
===========================================================================================================
(dollars in thousands) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand deposits $1,187,538 22.75 % $1,099,471 21.24 % $ 922,519 18.62 %
NOW account deposits 841,644 16.12 856,370 16.54 734,667 14.83
Money market investment deposits 718,621 13.77 787,003 15.20 831,610 16.79
Savings deposits 605,854 11.61 598,964 11.57 523,927 10.58
Other consumer time deposits 1,463,606 28.03 1,488,508 28.75 1,588,597 32.07
- -----------------------------------------------------------------------------------------------------------
Total core deposits 4,817,263 92.28 4,830,316 93.30 4,601,320 92.89
Time deposits $100,000 and over <FN1> 403,162 7.72 346,557 6.70 352,252 7.11
- -----------------------------------------------------------------------------------------------------------
Total average deposits $5,220,425 100.00 % $5,176,873 100.00 % $4,953,572 100.00 %
===========================================================================================================
<FN1> Foreign branch time deposits included are immaterial in all periods presented.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 8. MATURITIES OF TIME DEPOSITS
$100,000 AND OVER
================================================
(in thousands) December 31, 1994
- ------------------------------------------------
<S> <C>
Within three months $ 286,988
Three to six months 95,171
Six to twelve months 94,081
After twelve months 90,681
- ------------------------------------------------
Total $ 566,921
================================================
</TABLE>
Deposits
Deposits were $5.5 billion as of December 31, 1994.
As shown in Table 7, average deposits were $5.2 billion
in 1994, a 1% increase over 1993. Noninterest-bearing
deposits rose 8% over 1993, positively impacting FCC's
cost of funds. Money market investment deposits declined
9%; customers had more incentive to move into longer
maturity instruments, such as certificates of deposit and
Treasury notes, in order to improve returns. This trend
is expected to continue in 1995, as FCC continues to be
very selective in raising deposit rates and aggressive in
managing liability costs. Core deposits were 92% of
average deposits for 1994, compared to 93% in 1993.
Noninterest-bearing deposits were 20% of average earning
assets in 1994 and 19% in 1993.
Table 8 includes the maturities of time deposits of
$100,000 and over.
Short-Term Borrowings
Average short-term borrowings were $576.8 million
for 1994, a 9% increase over 1993. As a percent of
average interest-bearing liabilities, short-term
borrowings were 12% in 1994 and 11% in 1993. As of
December 31, 1994, short-term borrowings had declined to
$470.4 million, 31% lower than at December 31, 1993.
Late in 1994's fourth quarter, the proceeds from the sale
of approximately $240 million of securities were used to
reduce the level of short-term borrowings. This lessened
the reliance upon relatively high cost short-term
borrowings for funding. Table 9 presents the detail of
average short-term borrowings for 1994, 1993, and 1992.
<TABLE>
<CAPTION>
TABLE 9. AVERAGE SHORT-TERM BORROWINGS
=============================================================================================================
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
(dollars in thousands) Balance Rate Balance Rate Balance Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased and securities sold
under agreements to repurchase $571,325 4.03 % $516,058 2.84 % $ 265,873 2.93 %
Commercial paper - - 225 2.67 26 3.85
Other short-term borrowings 5,504 4.85 11,555 3.13 3,414 2.72
- -------------------------------------------------------------------------------------------------------------
Total $576,829 4.04 % $527,838 2.85 % $ 269,313 2.93 %
=============================================================================================================
</TABLE>
Asset/Liability Management
The objective of FCC's asset/liability management is
to provide an optimum level of net interest income in a
reasonably expected interest rate environment with an
acceptable level of risk, while balancing liquidity and
capital needs. FCC uses ongoing technical analysis of
opportunities and risks so that appropriate actions can
be taken by management to meet this objective. Actions
considered usually include purchases and sales of
securities to alter maturities and yields of the
portfolio, changes in the mix and level of earning assets
and funding sources, and the use of off-balance sheet
interest rate risk products such as swaps, caps and
floors.
<PAGE>
<TABLE>
<CAPTION>
TABLE 10. INTEREST RATE SENSITIVITY
==========================================================================================================================
By Repricing Dates at December 31, 1994
- --------------------------------------------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 After Noninterest-
(dollars in millions) Days Days Days Days 1 Year Bearing Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Securities $ 111 $ 25 $ 247 $ 286 $1,798 $ - $2,467
Loans and leases, net of unearned income 1,082 117 135 205 1,698 - 3,237
Money market investments 47 - - - - - 47
Other assets - - - - - 808 808
- --------------------------------------------------------------------------------------------------------------------------
Total assets $1,240 $ 142 $ 382 $ 491 $3,496 $ 808 $6,559
- --------------------------------------------------------------------------------------------------------------------------
SOURCES OF FUNDS
Money market deposits $ 979 $ - $ - $ 540 $ 42 $ - $1,561
Consumer time deposits 385 175 242 253 1,048 - 2,103
Time deposits $100,000 and over 192 95 95 94 91 - 567
Short-term borrowings 471 - - - - - 471
Long-term debt - - - - 89 - 89
Noninterest-bearing deposits - - - - - 1,227 1,227
Other liabilities - - - - - 70 70
Stockholders' equity - - - - - 471 471
- --------------------------------------------------------------------------------------------------------------------------
Total sources of funds $2,027 $ 270 $ 337 $ 887 $1,270 $ 1,768 $6,559
- --------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS $ 10 $ 300 $ 50 $ (10) $ (350) $ -
INTEREST RATE SENSITIVITY GAP $ (777) $ 172 $ 95 $ (406) $1,876 $ (960)
CUMULATIVE INTEREST RATE SENSITIVITY GAP $ (777) $ (605) $(510) $ (916) $ 960 $ -
CUMULATIVE INTEREST RATE SENSITIVITY GAP
AS A PERCENT OF TOTAL ASSETS (11.8)% (9.2)% (7.8)% (14.0)% 14.6 %
==========================================================================================================================
</TABLE>
Interest Rate Risk
Interest rate risk is created by changes in the
interest rate environment and the impact those changes
have on the maturities and repricing of assets and
liabilities. FCC relies on three methods to measure
interest rate risk. The most important method is the
simulation model, which determines the impact on net
interest income of assumed changes in interest rates and
the mix and volume of earning assets and interest-bearing
liabilities. The simulation model is also used to
measure the effect of rate shocks, which are sudden
movements of interest rates. If the result of these
simulations identify potentially adverse performance
situations, FCC's management may alter the balance sheet
or enter into off-balance sheet financial instruments to
minimize the impact. The second method measures the fair
value of assets and liabilities. The third method
measures the interest rate sensitivity gap using a static
balance sheet. This method has several limitations since
conditions change on a daily basis and assumptions on
repricing of deposits without stated maturities may not
reflect future behavior of customers. Table 10
demonstrates FCC's static gap position as of December 31,
1994.
FCC took several steps to manage interest rate risk
during the rising rate environment of 1994. Securities
were sold and the proceeds were reinvested in higher-
yielding securities in order to improve the income
stream. Additionally, deposit rates were increased
selectively in order to lengthen maturities, thereby
reducing liability sensitivity. At year-end, short-term
borrowings were reduced, which also reduced liability
sensitivity.
Off-Balance Sheet Instruments
FCC uses off-balance sheet instruments to manage
various risks and generate fee income. Loan commitments,
letters of credit, foreign exchange contracts and
interest rate contracts are not carried on the balance
sheet. However, income and expenses related to these
instruments are reflected in the financial statements.
Note 18 provides additional information for off-balance
sheet instruments.
<PAGE>
<TABLE>
<CAPTION>
TABLE 11. INTEREST RATE SWAPS
======================================================================================================================
Weighted Average Rate
Weighted ______________________
Average Receive Pay Floating
Notional Maturity Fixed Floating Rate Reset Liability
(dollars in thousands) Amount (years) Rate Rate Index Frequency Hedged
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Generic Swaps $110,000 1.6 6.13 % 5.70 % LIBOR Quarterly Certificates of Deposit
Callable Swaps 50,000 1.9 4.84 6.31 LIBOR Semi-annually Certificates of Deposit
Amortizing interest
rate swaps 200,000 1.9 4.35 5.73 LIBOR Quarterly Certificates of Deposit
- ----------------------------------------------------------------------------------------------------------------------
Total Swaps at
December 31, 1994 $360,000 1.8 4.96 % 5.80 %
======================================================================================================================
</TABLE>
FCC enters into interest rate contracts with the
objective of partially insulating net interest income
from changes in interest rates. FCC does not use
interest rate contracts for speculative purposes.
FCC's interest rate swaps' total notional amount was
$360 million as of December 31, 1994, as shown in Table
11. The swap contracts were purchased to hedge the cost
of certificates of deposit when interest rates were
declining. The contracts converted deposits which were
fixed rate into floating rate. However, as rates began
to rise in 1994, these swaps began to increase FCC's
deposit costs and are expected to continue to do so until
these contracts mature. If rates had declined, the
amortizing interest rate swaps notional amount would have
begun to amortize, shortening the maturity of the
contract.
At December 31, 1994, FCC had $350 million of caps
which mature between August and November of 1996. These
caps hedge against future increases in the cost of short-
term borrowings. The weighted average strike price is
currently 6.27%, which graduates over the life of the
contract; the index is LIBOR, which resets quarterly. An
additional $100 million contract is a cap corridor, with
a maturity of July 1995. The contract's index is LIBOR
with a quarterly reset, and the cost of money market
deposits is hedged. These contracts are expected to
reduce the effects of rising rates on the cost of
interest-bearing liabilities. Deferred gains related to
terminated interest rate contracts were $16,000 and
$10,000 at December 31, 1994 and 1993, respectively.
Liquidity
Liquidity is provided by a stable base of funding
sources, especially core deposits, and an adequate level
of assets readily convertible into cash. These sources
of liquidity are needed to meet cash requirements for
deposit withdrawals and the funding of loans.
FCC's core deposits, money market investments, short
term borrowings and securities available for sale
provided a more than adequate level of liquidity in 1994.
Other potential sources of liquidity are commercial paper
issued by the Parent Company and lines of credit
maintained with major banks. No commercial paper was
issued in 1994, and the lines of credit totaled $30.0
million as of December 31, 1994.
<TABLE>
<CAPTION>
TABLE 12. ANALYSIS OF DERIVATIVE PRODUCT INTEREST INCOME (EXPENSE)
=======================================================================================
Option Interest Amortizing
Year Ended December 31,1994 Based Rate Interest/
(in thousands) Instruments Swaps Callable Swaps Total
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 639 $ 285 $ 102 $ 1,026
Premium amortization (306) - - (306)
- ---------------------------------------------------------------------------------------
Interest income $ 333 $ 285 $ 102 $ 720
=======================================================================================
</TABLE>
<PAGE>
Capital and Dividends
As of December 31, 1994, total stockholders' equity
was 7.18% of total assets, compared to 7.65% one year
ago. FCC adopted SFAS No. 115 effective January 1, 1994,
which requires a reduction of stockholders' equity for
the unrealized loss on securities available for sale, net
of the tax effect. The unrealized loss was $71.8 million
as of December 31, 1994. Excluding the SFAS No. 115
adjustment, stockholders' equity was 8.19% of total
assets as of December 31, 1994.
Stockholders' Equity
as a percentage of year - end assets
The graph inserted shows stockholders' equity as a percentage
of year - end assets from 1990 to 1994. The plot points
are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR % 5.03 5.01 6.79 7.65 7.18
Leverage Ratio
as a % of year-end assets
The graph inserted shows stockholders' equity plus minority
interest plus qualifying long-term debt less intangible
assets divided by the latest quarter's average total assets
less intangible assets from 1990 to 1994. The plot points
are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR % 4.66 4.87 6.76 7.63 8.04
Regulatory ratios, including leverage, tier 1 and
tier 2, are calculated excluding the effect of the SFAS
No. 115 adjustment. The regulatory leverage ratio was
8.04% as of December 31, 1994, and 7.63% at December 31,
1993. Table 13 presents FCC's risk-based and other
capital ratios for the past five years. All ratios
remain well above regulatory minimums. Under present
regulations, all five of FCC's banks are classified as
"well-capitalized".
FCC increased its common stock cash dividend 20%
during 1994 and paid $1.10 per share for the full year.
The Parent Company's sources of funds to pay cash
dividends on its common and preferred stock are its net
working capital and the dividends it receives from the
banks. As of December 31, 1994, the Parent Company had
$104.9 million of net working capital. Additionally, the
Parent Company could receive dividends from the banks
without prior regulatory approval of $57.3 million after
December 31, 1994, plus the banks' adjusted net profits
for 1995.
On December 19, 1994 FCC announced its intention to
repurchase up to two million shares of its common stock
for the purpose of funding up to two of three pending
acquisitions. As of December 31, 1994, no shares had
been repurchased.
Credit Risk Management
FCC manages its credit risk by diversifying its loan
portfolio, maintaining credit underwriting standards
which emphasize cash flows and repayment ability,
providing an adequate allowance for loan losses and
continually reviewing loans through the independent loan
review process. Portfolio diversification reduces credit
risk by minimizing the impact on the portfolio if
weaknesses develop in certain segments of the economy.
Credit underwriting standards ensure that loans are
properly structured and collateralized. An adequate
allowance for loan losses provides for losses inherent in
the loan portfolio. The loan review process identifies
and monitors potentially weak or deteriorating credits.
<TABLE>
<CAPTION>
TABLE 13. RISK-BASED CAPITAL AND CAPITAL RATIOS
===========================================================================================================================
December 31
- ---------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 1 capital $ 527,686 $ 493,529 $ 397,700 $ 236,898 $ 208,188
Tier 2 capital 127,893 121,921 122,823 125,218 127,527
- ---------------------------------------------------------------------------------------------------------------------------
Total capital $ 655,579 $ 615,450 $ 520,523 $ 362,116 $ 335,715
===========================================================================================================================
Risk-weighted assets $3,551,665 $ 3,005,545 $ 2,588,546 $ 2,605,998 $ 2,745,070
===========================================================================================================================
Ratios at end of year
Tier 1 capital 14.86 % 16.42 % 15.36 % 9.09 % 7.58 %
Total capital 18.46 % 20.48 % 20.11 % 13.90 % 12.23 %
Equity ratio 7.18 % 7.65 % 6.79 % 5.01 % 5.03 %
Tangible equity ratio 6.97 % 7.43 % 6.51 % 4.67 % 4.60 %
Leverage ratio 8.04 % 7.63 % 6.76 % 4.87 % 4.66 %
===========================================================================================================================
</TABLE>
<PAGE>
Nonperforming Assets
Nonaccrual loans, restructured loans and foreclosed
assets are included in nonperforming assets.
Nonperforming assets declined $15.0 million, or 46%,
during the year, to $17.7 million at December 31, 1994.
As a percent of loans and foreclosed assets,
nonperforming assets were .55% at year-end, compared to
1.22% one year ago. As shown in Table 14, positive
trends in nonperforming assets began in 1992 and
continued through 1994. Table 15 reconciles the changes
in nonperforming assets during 1994. All categories of
nonperforming loans decreased in 1994. 62% of
nonperforming loans were contractually current or no more
than 30 days past due at the end of 1994. During the
year, FCC recovered interest on nonaccrual loans of $2.7
million, which was recorded as interest income.
Foreclosed assets, net of the allowance, were $4.3
million as of December 31, 1994, a decline of $3.0
million from a year ago. The allowance for foreclosed
assets was $3.6 million at year-end, a decline of $1.9
million from 1993. Sales of property caused the
decreases in both foreclosed assets and the allowance for
foreclosed assets during the year.
Loans and leases past due 90 days or more and not on
nonaccrual status were $10.3 million at December 31,
1994, or .32% of total loans. Included in this category
were $5.6 million in government-guaranteed student loans
and $4.4 million of credit card loans, which are charged-
off within 180 days of becoming past due.
Nonperforming Assets (millions)
This graph inserted shows nonperforming assets from 1990
to 1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 102.509 90.432 63.848 32.709 17.684
<TABLE>
<CAPTION>
TABLE 14. NONPERFORMING ASSETS
=================================================================================================================================
December 31
- ---------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans by type
Loans to individuals-residential mortgages $ 4,207 $ 4,998 $ 8,826 $ 9,574 $ 8,972
Loans to individuals-other 602 866 1,027 1,604 1,671
Commercial, financial and agricultural 879 3,761 8,305 14,634 16,198
Real estate-commercial mortgages 7,555 15,613 23,757 26,587 32,259
Real estate-other 156 223 585 2,992 8,314
Other - - 608 1,163 427
Restructured loans - - - 637 893
- ---------------------------------------------------------------------------------------------------------------------------------
13,399 25,461 43,108 57,191 68,734
- ---------------------------------------------------------------------------------------------------------------------------------
Foreclosed assets
Other real estate 7,847 12,667 29,258 37,129 36,464
Other foreclosed assets 86 96 93 367 122
Allowance for losses on foreclosed assets (3,648) (5,515) (8,611) (4,255) (2,811)
- ---------------------------------------------------------------------------------------------------------------------------------
4,285 7,248 20,740 33,241 33,775
- ---------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $17,684 $ 32,709 $63,848 $ 90,432 $102,509
=================================================================================================================================
Loans past due 90 days or more and not on nonaccrual status $10,304 $ 12,523 $13,499 $ 10,182 $ 8,716
=================================================================================================================================
End of year ratios
Nonperforming assets as a percent of loans and leases <FN1>
plus foreclosed assets 0.55 % 1.22 % 2.82 % 3.91 % 4.26 %
Allowance for loan losses as a percent of nonperforming loans 400.45 % 268.26 % 178.56 % 123.83 % 84.10 %
Loans and leases past due 90 days or more and not on nonaccrual
status as a percent of loans and leases <FN1> 0.32 % 0.47 % 0.60 % 0.45 % 0.37 %
=================================================================================================================================
<FN1> Net of unearned income.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 15. CHANGES IN NONPERFORMING ASSETS
=======================================================================================
(in thousands) 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of year $ 32,709 $ 66,574 $ 90,432 $ 102,509
Additions 11,485 18,175 32,916 75,121
Payments and sales (23,276) (40,314) (38,988) (52,942)
Writedowns, charge-offs and
foreclosed assets provisions (1,376) (4,628) (13,345) (27,977)
Loans returned to accrual status (1,858) (7,098) (7,167) (6,279)
- ---------------------------------------------------------------------------------------
Net change (15,025) (33,865) (26,584) (12,077)
- ---------------------------------------------------------------------------------------
Balance at end of year $ 17,684 $ 32,709 $ 63,848 $ 90,432
=======================================================================================
</TABLE>
Accounting Change
The Financial Accounting Standards Board (FASB)
issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan" in May, 1993. In October, 1994,
the FASB issued SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan-Income Recognition and
Disclosures" which amends SFAS No. 114. These standards
require the measurement of certain impaired loans based
on the present value of expected future cash flows
discounted at the loan's effective interest rates.
Adoption of SFAS Nos. 114 and 118 is required for fiscal
years beginning after December 15, 1994. FCC will adopt
these statements beginning January 1, 1995; adoption
will not have a material impact on FCC's consolidated
financial statements.
Watch List
FCC's watch list includes loans which, for
management purposes, have been identified as requiring a
higher level of monitoring due to risk. FCC's watch list
includes both performing and nonperforming loans, as well
as foreclosed assets. The majority of watch list loans
are classified as performing, because they do not have
characteristics resulting in uncertainty about the
borrower's ability to repay principal and interest in
accordance with the original terms of the loans.
The watch list consists of classifications,
identified as Type 1 through Type 4. Types 1, 2 and 3
generally parallel the regulatory classifications of
loss, doubtful and substandard, respectively. Type 4
generally parallels the regulatory classification of
Other Assets Especially Mentioned (OAEM). These loans
require monitoring due to conditions which, if not
corrected, could increase credit risk. Total watch list
loans and foreclosed assets declined 32% during the year
to $107.5 million at December 31, 1994.
<TABLE>
<CAPTION>
TABLE 16. SUMMARY OF LOAN AND LEASE LOSS EXPERIENCE
=================================================================================================================================
(dollars in thousands) 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $ 68,302 $ 79,919 $ 70,817 $ 57,807 $ 44,412
Allowance of purchased loans - - - - (63)
Provision charged to expense (11,568) (4,504) 22,040 43,734 47,425
Loans and leases charged to the allowance
Loans to individuals-residential mortgages 227 743 1,816 4,344 3,304
Loans to individuals-other 2,519 2,267 3,371 5,381 4,921
Commercial, financial and agricultural 765 3,027 4,829 11,310 12,865
Real estate-commercial mortgages 165 510 2,412 4,826 8,010
Real estate-other 7 115 137 400 231
Credit card loans 9,388 9,545 11,514 12,322 10,444
Other - 26 21 444 168
- ---------------------------------------------------------------------------------------------------------------------------------
Total charge-offs 13,071 16,233 24,100 39,027 39,943
- ---------------------------------------------------------------------------------------------------------------------------------
Recoveries on loans and leases previously charged to the allowance
Loans to individuals-residential mortgages 1,052 1,024 1,011 662 119
Loans to individuals-other 1,347 1,528 1,543 1,620 1,221
Commercial, financial and agricultural 3,703 2,860 2,635 3,903 1,865
Real estate-commercial mortgages 745 881 1,005 553 1,552
Real estate-other 553 288 99 227 96
Credit card loans 2,571 2,144 1,748 1,305 1,105
Other 22 395 175 33 18
- ---------------------------------------------------------------------------------------------------------------------------------
Total recoveries 9,993 9,120 8,216 8,303 5,976
- ---------------------------------------------------------------------------------------------------------------------------------
Net charge-offs 3,078 7,113 15,884 30,724 33,967
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 53,656 $ 68,302 $ 76,973 $ 70,817 $ 57,807
=================================================================================================================================
Gross charge-offs as a percent of average loans and leases <FN1> 0.46 % .67 % 1.10 % 1.68 % 1.66 %
Recoveries as a percent of gross charge-offs 76.45 % 56.18 % 34.09 % 21.28 % 14.96 %
Net charge-offs as a percent of average loans and leases <FN1> 0.11 % .30 % 0.73 % 1.32 % 1.41 %
Allowance for loan losses as a percent of loans and leases <FN1>
at end of year 1.66 % 2.55 % 3.44 % 3.11 % 2.44 %
=================================================================================================================================
<FN1> Net of unearned income.
</TABLE>
<PAGE>
Allowance for Loan Losses
The allowance for loan losses was $53.7 million as
of December 31, 1994, a $14.6 million decline since
December 31, 1993. This decline reflects 1994's negative
provision for loan losses. As a percent of loans and
leases, the allowance was 1.66% at the end of 1994,
compared to 2.55% at December 31, 1993. Management
believes that the allowance is adequate to cover possible
losses in the loan portfolio. Table 16 presents the
activity in the allowance for loan losses for the past
five years. The allocation of the allowance for loan
losses is included in Table 17.
Net charge-offs as a percent of average loans were
.11% in 1994, compared to .30% in the prior year. The
decrease in net charge-offs from 1993 primarily reflects
net recoveries on commercial loans. Net charge-offs on
credit card loans remained stable at slightly less than
2% of average credit card loans.
Allowance for Loan Losses
as a % of year - end net loans and leases
The graph inserted shows the allowance for loan losses
as a percentage of year end net loans and leases from 1990
to 1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR % 2.44 3.11 3.44 2.55 1.66
Net Charge - offs (millions)
This graph inserted shows net charge - offs from 1990 to
1994. The plot points are:
Graph Denom-
Type nations 1990 1991 1992 1993 1994
- --------------------------------------------------------
BAR MILLIONS 33.967 30.724 15.884 7.113 3.078
<TABLE>
<CAPTION>
TABLE 17. ALLOWANCE FOR LOAN LOSSES
==================================================================================================================================
December 31
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------------
Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans to individuals 29.32 % 44.96 % 22.92 % 44.10 % 18.03 % 36.22 % 27.36 % 34.09 % 17.15 % 33.53 %
Commercial, financial
and agricultural 19.32 21.89 18.50 17.97 24.71 20.99 15.34 24.63 24.20 26.38
Real estate 13.12 17.35 24.46 19.40 25.10 21.25 25.45 18.81 37.74 19.45
Credit card 19.10 13.15 18.57 14.29 16.27 17.09 14.35 17.55 12.21 16.40
Other 0.61 2.65 2.41 4.24 5.57 4.45 4.28 4.92 1.70 4.24
Unallocated 18.53 0.00 13.14 0.00 10.32 0.00 13.22 0.00 7.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %
==================================================================================================================================
</TABLE>
<PAGE>
Fair Value of Financial Instruments
SFAS No. 107, "Disclosures About Fair Value of
Financial Instruments", as amended by SFAS No. 119,
"Disclosure About Derivative Financial Instruments and
Fair Value of Financial Instruments," requires disclosure
of fair value information about certain financial
instruments, whether or not recognized in the balance
sheet, when it is practicable to estimate that value.
These disclosures as of December 31, 1994 and December
31, 1993 are contained in Note 19.
Fair values were determined based on market quotes
where available or were calculated using discounted cash
flows. The differences between fair values and book
values were primarily caused by differences between
contractual and market interest rates at the respective
year-ends. Fluctuations in fair values will occur as
interest rates change. Rising interest rates will
generally result in declines in the fair value of fixed
rate loans and securities; alternatively, rising
interest rates increase the value of fixed rate deposits
with stated maturities. FCC's management of changes in
interest rates and fair values is discussed in the
Asset/Liability Management and Portfolio Management
sections of this Financial Review.
Fourth Quarter Results
FCC's net income for the fourth quarter of 1994 was
$9.1 million, compared to $22.8 million in 1993's fourth
quarter. 1994's lower level of earnings primarily
reflected $11.3 million in after tax losses on securities
transactions. Operating income was $20.4 million in the
fourth quarter, compared to $23.4 million in 1993's
fourth quarter.
Net interest income was $67.0 million for the fourth
quarter of 1994, 8% higher than the fourth quarter of
1993. FCC's net interest margin was 4.52%, a 28 basis
point increase from last year. The net interest spread
was 3.76% in the current quarter, an increase of 12 basis
points from 1993's fourth quarter. These improvements
were primarily the result of a 20% increase in average
loans and higher yields on loans and securities,
partially offset by the repricing of interest-bearing
liabilities in a rising rate environment. Loans were 51%
of earning assets in the fourth quarter of 1994, compared
to 43% in the same period of last year. Improving
loan quality resulted in a negative provision for loan
losses. The provision for loan losses was a negative
$354,000, compared to a negative $600,000 in 1993's
fourth quarter.
Other income, excluding securities transactions,
was $28.8 million for the fourth quarter, 10% higher than
1993's fourth quarter. Increases in credit card fees and
ATM fee income were the primary causes of this increase.
Operating expense was $65.9 million for the fourth
quarter of 1994, 11% higher than the same period of last
year. Higher personnel and equipment expenses were the
most significant factors in the increase. Increased
personnel expense reflected a $2.3 million charge for
severance expense, plus 1994 merit increases and a 2%
increase in the average number of employees. The rise in
equipment expense was due to increased depreciation
primarily related to customer service initiatives.
Additionally, income tax expense rose in 1994 due to
a $3.5 million one-time favorable adjustment to income
tax expense in 1993's fourth quarter related to the
settlement of a tax issue with the IRS.
Selected Quarterly Data compares certain quarterly
financial information for 1994 and 1993.
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (dollars in thousands except per share data)
Years Ended December 31
============================================================================================================================
1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $6,453,841 $ 6,335,669 $ 5,741,399 $ 4,671,478 $ 4,482,019
Earning assets 5,924,892 5,812,761 5,280,347 4,257,388 4,035,104
Loans and leases <FN1> 2,823,061 2,407,231 2,184,584 2,323,018 2,402,541
Securities 3,038,747 3,110,544 2,734,925 1,515,299 1,290,487
Deposits 5,220,425 5,176,873 4,953,572 3,931,612 3,552,578
Long-term debt 89,266 95,238 97,154 101,246 103,033
Stockholders' equity 500,240 469,694 355,716 235,385 239,011
- ----------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA
Total interest income $ 408,004 $ 393,334 $ 398,701 $ 393,922 $ 408,996
Net interest income 256,261 250,010 235,353 191,862 168,021
Net interest income (FTE) 261,913 256,049 241,873 199,574 176,447
Provision for loan losses (11,568) (4,504) 22,040 43,734 47,425
Other income (exclusive of securities transactions) 110,434 102,844 96,369 83,419 73,213
Securities transactions (43,549) (423) 258 259 55
Operating expense 241,362 221,080 203,781 185,963 165,325
Operating income 91,990 95,489 72,304 33,858 22,002
Net income 63,684 95,214 72,475 34,029 22,038
- ----------------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 0.99 % 1.50 % 1.26 % 0.73 % 0.49 %
Return on average total equity 12.73 % 20.27 % 20.37 % 14.46 % 9.22 %
Return on average common equity 13.48 % 22.18 % 22.85 % 14.46 % 9.11 %
Net interest margin 4.42 % 4.40 % 4.58 % 4.69 % 4.37 %
Efficiency ratio 64.82 % 61.60 % 60.25 % 65.71 % 66.22 %
Overhead ratio 2.21 % 2.03 % 2.03 % 2.41 % 2.28 %
Allowance for loan losses to loans and leases <FN1> 1.66 % 2.55 % 3.44 % 3.11 % 2.44 %
Nonperforming assets to loans and leases <FN1>
plus foreclosed assets 0.55 % 1.22 % 2.82 % 3.91 % 4.26 %
Allowance for loan losses to nonperforming loans 400.45 % 268.26 % 178.56 % 123.83 % 84.10 %
Equity ratio 7.18 % 7.65 % 6.79 % 5.01 % 5.03 %
Leverage ratio 8.04 % 7.63 % 6.76 % 4.87 % 4.66 %
- ----------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
EARNINGS PER SHARE
Net income-primary $ 2.25 $ 3.48 $ 2.88 $ 1.56 $ 0.94
Operating income-primary $ 3.33 $ 3.50 $ 2.87 $ 1.55 $ 0.94
Net income-fully diluted $ 2.19 $ 3.18 $ 2.70 $ 1.56 $ 0.94
Operating income-fully diluted $ 3.07 $ 3.20 $ 2.69 $ 1.55 $ 0.94
COMMON DIVIDENDS
Cash dividends $ 1.10 $ 0.85 $ 0.70 $ 0.64 $ 0.64
Dividend payout ratio 48.89 % 24.27 % 25.78 % 41.03 % 68.09 %
BOOK VALUES (end of period)
Book value $ 15.71 $ 17.28 $ 14.57 $ 11.38 $ 10.45
Tangible book value $ 15.13 $ 16.66 $ 13.83 $ 10.57 $ 9.50
COMMON STOCK DATA
High stock price $ 30.00 $ 32.20 $ 27.86 $ 18.14 $ 12.54
Low stock price $ 21.75 $ 23.90 $ 16.94 $ 7.20 $ 6.66
Closing stock price $ 22.00 $ 25.13 $ 25.60 $ 17.20 $ 7.46
Trading volume 30,234,732 19,562,420 26,741,915 10,667,309 5,968,360
Number of stockholders (end of period) 7,603 7,604 6,714 6,970 7,216
AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Primary 26,317 26,132 23,729 21,809 21,539
Fully diluted 29,112 32,125 29,568 21,809 21,539
NUMBER OF EMPLOYEES (end of period) 3,407 3,400 3,026 2,695 2,551
============================================================================================================================
<FN1>Net of unearned income.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (dollars in thousands except per share data)
Years Ended December 31
==================================================================================================================
1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 4,202,912 $ 3,857,968 $ 3,511,491 $ 3,583,941
Earning assets 3,719,972 3,418,204 3,098,456 3,149,532
Loans and leases <FN1> 2,232,213 2,005,940 1,802,858 1,829,660
Securities 1,061,206 1,008,022 849,335 834,454
Deposits 3,343,223 3,052,002 2,722,593 2,752,672
Long-term debt 104,863 105,498 102,402 106,567
Stockholders' equity 231,097 220,254 215,459 222,656
- ------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA
Total interest income $ 392,769 $ 331,866 $ 286,020 $ 304,037
Net interest income 156,005 142,550 130,188 126,277
Net interest income (FTE) 164,495 151,294 142,090 144,100
Provision for loan losses 26,220 24,651 22,674 38,365
Other income (exclusive of securities transactions) 64,215 59,765 52,839 49,654
Securities transactions -866 -857 1,386 609
Operating expense 155,397 145,506 137,388 145,347
Operating income 28,768 24,622 18,900 3,760
Net income 28,197 24,056 19,732 4,089
- ------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 0.67 % 0.62 % 0.56 % 0.11%
Return on average total equity 12.20 % 10.92 % 9.16 % 1.84%
Return on average common equity 12.37 % 10.94 % 8.94 % 0.57%
Net interest margin 4.42 % 4.43 % 4.59 % 4.58%
Efficiency ratio 67.94 % 68.94 % 70.48 % 75.02%
Overhead ratio 2.45 % 2.51 % 2.73 % 3.04%
Allowance for loan losses to loans and leases <FN1> 1.91 % 2.07 % 2.12 % 2.10%
Nonperforming assets to loans and leases <FN1>
plus foreclosed assets 2.76 % 3.50 % 4.06 % 4.83%
Allowance for loan losses to nonperforming loans 142.45 % 80.98 % 63.23 % 48.27%
Equity ratio 5.15 % 5.35 % 5.73 % 5.84%
Leverage ratio 5.06 % 5.11 % 5.37 % 5.25%
- ------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
EARNINGS PER SHARE
Net income-primary $ 1.20 $ 1.02 $ 0.81 $ 0.06
Operating income-primary $ 1.23 $ 1.05 $ 0.77 $ 0.03
Net income-fully diluted $ 1.20 $ 1.02 $ 0.81 $ 0.06
Operating income-fully diluted $ 1.23 $ 1.05 $ 0.77 $ 0.03
COMMON DIVIDENDS
Cash dividends $ 0.64 $ 0.64 $ 0.64 $ 0.64
Dividend payout ratio 53.33 % 62.75 % 79.01 % 1,280.00%
BOOK VALUES (end of period)
Book value $ 10.14 $ 9.54 $ 9.16 $ 9.02
Tangible book value $ 9.01 $ 8.41 $ 7.76 $ 7.34
COMMON STOCK DATA
High stock price $ 12.74 $ 10.54 $ 10.80 $ 13.60
Low stock price $ 9.27 $ 7.86 $ 7.40 $ 7.40
Closing stock price $ 12.40 $ 9.74 $ 8.00 $ 7.86
Trading volume 3,651,604 4,173,330 4,674,623 8,045,740
Number of stockholders (end of period) 7,267 7,281 7,508 7,214
AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Primary 21,314 21,101 21,056 21,014
Fully diluted 21,314 21,101 21,056 21,014
NUMBER OF EMPLOYEES (end of period) 2,553 2,341 2,314 2,358
==================================================================================================================
<FN1> Net of unearned income.
</TABLE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (dollars in thousands except per share data)
Compound
Growth Rates
===================================================================================== ------------------------
1985 1984 Five-Year Ten-Year
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 2,887,281 $ 2,440,978 8.96 % 10.21 %
Earning assets 2,509,433 2,087,143 9.76 % 11.00 %
Loans and leases <FN1> 1,449,411 1,058,611 4.81 % 10.31 %
Securities 674,358 606,137 23.42 % 17.49 %
Deposits 2,178,832 1,783,166 9.32 % 11.34 %
Long-term debt 58,741 22,199 (3.17)% 14.93 %
Stockholders' equity 204,919 180,603 16.70 % 10.72 %
- --------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA
Total interest income $ 273,863 $ 251,344 0.76 % 4.96 %
Net interest income 112,647 97,792 10.44 % 10.11 %
Net interest income (FTE) 131,080 115,694 9.75 % 8.51 %
Provision for loan losses 16,699 9,244 N/A N/A
Other income (exclusive of securities transactions) 40,917 33,619 11.45 % 12.63 %
Securities transactions 1,287 -4,032 N/A N/A
Operating expense 115,383 90,000 9.21 % 10.37 %
Operating income 22,177 28,391 26.17 % 12.47 %
Net income 22,872 26,214 17.70 % 9.28 %
- --------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Return on average assets 0.78 % 1.06 %
Return on average total equity 11.16 % 14.27 %
Return on average common equity 11.07 % 14.27 %
Net interest margin 5.22 % 5.54 %
Efficiency ratio 67.08 % 60.28 %
Overhead ratio 2.97 % 2.70 %
Allowance for loan losses to loans and leases <FN1> 1.99 % 1.66 %
Nonperforming assets to loans and leases <FN1>
plus foreclosed assets 3.87 % 1.36 %
Allowance for loan losses to nonperforming loans 127.85 % 55.66 %
Equity ratio 5.94 % 7.47 %
Leverage ratio 6.22 % 7.95 %
- ---------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
EARNINGS PER SHARE
Net income-primary $ 1.03 $ 1.26 13.40 % 5.97 %
Operating income-primary $ 0.99 $ 1.37 22.04 % 9.29 %
Net income-fully diluted $ 1.03 $ 1.24 12.79 % 5.85 %
Operating income-fully diluted $ 0.99 $ 1.34 20.07 % 8.64 %
COMMON DIVIDENDS
Cash dividends $ 0.64 $ 0.58 11.44 % 6.61 %
Dividend payout ratio 62.14 % 46.45 %
BOOK VALUES (end of period)
Book value $ 9.63 $ 9.26
Tangible book value $ 8.99 $ 9.26
COMMON STOCK DATA
High stock price $ 15.60 $ 14.26
Low stock price $ 11.06 $ 10.87
Closing stock price $ 11.74 $ 12.26
Trading volume 4,676,329 2,413,604
Number of stockholders (end of period) 7,443 7,626
AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Primary 20,991 20,704
Fully diluted 20,991 21,075
NUMBER OF EMPLOYEES (end of period) 2,692 1,867
====================================================================================================================
<FN1> Net of unearned income.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED QUARTERLY DATA (dollars in thousands except per share data)
1994 Quarters
==============================================================================================
4th 3rd 2nd 1st
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income $ 67,009 $ 64,516 $ 61,990 $ 62,746
Provision for loan losses (354) (2,550) (4,832) (3,832)
Other income 11,433 6,403 20,548 28,501
Operating expense 65,865 60,014 59,011 56,472
Income tax expense 3,881 4,032 9,280 12,475
- ----------------------------------------------------------------------------------------------
Net income 9,050 9,423 19,079 26,132
Perferred dividend requirements 1,087 1,086 1,087 1,087
- ----------------------------------------------------------------------------------------------
Income applicable to common
shares $ 7,963 $ 8,337 $ 17,992 $ 25,045
==============================================================================================
Per common share data
Primary $ 0.30 $ 0.32 $ 0.68 $ 0.95
Fully diluted $ 0.30 $ 0.32 $ 0.65 $ 0.86
Dividends $ 0.30 $ 0.30 $ 0.25 $ 0.25
Common stock data <FN1>
High stock price $ 26.76 $ 28.75 $ 30.00 $ 28.50
Low stock price $ 21.75 $ 25.75 $ 23.50 $ 24.00
Closing stock price $ 22.00 $ 26.75 $ 28.25 $ 24.00
Trading volume 5,723,897 4,857,105 7,313,633 12,340,097
==============================================================================================
1993 Quarters
==============================================================================================
4th 3rd 2nd 1st
- ----------------------------------------------------------------------------------------------
Net interest income $ 61,882 $ 62,102 $ 62,934 $ 63,092
Provision for loan losses (600) (2,233) (2,259) 588
Other income 25,245 25,316 27,070 24,790
Operating expense 59,370 54,589 54,585 52,536
Income tax expense 5,528 11,192 12,290 11,631
- ----------------------------------------------------------------------------------------------
Net income 22,829 23,870 25,388 23,127
Preferred dividend requirements 1,087 1,087 1,087 1,087
- ----------------------------------------------------------------------------------------------
Income applicable to common
shares $ 21,742 $ 22,783 $ 24,301 $ 22,040
==============================================================================================
Per common share data
Primary $ 0.83 $ 0.87 $ 0.93 $ 0.85
Fully diluted $ 0.76 $ 0.80 $ 0.84 $ 0.78
Dividends $ 0.25 $ 0.20 $ 0.20 $ 0.20
Common stock data <FN1>
High stock price $ 31.80 $ 31.80 $ 32.20 $ 31.00
Low stock price $ 23.90 $ 28.40 $ 25.40 $ 25.33
Closing stock price $ 25.13 $ 30.00 $ 29.60 $ 30.00
Trading volume 8,516,265 2,935,716 4,424,135 3,686,304
==============================================================================================
<FN1> Common and preferred stocks are traded in the over-the-counter market and are listed on the NASDAQ Stock
Market. All closing stock prices represent closing sales prices as reported on the NASDAQ Stock Market.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (dollars in thousands)
December 31
====================================================================================================================
1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 397,376 $ 387,548
Interest-bearing deposits in other banks 138 55,422
Securities:
Held to maturity (market value $8,801 and $1,547,086, respectively) 8,800 1,523,638
Available for sale, at market 2,458,443 -
Held for sale, at lower of aggregate amortized cost or market - 1,779,927
Trading account securities 8,970 482
Federal funds sold and securities purchased under resale agreements 38,200 28,600
Loans and leases, net of unearned income of $5,057 and $11,822, respectively 3,236,653 2,674,697
Allowance for loan losses (53,656) (68,302)
- --------------------------------------------------------------------------------------------------------------------
Net loans and leases 3,182,997 2,606,395
====================================================================================================================
Premises and equipment 117,441 102,230
Accrued interest receivable 61,415 55,197
Other real estate 4,224 7,177
Goodwill and other intangibles 15,118 16,143
Other assets 265,568 97,526
- --------------------------------------------------------------------------------------------------------------------
Total assets $6,558,690 $ 6,660,285
====================================================================================================================
LIABILITIES
Noninterest-bearing deposits $1,226,752 $ 1,196,259
Interest-bearing deposits 4,231,318 4,113,600
- --------------------------------------------------------------------------------------------------------------------
Total deposits 5,458,070 5,309,859
====================================================================================================================
Short-term borrowings 470,483 678,316
Accrued interest payable 22,527 16,844
Accounts payable and other accrued liabilities 47,608 55,890
Long-term debt 88,956 89,704
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 6,087,644 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 and 2,399,170 shares, respectively 59,954 59,979
Common stock, $5 par value
Authorized--100,000,000 shares
Issued--26,192,514 and 26,062,067 shares, respectively 130,963 130,311
Capital surplus 137,671 135,911
Retained earnings 214,808 184,288
Unearned restricted stock compensation (592) (817)
Net unrealized (loss) on securities available for sale (71,758) -
- --------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 471,046 509,672
====================================================================================================================
Total liabilities and stockholders' equity $6,558,690 $ 6,660,285
====================================================================================================================
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 data)
Years Ended December 31
==================================================================================================
1994 1993 1992
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $ 241,899 $ 214,670 $ 212,294
Interest on tax-exempt securities 7,298 9,067 10,066
Interest and dividends on taxable securities 156,175 159,533 159,776
Interest on money market investments 2,632 10,064 16,565
- --------------------------------------------------------------------------------------------------
Total interest income 408,004 393,334 398,701
==================================================================================================
INTEREST EXPENSE
Interest on deposits 117,272 116,549 143,598
Interest on short-term borrowings 23,283 15,047 7,897
Interest on long-term debt 11,188 11,728 11,853
- --------------------------------------------------------------------------------------------------
Total interest expense 151,743 143,324 163,348
==================================================================================================
NET INTEREST INCOME 256,261 250,010 235,353
PROVISION FOR LOAN LOSSES (11,568) (4,504) 22,040
- --------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 267,829 254,514 213,313
==================================================================================================
OTHER INCOME
Deposit fees and service charges 44,175 43,492 40,528
Credit card fee income 24,816 22,380 21,529
Trust fee income 13,738 11,371 9,439
Broker/dealer revenue 7,377 8,775 7,225
ATM fee income 5,374 2,046 1,295
Other operating revenue 14,954 14,780 16,353
Securities transactions (43,549) (423) 258
- --------------------------------------------------------------------------------------------------
Total other income 66,885 102,421 96,627
==================================================================================================
334,714 356,935 309,940
OPERATING EXPENSE
Salary expense 109,444 97,651 85,065
Employee benefits 22,572 21,736 17,046
- --------------------------------------------------------------------------------------------------
Total personnel expense 132,016 119,387 102,111
Net occupancy expense 16,717 15,673 14,775
Equipment expense 16,055 12,867 12,406
Professional fees 13,810 11,532 8,574
FDIC insurance expense 11,599 11,706 10,384
Other operating expense 51,165 49,915 55,531
- --------------------------------------------------------------------------------------------------
Total operating expense 241,362 221,080 203,781
==================================================================================================
INCOME BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST 93,352 135,855 106,159
INCOME TAX EXPENSE 29,668 40,641 32,766
==================================================================================================
INCOME BEFORE MINORITY INTEREST 63,684 95,214 73,393
EARNINGS OF MINORITY INTEREST - - 918
==================================================================================================
NET INCOME 63,684 95,214 72,475
PREFERRED DIVIDEND REQUIREMENTS 4,347 4,348 4,076
==================================================================================================
INCOME APPLICABLE TO COMMON SHARES $ 59,337 $ 90,866 $ 68,399
==================================================================================================
EARNINGS PER COMMON SHARE
Primary $ 2.25 $ 3.48 $ 2.88
Fully diluted $ 2.19 $ 3.18 $ 2.70
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 26,317,242 26,132,211 23,728,540
Fully diluted 29,111,621 32,125,003 29,568,365
==================================================================================================
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, 1992 $ - $ 58,873 $ 79,995 $112,685 $ (1,146) - $ 250,407
Net income - - - 72,475 - - 72,475
Cash dividends
Series 1992 preferred stock
($1.6986 per share) - - - (4,076) - - (4,076)
Common stock ($.70 per share) - - - (16,251) - - (16,251)
Stock split effected in the form
of a 50% dividend - 32,568 - (32,610) - - (42)
Series 1992 preferred stock
issued in public offering
- 2,400,000 shares 60,000 - (2,403) - - - 57,597
Conversion of 360 shares of
preferred stock into 223
shares of common stock (9) 1 8 - - - -
Public offering of common
stock - 1,000 shares - 5,000 40,852 - - - 45,852
Common stock issuances to plans
- 62,429 shares - 312 2,261 - - - 2,573
Stock options exercised, net
of shares surrendered in payment
and tax benefit - 233,679 shares - 1,168 4,869 - - - 6,037
Restricted stock activity - (164) 776 - 540 - 1,152
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 59,991 97,758 126,358 132,223 (606) - 415,724
=====================================================================================================================
Pooling of interests with FANB - 6,124 3,400 8,092 - - 17,616
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992
(Restated) 59,991 103,882 129,758 140,315 (606) - 433,340
Net income - - - 95,214 - - 95,214
Cash dividends
Series 1992 preferred stock
($1.8125 per share) - - - (4,348) - - (4,348)
Common stock ($.85 per share) - - - (20,985) - - (20,985)
FANB common stock - - - (1,064) - - (1,064)
Stock split effected in the form
of a 25% dividend - 24,780 - (24,844) - - (64)
Conversion of 470 shares of
preferred stock into 437
shares of common stock (12) 2 10 - - - -
Common stock issued in exchange
for FANB convertible debt
- 65,877 shares - 329 301 - - - 630
Common stock issuances to plans
- 145,485 shares - 727 4,312 - - - 5,039
Stock options exercised, net of
shares surrendered in payment
and tax benefit - 98,565 shares - 493 942 - - - 1,435
Restricted stock activity - 98 588 - (211) - 475
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 59,979 130,311 135,911 184,288 (817) - 509,672
=====================================================================================================================
Net income - - - 63,684 - - 63,684
Cash dividends:
Series 1992 preferred stock
($1.8125 per share) - - - (4,347) - - (4,347)
Common stock ($1.10 per share) - - - (28,782) - - (28,782)
Conversion of 1,000 shares of
preferred stock into 1,164
shares of common stock (25) 6 19 - - - -
Common stock issuances to plans
- 58,718 shares - 292 1,124 (35) - - 1,381
Stock options exercised, net of
shares surrendered in payment
and tax benefit - 64,537 shares - 323 558 - - - 881
Restricted stock activity - 31 59 - 225 - 315
Net unrealized (loss) on
securities available for sale - - - - - (71,758) (71,758)
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 $ 59,954 $ 130,963 $137,671 $214,808 $ (592) $(71,758) $ 471,046
=====================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands)
Years Ended December 31
=========================================================================================================================
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 63,684 $ 95,214 $ 72,475
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses (11,568) (4,504) 22,040
Depreciation and amortization 14,508 11,145 9,963
Amortization of intangibles 2,195 2,829 2,445
Deferred income tax (benefit) expense 6,834 (8,626) (2,416)
Net (gain) loss from securities transactions 43,549 423 (258)
Net (gain) on loan sales (546)
(Increase) decrease in trading account securities (8,488) 1,894 (1,736)
(Increase) decrease in accrued interest receivable (6,218) 1,898 (9,672)
(Increase) in other assets (1,171) (22,914) (16,536)
Increase (decrease) in accrued interest payable 5,683 1,002 (6,611)
Increase (decrease) in accounts payable and other accrued liabilities (9,959) 15,775 3,435
Other, net 759 875 11,350
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 99,262 95,011 84,479
=========================================================================================================================
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits in other banks 55,284 328,264 (84,449)
Proceeds from sales and calls of securities held to maturity and held for sale 65 469,616 229,872
Proceeds from maturities of securities held to maturity and held for sale 759,664 1,029,403 1,048,500
Purchases of securities held to maturity and held for sale (22) (1,743,533) (2,410,087)
Proceeds from sales and calls of securities available for sale 1,652,634 - -
Proceeds from maturities of securities available for sale 237,612 - -
Purchases of securities available for sale (2,102,912) - -
Net (increase) decrease in federal funds sold and securities purchased
under resale agreements (9,600) (7,774) 74,674
Proceeds from sales of loans 97,315
Net (increase) decrease in loans (663,404) (352,158) 21,809
Purchase of minority interest - - (8,288)
Purchase of Wolcott Mortgage Group, Inc., net of cash acquired (1,194)
Proceeds provided (used) by acquisition of Pelican deposits
and selected marketable assets:
Purchases of assets, net of cash acquired - - (213,780)
Proceeds from sale of selected acquired assets - - 204,222
Assumption of deposits and other liabilities - - 1,416,415
Repayment of deposits in branches not reopened - - (275,434)
Purchases of premises and equipment (30,305) (19,278) (14,808)
Proceeds from sales of foreclosed assets 5,836 15,920 18,265
Other, net 530 1,818 564
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 1,503 (277,722) 7,475
=========================================================================================================================
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, NOW accounts,
money market accounts and savings accounts (108,557) 108,767 225,661
Net increase (decrease) in time deposits 256,760 (75,784) (636,219)
Net increase (decrease) in short-term borrowings (208,761) 198,679 248,029
Payments on long-term debt (748) (5,970) (4,399)
Proceeds from common stock issued in public offering - - 45,852
Proceeds from sales of common stock 1,840 5,385 6,167
Proceeds from Series 1992 preferred stock sold in public offering - - 57,597
Cash dividends (31,471) (24,995) (17,872)
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (90,937) 206,082 (75,184)
=========================================================================================================================
INCREASE IN CASH AND CASH EQUIVALENTS 9,828 23,371 16,770
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 387,548 364,177 338,721
=========================================================================================================================
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 397,376 $ 387,548 $ 355,491
=========================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
Summary of Significant Accounting Policies
The accounting and reporting policies of First Commerce
Corporation (FCC) and its subsidiaries conform with generally accepted
accounting principles and with general practices within the financial
services industry. The principles and policies followed by FCC and its
subsidiaries and the methods of applying those principles and policies
which materially affect the determination of the consolidated financial
position, results of operations or cash flows are summarized below and in
the following notes.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of FCC
and all of its subsidiaries, of which the banking subsidiaries are
collectively "the Banks". All significant intercompany accounts and
transactions have been eliminated.
BASIS OF PRESENTATION
Certain prior years' amounts have been reclassified to conform
with current year financial statement presentation.
SECURITIES
Effective January 1, 1994, FCC adopted Statement of Financial
Accounting Standards No. 115 (SFAS No. 115) "Accounting for Certain
Investments in Debt and Equity Securities" which requires the
classification of securities as trading, available for sale or held to
maturity. Management determines the classification of its securities when
they are purchased. FCC's trading account securities are classified in the
money market investment portfolio, and are carried at market value.
Securities which FCC has the intent and ability to hold until
maturity are classified as held to maturity. These securities are stated at
cost, adjusted for amortization of premiums and accretion of discounts
using either the interest method or the straight-line method, which
produces approximately the same results.
Securities which may be sold in response to changes in interest
rates, liquidity needs or asset/liability management strategies are classified
as available for sale. These securities are reflected at market value, and
net unrealized gains or losses are shown as a separate component of
stockholders' equity, net of the tax effect. Realized gains or losses are
recognized, using the specific identification method, at the time of sale or
call of a security, and are shown as a separate component of other income
in the consolidated statements of income.
Prior to adoption of SFAS No. 115, certain securities were
classified as held for sale, and were stated at the lower of aggregate
amortized cost or market and adjustment to market and realized gains or
losses were shown as a separate component of other income in the
consolidated statements of income.
MONEY MARKET INVESTMENTS
Money market investments include interest-bearing deposits in
other banks, federal funds sold, securities purchased under resale
agreements and trading account securities. They are stated at cost, which
approximates market value, with the exception of trading account
securities, which are carried at market value. Adjustments to market
value and trading account gains and losses are included in other operating
revenue in the consolidated statements of income. Interest and dividend
income on trading account securities is included in interest income on
money market investments.
LOANS AND LEASES
Interest income on most loans is accrued based on the principal
amounts outstanding. Unearned income on loans made on a discounted
basis is recognized as interest income using either the rule of 78s (sum-of-
the-month's digits) or the interest method, which result in approximately
level rates of return over the terms of the loans.
Most loans and leases are held to maturity and are stated at cost.
Loans which are held for sale, principally residential mortgage loans, are
reflected at the lower of cost or market value in the consolidated balance
sheets.
Loan origination fees and costs are deferred and amortized as an
adjustment of the yield using the interest method for commercial loans and
the straight-line method for consumer and residential mortgage loans. The
amortization period for commercial and consumer loans is the actual life
of the loans; for residential mortgage loans, the amortization period is the
average life of the loan. Loan origination costs on credit card loans are
not deferred due to the immaterial effect on FCC's financial statements.
Annual credit card fees are recognized on a straight-line basis over the
twelve-month period that cardholders may use the card.
NONPERFORMING LOANS
Nonperforming loans and leases consist of nonaccrual loans and
restructured loans. Loans and leases past due 90 days or more are
considered to be performing loans and leases until placed on nonaccrual
status. Loans and leases are placed on nonaccrual status when, in the
opinion of management, there is sufficient uncertainty as to timely
collection of interest or principal so as to preclude the recognition in
reported earnings of some or all of the contractual interest. When a loan
is placed on nonaccrual status, interest accrued but not collected is usually
reversed against interest income. Generally, any payments received on
nonaccrual loans and leases are first applied to reduce outstanding
principal amounts. Loans are not reclassified as accruing until interest
and principal payments are brought current and future payments are
reasonably assured. Delinquent credit card loans are charged-off within
180 days. Student loans, which are 100% government guaranteed, are not
placed on nonaccrual status.
<PAGE>
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses represents management's best
estimate of potential losses in the loan and lease portfolios. This estimate
is based on an ongoing assessment of the portfolios. Factors which are
considered include significant changes in the character of the portfolios,
loan concentrations, current year charge-offs, historic ratios of charge-offs
to average loans and leases, trends in portfolio volumes, delinquencies,
nonaccruals and economic conditions. Ultimate losses may vary from the
current estimates. These estimates are reviewed periodically and, as
adjustments become necessary, they are reported in earnings in the periods
in which they become known.
FORECLOSED ASSETS
Property transferred to foreclosed assets is recorded at fair value
at the time of transfer. Fair value is the anticipated sales price of the
assets, less estimated costs to sell, based upon independent appraisals and
other relevant factors. When a loan is reclassified as a foreclosed asset,
the reduction of the carrying value to the fair value is charged to the
allowance for loan losses. Subsequent to foreclosure, foreclosed assets are
reflected at the lower of current fair value or the fair value at the date of
transfer to foreclosed assets. Any subsequent reductions are charged to
nonperforming assets expense. Revenues and expenses associated with
operating or disposing of foreclosed assets are recorded during the period
in which they are incurred.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is computed using various
methods, principally straight-line, over the estimated useful lives of each
type of asset. Leasehold improvements are amortized using the straight-
line method over the periods of the leases or the estimated useful lives,
whichever is shorter. Additions to premises and equipment and major
replacements or improvements are capitalized. Gains and losses on
dispositions, maintenance, repairs and minor replacements are reflected
in current operations.
INCOME TAXES
FCC and its subsidiaries file a consolidated federal income tax
return. Income tax expense or benefit is based on income reported for
financial accounting purposes. FCC accounts for income taxes under the
asset and liability method. Deferred assets and liabilities are established
for the temporary differences between the financial reporting basis and the
tax basis of FCC's assets and liabilities at enacted tax rates expected to be
in effect when such amounts are realized or settled.
FOREIGN EXCHANGE CONTRACTS
Generally, sales or purchases of foreign exchange contracts are
covered with offsetting transactions. FCC uses foreign exchange contracts
as commercial service products and does not intend to speculate with open
positions in the foreign exchange market. Unrealized gains or losses in
the foreign exchange portfolio are recognized upon the maturity of the
contracts.
INTEREST RATE CONTRACTS
FCC enters into a variety of interest rate contracts such as caps,
collars and floors in the management of its interest rate exposure. These
instruments are typically entered into as hedges against interest rate risk
on specific assets and liabilities. The premium paid or received for any
of these instruments is amortized over the expected remaining term of the
agreement. Cash flows relative to these instruments are recorded as
adjustments to interest income or expense. Gains and losses on any
contracts sold are deferred and amortized over the expected remaining
term of the hedged asset or liability. If the asset or liability is disposed
of, any unamortized gain or loss on the hedging instrument is included in
the determination of the gain or loss from the disposition.
INTEREST RATE SWAP AGREEMENTS
FCC enters into interest rate swap agreements primarily as a means
to manage its interest rate exposure. Adjusted revenues or expenses
related to interest rate swaps are recognized over the lives of the
agreements. Fees related to swap agreements are amortized using the
interest method over the life of the swap. If an interest rate swap which
qualifies for deferral accounting is terminated, the gain or loss is deferred
and amortized over the remaining life of the specific asset or liability it
was hedging. If the instrument being hedged by a swap is disposed of,
the swap agreement is marked to market with any resulting gain or loss
included in the determination of the gain or loss from the disposition.
Interest rate swap agreements not qualifying for deferral accounting are
recorded at market value. Any changes in the market value are
recognized in other income.
RETIREMENT PLAN
FCC and its subsidiaries have established a retirement plan
covering substantially all employees. Pension expense is charged to
current operations and consists of service costs and interest costs reduced
by the expected return on plan assets and amortization of initial
unrecognized net assets. Current policy is to pay into the trust fund only
that portion of the accrued liability which is currently tax deductible.
<PAGE>
POSTRETIREMENT BENEFITS
FCC accrues the expected costs of postretirement benefits during
the years that an eligible employee renders service to the employer.
INTANGIBLE ASSETS
Unamortized costs of purchased subsidiaries in excess of the fair
value of the acquired net tangible assets are included in goodwill and other
intangibles in the consolidated balance sheets. Also included in goodwill
and other intangibles are premiums paid on the purchase of loan portfolios
and deposit assumptions. Identifiable intangible assets, principally related
to "depositor and borrower relationships," are being amortized using the
straight-line method over the estimated periods benefited. The remaining
costs (goodwill) are being amortized using the straight-line method over
periods ranging from 5 to 20 years.
EARNINGS PER COMMON SHARE
Income for primary earnings per share is adjusted for preferred
stock dividends. Primary earnings per share are computed based on the
weighted average number of common shares outstanding and common
stock equivalents arising from the assumed exercise of outstanding stock
options, unless their effect would be antidilutive. Fully diluted earnings
per share are computed using average common shares and equivalents.
Common stock equivalents are increased by the assumed conversion of
convertible debentures and preferred stock into common stock as if
converted at the beginning of the period, unless their effect would be
antidilutive. Income for fully diluted earnings per share is adjusted for
interest expense related to the debentures, net of the related income tax
effect, and preferred stock dividends.
STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand and noninterest-bearing amounts due from banks.
OTHER
Assets held by the Banks in fiduciary capacities (assets under trust
agreements) are not assets of the Banks and are not included in the
consolidated balance sheets. Generally, certain minor sources of income
are recorded when payment is received. Results of these activities on the
cash basis do not differ materially from those that would be reported using
the accrual basis of accounting.
===========================================================================
NOTE 2
SUBSEQUENT EVENTS
Effective February 17, 1995, First Bancshares, Inc. (First), the
parent company of First Bank, Slidell, Louisiana, merged with FCC
in exchange for approximately 2,705,220 shares of FCC common stock.
First Bank was merged with First National Bank of Commerce (FNBC), a
wholly owned subsidiary of FCC. The acquisition was accounted for as a
pooling-of-interests; accordingly, prior period financial
information will be restated to include this acquisition. On
December 31, 1994, First Bancshares, Inc. had $246 million in
assets. Selected separate and combined financial information of
FCC and First for the year ended December 31, 1994 are presented
below (in thousands, except per share amounts).
<TABLE>
<CAPTION>
FCC First Combined
________________________________________________________________________
<S> <C> <C> <C>
Year Ended December 31, 1994
Net interest income $ 256,261 $ 14,231 $ 270,492
Other income, excluding
securities transactions $ 110,434 $ 3,513 $ 113,947
Net income $ 63,684 $ 3,267 $ 66,951
Earnings per common share
Primary $ 2.25 $ 3.85 $ 2.16
Fully diluted $ 2.19 $ 3.85 $ 2.10
________________________________________________________________________
</TABLE>
On February 17, 1995, FCC acquired City Bancorp, Inc. (City), the parent
company of City Bank & Trust Company (City Bank), New Iberia, Louisiana, for
approximately 516,252 shares of FCC common stock. City Bank was merged with
The First National Bank of Lafayette, a wholly owned subsidiary of FCC. The
acquisition was accounted for as a purchase. FCC intends to repurchase in the
open market the number of shares of common stock issued for the City Bank
acquisition. Related intangibles will be amortized over periods not to exceed
fifteen years. On December 31, 1994, City had $79 million in assets. Proforma
results of City have been excluded due to the immaterial impact on FCC's
consolidated results of operations.
===========================================================================
<PAGE>
NOTE 3
ACQUISITIONS
Pending at December 31, 1994, was FCC's proposed acquisition of
Lakeside Bancshares, Inc. (Lakeside), the parent company of
Lakeside National Bank of Lake Charles (LNB). It is the intent of FCC
to acquire Lakeside and merge LNB into The First National Bank of
Lake Charles, a wholly owned subsidiary of FCC. At December 31,
1994, Lakeside had $177 million in assets. The acquisition is subject to
various approvals and conditions, including regulatory approval. The
acquisition of Lakeside is expected to be completed in the first half of
1995 and to be accounted for as a purchase.
On October 5, 1994, FNBC acquired Wolcott Mortgage Group, Inc.
(Wolcott), a mortgage company which originates and sells residential
mortgages. Wolcott's shareholders received $1.39 million in cash. A
contingent payment may be made in October 1995, based on certain
conditions. The acquisition was accounted for as a purchase.
Goodwill related to this transaction is amortized using the
straight-line method over 15 years. The results of operations of
Wolcott since the date of acquisition have been included in FCC's
consolidated statements. Proforma results of operations
have been excluded due to the immaterial impact on FCC's
consolidated results of operations.
Effective January 1, 1994, First Acadiana National Bancshares,
Inc. (FANB), the parent company of First Acadiana National Bank,
Opelousas, Louisiana, merged with FCC in exchange 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.
On January 13, 1992, FCC's banks in New Orleans, Baton Rouge
and Alexandria acquired from the Resolution Trust Corporation
approximately $1.5 billion of insured deposits and other marketable
securities of Pelican Homestead and Savings Association
(Pelican). $275 million of these deposits were immediately paid
out.
===========================================================================
NOTE 4
RESTRICTIONS ON CASH AND DUE FROM BANKS
The Banks are required to maintain average reserve balances with
the Federal Reserve Bank based on a percentage of deposits. Average
balances maintained for such purposes were $63,609,000 and
$93,470,000 during 1994 and 1993, respectively.
===========================================================================
NOTE 5
SECURITIES HELD TO MATURITY
An analysis of securities held to maturity follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
==============================================================================
December 31, 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Obligations of states
and political
subdivisions $ 152 $ 1 $ - $ 153
Other debt securities 500 - - 500
Equity securities 8,148 - - 8,148
- ------------------------------------------------------------------------------
Total securities held
to maturity $ 8,800 $ 1 $ - $ 8,801
==============================================================================
December 31, 1993
- ------------------------------------------------------------------------------
U.S. Treasury securities $770,915 $ 5,688 $ (2) $ 776,601
Obligations of U.S.
agencies and
corporations 674,108 6,300 (1,204) 679,204
Obligations of states
and political
subdivisions 63,731 12,645 - 76,376
Other bonds, notes,
debentures and stock 14,884 33 (12) 14,905
- ------------------------------------------------------------------------------
Total securities held
to maturity $1,523,638 $ 24,666 $ (1,218) $1,547,086
==============================================================================
December 31, 1992
- ------------------------------------------------------------------------------
U.S. Treasury securities $1,334,406 $ 18,683 $ (223) $1,352,866
Obligations of U.S.
agencies and
corporations 1,053,050 2,781 (8,926) 1,046,905
Obligations of states
and political
subdivisions 68,119 11,778 (39) 79,858
Other bonds, notes,
debentures and stock 36,820 3 (586) 36,237
- ------------------------------------------------------------------------------
Total securities held
to maturity $2,492,395 $ 33,245 $ (9,774) $2,515,866
==============================================================================
</TABLE>
Upon adoption of SFAS No. 115 on January 1, 1994, $757 million of
securities previously classified as held to maturity were reclassified as
available for sale.
<PAGE>
An analysis of the amortized cost and fair values of securities held
to maturity by maturity periods follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
===========================================================================
December 31, 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 26 $ - $ - $ 26
One to five years 626 1 - 627
Five to ten years - - - -
After ten years 8,148 - - 8,148
- ---------------------------------------------------------------------------
Total securities held
to maturity $ 8,800 $ 1 $ - $ 8,801
- ---------------------------------------------------------------------------
</TABLE>
Securities with carrying values of approximately $961,706,000,
$823,574,000, and $584,573,000 at December 31, 1994, 1993 and 1992,
respectively, were required to be pledged to secure public and trust deposits,
and for other purposes.
Excluding securities issued by the U. S. government or by U. S. government
agencies and corporations, no securities of any issuer exceeded 10 percent of
consolidated stockholders' equity as of December 31, 1994 and 1993, when
securities held to maturity and available for sale were combined for 1994, and
held to maturity and held for sale were combined for 1993.
===========================================================================
NOTE 6
SECURITIES AVAILABLE FOR SALE
An analysis of securities available for sale follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
======================================================================================
December 31, 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 1,257,160 $ 160 $ (30,816) $1,226,504
Obligations of U. S. agencies
and corporations
Mortgage-backed securities 1,081,605 51 (83,926) 997,730
Notes 118,063 4 (387) 117,680
Obligations of states
and political
subdivisions 97,082 6,896 (1,792) 102,186
Other debt securities 2,520 - (5) 2,515
Equity securities 12,410 - (582) 11,828
- --------------------------------------------------------------------------------------
Total securities
available for sale $ 2,568,840 $ 7,111 $ (117,508) $2,458,443
======================================================================================
</TABLE>
During 1994, proceeds from the sales and calls of securities available for
sale were $1,652,634,000, resulting in gross realized gains of $2,662,000 and
gross realized losses of $46,183,000.
An analysis of the amortized cost and fair values of the securities
available for sale by maturity periods follows (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
======================================================================================
December 31, 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 31,739 $ 141 $ (26) $ 31,854
One to five years 1,530,605 754 (41,940) 1,489,419
Five to ten years 42,586 947 (2,918) 40,615
After ten years 963,910 5,269 (72,624) 896,555
- --------------------------------------------------------------------------------------
Total securities
available for sale $ 2,568,840 $ 7,111 $ (117,508) $2,458,443
======================================================================================
</TABLE>
Maturities of mortgage-backed securities are classified by contractual
maturity dates. Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without penalties. At December 31, 1994, the weighted average contractual
maturity of the U.S. agency mortgage-backed securities was 22 years,
compared to an average expected maturity of approximately 5 years. During
1994, $202 million of mortgage-backed securities were paid out prior to
maturity.
Prior to the adoption of SFAS No. 115, FCC had classified certain
securities as held for sale. An analysis of securities held for sale as
of December 31, 1993 and 1992 follows (in thousands):
<TABLE>
<CAPTION>
Carrying Unrealized Unrealized Market
Value Gains (Losses) Value
======================================================================================
December 31, 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 713,558 $ 5,019 $ (17)$ 718,560
Obligations of U.S.
agencies and
corporations 1,005,358 1,852 (6,449) 1,000,761
Obligations of states
and political
subdivisions 41,011 3,024 (50) 43,985
Other bonds, notes,
debentures and stock 20,000 - - 20,000
- --------------------------------------------------------------------------------------
Total securities held
for sale $ 1,779,927 $ 9,895 $ (6,516)$1,783,306
======================================================================================
December 31, 1992
- --------------------------------------------------------------------------------------
U.S. Treasury securities $ 131,458 $ 4,415 $ (785)$ 135,088
Obligations of U.S.
agencies and
corporations 274,611 3,813 (534) 277,890
Obligations of states
and political
subdivisions 38,688 2,123 (20) 40,791
Other bonds, notes,
debentures and stock 18,600 - - 18,600
- --------------------------------------------------------------------------------------
Total securities held
for sale $ 463,357 $ 10,351 $ (1,339)$ 472,369
======================================================================================
</TABLE>
<PAGE>
===========================================================================
NOTE 7
LOANS AND LEASES
The composition of loans and leases follows (in thousands):
<TABLE>
<CAPTION>
December 31
===========================================================================
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Loans to individuals $1,457,550 $ 1,184,726
Commercial, financial and
agricultural 709,529 482,677
Real estate 561,975 521,283
Credit card loans 426,224 383,932
Other loans 86,432 113,901
- ---------------------------------------------------------------------------
Total loans and leases 3,241,710 2,686,519
Unearned income (5,057) (11,822)
- ---------------------------------------------------------------------------
Loans and leases, net
of unearned income $3,236,653 $ 2,674,697
===========================================================================
</TABLE>
The following tables provide a further classification of certain
categories of loans and leases (dollars in thousands):
<TABLE>
<CAPTION>
December 31
============================================================================================================
Loans to Individuals by Type as a
Percent of Total Loans and Leases 1994 1993
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Residential (1-4 family) - first lien $ 524,223 16.17 % $ 448,054 16.68 %
Residential (1-4 family) - junior lien 72,837 2.25 73,308 2.73
Automobile 477,720 14.74 352,744 13.13
Education 186,039 5.74 146,516 5.45
Personal expenditures 151,798 4.68 110,474 4.11
Other 44,933 1.38 53,630 2.00
- -------------------------------------------------------------------------------------------------------------
$1,457,550 44.96 % $1,184,726 44.10 %
============================================================================================================
December 31
============================================================================================================
Commercial, Financial and Agricultural Loans by Industry
as a Percent of Total Loans and Leases 1994 1993
- ------------------------------------------------------------------------------------------------------------
Services $ 197,546 6.09 % $ 128,026 4.77 %
Mining 89,714 2.77 28,486 1.06
Transportation 70,126 2.16 61,993 2.31
Wholesale trade 69,035 2.13 51,979 1.93
Manufacturing 65,550 2.02 43,925 1.64
Financial 55,033 1.70 45,679 1.70
Retail trade 43,206 1.33 40,030 1.49
Construction 40,241 1.24 27,317 1.02
Communications 25,603 0.79 18,859 0.70
Other 53,475 1.66 36,383 1.35
- ------------------------------------------------------------------------------------------------------------
$ 709,529 21.89 % $ 482,677 17.97 %
============================================================================================================
December 31
============================================================================================================
Real Estate Loans by Type as a Percent
of Total Loans and Leases 1994 1993
- ------------------------------------------------------------------------------------------------------------
Commercial $ 489,527 15.11 % $ 466,228 17.35 %
Construction and land development 47,563 1.47 33,000 1.23
Multi-family 21,005 0.65 19,099 0.71
Farmland 3,880 0.12 2,956 0.11
- ------------------------------------------------------------------------------------------------------------
$ 561,975 17.35 % $ 521,283 19.40 %
============================================================================================================
</TABLE>
In the ordinary course of business, the Banks make loans to
directors and executive officers of FCC and its subsidiaries and
to their associates. In the opinion of management, related party
loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated parties and do not
involve more than normal risks of collectibility. The amount of
such related party loans was $105,853,000 and $47,736,000 at
December 31, 1994 and 1993, respectively. An analysis of 1994
activity with respect to these loans follows (in thousands):
<TABLE>
<CAPTION>
1994
===========================================================================
<S> <C>
Beginning balance $ 47,736
Additions 196,732
Repayments (141,193)
Increase due to change in related parties 2,578
- ---------------------------------------------------------------------------
Ending balance $ 105,853
===========================================================================
</TABLE>
===========================================================================
NOTE 8
ALLOWANCE FOR LOAN LOSSES
A summary analysis of the transactions in the allowance for loan losses
follows (dollars in thousands):
<TABLE>
<CAPTION>
Years Ended December 31
====================================================================================
1994 1993 1992
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $ 68,302 $ 79,919 $ 70,817
Provision charged to expense (11,568) (4,504) 22,040
Loans and leases charged to the allowance (13,071) (16,233) (24,100)
Recoveries on loans and leases previously
charged to the allowance 9,993 9,120 8,216
- ------------------------------------------------------------------------------------
Net charge-offs (3,078) (7,113) (15,884)
- ------------------------------------------------------------------------------------
Balance at end of year $ 53,656 $ 68,302 $ 76,973
====================================================================================
Net charge-offs as a percent of
average loans and leases <FN1> 0.11 % .30 % .73 %
Allowance for loan losses as a percent of
loans and leases <FN1> at end of year 1.66 % 2.55 % 3.44 %
====================================================================================
<FN1> Net of unearned income.
</TABLE>
<PAGE>
===========================================================================
NOTE 9
NONPERFORMING ASSETS
Nonperforming assets include loans and leases on nonaccrual
status, loans and leases that have been restructured with borrowers as
to interest rates or repayment terms for credit reasons, real estate
acquired through foreclosures, loans classified as in-substance
foreclosures, unused bank premises and other foreclosed assets.
Loans past due 90 days or more are considered to be performing
assets until placed on nonaccrual status. Nonperforming assets
included in the consolidated balance sheets were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
December 31
======================================================
1994 1993
- ------------------------------------------------------
<S> <C> <C>
Nonaccrual loans $13,399 $25,461
Foreclosed assets
Other real estate 7,847 12,667
Other foreclosed assets 86 96
Allowance for losses
on foreclosed assets (3,648) (5,515)
- ------------------------------------------------------
4,285 7,248
- ------------------------------------------------------
Total nonperforming assets $17,684 $32,709
======================================================
Loans past due 90 days
or more and not
on nonaccrual status $10,304 $12,523
======================================================
Ratios at end of year
Nonperforming assets
as a percent of loans
and leases <FN1> plus
foreclosed assets 0.55 % 1.22 %
Allowance for loan losses
as a percent of non-
performing loans 400.45 % 268.26 %
Loans and leases past
due 90 days or more
and not on nonaccrual
status as a percent of
loans and leases <FN1> 0.32 % 0.47 %
======================================================
<FN1> Net of unearned income.
</TABLE>
The loss of income associated with nonperforming loans and leases, and
the cost of carrying foreclosed assets were (in thousands except per share
amounts):
<TABLE>
<CAPTION>
Years Ended December 31
===============================================================================
1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Effect on pretax income
Nonperforming loans
Contractual interest income $ 1,754 $ 4,372 $ 5,936
Income actually received and recorded
on loans on nonaccrual status
during the year (306) (242) (62)
- --------------------------------------------------------------------------------
Loss of interest income on loans 1,448 4,130 5,874
- --------------------------------------------------------------------------------
Foreclosed assets
Cost of operations 1,400 1,429 1,616
Interest cost (average funds
sold rate) 268 477 783
Net (gains) on foreclosed assets (1,133) (1,933) (1,736)
Provision for losses on foreclosed assets 496 1,656 6,449
===============================================================================
Cost to carry foreclosed assets 1,031 1,629 7,112
===============================================================================
Total effect on pretax income $ 2,479 $ 5,759 $ 12,986
===============================================================================
Cost per common share after tax $ 0.06 $ 0.12 $ 0.36
===============================================================================
</TABLE>
Additionally, interest of $2,367,000 was recovered on loans previously on
nonaccrual, but not on nonaccrual status in 1994.
The activity in the allowance for foreclosed assets was as follows
(in thousands):
<TABLE>
<CAPTION>
Years Ended December 31
===============================================================================
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning
of year $ 5,515 $ 8,611 $ 4,255
Allowance provisions 496 1,656 6,449
Sales and dispositions (2,363) (4,752) (2,093)
- --------------------------------------------------------------------------------
Net change (1,867) (3,096) 4,356
- --------------------------------------------------------------------------------
Balance at end of year $ 3,648 $ 5,515 $ 8,611
===============================================================================
</TABLE>
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 114 (SFAS No. 114),
"Accounting by Creditors for Impairment of a Loan". In October 1994,
FASB issued Statement of Financial Accounting Standards No. 118 (SFAS
No. 118), "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures," which amends SFAS No. 114. These
standards require the measurement of impairment on certain loans based
on the present value of expected future cash flows discounted at the loan's
effective interest rate. Adoption of SFAS Nos. 114 and 118 is required for
fiscal years beginning after December 15, 1994. FCC will adopt these
statements beginning January 1, 1995. Adoption will not have a material
impact on FCC's consolidated financial statements.
===========================================================================
NOTE 10
PREMISES AND EQUIPMENT
An analysis of premises and equipment by asset classification follows
(in thousands):
<TABLE>
<CAPTION>
December 31
=================================================================
1994 1993
- -----------------------------------------------------------------
<S> <C> <C>
Land $ 20,836 $ 20,687
Buildings 69,307 64,636
Leasehold improvements 19,573 18,765
Furniture, fixtures and equipment 95,637 76,045
Capitalized leased equipment 390 390
Construction in progress 6,824 7,746
- -----------------------------------------------------------------
212,567 188,269
Accumulated depreciation
and amortization (95,126) (86,039)
- -----------------------------------------------------------------
$ 117,441 $ 102,230
=================================================================
</TABLE>
Provisions for depreciation and amortization charged to operating
expense were $14,508,000, $11,145,000 and $9,963,000 for 1994, 1993 and
1992, respectively.
<PAGE>
At December 31, 1994, the Banks and a service subsidiary were obligated
under a number of noncancelable leases for land and buildings used for
continuing operations and for automobiles and equipment on a short-term
basis. Future minimum rental payments under operating leases having an
initial or remaining noncancelable lease term in excess of one year were as
follows (in thousands):
<TABLE>
<CAPTION>
Premises Equipment Total
=================================================================
<S> <C> <C> <C>
1995 $ 7,140 $ 183 $ 7,323
1996 6,419 173 6,592
1997 5,505 38 5,543
1998 5,175 - 5,175
1999 5,021 - 5,021
Later years 52,626 - 52,626
- -----------------------------------------------------------------
$ 81,886 $ 394 $ 82,280
=================================================================
</TABLE>
Generally, operating leases contain various renewal options and some
contain a provision for increased rentals under cost of living escalation
clauses. Total rental expense, net of immaterial sublease rentals, was
$6,608,000, $6,080,000 and $5,858,000 for 1994, 1993 and 1992, respectively.
===========================================================================
NOTE 11
GOODWILL AND OTHER INTANGIBLES
Tangible and identifiable intangible assets and liabilities of
acquisitions accounted for as purchases were recorded at their fair values
at the dates of acquisition. The excess of purchase price over the fair
value of net tangible and identifiable intangible assets acquired was
recorded as goodwill. Also included in goodwill and other intangibles are
premiums which were paid on the purchase of loan portfolios and deposits
purchased from the Federal Deposit Insurance Corporation and the
Resolution Trust Corporation. Selected information concerning intangibles
follows (in thousands):
<TABLE>
<CAPTION>
December 31
- ------------------------------------------------------------------------
1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
Favorable leasehold interests $ 704 $ 737
Borrower relationships 238 415
Depositor relationships 2,776 3,724
Goodwill 11,400 11,267
- ------------------------------------------------------------------------
Total $ 15,118 $ 16,143
========================================================================
</TABLE>
<TABLE>
<CAPTION>
Pretax Amortization
Years Ended December 31
========================================================================
1994 1993 1992
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Favorable leasehold interests $ 34 $ 34 $ 40
Borrower relationships 179 389 581
Depositor relationships 945 1,386 961
Goodwill 1,037 1,020 863
- ------------------------------------------------------------------------
Total $ 2,195 $ 2,829 $ 2,445
========================================================================
</TABLE>
===========================================================================
NOTE 12
DEPOSITS
The composition of deposits was as follows (in thousands):
<TABLE>
<CAPTION>
December 31
========================================================================
1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
Demand deposits $ 1,218,765 $ 1,182,557
NOW account deposits 911,699 911,268
Money market investment deposits 649,186 760,998
Savings deposits 581,863 615,239
Other consumer time deposits 1,529,636 1,440,049
- ------------------------------------------------------------------------
Total core deposits 4,891,149 4,910,111
Time deposits $100,000 and over <FN1> 566,921 399,748
- ------------------------------------------------------------------------
Total $ 5,458,070 $ 5,309,859
========================================================================
<FN1> Foreign branch time deposits included are immaterial in each period presented.
</TABLE>
===========================================================================
NOTE 13
SHORT-TERM BORROWINGS
An analysis of short-term borrowings follows (in thousands):
<TABLE>
<CAPTION>
December 31
=========================================================================
1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Federal funds purchased
and securities sold under
agreements to repurchase $ 461,255 $ 636,145 $ 467,433
Commercial paper - - 500
Other short-term borrowings 9,228 42,171 11,704
- -------------------------------------------------------------------------
Total $ 470,483 $ 678,316 $ 479,637
=========================================================================
</TABLE>
Information regarding federal funds purchased and securities sold
under agreements to repurchase follows (dollars in thousands):
<TABLE>
<CAPTION>
=========================================================================
1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Average interest rate
on December 31 5.32 % 2.66 % 2.51 %
- -------------------------------------------------------------------------
Year-to-date averages
Interest rate 4.03 % 2.85 % 2.93 %
Balance $ 571,325 $ 516,058 $ 265,873
- -------------------------------------------------------------------------
Maximum amount
outstanding at any
month-end during
the year $ 650,015 $ 775,178 $ 467,433
=========================================================================
</TABLE>
Federal funds purchased arise principally from transactions
with other banks. At December 31, 1994, federal funds
purchased had maturities ranging from three to four days.
Securities sold under agreements to repurchase had
maturities up to twenty-two days as of December 31, 1994,
and were investment transactions with other national banks,
public entities, corporate customers and securities dealers.
To the extent that the proceeds of these transactions exceed
funding requirements of the Banks, the excess funds are sold
in the money markets.
<PAGE>
FCC maintains lines of credit with several large banks,
totaling $30 million at December 31, 1994 to support the
issuance of commercial paper and pays fees to maintain these
lines. No lines of credit were in use at December 31, 1994,
1993 or 1992.
=================================================================
NOTE 14
LONG-TERM DEBT
Long-term debt consisted of (in thousands):
<TABLE>
<CAPTION>
December 31
=================================================================
1994 1993
- -----------------------------------------------------------------
<S> <C> <C>
First Commerce Corporation
12 3/4% convertible debentures,
due in December 2000; unsecured <FN1>
Series A $ 26,846 $ 26,846
Series B 56,492 57,122
- -----------------------------------------------------------------
83,338 83,968
- -----------------------------------------------------------------
Subsidiaries
9% mortgage note payable,
due in installments, balance
due in November 1996 5,295 5,370
10% mortgage note payable,
due in installments through
July 2003 25 49
Obligations under capitalized
leases, due in installments
through August 2003 298 317
- -----------------------------------------------------------------
Total long-term debt $ 88,956 $ 89,704
=================================================================
<FN1> At December 31, 1994, approximately $15,434,000 was held by
directors and executive officers of FCC.
</TABLE>
Annual principal repayment requirements for the
years 1995 through 1999 are as follows (in thousands):
Subsidiaries
==========================================================
1995 $ 109
- ----------------------------------------------------------
1996 5,240
- ----------------------------------------------------------
1997 31
- ----------------------------------------------------------
1998 35
- ----------------------------------------------------------
1999 38
- ----------------------------------------------------------
The 12 3/4% Convertible Debentures due 2000, Series A and B, were
issued in exchange for all of the capital stock held by stockholders of
The First National Bank of Lake Charles and Rapides Bank & Trust
Company in Alexandria, respectively. FCC is required to redeem Series
B Debentures at the principal amount upon the death of the original
holder; Series A Debentures allow redemption upon the death of their
original holder at the option of the holder's estate. At the option of the
holder, each of the Series A or B Debentures may be converted into
FCC common stock at the conversion price of $26.66 principal amount
for one share of stock.
Total cash payments for interest expense on long-term debt,
short-term borrowings and deposits were $146,060,000, $142,322,000
and $164,244,000 in 1994, 1993 and 1992, respectively.
===========================================================================
NOTE 15
EMPLOYEE BENEFIT PLANS
Retirement Plans--The Retirement Plan for Employees of First
Commerce Corporation (Retirement Plan) is a defined benefit plan
covering substantially all employees who have attained age 21 and
completed one year of employment. Benefits are based on years of
service and the employees' highest average monthly compensation for
any 60-month period during the last 120-month period of service.
FCC's funding policy is to contribute annually the maximum that can be
deducted for federal income tax purposes.
The following table sets forth the plan's funded status at December 31,
1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
December 31
======================================================================
1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
Projected benefit obligation
Vested benefits $ (52,261) $ (52,031)
Nonvested benefits (1,001) (1,021)
- ----------------------------------------------------------------------
Accumulated benefit obligation (53,262) (53,052)
Effect of projected future
compensation levels (15,627) (16,005)
- ----------------------------------------------------------------------
Projected benefit obligation (68,889) (69,057)
Plan assets at fair value 63,810 68,233
- ----------------------------------------------------------------------
Projected benefit obligation in excess of
plan assets (5,079) (824)
Unrecognized net loss due to past experience
different from assumptions made 2,839 841
Unrecognized prior service cost (962) (1,082)
Unrecognized net assets being recognized
over 15 years (3,866) (4,511)
- ----------------------------------------------------------------------
Unfunded accrued pension cost included
in other accrued liabilities $ (7,068) $ (5,576)
======================================================================
</TABLE>
The plan's assets at December 31, 1994 consisted primarily of U. S.
government securities, corporate bonds, and common stocks. At
December 31, 1994 and 1993 the plan's assets included $176,132 and
$201,157 of FCC common stock, at market value. As of December 31,
1994, the plan's assets included 8,006 shares of FCC common stock
with a market value of $22.00 per share. During 1994, dividends of
$8,400 were paid on FCC common shares held by the plan.
Net periodic pension cost for 1994, 1993 and 1992 included the
following (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31
==============================================================================
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during
the period $ 3,198 $ 2,524 $ 2,289
Interest cost on projected benefit
obligation 4,738 4,380 4,093
Loss (return) on plan assets 1,368 (5,657) (2,937)
Other components, net (7,812) (556) (3,296)
- ------------------------------------------------------------------------------
Net periodic pension cost $ 1,492 $ 691 $ 149
==============================================================================
</TABLE>
<PAGE>
In determining the plan's funded status, the weighted average discount
rate assumed was 7 1/2% at December 31, 1994 and 1992, and 7% at December 31,
1993. The rate of increase in future salary levels was 5 1/2% in each of the
three years. The expected long-term rate of return on assets was 8 1/2% in
1994, 1993 and 1992.
Tax-Deferred Savings Plan--FCC has a Tax-Deferred Savings Plan covering
substantially all full-time employees. Employees may voluntarily contribute
up to a maximum of 15%, with the limit depending on the salary level.
Employees receive matching contributions of 50% of voluntary contributions up
to a maximum of 2 1/2% of gross pay. Vesting in matching employer
contributions occurs at 25% per year after one year's participation with full
vesting after four years. Employer contributions were $1,682,000, $1,637,000
and $1,198,000, in 1994, 1993 and 1992 respectively.
Postretirement Benefits--Certain of FCC's subsidiaries provide
postretirement medical and life insurance coverage for specified groups of
employees who retired in prior years. The expected costs of postretirement
benefits are accrued during the years that an eligible employee renders
service to the employer, including a portion of the accumulated
postretirement benefit at January 1, 1993, amortized over a 20-year period.
The estimated current accumulated postretirement benefit obligation (APBO)
was $1,242,000 and $1,972,000 at December 31, 1994 and 1993, respectively.
The APBO calculation assumes a discount rate of 7 1/2% at December 31, 1994
and 1993. The health care cost trend rate assumed in the current calculation
begins at 9% and declines in future periods, with an underlying inflation rate
of 4%. An increase in the health care cost trend rate of 1% would result in an
increase in the postretirement medical obligation portion of the APBO of
approximately 9.1% from $940,000 to $1,026,000. FCC's accumulated
postretirement benefit expense was $151,000 in 1994 and $371,000 in 1993,
including the 20-year amortization of the transition obligation. Retiree
medical insurance and life insurance expense was $30,000, $47,000 and $13,000
in 1994, 1993 and 1992, respectively.
Postemployment Benefits - In November 1992, Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" was issued. FCC adopted this standard on January 1, 1994. The
Statement requires the accrual of the expected costs of postemployment
benefits during the years in which an eligible employee renders service to
an employer. FCC's postemployment benefit obligation is immaterial.
===========================================================================
NOTE 16
STOCKHOLDERS' EQUITY
In December 1994, FCC announced its intention to repurchase up to
two million shares of FCC's common stock for use in connection with one
or more pending acquisitions. The timing and number of shares purchased
will depend on the number of shares needed for the acquisitions, the
completion dates of the acquisitions, as well as the prices at which the
shares can be purchased.
FCC issued 1,290,145 shares of common stock in connection with the
acquisition of First Acadiana National Bancshares, Inc. on January 1, 1994.
On December 30, 1993, FCC paid a five-for-four stock split effected
in the form of a 25% stock dividend to stockholders of record on December
17, 1993. On January 11, 1993, FCC paid a three-for-two stock split
effected in the form of a 50% stock dividend to stockholders of record on
December 11, 1992. Fractional shares were paid in cash based on the
closing price on the payment date adjusted for the stock split. All
average number of shares outstanding and per share amounts were restated
to reflect both splits.
On June 23, 1992, FCC issued an additional one million common shares,
which were sold in a public offering.
On January 23, 1992, FCC issued 2,400,000 shares of 7.25% preferred
stock, $25 stated value in a public offering. The preferred stock is
non-voting and cumulative as to dividends. Each share of preferred stock
is convertible into 1.1646 shares of common stock.
FCC's 1985 Stock Option Plan (the 1985 Plan) and Tandem Stock
Appreciation Rights Plan (the SAR Plan) were replaced with a new plan
in 1992. The FCC 1992 Stock Incentive Plan (the 1992 Plan) covers up to
10% of the outstanding shares of common stock. During 1994, 79,978
options were granted at a price of $27.50 per share under the 1992 Plan.
The exercise price of the shares subject to each option granted under
the 1985 Plan is the higher of the fair market value of the stock on the
date of grant or the book value. Under the 1992 Plan the exercise
price may not be less than the fair market value of the common stock on
the date of grant.
<PAGE>
Options are exercisable in 25% increments beginning one year after
the date of grant and each year thereafter on a cumulative basis under
the 1985 Plan. Under the 1992 Plan, no option may be exercised during
the six-month period immediately following the date of grant.
The Compensation Committee has the discretion to determine the term of
each option, and the time or times during its term when such option
becomes exercisable. The income tax effect of any difference between
the market price at the exercise date and the option price is credited to
additional paid-in capital as the options are exercised. Both plans
allow the issuance of restricted stock; restriction terms are determined
at the time of grant. Under the SAR plan, rights may be granted in
conjunction with options granted under the option plan. In 1994, 239,935
rights were granted at a price of $27.50 per share under the 1992 plan.
Compensation expense is recognized in connection with stock appreciation
rights based on the current market value of the common stock. No
compensation expense was recognized in 1994 related to these rights.
A summary of changes in stock options follows (dollars in thousands except
per share data):
=====================================================================
Option Price
- ---------------------------------------------------------------------
Number of
Shares Per Share Aggregate
- ---------------------------------------------------------------------
[S] [C] [C] [C]
Outstanding
January 1, 1992 940,614 $9.13-$11.74 $ 9,392
Granted 122,607 $21.07 2,583
Exercised (475,231) $9.13-$11.74 (4,553)
Canceled (11,876) $10.40-$21.07 (174)
- ---------------------------------------------------------------------
Outstanding
December 31, 1992 576,114 $9.13-$21.07 $ 7,248
Granted 76,736 $28.20-$30.80 2,184
Exercised (168,555) $9.13-21.07 (1,684)
Canceled (4,245) $10.44-28.20 (64)
- ---------------------------------------------------------------------
Outstanding
December 31, 1993 480,050 $9.27-$30.80 $ 7,684
Granted
Options 79,978 $27.50 2,199
Rights 239,935 $27.50 6,598
Exercised
Options (81,067) $ 9.27-$28.20 (893)
Canceled
Options (19,390) $ 9.27-$28.20 (335)
Rights (7,569) $27.50 (208)
- ---------------------------------------------------------------------
Outstanding
December 31, 1994 691,937 $ 9.27-$30.80 $ 15,045
=====================================================================
Options for 245,602 shares were exercisable at December 31, 1994.
Restricted stock issued in 1988 and 1989 vested at 55% on January 31,
1992, based upon the level of cumulative earnings per share for the years
1989 to 1991. The restrictions on 100% of the 1991 grants lapsed on December
31, 1993, based upon the level of cumulative earnings per share for the years
1991 through 1993. The restrictions on the 1993 grants will lapse in full
or in part in 1996, depending on the level of cumulative earnings per share
for the years 1993 through 1995. The restrictions on the 1994 grants will
lapse in full or in part in 1997, depending on the level of cumulative earnings
per share for the years 1994 through 1996 and FCC's average annual return on
equity for this same three year period. Additionally, a performance share
award, not to exceed 50% of the shares awarded, may be earned based on
certain peer group rankings. Those officers holding restricted stock receive
dividends and have the right to vote the shares based on the assumption that
all restrictions will lapse. A summary of changes in restricted stock
follows:
=========================================================
Number of Shares
=========================================================
Outstanding, January 1, 1992 234,414
Granted 5,625
Earned and issued unrestricted (73,963)
Canceled (67,408)
- ---------------------------------------------------------
Outstanding, December 31, 1992 98,668
Granted 47,814
Earned and issued unrestricted (82,293)
Canceled (16,375)
- ---------------------------------------------------------
Outstanding, December 31, 1993 47,814
Granted 9,792
Canceled (3,554)
- ---------------------------------------------------------
Outstanding, December 31, 1994 54,052
=========================================================
FCC recorded $315,000, $944,000 and $1,152,000 of amortization expense in
1994, 1993, and 1992, respectively related to these resticted shares.
<PAGE>
At December 31, 1994, 910,618 shares of common stock were reserved for
issuance under the FCC Tax-Deferred and Supplemental Tax-Deferred Savings
Plans, in which participants can choose to invest in FCC common stock. FCC's
contributions to the plan are made in either cash or FCC common stock, with
cash contributions used to purchase FCC common stock. The plan trustee
purchased 19,839 shares in 1994, 115,001 shares in 1993 and 45,736 shares in
1992 of FCC common stock directly from FCC.
At December 31, 1994, 1,449,023 shares of common stock were reserved for
issuance under the FCC Dividend and Interest Reinvestment and Stock Purchase
Plan, which allows participants to reinvest their dividends (from both common
and preferred stock), interest (on the 12 3/4% Debentures, Series A and B) and
certain optional cash contributions in FCC common stock. The plan allows FCC,
at its discretion, to either issue new shares or purchase shares in the open
market on the reinvestment dates for the plan's participants. FCC issued
38,879 shares of common stock in 1994, 66,845 shares in 1993 and 71,318
shares in 1992, directly to the plan for participants.
===========================================================================
NOTE 17
DIVIDEND AND LOAN RESTRICTIONS
The primary source of funds for the dividends paid by FCC to its
stockholders is dividends from the Banks. The payment of dividends
by national banks is regulated by the Comptroller of the Currency. The
payment of dividends by state banks in Louisiana that are members of
the Federal Reserve system is regulated by the Louisiana
Commissioner of Financial Institutions and the Federal Reserve Board.
The amount of retained earnings that could be paid to FCC after
December 31, 1994 without prior approval was approximately
$57,306,000, plus an amount equal to the Banks' net income for 1995.
The parent company's net working capital is another source for the
payment of dividends. Net working capital was $104,862,000 as of
December 31, 1994.
Under current Federal Reserve regulations, the Banks are limited in
the amounts they may loan to their affiliates, including FCC. Loans to
a single affiliate may not exceed 10% and loans to all affiliates may not
exceed 20% of an individual bank's net assets plus its allowance for
loan losses. Such loans must be collateralized by assets with market
values of 100% to 130% of loan amounts, depending upon the nature
of the collateral.
===========================================================================
NOTE 18
OFF-BALANCE SHEET INSTRUMENTS
In the normal course of business, FCC is a party to financial instruments
which are not recorded in the consolidated financial statements. These
financial instruments include commitments to extend credit, letters of credit,
interest rate contracts and foreign exchange contracts.
Loan commitments and lines of credit represent commitments to lend
funds at specific rates, with fixed expiration or review dates and for specific
purposes. These commitments are agreements to fund loans if the
conditions in the agreements are met. For their credit card customers, the
Banks have the right to change or terminate any terms or conditions of the
credit card accounts at any time. Since many commitments and unused
credit card lines are never actually drawn upon, the unfunded amounts do
not necessarily represent future funding requirements. The Banks evaluate
each customer's creditworthiness on an individual basis. The amount of
collateral obtained, if any, upon extension of credit is based on the credit-
worthiness of the customer.
Standby letters of credit obligate the Banks to pay third parties if the
Banks' customers fail to perform under the agreements with those third
parties. Commercial letters of credit are used to finance contracts for the
shipment of goods from seller to buyer. Letters of credit are subject to
credit review, collateral requirements and debt covenants similar to those in
loan agreements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers.
Foreign exchange contracts are commitments to purchase or deliver
foreign currency at a specified exchange rate. These contracts are used as
commercial service products and guarantee that at a future date, the
customer will receive the foreign currency at a specified rate. The market
risk from unfavorable movements in currency exchange rates is minimized
by offsetting transactions.
In order to manage interest rate risk on certain assets and liabilities,
the Banks may enter into interest rate contracts, including swaps, cap
corridors, caps, swaptions and floors. These agreements obligate one or both
parties to make interest rate payments based on designated or calculated
interest rates times the notional amounts of the contracts. The notional
amounts do not represent an amount at risk because they are only used as the
basis for determining the actual cash flows related to the interest rate
contracts. Normal credit reviews of the parties to these agreements are
performed to minimize the risk of default. A swaption is an option to either
enter into an interest rate swap at some future date or cancel an existing
swap. A cap corridor is the simultaneous purchase and sale of a cap; the cap
sold is for a higher rate than the one purchased.
<PAGE>
A summary of obligations under financial instruments which are not
reflected in the consolidated financial statements follows (in thousands):
<TABLE>
<CAPTION>
December 31
===============================================================================
1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit for loans and
leases (excluding credit card plans) $ 927,593 $ 627,540
Commitments to extend credit for credit
card plans $ 1,437,709 $ 983,711
Commercial letters of credit $ 1,744 $ 2,140
Financial letters of credit $ 53,615 $ 46,268
Performance letters of credit $ 16,669 $ 16,681
Foreign exchange contracts
Commitments to purchase $ 580 $ 1,228
Commitments to sell $ 660 $ 1,326
When-issued securities
Commitments to purchase $ 50 $ 470
Commitments to sell $ 50 $ 470
Interest rate contracts <FN1>
Swaps, including amortizing interest rate swaps $ 360,000 $ 263,000
Swaptions $ 0 $ 200,000
Caps $ 350,000 $ 5,000
Cap corridors $ 100,000 $ 550,000
===============================================================================
<FN1> Notional principal amounts.
</TABLE>
===========================================================================
NOTE 19
FAIR VALUE OF FINANCIAL INSTRUMENTS
In December, 1991, the FASB issued Statement of Financial Accounting
Standards No. 107 (SFAS No. 107), "Disclosures about Fair Value of Financial
Instruments". In October, 1994, FASB issued Statement of Financial Accounting
Standards No. 119 (SFAS No. 119), "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments," which amends SFAS No.
107. These standards require disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate that value. Approximately 92% of FCC's
assets and liabilities are considered financial instruments as defined in SFAS
No. 107. Many of FCC's financial instruments, however, lack a readily
available trading market as characterized by a willing buyer and willing
seller engaging in an exhange transaction. Therefore, significant
estimations and present value calculations were used by FCC for the purpose of
this disclosure. Estimated fair values have been determined by FCC using the
best available data and an estimation methodology suitable for each category
of financial instrument.
Fair value estimates are based on existing on and off-balance sheet
financial instruments without considering the value of future business and
the value of assets and liabilities that are not considered financial
instruments. Also, the tax ramifications related to unrealized gains
and losses have not been considered in any of the estimates.
Reasonable comparability between financial institutions may not be
likely due to the wide range of permitted valuation techniques and numerous
estimates which must be made given the absence of active secondary markets
for many of the financial instruments. This lack of uniform valuation
methodologies also introduces a greater degree of subjectivity to these
estimated fair values.
Certain financial instruments and all nonfinancial instruments are
excluded from the disclosure requirements of SFAS No. 107 and 119.
Accordingly, the aggregate fair value amounts presented do not represent
the underlying value of FCC.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument.
On-balance sheet financial instruments:
Cash and short-term investments - For cash and due from banks and money
market investments, the carrying amount is a reasonable estimate of fair
value.
Securities - The fair value of securities held to maturity, available for
sale and held for sale is the market value. The market value was
determined from quoted prices or quoted prices of similar securities of
comparable risk and maturity where no quoted market price exists.
Loans - The fair value of loans, except for credit card loans, was
calculated by discounting the scheduled principal and interest payments
to maturity using estimates of December 31, 1994 and 1993 rates. For
credit card loans, cash flows and maturities were estimated based on
historical experience and discounted using an average yield adjusted
for servicing costs and credit losses.
Deposits - Deposits with stated maturities were valued using a present
value of contractual cash flows with a discount rate approximating current
market rates for deposits of similar remaining maturities. SFAS No. 107
requires that deposits without stated maturities, such as noninterest-
bearing demand deposits, money market accounts and savings accounts, have
a fair value equal to the amount payable on demand as of December 31,
1994, which is also their book value. However, these deposits do have an
inherent value due to the nature of the relationships with these long-
term depositors, which are reflected by the premiums that purchasers of
deposits have been willing to pay to sellers historically.
Short-term borrowings - The fair value of short-term borrowings is the
book value.
Long-term debt - The fair value of the long-term debt was estimated from
dealer quotes.
<PAGE>
Off-balance sheet financial instruments:
Interest rate contracts - The fair values of interest rate contracts were
obtained from dealer quotes. The fair value of interest rate contracts is
not related to the notional amount. These values represent the estimated
amount that FCC would receive or pay to terminate the contracts, taking
into account current interest rates and, when appropriate, the
current creditworthiness of the counterparties.
Foreign exchange contracts - The fair value of foreign exchange contracts
is related to the cash flows arising from these contracts and will
fluctuate based on currency values. The fair value of foreign exchange
contracts was immaterial.
Commitments to extend credit and letters of credit - The fair value of
commitments to extend credit and all types of letters of credit were
established using the fees currently charged to enter into similar
agreements. The aggregate fair value of these committments and letters
of credit was immaterial.
When-issued securities - The fair value of when-issued securities is the
par value. The fair value of when-issued securities was immaterial.
The estimated fair values of FCC's financial instruments follows (in
thousands).
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
- -------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
On-balance sheet
financial assets:
Cash and short-term
investments $ 444,684 $ 444,684 $ 472,052 $ 472,052
Securities available
for sale/held for sale $2,458,443 $ 2,458,443 $1,779,927 $1,783,306
Securities held to
maturity $ 8,800 $ 8,801 $1,523,638 $1,547,086
Loans, net of unearned
income and the
allowance for loan
losses $3,182,997 $ 3,143,661 $2,606,395 $2,601,299
On-balance sheet financial
liabilities:
Deposits $5,458,070 $ 5,437,943 $5,309,859 $5,325,742
Short-term borrowings $ 470,483 $ 470,483 $ 678,316 $ 678,316
Long-term debt $ 88,956 $ 107,618 $ 89,704 $ 140,736
Off-balance sheet financial
instruments:
Interest rate contracts $ 2,586 $ (12,977) $ 773 $ (1,109)
===========================================================================
NOTE 20
CONTINGENCIES
FCC and its subsidiaries have been named as defendants in various
legal actions arising from normal business activities in which damages
in various amounts are claimed. The amount, if any, of ultimate liability
with respect to such matters cannot be determined. However, after
consulting with legal counsel, management believes any such liability
will not have a material effect on FCC's consolidated financial condition
or results of operations.
===========================================================================
NOTE 21
OTHER OPERATING EXPENSE
The composition of other operating expense follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31
====================================================================
1994 1993 1992
- --------------------------------------------------------------------
<S> <C> <C> <C>
Advertising and marketing $ 8,985 $ 8,203 $ 7,482
Stationery and supplies 6,643 6,439 5,798
Taxes, licenses and other fees 6,641 5,462 4,048
Computer-related services 6,495 5,886 5,300
Postage 4,937 5,000 5,071
Communications 3,960 3,865 3,370
Travel and entertainment 2,707 2,507 1,938
Credit card expense 2,689 2,714 1,806
Armored car, courier and freight 2,584 2,250 2,223
Nonperforming assets expense 763 1,152 6,329
Other 4,761 6,437 12,166
- --------------------------------------------------------------------
Total $ 51,165 $ 49,915 $ 55,531
====================================================================
</TABLE>
===========================================================================
NOTE 22
INCOME TAXES
The components of income tax expense in the consolidated statements of
income for the years ended December 31, 1994, 1993, and 1992 were as follows
(in thousands):
<TABLE>
<CAPTION>
Liability Method Deferred Method
- ------------------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Current $ 22,834 $ 49,267 $ 35,182
Deferred 6,834 (8,626) (2,416)
- ------------------------------------------------------------------------------
Total $ 29,668 $ 40,641 $ 32,766
==============================================================================
</TABLE>
<PAGE>
Income tax expense related to state and foreign income taxes is included
above and was insignificant in all years presented. Income tax benefit
related to securities transactions was $15,243,000 in 1994, $148,000 in 1993
and $87,000 in 1992.
Total income tax expense for 1994, 1993 and 1992 was different from the amount
computed by applying the statutory federal income tax rates to pretax income as
follows (in percentages):
<TABLE>
<CAPTION>
Years Ended December 31
===========================================================================================
Liability Method Deferred Method
- -------------------------------------------------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax expense 35.00 % 35.00 % 34.00 %
Increase (decrease) resulting from:
Benefits attributable to tax-exempt interest (3.70) (2.85) (4.03)
Deferred taxes no longer needed - (2.86) 0.00
Effect of change in tax rate on beginning
deferred items - (0.33) 0.00
Effect of adopting SFAS 109 - 0.43 0.00
Nondeductible expenses 0.98 0.46 0.71
Other items, net (0.50) 0.06 0.18
- -------------------------------------------------------------------------------------------
Actual income tax expense 31.78 % 29.91 % 30.86 %
===========================================================================================
</TABLE>
The current income tax (receivable) payable was $(1.89) million and $9.95
million on December 31, 1994 and 1993, respectively.
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 $54.56 million and $24.23 million on Dec. 31, 1994 and 1993,
respectively. The major temporary differences which created deferred tax
assets and liabilities as of December 31, 1994 and 1993 are as follows (in
thousands):
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
=====================================================================================================================
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unrealized loss on securities $ 38,638 $ 0 $ 0 $ 0
Allowance for loan losses 19,309 0 24,508 0
Amortization of intangibles 3,039 0 3,703 0
Employee benefits 2,253 0 1,731 0
Interest on nonaccrual loans 1,310 0 2,431 0
Alowance for losses on foreclosed assets 630 0 2,705 0
Accumulated depreciation 0 4,165 0 4,242
Accrued liabilities 0 4,061 0 3,943
Bond accretion 0 3,190 0 3,968
Other 1,424 630 3,430 2,128
- ---------------------------------------------------------------------------------------------------------------------
Total deferred taxes $ 66,603 $ 12,046 $ 38,508 $ 14,281
=====================================================================================================================
</TABLE>
Deferred income tax benefit for the year ended December 31, 1992 included the
following components (in thousands):
================================================
Provision for loan losses $ (1,818)
Provision for other losses (566)
Interest on nonaccrual loan (1,303)
Depreciation (546)
Direct lease financing inco (1)
Bond accretion (45)
Other items, net 1,863
- ------------------------------------------------
Total deferred tax benefit $ (2,416)
================================================
FCC's cash payments for federal income tax liabilities were $32.62 million,
$37.73 million and $31.20 million for 1994, 1993 and 1992, respectively.
===========================================================================
NOTE 23
CONDENSED PARENT COMPANY ONLY
FINANCIAL INFORMATION
Condensed Balance Sheets (in thousands)
<TABLE>
<CAPTION>
December 31
=========================================================================
1994 1993
- -------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Interest-bearing deposits in
subsidiary banks <FN1>
Cash and due from banks $ 96,883 $ 43,412
Time deposits 381 618
Loan receivable, net of unearned income 975 -
Investments in subsidiaries at equity <FN1>
Banks 440,245 530,581
Nonbanks 7,181 4,388
- -------------------------------------------------------------------------
447,426 534,969
Other assets 22,889 31,982
- -------------------------------------------------------------------------
Total assets $ 568,554 $ 610,981
=========================================================================
LIABILITIES
Payables to subsidiaries <FN1> $ 3,751 $ 7,583
Long-term debt 83,338 83,968
Other liabilities 10,419 9,758
- -------------------------------------------------------------------------
Total liabilities 97,508 101,309
STOCKHOLDERS' EQUITY 471,046 509,672
- -------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 568,554 $ 610,981
=========================================================================
<FN1> Eliminated in consolidation, except for goodwill and other intangibles.
</TABLE>
Condensed Statements of Income (in thousands)
<TABLE>
<CAPTION>
Years Ended December 31
======================================================================================
1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Interest and dividends on
securities $ 860 $ 274 $ 104
Interest on receivables from
subsidiaries <FN1> 1,667 1,798 2,546
Dividends from subsidiaries <FN1> 90,030 22,123 3,386
Other income 25 234 5
- --------------------------------------------------------------------------------------
92,582 24,429 6,041
- --------------------------------------------------------------------------------------
EXPENSES
Interest on debt to nonbank subsidiaries 165 183 -
Interest on debt to nonaffiliates 10,670 11,204 11,313
Other 546 1,074 1,624
- --------------------------------------------------------------------------------------
11,381 12,461 12,937
- --------------------------------------------------------------------------------------
Income before income taxes and
equity in undistributed earnings
of subsidiaries 81,201 11,968 (6,896)
Income tax benefit (3,665) (13,514) (3,062)
- --------------------------------------------------------------------------------------
84,866 25,482 (3,834)
Equity in undistributed earnings
of subsidiaries <FN1> (21,182) 69,732 76,309
- --------------------------------------------------------------------------------------
NET INCOME 63,684 95,214 72,475
PREFERRED DIVIDEND
REQUIREMENTS 4,347 4,348 4,076
- --------------------------------------------------------------------------------------
INCOME APPLICABLE TO
COMMON SHARES $ 59,337 $ 90,866 $ 68,399
======================================================================================
<FN1> Eliminated in consolidation.
</TABLE>
Parent Company
Statements of Cash Flows (in thousands)
<TABLE>
<CAPTION>
Years Ended December 31
==========================================================================
1994 1993 1992
- --------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 63,684 $ 95,214 $ 72,475
Adjustments to reconcile net income to
net cash provided by operating activities
Equity in undistributed earnings
of subsidiaries (a) 21,182 (69,732) (76,309)
Deferred income tax (benefit) expense (183) (13,394) 304
Increase (decrease) in interest
payable 23 (21) (33)
Decrease in other assets 849 1,682 106
Increase (decrease) in other
liabilities (1,020) 27 (9,688)
Other 296 944 1,277
- --------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 84,831 14,720 (11,868)
- --------------------------------------------------------------------------
INVESTING ACTIVITIES
Investment in subsidiaries <FN1> (5,000) 3,000 (38,288)
Purchase of interest-bearing
time deposits <FN1> - - (2,020)
Proceeds from maturity of interest-
bearing time deposits <FN1> 237 313 2,335
(Increase) in loans (975) - -
Purchase of securities (11,998) (85,000) (22,300)
Proceeds from sales of securities 20,000 83,975 3,700
Principal collected on advances <FN1> 77,392 86,002 73,161
Advances originated or acquired <FN1> (80,755) (81,289) (73,366)
- --------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (1,099) 7,001 (56,778)
- --------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in commercial
paper - (500) 500
Payments on long-term debt (630) (5,842) (4,308)
Proceeds from issuance of stock
Common 1,840 5,385 52,019
Preferred - - 57,597
Cash dividends (31,471) (24,995) (17,872)
- --------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (30,261) (25,952) 87,936
- --------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 53,471 (4,231) 19,290
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 43,412 47,643 27,466
- --------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 96,883 43,412 46,756
==========================================================================
<FN1> Eliminated in consolidation.
</TABLE>
<PAGE>
MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
The management of First Commerce Corporation is responsible
for the preparation of the financial statements, related
financial data and other information in this annual report. The
financial statements are prepared in accordance with generally
accepted accounting principles and include some amounts that are
necessarily based on management's informed estimates and
judgements, with consideration given to materiality . All
financial information contained in this annual report is
consistent with that in the financial statements.
Management fulfills its responsibility for the integrity,
objectivity, consistency and fair presentation of the financial
statements and financial information through an accounting system
and related internal accounting controls that are designed to
provide reasonable assurance that assets are safeguarded and that
transactions are authorized and recorded in accordance with
established policies and procedures. The concept of reasonable
assurance is based on the recognition that the cost of a system
of internal accounting controls should not exceed the related
benefits. As an integral part of the system of internal
accounting controls, First Commerce Corporation has a
professional staff of internal auditors who monitor compliance
with and assess the effectiveness of the system of internal
accounting controls and coordinate audit coverage with the
independent public accountants.
The Audit Committee of the Board of Directors, composed
solely of outside directors, meets periodically with management,
the internal auditors and the independent public accountants to
review matters related to financial reporting, internal
accounting control and the nature, extent and results of the
audit effort. The independent public accountants and the
internal auditors have direct access to the Audit Committee with
or without management present.
The financial statements have been examined by Arthur
Andersen LLP, independent public accountants, who render and
independent professional opinion on the financial statements
prepared by management. Their appointment was recommended by the
Audit Committee and approved by the Board of Directors.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders
and Board of Directors of
First Commerce Corporation:
We have audited the consolidated balance sheets of FIRST COMMERCE
CORPORATION (a Louisiana corporation) and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Commerce Corporation
and subsidiaries as of December 31, 1994 and 1993 and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Note 1, effective January 1, 1994 the Company changed its
method of accounting for investment securities.
/s/ Arthur Anderson LLP
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
January 11, 1995
(except with respect to the
matters discussed in Note 2,
as to which the date is
February 17, 1995)
EXHIBIT 21
SUBSIDIARIES* OF FIRST COMMERCE CORPORATION
- First National Bank of Commerce
- Marquis Investments, Inc. (formerly First Commerce Investment
Services, Inc.)
- Baronne Street Properties, Inc.
- Wolcott Mortgage Group, Inc.
- City National Bank of Baton Rouge
- Rapides Bank & Trust Company in Alexandria
- The First National Bank of Lafayette
- The First National Bank of Lake Charles
- First Commerce Service Corporation (formerly MSDI Company)
- First Commerce Community Development Corporation
- First Commerce Capital, Inc.
__________________
* All Incorporated or organized in Louisiana.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this
Form 10-K into First Commerce Corporation's previously filed
Registration Statement File No. 2-97152 on Form S-8, Registration
Statement File No. 33-925 on Form S-8, Registration Statement
File No. 33-28002 on Form S-8 and Registration Statement File No.
33-50150 on Form S-8.
/s/ Arthur Andersen LLP
New Orleans, Louisiana, ARTHUR ANDERSEN LLP
March 20, 1995
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Ian Arnof and
Thomas L. Callicutt, Jr., or either of them, his or her true and
lawful attorney-in-fact and agent, with full power of
substitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign on his or her behalf
First Commerce Corporation's Annual Report on Form 10-K for the
year ended December 31, 1994.
Hereby executed by the following persons in the capacities
indicated on the 21st day of February, 1995.
/s/ Ian Arnof
IAN ARNOF ________________________
President and Chief Executive Officer
/s/ Thomas C. Jaeger
THOMAS C. JAEGER ________________________
Chief Financial Officer
/s/ Thomas L. Callicutt, Jr.
THOMAS L. CALLICUTT, JR. ________________________
Senior Vice President, Controller and
Principal Accounting Officer
/s/ James J. Bailey III
JAMES J. BAILEY III ________________________
Board Member
/s/ Sydney J. Besthoff III
SYDNEY J. BESTHOFF III ________________________
Board Member
/s/ Robert H. Bolton
ROBERT H. BOLTON ________________________
Board Member
/s/ Frances B. Davis
FRANCES B. DAVIS ________________________
Board Member
/s/ Laurance Eustis, Jr.
LAURANCE EUSTIS, JR. _______________________
Board Member
/s/ William P. Fuller
WILLIAM P. FULLER ________________________
Board Member
/s/ Arthur Hollins III
ARTHUR HOLLINS III ________________________
Board Member
/s/ F. Ben James, Jr.
F. BEN JAMES, JR. ________________________
Board Member
/s/ Erik F. Johnsen
ERIK F. JOHNSEN ________________________
Board Member
/s/ J. Merrick Jones, Jr.
J. MERRICK JONES, JR. ________________________
Board Member
/s/ Edwin Lupberger
EDWIN LUPBERGER ________________________
Board Member
/s/ Hermann Moyse, Jr.
HERMANN MOYSE, JR. ________________________
Board Member
/s/ O. Miles Pollard, Jr.
O. MILES POLLARD, JR. ________________________
Board Member
/s/ G. Frank Purvis, Jr.
G. FRANK PURVIS, JR. ________________________
Board Member
/s/ Edward M. Simmons
EDWARD M. SIMMONS ________________________
Board Member
/s/ H. Leighton Steward
H. LEIGHTON STEWARD ________________________
Board Member
/s/ Joseph B. Storey
JOSEPH B. STOREY ________________________
Board Member
/s/ Robert A. Weigle
ROBERT A. WEIGLE ________________________
Board Member
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE PERIOD ENDING DECEMBER 31, 1994 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 397,376
<INT-BEARING-DEPOSITS> 138
<FED-FUNDS-SOLD> 38,200
<TRADING-ASSETS> 8,970
<INVESTMENTS-HELD-FOR-SALE> 2,458,443
<INVESTMENTS-CARRYING> 8,800
<INVESTMENTS-MARKET> 8,801
<LOANS> 3,236,653
<ALLOWANCE> (53,656)
<TOTAL-ASSETS> 6,558,690
<DEPOSITS> 5,458,070
<SHORT-TERM> 470,483
<LIABILITIES-OTHER> 70,135
<LONG-TERM> 88,956
<COMMON> 130,963
0
59,954
<OTHER-SE> 280,129
<TOTAL-LIABILITIES-AND-EQUITY> 6,558,690
<INTEREST-LOAN> 241,899
<INTEREST-INVEST> 163,473
<INTEREST-OTHER> 2,632
<INTEREST-TOTAL> 408,004
<INTEREST-DEPOSIT> 117,272
<INTEREST-EXPENSE> 151,743
<INTEREST-INCOME-NET> 256,261
<LOAN-LOSSES> (11,568)
<SECURITIES-GAINS> (43,549)
<EXPENSE-OTHER> 51,165
<INCOME-PRETAX> 93,352
<INCOME-PRE-EXTRAORDINARY> 93,352
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,684
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 2.19
<YIELD-ACTUAL> 6.98
<LOANS-NON> 13,399
<LOANS-PAST> 10,304
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 68,302
<CHARGE-OFFS> (13,071)
<RECOVERIES> 9,993
<ALLOWANCE-CLOSE> 53,656
<ALLOWANCE-DOMESTIC> 53,656
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 9,942
</TABLE>
