SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (Date of earliest event reported): May 15, 1995
FIRST COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
LOUISIANA 0-7931 72-0701203
(State of incorporation) (Commission File Number) (IRS Employer
Identification Number)
210 BARONNE ST., NEW ORLEANS, LOUISIANA 70112
(Address of principal executive offices - Zip Code)
Registrant's telephone number, including area code: (504) 561-1371
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On May 15, 1995, First Commerce Corporation (FCC) and
Central Corporation (Central) entered into a definitive
agreement to merge Central into FCC. Central, the parent
company of Central Bank, is a bank holding company located
in Monroe, Louisiana with assets of approximately $834
million. Under the terms of the agreement, Central Bank
will retain separate bank status and will become a wholly
owned subsidiary of FCC. The merger is subject to approvals
of regulatory agencies and the shareholders of both FCC and
Central, among other conditions. If all conditions are met,
the transaction is expected to be completed in the fourth
quarter of 1995.
Upon consummation of the merger, each outstanding share of
Central common stock will be converted into 1.67 shares of
FCC common stock, subject to reduction in certain limited
circumstances not expected to occur. The exact number of
shares will be determined at the time the merger is
effected, but in no event will exceed 6,792,453 shares.
Based on FCC's stock price on May 24, 1995, the approximate
value of the transaction is $188 million. The merger will
be accounted for as a pooling-of-interests. Central has
also granted an option to FCC to purchase or require Central
to repurchase for cash up to 19.9% of its outstanding common
stock, exercisable in certain limited circumstances.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Interim Consolidated Financial Statements of Central
Corporation (unaudited):
Consolidated Statement of Condition as of March 31, 1995
Consolidated Statements of Income for the quarters
ended March 31, 1995 and 1994
Consolidated Statements of Cash Flows for the
quarters ended March 31, 1995 and 1994
Notes to Consolidated Financial Statements
(b) Consolidated Financial Statements of Central
Corporation:
Consolidated Statements of Condition as of
December 31, 1994 and 1993
Consolidated Statements of Income for the years
ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in
Stockholders' Equity for the years ended December
31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
(c) First Commerce Corporation Pro Forma Condensed Combined
Financial Information (Unaudited):
Pro Forma Condensed Combined Balance Sheet as of
March 31, 1995
Pro Forma Condensed Combined Statement of Income
for the three months ended March 31, 1995
Pro Forma Condensed Combined Statement of Income
for the year ended December 31, 1994
Pro Forma Condensed Combined Statement of Income
for the year ended December 31, 1993
Pro Forma Condensed Combined Statement of Income
for the year ended December 31, 1992
Notes to Pro Forma Condensed Combined Financial
Statements
<PAGE>
(d) Exhibits
4.1 Indenture between First Commerce Corporation
and Republic Bank Dallas, N.A. (now
NationsBank of Texas, N.A.), Trustee,
including the form of 12-3/4% Convertible
Debenture due 2000, Series A included as
Exhibit 4.1 to 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 of 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.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
<PAGE>
CENTRAL CORPORATION
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CONDITION
AS OF MARCH 31, 1995 AND THE RELATED UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR
THE THREE MONTH PERIOD ENDED MARCH 31, 1995 AND 1994.
<PAGE>
<TABLE>
<CAPTION>
CENTRAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(dollar amounts in thousands)
(unaudited)
March 31, December 31,
1995 1994<FN>
<S> <C> <C>
Assets
_______
Cash and due from banks $ 38,545 $ 40,585
Federal funds sold 56,035 78,000
Securities available for sale, at fair value 35,742 9,921
Investment securities (fair value $83,135
and $73,139) 84,751 76,198
Loans 594,709 593,689
Less: Allowance for possible loan losses 9,929 9,836
________ ________
Net loans 584,780 583,853
Bank premises and equipment 19,199 16,339
Other real estate 1,144 1,527
Accrued interest receivable 6,234 5,721
Other assets 7,622 8,006
________ ________
Total assets $834,052 $820,150
======== ========
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $114,959 $124,471
Interest bearing 629,035 589,657
________ ________
Total deposits 743,994 714,128
Federal funds purchased 8,179 29,602
Accrued interest payable 2,707 2,215
Other liabilities 5,208 2,991
Dividends payable 407 407
Capital lease obligations 774 701
_______ _______
Total liabilities 761,269 750,044
Stockholders' equity:
Capital stock of $1.00 par value - authorized
20,000,000 shares; issued and outstanding 4,066,731
(2,711,154 in 1994) 4,067 4,067
Surplus 15,904 15,904
Retained earnings 52,975 50,419
Unrealized gains on securities available
for sale, net (163) (284)
________ _________
Total stockholders' equity 72,783 70,106
________ _________
Total liabilities and stockholders' equity $834,052 $820,150
======== =========
<FN> The statement of condition at December 31, 1994 has been taken from the audited
statement of condition as of that date.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CENTRAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share amounts)
(unaudited)
Quarters Ended
March 31
-----------------------
1995 1994
<S> <C> <C>
Interest income:
Loans:
Taxable $13,891 $11,314
Nontaxable 150 155
Investment securities:
Taxable 1,072 1,479
Nontaxable 62 102
Federal funds sold 1,119 345
Other 1 1
_______ _______
Total interest income 16,295 13,396
Interest expense:
Deposits 6,416 4,665
Federal funds purchased 117 76
Capital lease obligations 18 13
______ ______
Total interest expense 6,551 4,754
______ ______
Net interest income 9,744 8,642
Provision for possible loan losses 230 600
______ ______
Net interest income after provision
for possible loan losses 9,514 8,042
Other revenues:
Service charges on deposit accounts 1,824 1,614
Loan fees 1,378 1,478
Trust income 455 438
Insurance income 186 204
Miscellaneous income 358 246
______ ______
Total other revenues 4,201 3,980
Other expenses:
Salaries and employee benefits 4,489 4,151
Data processing 991 809
Postage and supplies 548 444
Occupancy 527 435
FDIC deposit insurance 394 377
Marketing 444 365
Communications 317 280
Other equipment 334 307
Other 956 1,112
______ _____
Total other expenses 9,000 8,280
______ _____
Income before federal income taxes 4,715 3,742
Federal income taxes 1,752 1,315
______ ______
Net income $ 2,963 $ 2,427
======= =======
Net income per share (See note 2) $ .73 $ .60
======= =======
Cash dividends per share (See note 2) $ .10 $ .08
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CENTRAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
(unaudited)
Quarters Ended
March 31
1995 1994
------ ------
<S> <C> <C>
Cash flow provided by operations $ 6,333 $ 6,959
Cash flow from investing activities:
Maturities of investment securities 7,560 15,992
Purchases of investment securities (41,754) ---
Net change in loans (excluding sales) (19,886) (15,916)
Sales of loans 18,918 21,378
Capital expenditures (3,490) (219)
Proceeds from sale of other real estate 205 193
_________ ________
Net cash (used in) provided by
investing activities (38,447) 21,428
Cash flow from financing activities:
Net change in deposits 29,866 (506)
Net change in federal funds purchased (21,423) (12,273)
Dividends paid (407) (325)
Payments on capital lease obligations (67) (56)
Increase in capital lease obligations 140 ---
__________ ________
Net cash (used in) provided by
financing activities 8,109 (13,160)
__________ _________
Change in cash and federal funds sold (24,005) 15,227
Beginning cash and federal funds sold 118,585 63,340
__________ _________
Ending cash and federal funds sold $94,580 $78,567
======= =======
</TABLE>
<PAGE>
CENTRAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited financial statements reflect all adjustments
which are, in the opinion of management, necessary to present fairly the
consolidated financial position and results of operations of Central Corporation
(the Corporation) and its wholly-owned subsidiary, Central Bank (Central), in
accordance with generally accepted accounting principles consistently applied
for the dates and periods indicated. All such adjustments are of a normal
recurring nature. Users of these financial statements are presumed to be
familiar with the audited financial statements included in previous reports to
the Securities and Exchange Commission.
2. Per share calculations have been restated to reflect a three-for-two stock
split which occurred during the second quarter of 1994.
3. Certain 1994 balances have been reclassified to conform to current year
presentation.
<PAGE>
CENTRAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION 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 YEARS IN THE THREE YEAR PERIOD ENDED
DECEMBER 31, 1994, TOGETHER WITH AUDITORS' REPORT.
<PAGE>
Consolidated Statements
Central Corporation
Consolidated Statements Of Condition
(Dollar amounts expressed in thousands except share data)
December 31
1994 1993
ASSETS ________ ________
Cash and due from banks $ 40,585 $ 27,018
Federal funds sold 78,000 36,322
Securities available for sale, at fair value 9,921 41,769
Investment securities (fair value $73,139 and
$91,209) 76,198 90,960
Loans 593,689 559,900
Less: Allowance for possible loan losses 9,836 10,080
________ ________
Net loans 583,853 549,820
Bank premises and equipment 16,339 14,970
Other real estate 1,527 4,000
Accrued interest receivable 5,721 6,294
Other assets 8,006 6,873
________ ________
Total assets $820,150 $778,026
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $124,471 $118,410
Interest bearing 589,657 569,719
________ ________
Total deposits 714,128 688,129
Federal funds purchased 29,602 22,148
Accrued interest payable 2,215 1,894
Other liabilities 2,991 3,153
Dividends payable 407 325
Capital lease obligations 701 797
________ ________
Total liabilities 750,044 716,446
Stockholders' equity:
Capital stock of $1.00 par value - authorized
20,000,000 shares; issued and outstanding
4,066,731 shares (2,711,154 in 1993) 4,067 2,711
Surplus 15,904 17,260
Retained earnings 50,419 41,437
Unrealized gains (losses) on securities available
for sale, net (284) 172
________ ________
Total stockholders' equity 70,106 61,580
Total liabilities and stockholders' equity $820,150 $778,026
======== ========
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements
Central Corporation
Consolidated Statements Of Income
(Dollar amounts expressed in thousands except share data)
Years ended December 31
1994 1993 1992
____ ____ ____
<S> <C> <C> <C>
Interest income:
Loans:
Taxable $47,796 $ 43,700 $ 43,592
Nontaxable 661 576 615
Investment securities:
Taxable 4,999 6,677 8,746
Nontaxable 387 583 737
Federal funds sold 2,468 983 1,003
Other short-term investments 3 370 1,616
______ ______ ______
Total interest income 56,314 52,889 56,309
Interest expense:
Deposits 20,710 19,700 25,149
Federal funds purchased 324 314 468
Capital lease obligations and other debt 50 70 362
______ ______ ______
Total interest expense 21,084 20,084 25,979
______ ______ ______
Net interest income 35,230 32,805 30,330
Provision for possible loan losses 1,025 3,080 4,185
______ ______ ______
Net interest income after provision
for possible loan losses 34,205 29,725 26,145
Other revenues:
Service charges on deposit accounts 6,571 6,473 6,136
Loan fees 5,814 6,022 5,571
Trust income 1,802 1,645 1,332
Insurance income 591 715 656
Gain on sale of securities --- 125 ---
Miscellaneous income 1,354 918 803
______ ______ ______
Total other revenues 16,132 15,898 14,498
Other expenses:
Salaries and employee benefits 17,099 15,614 13,790
Data processing 3,448 3,048 2,711
Postage and supplies 1,872 1,787 1,774
Occupancy 1,952 1,647 1,758
FDIC deposit insurance 1,525 1,481 1,527
Marketing 1,757 1,438 1,385
Communications 1,226 1,038 1,116
Other equipment 1,286 1,131 1,040
Other 4,366 5,220 5,169
______ ______ ______
Total other expenses 34,531 32,404 30,270
______ ______ ______
Income before federal income taxes 15,806 13,219 10,373
Federal income taxes 5,279 4,194 3,321
______ ______ ______
Net income $10,527 $ 9,025 $ 7,052
====== ====== ======
Net income per share $ 2.59 $ 2.22 $ 1.73
====== ====== ======
Cash dividends per share $ .38 $ .31 $ .27
====== ====== ======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements
Central Corporation
Consolidated Statements Of Cash Flows
(Dollar amounts expressed in thousands)
Years ended December 31
1994 1993 1992
____ _____ ____
<S> <C> <C> <C>
Cash flow provided by operations:
Net income $ 10,527 $ 9,025 $ 7,052
Noncash adjustments:
Provision for possible loan losses 1,025 3,080 4,185
Depreciation and amortization 1,828 2,072 2,663
Other real estate write-downs 148 405 414
Deferred income taxes 449 (429) (490)
Decrease (increase) in interest receivable 573 (900) 1,881
Increase (decrease) in interest payable 321 (384) (1,121)
Increase (decrease) in income taxes payable (207) (259) 846
Gain on sales of other real estate (3) (146) (123)
Gain on sale of securities --- (125) ---
Other (1,049) (441) (700)
______ ______ ______
Net cash provided by operations 13,612 11,898 14,607
Cash flow from investing activities:
Maturities of securities 63,627 135,992 158,829
Purchases of securities (17,708) (113,018) (162,357)
Net change in loans (excluding sales) (96,804) (72,844) (79,592)
Sales of loans 61,479 15,228 11,939
Net change in other short-term investments --- 10,000 74,972
Capital expenditures (3,450) (2,027) (1,684)
Proceeds from sales of other real estate 2,595 1,080 4,319
Proceeds from sale of securities --- 235 ---
______ ______ ______
Net cash (used in) provided by
investing activities 9,739 (25,354) 6,426
Cash flow from financing activities:
Increase in deposits 25,999 4,612 2,794
Net change in federal funds purchased 7,454 (29) 5,527
Dividends paid (1,463) (1,193) (1,030)
Increase in capital lease obligations 131 --- ---
Payments on long-term debt --- (4,369) (332)
Payments on capital lease obligations (227) (216) (153)
______ ______ ______
Net cash (used in) provided by
financing activities 31,894 (1,195) 6,806
______ ______ ______
Change in cash and federal funds sold 55,245 (14,651) 27,839
Beginning cash and federal funds sold 63,340 77,991 50,152
______ ______ ______
Ending cash and federal funds sold $ 118,585 $ 63,340 $ 77,991
======= ======= ======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements
Central Corporation
Consolidated Statements Of Changes In Stockholders' Equity
(Dollar amounts expressed in thousands)
Unrealized
gains (losses)
on securities
Capital Retained available
stock Surplus earnings for sale Total
_______ _______ ________ _____________ ______
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $11,296 $ 6,867 $29,499 $ --- $47,662
Net income --- --- 7,052 --- 7,052
Cash dividends --- --- (1,084) --- (1,084)
______ ______ ______ _______ ______
Balance at December 31, 1992 11,296 6,867 35,467 --- 53,630
Change in par value (10,393) 10,393 --- --- ---
Stock split - three for one 1,808 --- (1,808) --- ---
Net income --- --- 9,025 --- 9,025
Cash dividends --- --- (1,247) --- (1,247)
Change in unrealized gains on
securities available for
sale, net --- --- --- 172 172
______ ______ ______ _______ ______
Balance at December 31, 1993 2,711 17,260 41,437 172 61,580
Stock split - three for two 1,356 (1,356) --- --- ---
Net income --- --- 10,527 --- 10,527
Cash dividends --- --- (1,545) --- (1,545)
Change in unrealized gains
(losses) on securities
available for sale, net --- --- --- (456) (456)
______ ______ ______ _______ ______
Balance at December 31, 1994 $ 4,067 $15,904 $50,419 $ (284) $70,106
====== ====== ====== ======= =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes
Notes To Consolidated Financial Statements
(Dollar amounts expressed in thousands)
1. Summary of Significant Accounting Policies
Organization of Central Corporation and Summary of
Significant Accounting Policies
Central Corporation (the Corporation) is a bank holding
company organized under the laws of the State of Louisiana.
Its principal operating unit, Central Bank (Central), was
organized in 1905 under a Louisiana charter.
(a) Consolidation and Basis of Presentation
The consolidated financial statements include the
accounts of the Corporation and its wholly-owned subsidiary
for all periods presented. Intercompany transactions and
balances have been eliminated.
The consolidated financial statements are presented on an
historical cost basis. Where required under generally
accepted accounting principles, additional information
regarding the fair value of financial instruments is
provided in note 13.
(b) Cash and Federal Funds Sold
For purposes of presenting the statement of cash flows,
the Corporation considers federal funds sold having a maturity
of one day as a cash equivalent to be included with cash and
due from banks.
(c) Securities
Securities designated as "investment securities" and
other short-term investments are stated at cost, adjusted for
amortization of the related premiums and accretion of
discounts, computed using a method that approximates level
yield. These securities are acquired with the intent to
hold them to maturity and the Corporation has the ability
to do so.
Securities designated as "available for sale" are stated
at fair value. Unrealized gains and losses are aggregated
and reported as a separate component of stockholders'
equity, net of deferred taxes. These securities are
acquired with the intent to hold them to maturity, but they
are available for disposal in the event of unforeseen
liquidity needs.
(d) Loans
Loans are stated at the principal amount outstanding, net of
unearned discount and deferred nonrefundable loan fees net
of related direct origination costs. Interest revenue is
recognized using the interest method based on the
contractual terms of each loan.
The accrual of interest on a loan is discontinued when
collection is in doubt. Receipts of previously nonaccrued
interest are recognized as income on a cash basis when
collection of the outstanding principal is considered
likely.
(e) Allowance for Possible Loan Losses
The allowance for possible loan losses is established
through a provision for possible loan losses charged to
expense. Amounts are charged against the allowance for
possible loan losses to reduce the loans to their estimated
collectible amount when management believes that the
collection of the full principal balance is unlikely. The
allowance is an amount that management believes will be
adequate to absorb possible loan losses based on evaluations
of the collectibility of loans and prior loan loss experience.
The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio,
overall portfolio quality, review of specific problem loans,
and current economic conditions that may affect the
borrower's ability to pay.
(f) Bank Premises and Equipment
Bank premises and equipment are recorded at cost.
Depreciation is recognized over the estimated useful lives
of each asset using the straight-line method.
(g) Other Real Estate
Other real estate acquired through foreclosure is carried
at the lower of its cost or fair value net of disposal
costs. Any loss incurred upon foreclosure is charged
against the allowance for possible loan losses. Subsequent
gains or losses as well as related operating income and
expenses are included in other expenses.
<PAGE>
Notes
(h) Federal Income Taxes
The Corporation files a consolidated federal income tax
return. Income taxes are accounted for under the liability
method. Deferred tax assets and liabilities are recorded
based on the difference between the tax basis and the
carrying amounts for financial reporting purposes of the
Corporation's various assets and liabilities. Tax credits
allowed by the Internal Revenue Service are generally taken
in the year earned as a reduction to income tax expense
using the flow-through method.
(i) Net Income and Dividends Per Share
Net income per share calculations are based on the
weighted average number of shares outstanding during each
year. Dividends per share calculations are based on the
shares outstanding at the time of the dividend. Previously
reported amounts are restated for the effects of stock
splits.
(j) Reclassifications
Certain balances have been reclassified to conform to
current year presentation.
2. Securities Available for Sale
On December 31, 1993, the Corporation adopted Statement of
Financial Accounting Standard No. 115 and began segregating
certain securities that could be sold prior to their
contractual maturity in the event of unforeseen liquidity
needs. These securities are reported at fair value on the
consolidated statement of condition with unrealized gains
and losses listed as a separate component of stockholders'
equity, net of deferred income tax. A comparison of their
amortized cost and fair value follows:
<TABLE>
<CAPTION>
December 31, 1994
Amortized Unrealized Unrealized Fair
cost gains losses value
__________ __________ __________ __________
<S> <C> <C> <C> <C>
U.S. government agencies $ 9,040 $ --- $ 430 $ 8,610
Equity securities 1,311 --- --- 1,311
_________ __________ __________ __________
$ 10,351 $ --- $ 430 $ 9,921
========= ========== ========== ==========
December 31, 1993
Amortized Unrealized Unrealized Fair
cost gains losses value
_________ __________ __________ __________
U.S. government obligations $ 17,133 $ 219 $ --- $ 17,352
U.S. government agencies 23,065 70 29 23,106
Equity securities 1,311 --- --- 1,311
_________ __________ __________ __________
$ 41,509 $ 289 $ 29 $ 41,769
========= ========== ========== ==========
</TABLE>
The following table presents the carrying value and fair value of
securities that are available for sale at December 31, 1994 by
remaining maturities:
<TABLE>
<CAPTION>
Carrying value Fair value
______________ ____________
<S> <C> <C>
Maturing within one year $ 3,346 $ 3,235
Maturing after one but within five years 5,694 5,375
Equity securities 1,311 1,311
________ _________
$ 10,351 $ 9,921
======== =========
</TABLE>
<PAGE>
Notes
Notes To Consolidated Financial Statements (Continued)
(Dollar amounts expressed in thousands)
3. Investment Securities
A comparison of investment securities at carrying value and fair
value follows:
<TABLE>
<CAPTION>
December 31, 1994
Amortized Unrealized Unrealized Fair
cost gains losses value
_________ __________ __________ _________
<S> <C> <C> <C> <C>
U.S. government obligations $ 6,579 $ --- $ 235 $ 6,344
U.S. government agencies
and corporations 65,217 --- 2,900 62,317
Obligations of states and political
subdivisions 3,959 78 --- 4,037
Collateralized mortgage obligations 433 --- 2 431
Other securities 10 --- --- 10
________ _______ ________ _________
Total investment securities $ 76,198 $ 78 $ 3,137 $ 73,139
======== ======= ======== =========
December 31, 1993
Amortized Unrealized Unrealized Fair
cost gains losses value
_________ _________ ________ _________
U.S. government obligations $ 6,700 $ 4 $ 13 $ 6,691
U.S. government agencies
and corporations 69,835 28 104 69,759
Obligations of states and political
subdivisions 6,404 272 --- 6,676
Collateralized mortgage obligations 8,011 83 21 8,073
Other securities 10 --- --- 10
_________ _______ ________ _________
Total investment securities $ 90,960 $ 387 $ 138 $ 91,209
========= ======= ======== =========
</TABLE>
The following table presents the carrying value and fair value
of investment securities at December 31, 1994, by remaining
maturities:
Carrying value Fair value
______________ __________
Maturing within one year $ 37,456 $ 36,483
Maturing after one but within five years 37,612 35,522
Maturing after five but within ten years 1,130 1,134
________ ________
Total $ 76,198 $ 73,139
======== ========
Securities and certain loans having a carrying value of
approximately $68,904 at December 31, 1994, and
$67,310 at December 31, 1993, were pledged to secure
public and trust deposits and for other purposes as
required or permitted by law.
At December 31, 1993, the Corporation reclassified securities
with an amortized cost of $41,509 from investment securities
to securities available for sale upon the adoption of Statement
of Financial Accounting Standard No. 115. This accounting
change resulted in an immediate after-tax increase in
stockholders' equity of $172.
<PAGE>
Notes
4. Loans A summary of loans by category is as follows:
December 31
1994 1993
____ ____
Commercial, financial, and agricultural $125,793 $104,244
Real estate - construction 15,264 14,341
Real estate - mortgage 156,643 169,642
Installment (net of unearned discount
of $7,851 and $8,430) 295,989 271,673
_______ _______
593,689 559,900
Less:
Allowance for possible loan losses 9,836 10,080
_______ _______
$583,853 $549,820
======= =======
Nonaccrual loans amounted to approximately $814 at December 31,
1994, and $5,627 at December 31, 1993. The effect of such
loans was to reduce net income by $76 in 1994, $437 in 1993,
and $244 in 1992. Loans characterized as troubled debt
restructuring were not significant.
The Bank, from time to time, makes loans to its officers and
directors as well as other related parties at substantially
the same terms as those prevailing at the time for comparable
transactions with unrelated parties. These loans do not
involve more than normal risks of collectability. A summary
of changes in such loans during 1994 follows:
Balance at beginning of year $24,780
Additions 9,478
Less: Amounts collected 8,148
______
Balance at end of year $26,110
======
Changes in the allowance for possible loan losses are summarized
as follows:
1994 1993 1992
____ ____ ____
Balance at beginning of year $10,080 $ 8,850 $ 7,201
Provision charged to operating
expenses 1,025 3,080 4,185
Less: Loans charged off, net of
recoveries of $1,041 in
1994, $1,154 in 1993,
and $1,141 in 1992 1,269 1,850 2,536
______ _______ _______
Balance at end of year $ 9,836 $ 10,080 $ 8,850
====== ======= =======
Statement of Financial Accounting Standard No. 114, Accounting
by Creditors for Impairment of a Loan, was issued in May, 1993.
The Statement will require impaired loans to be measured based
on the present value of their expected cash flows in determining
the adequacy of the allowance for possible loan losses. While
only lost principal is currently covered by the allowance today,
future allowances will be required to cover lost interest as well.
Statement of Financial Accounting Standard No. 118, Accounting by
Creditors for Impairment of a Loan - Income Recognition and
Disclosures was issued in October, 1994. This Statement allows a
creditor to use existing methods for recognizing interest income
on impaired loans. It is anticipated that any effect of adopting
these new accounting changes in 1995 will not be material and
can be covered by existing unallocated reserves.
<PAGE>
Notes
Notes To Consolidated Financial Statements (Continued)
(Dollar amounts expressed in thousands)
5. Bank Premises and Equipment
The following is a summary of bank premises and equipment, at cost:
December 31
1994 1993
____ ____
Land $ 3,374 $ 3,374
Bank premises 14,042 12,627
Equipment 13,709 12,113
_______ _______
31,125 28,114
Less: Accumulated depreciation 14,786 13,144
_______ _______
$ 16,339 $ 14,970
======= =======
Depreciation was charged to operations as follows:
Years ended December 31
1994 1993 1992
____ ____ ____
Occupancy expense $ 565 $ 476 $ 570
Equipment expense 1,516 1,415 1,261
_____ _____ _____
$2,081 $1,891 $1,831
===== ===== =====
6. Deposits
The following is a summary of deposits by type:
December 31
1994 1993
____ ____
Demand $124,471 $118,410
Interest bearing demand 91,704 90,753
Savings 157,522 163,179
Time 340,431 315,787
_______ _______
$714,128 $688,129
======= =======
Time deposits of one hundred thousand dollars or more at
December 31, 1994 and 1993 were approximately $59,867 and
$62,270, respectively.
The Corporation made interest payments on deposits and other
borrowings of $20,763, $20,468, and $27,100 in 1994, 1993,
and 1992, respectively.
<PAGE>
Notes
7. Pension Plan
The Corporation's noncontributory pension plan covers
substantially all employees having completed one year of
employment. Benefits under the plan are based upon years of
service and the employee's compensation during the last five
years of employment. The Corporation's funding policy is to
contribute annually the maximum amount that can be deducted
for federal income tax purposes. Data relative to the plan
at December 31 follows:
1994 1993
____ ____
Actuarial present value of benefit
obligation:
Vested $ 5,809 $ 5,999
Non-vested 1,013 967
______ ______
Accumulated benefit obligation 6,822 6,966
Effect of projected future
compensation levels 3,042 2,846
______ ______
Projected benefit obligation 9,864 9,812
Estimated market value of plan assets 8,847 8,188
______ ______
Plan assets in excess of projected
liabilities (1,017) (1,624)
Unrecognized transition gain (832) (941)
Unrecognized net loss 2,054 2,611
Unrecognized past service cost 431 480
______ ______
Prepaid pension cost $ 636 $ 526
====== ======
Net pension expense was comprised of:
1994 1993 1992
____ ____ ____
Service cost $ 547 $ 413 $ 353
Interest on projected benefit
obligation 698 606 527
Return on plan assets (113) (639) (446)
Net amortization and deferral (492) 22 (236)
______ _______ _____
Net pension expense $ 640 $ 402 $ 198
====== ======= =====
Assumptions used in the accounting were:
Discount rate used in determining
plan liabilities 8.00% 7.00% 8.50%
Rate of increase in future
compensation levels 5.00% 4.50% 5.00%
Expected long-term rate of return
on plan assets 8.50% 8.50% 10.00%
8. Other Employee Benefit Plans
Employee Stock Ownership Plan
Generally, employees are eligible to participate in the Employee
Stock Ownership Plan upon completion of one year of service.
Contributions to the plan, which are at the discretion of the
Board of Directors, are generally invested by the plan trustee
in the common stock of the Corporation. Annual contributions
are allocated to the account of each participant in the same
proportion that each participant's compensation for the year
bears to the total compensation of all participants for the
year. A participant's interest in his or her account becomes
fully vested after completion of five years of service.
Contributions to the plan were $720 in 1994, $625 in 1993,
and $525 in 1992.
Savings Plan
Employees participating in the 401(k) plan may elect to defer
up to 10% of their salaries. The Corporation matches
contributions at the rate of 50% on the first 6% of salary.
Eligibility and vesting requirements are similar to the
Employee Stock Ownership Plan except that employee contributions
are vested when made. Corporation contributions amounted to
$253 in 1994, $234 in 1993, and $209 in 1992.
Other Postretirement Benefits
The Corporation provides health care insurance benefits
to its employees through retirement on a contributory basis.
Generally, retirement benefits fully vest with 20 years of
service and become payable at retirement. The plan has an
annual limitation on the dollar amount of the employer's
share of the cost of covered benefits incurred by a plan
participant leaving the retiree responsible for the
difference. Certain participants who have retired under an
earlier plan are entitled to more liberal terms, the cost of
which is not material and has been included in the
accumulated postretirement benefit obligation. Until 1993,
the cost of providing these benefits was expensed as paid as
an extension of the group health insurance program.
<PAGE>
Notes
Notes To Consolidated Financial Statements (Continued)
(Dollar amounts expressed in thousands)
Effective January 1, 1993, the Corporation changed its
method of accounting for postretirement benefits as required
by Statement of Financial Accounting Standard (SFAS) No.
106, Employers' Accounting for Postretirement Benefits Other
Than Pensions. SFAS 106 requires the accrual, during an
employee's active years of service, of the expected costs of
providing postretirement health care benefits to retirees
and their dependents. The Corporation has elected to adopt
this new standard on a prospective basis recognizing the
cost of the initial plan liability over twenty years. Data
relative to the plan at December 31 follows:
1994 1993
____ ____
Accumulated postretirement benefit obligation:
Retirees $ 876 $ 886
Others fully eligible to retire 22 115
Active participants 886 720
_____ _____
Excess liabilities over plan assets 1,784 1,721
Unrecognized transition liability 1,286 1,358
Unrecognized net loss 82 173
_____ _____
Benefits accrued in other liabilities $ 416 $ 190
===== =====
Net periodic postretirement benefit cost was comprised of:
1994 1993
____ ____
Service cost $ 59 $ 40
Interest cost 119 123
Amortization of transition liability 72 71
_____ _____
$ 250 $ 234
===== =====
Generally, benefits are defined as a fixed amount per month
and do not increase as medical costs rise. Therefore, health
care cost trends do not significantly affect the
determination of plan liabilities. Health care cost trends do
have a bearing on the benefits payable to a small group of
participants who were grandfathered under a previous health
plan. Adjusting for a 1% increase in the assumed health care
cost trend rate, the cost and resulting liability would have
been revised as follows:
1994 1993
____ ____
Service cost $ 59 $ 40
Interest cost 126 130
Amortization of transition liability 72 71
_____ _____
$ 257 $ 241
===== ======
Accumulated postretirement benefit obligation:
Retirees $ 949 $ 970
Others fully eligible to retire 24 127
Active participants 886 720
_____ _____
$1,859 $1,817
===== =====
Assumptions used in the accounting were:
1994 1993
____ ____
Discount rate used in determining
plan liabilities 8.00% 7.00%[FN]
Rate of increase in future
compensation levels N/A N/A
Expected long-term rate of return
on plan assets N/A N/A
Expected long-term health care cost
trend rate 10.00% 10.00%
[FN] 8.50% as of January 1, 1993.
Other Postemployment Benefits
In 1993, the Corporation adopted SFAS No. 112, Employers'
Accounting for Postemployment Benefits. Although past
practice generally followed this accounting standard, a one-
time charge of $250 was incurred to recognize previously
unrecorded commitments. Subsequent accounting under this
standard has not been significant.
<PAGE>
Notes
9. Federal Income Taxes
Deferred income taxes reflect the net 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. Significant
components of the Corporation's deferred tax assets and
liabilities as of December 31 are as follows:
1994 1993
____ ____
Deferred tax assets:
Allowance for possible loan losses $3,344 $3,427
Writedowns of repossessed assets 461 677
Unrealized losses on securities
available for sale 146 ---
_____ _____
Total deferred tax assets 3,951 4,104
Deferred tax liabilities:
Depreciation of bank premises and
equipment 443 463
Net loan origination costs 460 368
Securities discount accretion 147 147
Pension accruals 236 198
Unrealized gains on securities
available for sale --- 88
Other 591 551
_____ _____
Total deferred tax liabilities 1,877 1,815
_____ _____
Net deferred tax assets $2,074 $2,289
===== =====
Federal income tax expense consists of the following:
1994 1993 1992
____ ____ ____
Currently payable $ 4,830 $ 4,623 $ 3,811
Deferred 449 (429) (490)
______ ______ ______
Federal income taxes $ 5,279 $ 4,194 $ 3,321
====== ====== ======
The differences between the Corporation's effective federal income
tax rate and the statutory rate are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
Amount Percent Amount Percent Amount Percent
______ _______ ______ _______ ______ _______
<S> <C> <C> <C> <C> <C> <C>
Tax at U.S. statutory rate $5,493 34.8% $4,521 34.2% $3,527 34.0%
Tax exempt interest (267) (1.7) (355) (2.7) (408) (3.9)
Other 53 .3 28 .2 202 1.9
_____ _____ _____ ____ _____ ____
Federal income taxes $5,279 33.4% $4,194 31.7% $3,321 32.0%
===== ===== ===== ==== ===== ====
</TABLE>
The Corporation paid federal income taxes of $5,181 in 1994,
$4,740 in 1993, and $3,285 in 1992.
10. Capital Lease Obligations
The Corporation finances certain of its electronic data
processing equipment under long term lease financing
arrangements. Discount rates used in fixing the resulting
liabilities are based on rates prevailing at the origination
of the commitment and range between 6.78% and 10.1%.
Scheduled payments remaining under these arrangements are as
follows:
1995 $267
1996 267
1997 121
1998 92
1999 76
<PAGE>
Notes
Notes To Consolidated Financial Statements (Continued)
(Dollar amounts expressed in thousands)
11. Off-balance-sheet Risk
In the normal course of business, the Corporation enters
into financial instruments, such as commitments to extend
credit and letters of credit, to meet the financing needs of
its customers. These instruments involve, to varying
degrees, elements of credit risk not reflected in the
consolidated statements of condition. The contract or
notional amounts of these instruments reflect the
Corporation's exposure to credit loss in the event of
nonperformance by the other party on whose behalf the
instrument has been issued. The Corporation undertakes the
same credit evaluation in making commitments and conditional
obligations as it does for on-balance-sheet instruments and
may require collateral or other credit support for off-
balance-sheet financial instruments. These obligations are
summarized below as of December 31:
1994 1993
____ ____
Commitments to extend credit $116,711 $77,095
Letters of credit $3,541 $3,506
A commitment to extend credit is an agreement to lend to a
customer as long as the conditions established in the
agreement have been satisfied. A commitment to extend
credit generally has a fixed expiration date or other
termination clauses and may require payment of a fee by the
borrower. Interest rates typically float until the
commitment is exercised. Since commitments often expire
without being fully drawn, the total commitment amounts do
not necessarily represent future cash requirements of the
Bank. The Corporation continually evaluates each customer's
creditworthiness on a case-by-case basis. In some
instances, a credit evaluation of a customer requesting a
commitment to extend credit results in the Corporation
obtaining collateral to support the obligation. Collateral
held varies but may include cash, accounts receivable,
inventory, property, plant and equipment, and real estate.
Letters of credit are conditional commitments issued by the
Corporation to guarantee the performance of a customer to a
third party. The credit risk involved in issuing a letter
of credit is essentially the same as that involved in
extending a loan.
The bank operates certain premises and equipment under
noncancelable operating leases. The total rental expense
charged against earnings amounted to $589 in 1994, $471 in
1993, and $385 in 1992. Minimum payments due under these
contracts over the next five years amount to:
1995 $893
1996 788
1997 438
1998 300
1999 180
The Corporation and Central are parties in legal actions
arising from normal business activities. Management has
consulted with legal counsel and believes that those actions
are without merit or that the ultimate liability, if any,
resulting from them will not materially affect the
Corporation's consolidated financial position.
12. Dividends and Regulatory Restrictions
Regulations limit the availability of Central's
undistributed retained earnings for the payment of dividends
to the Corporation without prior approval of bank regulatory
authorities. At December 31, 1994, approximately $13,722 of
undistributed earnings were available for future
distribution to the Corporation as dividends, subject to
approval by the Board of Directors.
Central is required by the Federal Reserve to maintain
certain minimum balances of noninterest bearing deposits in
either vault cash or Federal Reserve deposits. At December
31, 1994, this required balance was approximately $13,844.
<PAGE>
Notes
13. Fair Value of Financial Instruments
The following disclosure of the estimated fair value of
financial instruments is made in accordance with the
requirements of SFAS No. 107, Disclosure about Fair Value of
Financial Instruments, as of December 31:
1994 1993
____ ____
Carrying Fair Carrying Fair
value value value value
________ _____ ________ _______
Cash and cash equivalents:
Cash and due from banks $40,585 $40,585 $27,018 $27,018
Federal funds sold 78,000 78,000 36,322 36,322
Securities:
Securities available
for sale 9,921 9,921 41,769 41,769
Investment securities 76,198 73,139 90,960 91,209
Loans:
Commercial, financial
and agricultural 125,793 122,149 104,244 04,105
Real estate - construction 15,264 14,801 14,341 14,313
Real estate - mortgage 156,643 152,384 169,642 169,814
Installment 295,989 292,273 271,673 274,474
Deposits:
Demand 124,471 124,471 118,410 118,410
Interest bearing demand 91,704 91,704 90,753 90,753
Savings 157,522 157,522 163,179 163,179
Time 340,431 335,610 315,787 320,116
Federal funds purchased 29,602 29,602 22,148 22,148
Capital lease obligations 701 834 797 805
Where quoted market prices are not available, fair values
are estimated using present value or other valuation
techniques, which are significantly affected by the
assumptions used, such as discount rates. All non-financial
instruments, by definition, have been excluded from these
disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying
value of the Corporation and may not be indicative of
amounts that might ultimately be realized upon disposition
or settlement of those assets or liabilities.
The following methods and assumptions were used in
estimating the fair values of financial instruments:
Cash and cash equivalents: The carrying amounts reported
in the balance sheet approximate fair value.
Securities: Fair values reported for these assets are
based on quoted market prices, where available. Otherwise,
quoted market prices for comparable instruments are used.
Loans: For variable-rate loans that reprice frequently
and have no significant change in credit risk, carrying
amounts are considered reasonable approximations of fair
value. Certain loans that are traded in secondary markets
or are backed by securities that are traded are valued based
on market quotes adjusted for differences in loan
characteristics and credit quality. The fair values of
other fixed rate loans are estimated using discounted cash
flow analyses, using interest rates currently being offered
for loans having similar terms and characteristics. The
carrying value of accrued interest approximates its fair
value.
Deposits: The fair values disclosed for deposits that
are payable on demand equal their carrying value.
Similarly, variable-rate time deposits are valued at
carrying value. Fair values for fixed-rate time deposits
are estimated using a discounted cash flow calculation that
applies interest rates currently being offered to expected
maturities.
Federal funds purchased: The carrying amount reported in
the balance sheet approximates fair value.
Long-term debt and capital lease obligations: The fair
value of long-term financings are estimated using discounted
cash flow analyses using rates currently available for
similar borrowing arrangements.
<PAGE>
Notes
Notes To Consolidated Financial Statements (Continued)
(Dollar amounts expressed in thousands)
14.Parent Company Financial Statements
CENTRAL CORPORATION
Statements of Condition
December 31
Assets 1994 1993
______ ____ ____
Cash and due from banks $ 1 $ 1
Short-term investments 1,767 949
Investment in subsidiary 68,909 61,075
Other assets 6 10
______ ______
Total assets $70,683 $62,035
====== ======
Liabilities and Stockholders' Equity
____________________________________
Dividends payable $ 407 $ 325
Other liabilities 170 130
______ ______
Total liabilities 577 455
Stockholders' equity:
Common stock of $1.00 par value -
authorized 20,000,000 shares;
issued and outstanding 4,066,731
(2,711,154 in 1993) 4,067 2,711
Surplus 15,904 17,260
Retained earnings 50,419 41,437
Unrealized gains on securities
available for sale, net (284) 172
______ ______
Total stockholders' equity 70,106 61,580
______ ______
Total liabilities and
stockholders' equity $70,683 $62,035
====== ======
CENTRAL CORPORATION
Statements of Income
Years ended December 31
1994 1993 1992
____ ____ ____
Revenues:
Dividends from subsidiary $ 2,200 $ 3,750 $ 1,950
Interest and other income 51 27 106
_____ _____ _____
Total revenues 2,251 3,777 2,056
Expenses:
Interest expense --- 10 308
Other operating expenses 89 96 753
_____ _____ _____
Total expenses 89 106 1,061
_____ _____ _____
Income before federal income tax
benefit and equity in
undistributed income of
subsidiary 2,162 3,671 995
Federal income taxes 10 (7) (306)
_____ _____ _____
Income before equity in
undistributed income of
subsidiary 2,152 3,678 1,301
Equity in undistributed income of
subsidiary 8,375 5,347 5,751
______ ______ ______
Net income $ 10,527 $ 9,025 $ 7,052
====== ====== ======
<PAGE>
Notes
CENTRAL CORPORATION
Statements of Cash Flows
Years ended December 31
1994 1993 1992
____ ____ ____
Cash flow provided by operations:
Net income $10,527 $ 9,025 $ 7,052
Noncash adjustments:
Undistributed income of subsidiary (8,375) (5,347) (5,751)
Amortization 85 86 745
Other 45 (23) 6
______ ______ ______
Net cash provided by operations 2,282 3,741 2,052
Cash flow from investing activities:
Net change in other short-term
investments (819) 1,821 (690)
Cash flow from financing activities:
Dividends paid (1,463) (1,193) (1,030)
Payments on long-term debt --- (4,369) (332)
______ ______ ______
Cash flow (used in)
financing activities (1,463) (5,562) (1,362)
______ ______ ______
Change in cash --- --- ---
Beginning cash 1 1 1
______ ______ ______
Ending cash $ 1 $ 1 $ 1
====== ====== ======
<PAGE>
Independent Auditors' Report
To The Board of Directors and Stockholders
Of Central Corporation
We have audited the accompanying consolidated statements of
condition of Central Corporation and subsidiary as of
December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity and cash flows
for the years then ended. These financial statements are
the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of
the Corporation for the year ended December 31, 1992 were
audited by other auditors whose report, dated January 20,
1993, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such 1994 and 1993 consolidated financial
statements present fairly, in all material respects, the
financial position of Central Corporation and subsidiary at
December 31, 1994 and 1993, and the results of their
operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Baton Rouge, Louisiana
January 24, 1995
<PAGE>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
<PAGE>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
In addition to the proposed merger with Central Corporation (Central), First
Commerce Corporation (FCC) has two other transactions pending which are
described below. The unaudited pro forma condensed combined balance sheet
as of March 31, 1995 and the unaudited pro forma condensed combined statements
of income for the three months ended March 31, 1995 and for the years ended
December 31, 1994, 1993 and 1992 appearing on the following pages give effect
to the proposed mergers of Central, Lakeside Bancshares, Inc. (Lakeside) and
Peoples Bancshares, Inc. (Peoples) into FCC. A brief description of each of
the proposed mergers follows.
FCC and Central, the parent company of Central Bank, Monroe, Louisiana, have
signed a definitive agreement to merge Central into FCC. Under the terms of
the agreement, Central Bank will retain separate bank status and will become
a wholly owned subsidiary of FCC. Shareholders of Central will receive 1.67
shares, subject to reduction in certain limited circumstances not expected to
occur, of FCC common stock for each share of Central common stock outstanding.
The exact number of shares will be determined at the time the merger is
effected but in no event will exceed 6,792,453 shares.
FCC and Lakeside have signed a definitive agreement to merge the two
companies and their respective subsidiaries, The First National Bank of Lake
Charles (FNBLC) and Lakeside National Bank of Lake Charles (LNB). Shareholders
of Lakeside will receive shares of FCC common stock with a value of
approximately $30 million. The exact number of shares will be determined
at the time the mergers are effected.
FCC and Peoples have signed a definitive agreement to merge the two
companies. Peoples' majority owned subsidiary, Peoples Bank and Trust Company
of St. Bernard (Peoples Bank), will be merged with FCC's wholly owned
subsidiary, First National Bank of Commerce. Shareholders of Peoples and
the minority shareholders of Peoples Bank will receive shares of FCC common
stock with a value of approximately $30.6 million. The exact number of shares
will be determined at the time the mergers are effected.
The proposed mergers will be accounted for as poolings-of-interests. The
pro forma financial statements have been prepared to reflect the consummation
of all of the proposed mergers. No assurance can be given, however, that any
or all of the mergers will be consummated, and consummation of one or more
of the proposed mergers is not a condition to the consummation of any other
proposed merger.
<PAGE>
On February 17, 1995, FCC completed mergers with First Bancshares, Inc.
(First) and City Bancorp, Inc. (City). The First merger was accounted for as
a pooling-of-interests; accordingly, FCC's financial statements have been
restated. The City merger was accounted for using the purchase method of
accounting. FCC's results of operations include nonrecurring costs associated
with these mergers of approximately $1.5 million after taxes for the three
months ended March 31, 1995 and $2 million after taxes for the year ended
December 31, 1994.
No provision has been made for nonrecurring charges or credits directly
related to the proposed mergers in the pro forma financial statements. Such
charges are estimated to be $6 to $8 million after taxes. The unaudited
pro forma condensed combined balance sheet includes adjustments directly
attributable to the proposed mergers based on estimates derived from
information currently available.
The pro forma financial statements do not purport to be indicative of the
financial position or results of operations that would actually have been
obtained if the proposed mergers had been in effect at such dates or for
such periods, or of the results that may be obtained in the future.
<PAGE>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
March 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Historical
-------------------------------------------------- Pro Pro
Lakeside Forma Forma
FCC Central Lakeside Peoples <FN6> Divestiture <FN1>Adjustments <FN2>Combined
---------- ----------- ------------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 343,176 $ 38,408 $ 12,562 $ 7,207 $ (6,904) $ - $ 394,449
Interest-bearing deposits in
other banks 151 137 8,990 - - - 9,278
Securities held to maturity 10,179 84,751 39,564 20,953 - - 155,447
Securities available for sale 2,590,376 35,742 9,010 68,210 - - 2,703,338
Trading account securities 13,613 - - - - - 13,613
Federal funds sold and
securities purchased under
resale agreements 2,825 56,035 2,123 17,000 - - 77,983
Loans and leases, net of
unearned income 3,577,687 594,709 92,913 55,979 (25,534) - 4,295,754
Allowance for loan losses (57,828) (9,929) (3,028) (2,298) - - (73,083)
----------- ------------ ------------- ------------ -------------- ------------- ------------
Net loans and leases 3,519,859 584,780 89,885 53,681 (25,534) - 4,222,671
Premises and equipment 129,264 19,199 8,013 7,723 (701) - 163,498
Goodwill and other intangible
assets 21,064 826 - 397 - - 22,287
Other assets 248,819 14,174 1,756 4,564 (105) - 269,208
----------- ------------ ------------- ------------ -------------- ------------- ------------
Total assets $6,879,326 $ 834,052 $ 171,903 $ 179,735 $ (33,244) $ - $ 8,031,772
=========== ============ ============= ============ ============== ============= ============
LIABILITIES
Noninterest-bearing deposits $1,233,515 $ 114,959 $ 44,795 $ 33,275 $ (11,067) $ - $ 1,415,477
Interest-bearing deposits 4,434,589 629,035 108,484 122,838 (25,735) - 5,269,211
----------- ------------ ------------- ------------ -------------- ------------- ------------
Total deposits 5,668,104 743,994 153,279 156,113 (36,802) - 6,684,688
Short-term borrowings 489,215 8,179 - 1,730 - - 499,124
Other liabilities 85,965 9,096 1,084 5,032 1,218 - 102,395
Long-term debt 88,665 - - 1,277 - - 89,942
----------- ------------ ------------- ------------ -------------- ------------- -----------
Total liabilities 6,331,949 761,269 154,363 164,152 (35,584) - 7,376,149
----------- ------------ ------------- ------------ -------------- ------------- -----------
STOCKHOLDERS' EQUITY
Preferred stock 59,934 - - - - - 59,934
Common stock 147,234 4,067 1,250 602 - 38,942 <FN3> 192,095
Capital surplus 140,262 15,904 2,500 3,026 - (39,208) <FN3> 122,484
Retained earnings 232,139 52,975 13,882 12,733 2,340 - 314,069
Unearned restricted stock
compensation (1,056) - - - - - (1,056)
Treasury stock (13,760) - - (266) - 266 <FN3>(13,760)
Unrealized gain(loss) on
securities available for
sale (17,376) (163) (92) (512) - - (18,143)
----------- ------------ ------------- ------------ -------------- ------------- -----------
Total stockholders'
equity 547,377 72,783 17,540 15,583 2,340 - 655,623
----------- ------------ ------------- ------------ -------------- ------------- -----------
Total liabilities and
stockholders' equity $6,879,326 $ 834,052 $ 171,903 $ 179,735 $ (33,244) $ - $8,031,772
=========== ============ ============= ============ ============== ============= ===========
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended March 31, 1995
(In thousands, except share data)
<TABLE>
<CAPTION>
Historical
------------------------------------------------------ Pro Pro
Forma Forma
FCC Central Lakeside Peoples <FN6> Adjustments Combined
------------- ------------ ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 118,754 $ 16,295 $ 2,990 $ 2,958 $ - $ 140,997
Interest expense 48,508 6,551 692 1,044 - 56,795
------------- ------------ ------------ ----------- --------------- -------------
Net interest income 70,246 9,744 2,298 1,914 - 84,202
Provision for loan losses 3,007 230 (75) - - 3,162
------------- ------------ ------------ ----------- --------------- -------------
Net interest income after
provision for loan losses 67,239 9,514 2,373 1,914 - 81,040
Other income 16,204 4,201 743 438 - 21,586
Operating expense 67,668 9,000 2,130 1,960 - 80,758
------------- ------------ ------------ ----------- --------------- -------------
Income before income tax expense 15,775 4,715 986 392 - 21,868
Income tax expense 5,142 1,752 352 129 - 7,375
------------- ------------ ------------ ----------- --------------- -------------
Net income 10,633 2,963 634 263 - 14,493
Preferred dividend requirements 1,087 - - - - 1,087
------------- ------------ ------------ ----------- --------------- -------------
Income applicable to common shares $ 9,546 $ 2,963 $ 634 $ 263 $ - $ 13,406
============= ============ ============ =========== =============== =============
Earnings per share <FN4>
Primary $ 0.33 $ 0.73 $ 1.27 $ 11.24 $ 0.35
Fully diluted $ 0.33 $ 0.73 $ 1.27 $ 11.24 $ 0.35
Weighted average shares outstanding <FN4>
Primary 29,103,906 4,061,731 500,000 23,408 38,075,987
Fully diluted 29,103,906 4,061,731 500,000 23,408 38,075,987
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Year Ended December 31, 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
Historical
------------------------------------------------------------------------ Pro Pro
Forma Forma
FCC Central Lakeside Peoples<FN6> Adjustments Combined
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 427,790 $ 56,314 $ 11,533 $ 11,601 $ - $ 507,238
Interest expense 156,522 21,084 2,724 3,625 - 183,955
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net interest income 271,268 35,230 8,809 7,976 - 323,283
Provision for loan
losses (11,443) 1,025 - - - (10,418)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net interest income after
provision for loan
losses 282,711 34,205 8,809 7,976 - 333,701
Other income 69,564 16,132 3,238 1,707 - 90,641
Operating expense 253,659 34,531 9,710 7,624 - 305,524
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Income before income
tax expense 98,616 15,806 2,337 2,059 - 118,818
Income tax expense 31,854 5,279 775 619 - 38,527
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net income 66,762 10,527 1,562 1,440 - 80,291
Preferred dividend
requirements 4,347 - - - - 4,347
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Income applicable
to common shares $ 62,415 $ 10,527 $ 1,562 $ 1,440 $ - $ 75,944
================ ================ ================ ================ ================ ================
Earnings per share <FN4>
Primary $ 2.15 $ 2.59 $ 3.12 $ 61.52 $ 2.00
Fully diluted $ 2.10 $ 2.59 $ 3.12 $ 61.52 $ 1.97
Weighted average
shares outstanding <FN4>
Primary 29,022,779 4,066,731 500,000 23,408 37,994,860
Fully diluted 31,817,158 4,066,731 500,000 23,408 40,789,239
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Year Ended December 31, 1993
(In thousands, except share data)
<TABLE>
<CAPTION>
Historical
---------------------------------------------------------------------- Pro Pro
Forma Forma
FCC Central Lakeside Peoples <FN6> Adjustments Combined
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 413,973 $ 52,889 $ 11,999 $ 12,525 $ - $ 491,386
Interest expense 148,353 20,084 3,207 3,819 - 175,463
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net interest income 265,620 32,805 8,792 8,706 - 315,923
Provision for
loan losses (5,804) 3,080 - 300 - (2,424)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net interest income after
provision for
loan losses 271,424 29,725 8,792 8,406 - 318,347
Other income 104,964 15,898 3,256 1,816 - 125,934
Operating expense 231,665 32,404 9,764 7,859 - 281,692
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Income before
income tax expense 144,723 13,219 2,284 2,363 - 162,589
Income tax expense 43,521 4,194 822 804 - 49,341
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net income <FN5> 101,202 9,025 1,462 1,559 - 113,248
Preferred dividend
requirements 4,348 - - - - 4,348
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Income applicable
to common shares $ 96,854 $ 9,025 $ 1,462 $ 1,559 $ - $ 108,900
================ ================ ================ ================ ================ ================
Earnings per share <FN4>
Primary $ 3.36 $ 2.22 $ 2.92 $ 66.60 $ 2.88
Fully diluted $ 3.11 $ 2.22 $ 2.92 $ 66.60 $ 2.74
Weighted average
shares outstanding <FN4>
Primary 28,837,748 4,066,731 500,000 23,408 37,809,829
Fully diluted 34,830,540 4,066,731 500,000 23,408 43,802,621
(See accompanying notes)
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Year Ended December 31, 1992
(In thousands, except share data)
<TABLE>
<CAPTION>
Historical
-------------------------------------------------------------------- Pro Pro
Forma Forma
FCC Central Lakeside Peoples<FN6> Adjustments Combined
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 419,196 $ 56,309 $ 13,593 $ 14,633 $ - $ 503,731
Interest expense 170,031 25,979 4,798 5,197 - 206,005
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net interest
income 249,165 30,330 8,795 9,436 - 297,726
Provision for
loan losses 22,720 4,185 675 1,506 - 29,086
Net interest
income after ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
provision
for loan losses 226,445 26,145 8,120 7,930 - 268,640
Other income 98,682 14,498 4,167 1,882 - 119,229
Operating expense 213,515 30,270 10,383 7,862 - 262,030
--------------- ---------------- ---------------- ---------------- ---------------- ----------------
Income before
income tax expense
and minority
interest 111,612 10,373 1,904 1,950 - 125,839
Income tax expense 34,539 3,321 689 660 - 39,209
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net income before
minority interest 77,073 7,052 1,215 1,290 - 86,630
Earnings of
minority interest 918 - - - - 918
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net income 76,155 7,052 1,215 1,290 - 85,712
Preferred dividend
requirements 4,076 - - - - 4,076
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Income applicable
to common
shares $ 72,079 $ 7,052 $ 1,215 $ 1,290 $ - $ 81,636
================ ================ ================ ================ ================ ================
Earnings per share <FN4>
Primary $ 2.73 $ 1.73 $ 2.43 $ 55.11 $ 2.31
Fully diluted $ 2.58 $ 1.73 $ 2.43 $ 55.11 $ 2.25
Weighted average shares outstanding <FN4>
Primary 26,434,077 4,066,731 500,000 23,408 35,406,158
Fully diluted 32,273,902 4,066,731 500,000 23,408 41,245,983
(See accompanying notes)
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (Unaudited)
<FN1> In order to eliminate any concern about the competitive impact of the
proposed merger with Lakeside, FCC and Lakeside have committed to the
divestiture of two branches of LNB as required by regulators. The
sale of the two branches will include loans, deposits, premises and
equipment, and cash related to the branches. The amounts shown
represent the estimated book values of the assets and liabilities
to be sold as a result of these divestitures, for a premium of $3.6
million before taxes. The pro forma condensed combined income
statements do not reflect any adjustments for the divestiture. Any
such adjustments are estimated to be immaterial to the results of
operations of the pro forma condensed combined financial statements.
<FN2> In connection with the proposed mergers, FCC will issue shares of its
common stock to the shareholders of Central, Lakeside and Peoples and
to the minority shareholders of Peoples Bank. To calculate pro forma
information, it has been assumed that the number of outstanding shares
of FCC common stock includes shares to be issued upon consummation of
the mergers.
Under the terms of the proposed merger with Central, the number of
shares of FCC common stock to be issued will be 1.67 times the number
of Central common shares outstanding at the date of the merger, not to
exceed 6,792,453 shares. These pro formas assume the issuance of
6,791,441 shares of FCC common stock based on the number of shares of
Central common stock outstanding as of March 31, 1995.
Under the terms of the proposed merger with Lakeside, the number of
shares of FCC common stock to be delivered will be determined by
reference to the average of the closing sales prices of a share of
FCC common stock for the 20 trading days ending on the fifth trading
day before the closing date for the merger. For purposes of these
pro formas, the conversion rate has been assumed to be 2.16, based on
the average closing sales prices of a share of FCC common stock for
the 20 trading days ending May 22, 1995 of $27.79.
Under the terms of the proposed merger with Peoples, the number of
shares of FCC common stock to be delivered will be determined by
reference to the average of the closing sales prices of a share of
FCC common stock for the 10 trading days ending on the last trading
day before the closing date for the merger. For purposes of these
pro formas, the conversion rate has been assumed to be 44.31 for
each share of Peoples common stock and 44.02 for each share of
Peoples Bank common stock owned by the minority interest, based on
the average closing sales prices of a share of FCC common stock for
the 10 trading days ending May 22, 1995 of $27.81.
<FN3> Calculation of Pro Forma Capital. As required by generally accepted
accounting principles under the pooling-of-interests method of
accounting, FCC's common stock account has been decreased by the
balance in common stock for Central, Lakeside and Peoples and
increased by the par value of the FCC common stock assumed to be
issued under the proposed mergers. An analysis of these adjustments
follows (in thousands):
<TABLE>
<CAPTION>
Stockholders' Equity
---------------------------------------------------------------------------
Loss On
Securities Total
Common Capital Retained Treasury Available Stockholders'
Stock Surplus Earnings Stock For Sale Equity
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Central (A) $ 33,957 $ (13,986) $ - $ - $ - $ 19,971
(4,067) (15,904) - - - (19,971)
Lakeside (B) 5,398 (1,648) - - - 3,750
(1,250) (2,500) - - - (3,750)
Peoples (C) 5,506 (2,144) - - - 3,362
(602) (3,026) - 266 - (3,362)
---------------------------------------------------------------------------
$ 38,942 $ (39,208) $ - $ 266 $ - $ -
===========================================================================
</TABLE>
<PAGE>
(A) Issuance of 6,791,441 shares of FCC common stock for 4,066,731 shares
of Central common stock in a transaction accounted for as a pooling-
of-interests. FCC's common stock account has been decreased by the
balance in Central's common stock account ($4,067,000) and increased
by the par value of the FCC common stock issued ($33,957,000).
(B) Issuance of 1,079,525 shares of FCC common stock for 500,000 shares
of Lakeside common stock in a transaction accounted for as a pooling-
of-interests. FCC's common stock account has been decreased by the
balance in Lakeside's common stock account ($1,250,000) and increased
by the par value of the FCC common stock issued ($5,398,000).
(C) Issuance of 1,101,115 shares of FCC common stock for 24,082 shares
of Peoples common stock (less 674 shares of treasury stock retired)
and for the minority interest in Peoples Bank in a transaction
accounted for as a pooling-of-interests. FCC's common stock account
has been decreased by the balance in Peoples common stock account
($602,000) and increased by the par value of the FCC common stock
issued ($5,506,000).
<FN4> Pro forma earnings per share have been computed on the pro forma
combined weighted average shares outstanding. Pro forma combined
weighted average shares outstanding include weighted average
outstanding shares of FCC common stock, after adjustment for shares
of FCC common stock assumed to be issued in connection with the
proposed mergers. Income for primary earnings per share is adjusted
for preferred stock dividends. Income for fully diluted earnings per
share is adjusted for interest related to convertible debentures, net
of the related income tax effect, and preferred stock dividends.
For the first quarter of 1995, convertible items were antidilutive;
therefore, the primary and fully diluted earnings per share
computations are the same.
<FN5> Lakeside and Peoples adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" in 1993 and
reported the cumulative effect of this change in their respective
1993 consolidated statements of income. The effect of this change
was a $131,000 decrease in net income for Lakeside and a $36,000
decrease in net income for Peoples. These amounts are not considered
to be components of ongoing results and, accordingly, have not been
included in the historical or combined pro forma amounts presented.
<FN6> The Peoples historical information presented reflects Peoples
Bancshares, Inc., the Peoples Bank minority interest, and certain
properties of the Peoples Properties Limited Partnership.
Individually, these entities are not material. Therefore, they are
reflected in the pro forma financial statements on a combined basis.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
Dated: May 31, 1995 FIRST COMMERCE CORPORATION
By: /s/ Thomas L. Callicutt, Jr.
________________________________________
Thomas L. Callicutt, Jr.
Senior Vice President, Controller
and Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
Page
Exhibits Number
4.1 Indenture between First Commerce
Corporation and Republic Bank Dallas, N.A.
(now NationsBank of Texas, N.A.), Trustee,
including the form of 12-3/4% Convertible
Debenture due 2000, Series A included as
Exhibit 4.1 to 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 of 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.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Forms S-8 No. 2-97152, No. 33-925, No. 33-28002,
No. 33-50150 and No. 33-57035; Form S-3 No. 33-13128; Form
S-4 No. 33-54939) of First Commerce Corporation and in the
related Prospectuses of our report dated January 20, 1993
with respect to the consolidated financial statements of
Central Corporation for the year ended December 31, 1992
included in this Form 8-K of First Commerce Corporation
dated May 15, 1995.
/s/ Ernst & Young LLP
Ernst & Young LLP
New Orleans, Louisiana
June 1, 1995
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in First
Commerce Corporation's Registration Statement No. No. 2-97152
on Form S-8, Registration Statement No. 33-925 on Form S-8,
Registration Statement No. 33-28002 on Form S-8, Registration
Statement No. 33-50150 on Form S-8, Registration Statement No.
33-57035 on Form S-8, Registration Statement No. 33-13128 on
Form S-3, and Registration Statement No. 33-54939 on Form S-4
of our report dated January 24, 1995 relating to the financial
statements of Central Corporation appearing in the Current
Report on Form 8-K of First Commerce Corporation dated
May 15, 1995.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
May 31, 1995.
