________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 0-7931
FIRST COMMERCE CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0701203
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
210 Baronne Street 70112
New Orleans, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (504) 561-1371
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the last practicable date.
Class Outstanding as of October 31, 1996
_____ ________________________________
Common Stock, $5.00 par value 37,135,394
<PAGE>
FIRST COMMERCE CORPORATION
TABLE OF CONTENTS
Page No.
Part I: Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Report of Independent Public Accountants 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Part II: Other Information 22
<PAGE>
FIRST COMMERCE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(dollars in thousands) September 30 December 31
==============================================================================================================================
1996 1995
______________________________________________________________________________________________________________________________
<S> <C> <C>
ASSETS
Cash and due from banks $ 413,389 $ 497,268
Interest-bearing deposits in other banks 131 788
Securities available for sale, at fair value 2,205,903 2,599,767
Trading account securities 36,290 19,630
Federal funds sold and securities purchased under resale agreements 7,470 33,900
Loans and leases, net of unearned income of $246 and $7,070, respectively 5,832,032 5,122,726
Allowance for loan losses (79,310) (75,845)
______________________________________________________________________________________________________________________________
Net loans and leases 5,752,722 5,046,881
==============================================================================================================================
Premises and equipment 166,690 165,813
Accrued interest receivable 95,596 95,787
Other assets 94,561 70,973
______________________________________________________________________________________________________________________________
Total assets $8,772,752 $8,530,807
==============================================================================================================================
LIABILITIES
Noninterest-bearing deposits $1,371,238 $1,481,795
Interest-bearing deposits 5,478,652 5,472,606
______________________________________________________________________________________________________________________________
Total deposits 6,849,890 6,954,401
==============================================================================================================================
Short-term borrowings 995,881 635,728
Accrued interest payable 43,121 41,952
Accounts payable and other accrued liabilities 93,571 77,331
Long-term debt 85,875 88,346
______________________________________________________________________________________________________________________________
Total liabilities 8,068,338 7,797,758
==============================================================================================================================
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized
Series 1992, 7.25% cumulative convertible, $25 stated value
Issued -- 1,541,531 and 2,348,806 shares, respectively 38,538 58,720
Common stock, $5 par value
Authorized -- 100,000,000 shares
Issued -- 39,389,197 and 38,281,519 shares, respectively 196,946 191,408
Capital surplus 146,284 125,405
Retained earnings 384,904 337,782
Treasury stock -- 2,171,940 and 471,403 shares, at cost, respectively (72,577) (12,727)
Unearned restricted stock compensation (3,853) (1,123)
Net unrealized gain on securities available for sale 14,172 33,584
______________________________________________________________________________________________________________________________
Total stockholders' equity 704,414 733,049
==============================================================================================================================
Total liabilities and stockholders' equity $8,772,752 $8,530,807
==============================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Consolidated Balance Sheets.
</TABLE>
<PAGE>
FIRST COMMERCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(dollars in thousands except per share data) September 30 September 30
================================================================================================================
1996 1995 1996 1995
________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $125,134 $106,320 $356,079 $300,281
Interest and dividends on taxable securities 35,127 45,245 107,915 133,666
Interest on tax-exempt securities 1,555 1,647 4,741 5,441
Interest on money market investments 522 898 2,727 4,435
_________________________________________________________________________________________________________________
Total interest income 162,338 154,110 471,462 443,823
=================================================================================================================
INTEREST EXPENSE
Interest on deposits 55,097 55,100 165,139 155,292
Interest on short-term borrowings 10,937 9,145 24,799 22,881
Interest on long-term debt 2,687 2,826 8,014 8,392
_________________________________________________________________________________________________________________
Total interest expense 68,721 67,071 197,952 186,565
=================================================================================================================
NET INTEREST INCOME 93,617 87,039 273,510 257,258
PROVISION FOR LOAN LOSSES 12,525 4,659 23,815 10,792
_________________________________________________________________________________________________________________
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 81,092 82,380 249,695 246,466
=================================================================================================================
OTHER INCOME
Deposit fees and service charges 14,695 14,856 43,904 44,185
Credit card fee income 12,310 8,743 33,413 24,963
Trust fee income 5,266 4,277 15,183 12,620
Broker/dealer revenue 2,682 2,092 7,827 6,139
ATM fee income 2,349 2,148 7,247 6,219
Other operating revenue 6,276 8,406 19,305 18,479
Securities transactions (1,370) 5 (247) (13,281)
_________________________________________________________________________________________________________________
Total other income 42,208 40,527 126,632 99,324
=================================================================================================================
OPERATING EXPENSE
Salary expense 37,268 35,674 110,661 105,150
Employee benefits 6,471 7,148 21,925 22,598
_________________________________________________________________________________________________________________
Total personnel expense 43,739 42,822 132,586 127,748
Equipment expense 6,958 6,256 19,754 18,188
Net occupancy expense 5,141 5,779 15,950 16,647
Communications and delivery expense 4,640 4,455 14,283 12,762
Professional fees 2,916 5,164 9,566 13,658
FDIC insurance expense 5,842 261 7,057 7,535
Credit card expense 1,535 1,263 5,087 3,547
Other operating expense 12,843 15,043 37,261 41,484
_________________________________________________________________________________________________________________
Total operating expense 83,614 81,043 241,544 241,569
=================================================================================================================
INCOME BEFORE INCOME TAX EXPENSE 39,686 41,864 134,783 104,221
INCOME TAX EXPENSE 13,155 14,493 45,052 35,187
==================================================================================================================
NET INCOME 26,531 27,371 89,731 69,034
PREFERRED DIVIDEND REQUIREMENTS 698 1,086 2,116 3,259
==================================================================================================================
INCOME APPLICABLE TO COMMON SHARES $25,833 $26,285 $87,615 $65,775
==================================================================================================================
EARNINGS PER COMMON SHARE
Primary $ .68 $ .69 $ 2.26 $ 1.74
Fully diluted $ .66 $ .66 $ 2.17 $ 1.68
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Primary 38,074,386 37,903,624 38,693,526 37,858,367
Fully diluted 42,895,284 43,811,731 43,637,553 43,793,065
===================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
</TABLE>
<PAGE>
FIRST COMMERCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
(dollars in thousands) September 30
===============================================================================================================================
1996 1995
_______________________________________________________________________________________________________________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $89,731 $69,034
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 23,815 10,792
Depreciation and amortization 17,049 16,271
Amortization of intangibles 2,179 2,098
Deferred income tax (benefit) (2,142) (2,149)
Net loss from securities transactions 247 13,281
Net (gain) on loan sales (1,786) (852)
Net (gain) on branch divestitures (1,137) (3,054)
(Increase) in trading account securities (16,660) (3,126)
(Increase) decrease in accrued interest receivable 187 (8,891)
(Increase) decrease in other assets (13,621) 4,990
Increase in accrued interest payable 1,265 12,713
Increase in accounts payable and other accrued liabilities 16,081 18,954
(Increase) decrease in loans held for sale 2,317 (6,936)
Other, net 21 (1,950)
_______________________________________________________________________________________________________________________________
NET CASH PROVIDED BY OPERATING ACTIVITIES 117,546 121,175
===============================================================================================================================
INVESTING ACTIVITIES
Net decrease in interest-bearing deposits in other banks 657 4,023
Proceeds from maturities/calls of securities held to maturity - 73,619
Purchases of securities held to maturity - (32,879)
Proceeds from sales of securities available for sale 5 648,257
Proceeds from maturities/calls of securities available for sale 562,055 134,220
Purchases of securities available for sale (197,483) (623,546)
Net decrease in federal funds sold and securities purchased under resale agreements 26,430 131,855
Net (increase) in loans (740,826) (681,049)
Net cash acquired in acquisitions - 4,081
Divestiture of branches (14,410) (4,897)
Purchases of premises and equipment (20,059) (30,513)
Proceeds from sales of foreclosed assets 9,394 10,073
Other, net 1,733 2,008
_______________________________________________________________________________________________________________________________
NET CASH (USED) BY INVESTING ACTIVITIES (372,504) (364,748)
===============================================================================================================================
FINANCING ACTIVITIES
Net (decrease) in demand deposits, NOW accounts,
money market accounts and savings accounts (201,850) (282,111)
Net increase in time deposits 115,933 209,262
Net increase in short-term borrowings 360,153 276,383
Payments on long-term debt (156) (328)
Cash dividends (42,900) (31,172)
Proceeds from issuance of common and treasury stock 407 2,385
Purchase of treasury stock (60,508) (15,091)
_______________________________________________________________________________________________________________________________
NET CASH PROVIDED BY FINANCING ACTIVITIES 171,079 159,328
===============================================================================================================================
(DECREASE) IN CASH AND CASH EQUIVALENTS (83,879) (84,245)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 497,268 472,142
_______________________________________________________________________________________________________________________________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $413,389 $387,897
===============================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense $196,783 $173,689
Income taxes $ 46,790 $ 29,007
Supplemental schedule of non-cash financing activities:
Conversion of preferred stock to common stock $ 20,182 $ 1,234
Conversion of long-term debt to common stock $ 2,315 $ -
================================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
</TABLE>
<PAGE>
FIRST COMMERCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
Basis of Presentation
The accounting and reporting policies of First Commerce
Corporation and its subsidiaries (FCC) conform with
generally accepted accounting principles and with general
practices within the financial services industry. In
preparing the consolidated financial statements, FCC is
required to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements
and accompanying notes. Actual results could differ from
those estimates.
The consolidated financial statements reflect all
adjustments which are, in the opinion of management,
necessary for a fair presentation of the consolidated
financial condition, results of operations and cash flows
for the interim periods presented. Adjustments included
herein are of a normal recurring nature and include
appropriate estimated provisions. The consolidated
financial statements for the interim periods have not been
independently audited. However, the interim consolidated
financial statements have been reviewed by FCC's independent
public accountants in accordance with standards for such
reviews established by the American Institute of Certified
Public Accountants, and their review report is included
herein.
The Notes to Consolidated Financial Statements included
herein should be read in conjunction with the Notes to
Consolidated Financial Statements included in FCC's 1995
Annual Report to Shareholders.
NOTE 2
Stockholders' Equity
On October 21, 1996, FCC called its 7.25% Cumulative
Convertible Preferred Stock, Series 1992 for redemption on
January 2, 1997. The preferred stock is redeemable for $25
per share, plus accrued dividends, and is convertible into
1.1646 shares of common stock. Holders of the preferred
stock can convert their preferred shares through December
23, 1996. Any shares not converted by that date will be
redeemed on January 2, 1997. FCC expects most holders of
the preferred stock to convert to common stock instead of
electing to receive the cash redemption payment. On May 20,
1996, FCC announced its plan to repurchase 1.8 million
shares of its common stock in anticipation of such
conversions. As of September 30, 1996, 1.7 million shares
had been repurchased. As of October 10, 1996, all 1.8
million shares had been repurchased.
NOTE 3
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.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders
and Board of Directors of
First Commerce Corporation:
We have reviewed the accompanying consolidated balance
sheet of FIRST COMMERCE CORPORATION (a Louisiana
corporation) and subsidiaries as of September 30, 1996, and
the related consolidated statements of income and cash flows
for the three-month and nine-month periods ended September
30, 1996 and 1995. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially
less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the
expression of an opinion regarding the consolidated
financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with
generally accepted auditing standards, the consolidated
balance sheet of First Commerce Corporation and subsidiaries
as of December 31, 1995 and the related statements of
income, changes in stockholders' equity and cash flows for
the year then ended (not presented herein) and, in our
report dated January 15, 1996, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1995 is fairly
stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
October 21, 1996
<PAGE>
FIRST COMMERCE CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(dollars in thousands except per share data) 1996 1995
====================================================================================================================
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $8,526,062 $8,284,388 $8,442,698 $8,367,588 $8,264,744
Earning assets 7,857,391 7,576,406 7,699,873 7,677,557 7,569,424
Loans and leases 5,612,251 5,277,895 5,170,534 4,935,576 4,651,921
Securities 2,201,775 2,197,283 2,457,394 2,689,239 2,854,503
Deposits 6,792,549 6,917,697 6,889,954 6,741,690 6,737,925
Long-term debt 85,912 85,980 87,028 88,950 90,095
Stockholders' equity 709,896 738,940 740,091 726,349 717,016
____________________________________________________________________________________________________________________
INCOME STATEMENT DATA
Total interest income $162,338 $154,050 $155,074 $154,671 $154,110
Net interest income 93,617 90,968 88,925 86,086 87,039
Net interest income (FTE) 95,051 92,289 90,384 87,596 88,442
Provision for loan losses 12,525 7,465 3,825 19,808 4,659
Other income (exclusive of securities transactions) 43,578 42,501 40,800 38,674 40,522
Securities transactions (1,370) (84) 1,207 1,868 5
Operating expense 83,614 78,144 79,786 95,635 81,043
Operating income 27,422 31,722 30,748 5,703 27,367
Net income 26,531 31,667 31,533 6,917 27,371
____________________________________________________________________________________________________________________
KEY RATIOS
Return on average assets 1.24% 1.54% 1.50% 0.33% 1.31%
Return on average total equity 14.87% 17.24% 17.14% 3.78% 15.14%
Return on average common equity 15.31% 17.79% 17.82% 3.48% 15.86%
Operating return on average assets 1.28% 1.54% 1.46% 0.27% 1.31%
Operating return on average total equity 15.37% 17.27% 16.71% 3.12% 15.14%
Operating return on average common equity 15.84% 17.82% 17.37% 2.76% 15.86%
Net interest margin 4.82% 4.89% 4.71% 4.54% 4.65%
Efficiency ratio 60.31% 57.97% 60.82% 75.74% 62.84%
Overhead ratio 2.03% 1.89% 2.04% 2.94% 2.12%
Average loans to deposits ratio 82.62% 76.30% 75.04% 73.21% 69.04%
Allowance for loan losses to loans and leases 1.36% 1.39% 1.46% 1.48% 1.55%
Nonperforming assets to loans and leases
plus foreclosed assets .57% .61% 1.09% 1.17% .87%
Equity ratio 8.03% 8.80% 8.94% 8.59% 8.66%
Leverage ratio 7.90% 8.65% 8.33% 8.16% 8.33%
____________________________________________________________________________________________________________________
EARNINGS PER COMMON SHARE
Net income-primary $ .68 $ .79 $ .79 $ .15 $ .69
Net income-fully diluted $ .66 $ .76 $ .75 $ .15 $ .66
Operating income-primary $ .71 $ .79 $ .77 $ .12 $ .69
Operating income-fully diluted $ .67 $ .76 $ .74 $ .12 $ .66
Average primary shares (in thousands) 38,074 39,114 38,899 38,017 37,904
Average fully diluted shares (in thousands) 42,895 43,972 44,008 38,017 43,812
COMMON STOCK DIVIDENDS
Cash dividends $ .35 $ .35 $ .35 $ .35 $ .30
Dividend payout ratio 51.47% 44.30% 44.30% 233.33% 43.48%
BOOK VALUES (end of period)
Book value $17.96 $18.11 $18.02 $17.86 $17.66
Tangible book value $17.46 $17.61 $17.51 $17.32 $17.11
COMMON STOCK DATA
High stock price $36.63 $36.00 $34.25 $33.75 $34.50
Low stock price $33.25 $32.25 $30.25 $30.63 $29.25
Closing stock price $34.88 $35.38 $33.00 $32.00 $31.50
Trading volume 9,117,644 5,498,461 5,051,242 5,046,101 6,815,541
Number of stockholders (end of period) 9,267 9,257 9,286 9,951 9,100
NUMBER OF EMPLOYEES (end of period) 3,997 4,053 4,080 4,211 4,198
===================================================================================================================
</TABLE>
<PAGE>
THIRD QUARTER IN REVIEW
First Commerce Corporation's (FCC's) net income for the
third quarter of 1996 was $26.5 million, compared to $27.4
million in 1995's third quarter. Fully diluted earnings per
share was $.66 for both periods. 1996's third quarter
results include a $5.3 million expense, or $.08 per fully
diluted share after tax, related to the estimated assessment
for the recapitalization of the Savings Association
Insurance Fund (SAIF). FCC has approximately $1.0 billion
of deposits acquired from thrifts, known as Oakar deposits,
on which the assessment will be based. Several additional
items impacted the third quarter's results:
- - Net interest income (FTE) was up 7% from last year's
third quarter, mainly on the strength of loan growth.
- - The provision for loan losses was $12.5 million in the
third quarter, compared to $4.7 million last year. Net
charge-offs were .61% of average loans in 1996's third
quarter, compared to .26% last year.
- - Other income, excluding securities transactions and a
nonrecurring gain in 1995's third quarter, was 16% higher
than the third quarter of last year.
- - Operating expense, excluding nonrecurring charges, was
unchanged from 1995's level. The efficiency ratio
declined to 56.51% in the third quarter.
A more detailed review of FCC's financial condition and
earnings for the third quarter of 1996 follows. This review
should be read in conjunction with the consolidated
financial statements of First Commerce Corporation and
Subsidiaries included in this report, and the Financial
Review in the 1995 Annual Report.
EARNINGS ANALYSIS
Net Interest Income
Net interest income (FTE) for the third quarter was
$95.1 million, 7% higher than last year's third quarter.
The net interest margin was 4.82% this quarter, 17 basis
points higher than the third quarter of 1995. 1996's
improved net interest income and net interest margin were
primarily the result of a 21% increase in average loans.
Loans rose as a percent of average earning assets to 71%,
compared to 61% in the third quarter of 1995. Loan growth
was primarily funded by a reduction in securities. Average
securities were 28% of earning assets in the current
quarter, compared to 38% last year.
For the nine months, net interest income (FTE) was
$277.7 million, a 6% increase from the same period in 1995.
The net interest margin was 4.81% for the first nine months
of 1996, compared to 4.73% last year. These improvements
reflect a 21% increase in average loans. Average loans
increased as a percent of earning assets from 60% to 69%.
Table 1 presents average balance sheets, net interest
income (FTE) and interest rates for the third quarters of
1996 and 1995, and the nine months ended September 30, 1996
and 1995. Table 2 analyzes the components of changes in net
interest income between these same periods.
Provision for Loan Losses
The provision for loan losses was $12.5 million in the
third quarter of 1996, compared to $4.7 million in 1995's
third quarter. For the nine-month periods, the provision
was $23.8 million in 1996, compared to $10.8 million last
year. The increase in the provision is principally related
to higher net charge-offs, while loan growth also
contributed.
For a discussion of the allowance for loan losses, net
charge-offs and nonperforming assets, see the Credit Risk
Management section of this Financial Review.
Other Income
Other income, excluding securities transactions, was
$43.6 million in the third quarter, compared to $40.5
million in the same quarter of 1995. In 1995's third
quarter, other income included a $3.1 million gain from the
divestiture of two branches of an acquired institution.
Excluding securities transactions and the gain from
divestiture, other income rose 16% over the third quarter of
1995. Virtually all categories increased, reflecting higher
volumes of transactions and accounts. The most significant
growth was in credit card income, up $3.6 million, or 41%.
Additional increases were experienced in trust fees
($989,000, or 23%) and broker/dealer revenues ($590,000, or
28%).
For the nine-month period, other income, excluding
securities transactions, was $126.9 million, 13% higher than
in 1995. Improvements were experienced in almost all
categories. Higher credit card ($8.5 million, or 34%),
trust ($2.6 million, or 20%) and broker/dealer ($1.7
million, or 27%) income were mainly due to increased
business volumes.
Securities transactions resulted in pretax net losses
of $1.4 million in the third quarter of 1996, compared to
minimal net gains in the same period of 1995. Pretax net
losses of $247,000 and $13.3 million were recorded in the
nine months ended September 30, 1996 and 1995, respectively.
The loss recorded in 1995 was related to FCC's securities
portfolio restructuring.
Operating Expense
Operating expense was $83.6 million in the third
quarter of 1996, compared to $81.0 million in last year's
third quarter. In 1996's third quarter, operating expense
included a $5.3 million expense related to the estimated
assessment by the FDIC for the recapitalization of the SAIF.
Operating expense for 1995's third quarter included $3.7
million in merger-related charges. Excluding nonrecurring
charges from both periods, operating expense in the third
quarter of 1996 was materially unchanged from 1995's third
quarter. Personnel costs rose 4%, reflecting higher
incentive expenses, partially offset by a 5% reduction in
the number of employees. Lower professional fees, due to
declines in legal and strategic initiative expenses, also
offset this increase.
For the nine months ended September 30, 1996, operating
expense was $241.5 million, virtually unchanged from 1995's
level. 1996's operating expense was impacted by the above-
mentioned $5.3 million one-time SAIF assessment, while 1995
includes $8.1 million in merger-related and process
innovation charges. Excluding these items, operating
expense was up 1% from last year, mainly due to higher
personnel costs. The increase in personnel costs primarily
reflected higher incentive expenses. Lower FDIC insurance
expense (after adjusting for the SAIF assessment) and
professional fees partially offset the increase.
FINANCIAL CONDITION ANALYSIS
Loans
Loans were $5.8 billion at the end of the third
quarter, up 21% from September 30, 1995 and 14% higher than
year-end 1995. Average loans for the third quarter of 1996
were $5.6 billion, 21% higher than last year's same period.
There were increases in all categories, with the most
significant in indirect automobile, credit card and
commercial real estate loans.
Securities
At September 30, 1996, securities were $2.2 billion,
compared to $2.6 billion at December 31, 1995. For both
periods, all securities were classified as available for
sale. Unrealized gains, net of taxes, increased
stockholders' equity $14.2 million at September 30, 1996,
compared to $33.6 million at year-end. The fluctuation in
market values was mainly driven by changes in market
interest rates.
During the third quarter, securities averaged $2.2
billion, 23% lower than the third quarter of 1995. Proceeds
from maturing securities were used to fund loan growth.
Money Market Investments
Money market investments were $44 million at September
30, 1996. Average money market investments for the third
quarter were $43 million, compared to $63 million in last
year's third quarter. Money market investments were allowed
to decline to fund loan growth.
Deposits
At September 30, 1996, deposits were $6.8 billion,
compared to $7.0 billion at year-end. Average deposits for
the third quarter were $6.8 billion, 1% over 1995's third
quarter but down 2% from the second quarter of 1996. The
most significant growth from 1995's third quarter was in
money market investment deposits. Lower public funds
deposits was the main cause of the decline from last
quarter.
Short-Term Borrowings
As of September 30, 1996, short-term borrowings were
$996 million and averaged $805 million for the quarter.
Average short-term borrowings were $615 million in last
year's third quarter. As a percent of average earning
assets, short-term borrowings were 10% in the current
quarter, compared to 8% in 1995's third quarter. Funding of
loan growth was the main cause of the increase.
Interest Rate Contracts
The total notional amount of FCC's interest rate
contracts at September 30, 1996 was $850 million, unchanged
from June 30, 1996. Table 3 summarizes FCC's interest rate
contracts at the end of the third quarter.
During the third quarter, a $100 million interest rate
cap, which hedged the cost of short-term borrowings,
matured. Additionally, FCC purchased a $100 million
interest rate swap to hedge against interest rate
fluctuations on U.S. Treasury securities. This swap becomes
effective in March 1997 and has a five-year maturity.
Interest rate contracts increased interest expense
$450,000 this quarter and $1.7 million for the nine-month
period. At September 30, 1996, the estimated fair value of
FCC's interest rate contracts was $1.9 million, of which
$1.5 million was the value of the new swap.
Capital and Dividends
Stockholders' equity was 8.03% of total assets at
September 30, 1996, compared to 8.59% at December 31, 1995.
The decline reflects FCC's repurchase of its common stock in
anticipation of conversions of its preferred stock. Table 4
presents FCC's risk-based and other capital ratios as of
September 30, 1996 and December 31, 1995. All ratios remain
well above regulatory minimums. Under present regulations,
all six of FCC's banks are classified as "well-capitalized."
In May 1996, FCC announced its intent to repurchase up
to 1.8 million shares of its common stock in anticipation of
conversions of its 7.25% convertible preferred stock. FCC
called the preferred stock on October 21, 1996 for
redemption on January 2, 1997, but expects most preferred
shareholders to convert to common stock before year-end. At
the end of the third quarter, 1.7 million shares had been
repurchased. As of October 10, 1996, all 1.8 million shares
had been repurchased.
At September 30, 1996, the Parent Company had net
working capital of $7 million, compared to $77 million at
December 31, 1995. Additionally, the Parent Company could
receive dividends from the banks without prior regulatory
approval of $79 million, plus an amount equal to the banks'
adjusted net profits for the remainder of the year. The
decline in net working capital from year-end was the result
of FCC's share repurchases. FCC expects to collect special
dividends from its banks in the fourth quarter to replenish
its net working capital.
Credit Risk Management
Nonperforming Assets
Nonperforming assets as of September 30, 1996 were $34
million, compared to $60 million at December 31, 1995. The
decline was the result of the sale of a riverboat casino
securing a nonaccrual loan and the payoff of a large
nonaccrual loan secured by real estate during the second
quarter of 1996. Nonperforming assets were .57% of loans
and foreclosed assets at September 30, 1996, compared to
1.17% at December 31, 1995. At September 30, 1996, 38% of
nonperforming loans were contractually current or no more
than 30 days past due, compared to 58% at year-end. The
change was primarily caused by a $10 million loan which
moved from contractually current to 30-59 days past due in
the second quarter.
Accruing loans past due 90 days or more were $24
million at quarter-end, or .41% of loans, compared to $21
million, or .40%, at December 31, 1995. Watch list loans
and foreclosed assets were $149 million at September 30,
1996, compared to $190 million at the end of 1995. The
decline was mainly caused by the drop in nonaccrual loans
discussed above.
Table 5 presents information on nonperforming assets,
detailed by type, as of September 30, 1996 and December 31,
1995.
Allowance for Loan Losses
At September 30, 1996, the allowance for loan losses
was $79 million, or 279% of nonperforming loans, compared to
$76 million, or 142% of nonperforming loans, at year-end
1995. The allowance was 1.36% of loans at the end of the
third quarter, compared to 1.48% at December 31, 1995.
Management believes that the allowance is adequate to cover
losses inherent in the loan portfolio.
Net charge-offs were $8.5 million in the third quarter
of 1996, compared to $3.0 million in last year's third
quarter. For the nine-month periods, net charge-offs were
$20.4 million in 1996 and $8.3 million in 1995. As a
percent of average loans, net charge-offs were .61% in the
current quarter and .51% for the first nine months of 1996.
These percentages compare to .26% and .25% for 1995's third
quarter and first nine months, respectively. Increasing net
charge-offs of credit card and individual loans were the
main causes of FCC's higher level of net charge-offs.
Credit card net charge-offs rose to 3.20% in the third
quarter from 3.08% in the second quarter and 2.37% in 1995's
third quarter. FCC is experiencing an increase in charge-
offs resulting from personal bankruptcies, as are credit
card issuers nationwide; however, the net charge-off ratio
remains well below national averages. During 1996, growth
in FCC's credit card loans has come primarily from its
contract with the military; these loans have experienced net
charge-offs of approximately 2%. Net charge-offs of loans
to individuals were .76% in the third quarter, compared to
.51% in the second quarter and .33% in the third quarter of
1995. In the third quarter, commercial loan recoveries
continued to exceed charge-offs. Dependent primarily upon
economic conditions, changes in the level of total loans and
the mix of the loan portfolio, FCC's net charge-offs may
continue to grow in future periods; this growth could result
in a rising provision for loan losses.
Table 6 presents the activity in the allowance for loan
losses for the third quarters and first nine months of 1996
and 1995.
<PAGE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME (FTE) (a) AND INTEREST RATES
===========================================================================================================================
Third Quarter 1996 Third Quarter 1995
___________________________________________________________________________________________________________________________
Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases $5,612,251 $125,849 8.93% $4,651,921 $106,989 9.13%
Securities
Taxable 2,114,504 35,177 6.63 2,761,380 45,288 6.53
Tax-exempt 87,271 2,223 10.19 93,123 2,334 10.03
___________________________________________________________________________________________________________________________
Total securities 2,201,775 37,400 6.77 2,854,503 47,622 6.64
___________________________________________________________________________________________________________________________
Money market investments 43,365 523 4.80 63,000 902 5.68
___________________________________________________________________________________________________________________________
Total earning assets 7,857,391 $163,772 8.30% 7,569,424 $155,513 8.17%
___________________________________________________________________________________________________________________________
NONEARNING ASSETS
Other assets(b) 746,883 769,512
Allowance for loan losses (78,212) (74,192)
___________________________________________________________________________________________________________________________
Total assets $8,526,062 $8,264,744
===========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $1,056,095 $5,003 1.88% $996,801 $4,616 1.84%
Money market investment deposits 864,976 6,560 3.02 744,265 5,680 3.03
Savings and other consumer time deposits 2,778,321 33,148 4.75 2,814,545 33,975 4.79
Time deposits $100,000 and over 765,098 10,386 5.40 762,484 10,829 5.63
___________________________________________________________________________________________________________________________
Total interest-bearing deposits 5,464,490 55,097 4.01 5,318,095 55,100 4.11
___________________________________________________________________________________________________________________________
Short-term borrowings 805,347 10,937 5.40 615,468 9,145 5.89
Long-term debt 85,912 2,687 12.44 90,095 2,826 12.44
___________________________________________________________________________________________________________________________
Total interest-bearing liabilities 6,355,749 $68,721 4.30% 6,023,658 $67,071 4.42%
___________________________________________________________________________________________________________________________
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,328,059 1,419,830
Other liabilities 132,358 104,240
Stockholders' equity 709,896 717,016
===========================================================================================================================
Total liabilities and stockholders'
equity $8,526,062 $8,264,744
===========================================================================================================================
Net interest income (FTE) and margin $95,051 4.82% $88,442 4.65%
===========================================================================================================================
Net earning assets and spread $1,501,642 4.00% $1,545,766 3.75%
===========================================================================================================================
Cost of funds 3.48% 3.51%
===========================================================================================================================
(a) Fully taxable equivalent based on a 35% tax rate.
(b) Includes fair value adjustment on securities available for sale.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 1. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME (FTE) (a) AND INTEREST RATES (continued)
===========================================================================================================================
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
___________________________________________________________________________________________________________________________
Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate
____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS
Loans and leases $5,354,500 $358,159 8.93% $4,410,274 $302,332 9.16%
Securities
Taxable 2,196,620 108,065 6.57 2,779,576 133,774 6.43
Tax-exempt 88,558 6,720 10.12 100,456 7,739 10.27
____________________________________________________________________________________________________________________________
Total securities 2,285,178 114,785 6.70 2,880,032 141,513 6.56
____________________________________________________________________________________________________________________________
Money market investments 72,074 2,732 5.06 101,812 4,441 5.83
____________________________________________________________________________________________________________________________
Total earning assets 7,711,752 $475,676 8.24% 7,392,118 $448,286 8.10%
____________________________________________________________________________________________________________________________
NONEARNING ASSETS
Other assets (b) 782,774 746,018
Allowance for loan losses (76,417) (73,236)
____________________________________________________________________________________________________________________________
Total assets $8,418,109 $8,064,900
=============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW account deposits $1,096,272 $15,738 1.92% $1,032,400 $14,747 1.91%
Money market investment deposits 848,095 18,938 2.98 700,996 13,389 2.56
Savings and other consumer time deposits 2,795,005 99,194 4.74 2,807,615 97,263 4.63
Time deposits $100,000 and over 776,292 31,269 5.38 725,948 29,893 5.51
____________________________________________________________________________________________________________________________
Total interest-bearing deposits 5,515,664 165,139 4.00 5,266,959 155,292 3.94
____________________________________________________________________________________________________________________________
Short-term borrowings 609,904 24,799 5.43 513,395 22,881 5.96
Long-term debt 86,305 8,014 12.40 90,005 8,392 12.47
____________________________________________________________________________________________________________________________
Total interest-bearing liabilities 6,211,873 $197,952 4.26% 5,870,359 $186,565 4.25%
____________________________________________________________________________________________________________________________
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits 1,350,799 1,423,107
Other liabilities 125,868 96,982
Stockholders' equity 729,569 674,452
____________________________________________________________________________________________________________________________
Total liabilities and stockholders' equity $8,418,109 $8,064,900
============================================================================================================================
Net interest income (FTE) and margin $277,724 4.81% $261,721 4.73%
=============================================================================================================================
Net earning assets and spread $1,499,879 3.98% $1,521,759 3.85%
=============================================================================================================================
Cost of funds 3.43% 3.37%
==============================================================================================================================
(a) Fully taxable equivalent based on a 35% tax rate.
(b) Includes fair value adjustment on securities available for sale.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 2. SUMMARY OF CHANGES IN NET INTEREST INCOME (FTE) (a)
================================================================================================================================
Nine Months Ended September 30, 1996
Third Quarter 1996 Compared to Nine Months Ended
Compared to Third Quarter 1995 September 30, 1995
________________________________________________________________________________________________________________________________
Total Due to Due to Total Due to Due to
Increase Change in Change in Increase Change in Change in
(dollars in thousands) (Decrease) Volume Rate (Decrease) Volume Rate
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME (FTE)
Loans and leases $18,860 $21,594 ($2,734) $55,827 $63,318 ($7,491)
Securities
Taxable (10,111) (10,753) 642 (25,709) (28,619) 2,910
Tax-exempt (111) (149) 38 (1,019) (904) (115)
________________________________________________________________________________________________________________________________
Total securities (10,222) (10,902) 680 (26,728) (29,523) 2,795
________________________________________________________________________________________________________________________________
Money market investments (379) (338) (41) (1,709) (1,332) (377)
________________________________________________________________________________________________________________________________
Total interest income (FTE) $8,259 $10,354 ($2,095) $27,390 $32,463 ($5,073)
================================================================================================================================
INTEREST EXPENSE
Interest-bearing deposits
NOW account deposits $387 $279 $108 $991 $917 $74
Money market investment deposits 880 916 (36) 5,549 3,073 2,476
Savings and other consumer time deposits (827) (435) (392) 1,931 (439) 2,370
Time deposits $100,000 and over (443) 37 (480) 1,376 2,039 (663)
________________________________________________________________________________________________________________________________
Total interest-bearing deposits (3) 797 (800) 9,847 5,590 4,257
________________________________________________________________________________________________________________________________
Short-term borrowings 1,792 2,632 (840) 1,918 4,044 (2,126)
Long-term debt (139) (131) (8) (378) (344) (34)
________________________________________________________________________________________________________________________________
Total interest expense $1,650 $3,298 ($1,648) $11,387 $9,290 $2,097
________________________________________________________________________________________________________________________________
Change in net interest income (FTE) $6,609 $7,056 ($447) $16,003 $23,173 ($7,170)
=================================================================================================================================
(a) Fully taxable equivalent based on a 35% tax rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 3. INTEREST RATE CONTRACTS
===============================================================================================================================
Weighted Average Rate
_____________________
Receive Floating
Notional Maturity Fixed Strike Rate Reset Underlying
(dollars in thousands) Amount Date Rate Rate Index Frequency Asset/Liability
_______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate swap (a) $100,000 March 2002 7.18% - % LIBOR Quarterly U. S. Treasuries
Interest rate floors (b) 500,000 December 1998 - 4.65 LIBOR Quarterly Transaction deposits
Interest rate cap 200,000 November 1996 - 7.95 LIBOR Quarterly Short-term borrowing
Interest rate cap 50,000 November 1996 - 8.00 LIBOR Semi-annually Short-term borrowing
________________________________________________________________________________________________________________________________
Total at September 30, 1996 $850,000 7.18% 5.75%
================================================================================================================================
(a) This contract will become effective in March 1997.
(b) These contracts will become effective in December 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 4. RISK-BASED CAPITAL AND CAPITAL RATIOS
==================================================================================================
September 30 December 31
(dollars in thousands) 1996 1995
__________________________________________________________________________________________________
<S> <C> <C>
Tier 1 capital $671,662 $679,003
Tier 2 capital 138,538 149,769
__________________________________________________________________________________________________
Total capital $810,200 $828,772
==================================================================================================
Risk-weighted assets $5,927,715 $5,343,946
==================================================================================================
Ratios at end of period
Tier 1 capital 11.33% 12.71%
Total capital 13.67% 15.51%
Equity ratio 8.03% 8.59%
Tangible equity ratio 7.83% 8.37%
Leverage ratio 7.90% 8.16%
==================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 5. NONPERFORMING ASSETS
==========================================================================================
September 30 December 31
(dollars in thousands) 1996 1995
__________________________________________________________________________________________
<S> <C> <C>
Nonaccrual loans by type
Loans to individuals-residential mortgages $7,428 $6,897
Loans to individuals-other 374 335
Commercial, financial and agricultural 12,667 27,610
Real estate-commercial mortgages 7,462 15,455
Real estate-construction and other 482 3,064
Other 14 -
__________________________________________________________________________________________
Total nonaccrual loans 28,427 53,361
__________________________________________________________________________________________
Total foreclosed assets 5,114 6,470
__________________________________________________________________________________________
Total nonperforming assets $33,541 $59,831
==========================================================================================
Loans past due 90 days or more and not on nonaccrual status $24,193 $20,668
==========================================================================================
End of period ratios
Nonperforming assets as a percent of loans and leases
plus foreclosed assets .57% 1.17%
Allowance for loan losses as a percent of nonperforming loans 232.46% 142.14%
Loans and leases past due 90 days or more and not on
nonaccrual status as a percent of loans and leases .41% .40%
==========================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 6. SUMMARY OF LOAN AND LEASE LOSS EXPERIENCE
=====================================================================================================================
Three Months Ended Nine Months Ended
September 30 September 30
=====================================================================================================================
(dollars in thousands) 1996 1995 1996 1995
=====================================================================================================================
<S> <C> <C> <C> <C>
Balance at beginning of period $75,332 $73,057 $75,845 $71,052
Allowance acquired in bank purchase - - - 1,142
Provision charged to expense 12,525 4,659 23,815 10,792
Loans and leases charged to the allowance
Loans to individuals-residential mortgages 234 50 286 178
Loans to individuals-other 4,798 1,785 11,345 4,560
Commercial, financial and agricultural 373 248 654 886
Real estate-commercial mortgages 37 100 38 295
Real estate-construction and other - 9 - 9
Credit card loans 6,545 3,951 17,400 11,095
______________________________________________________________________________________________________________________
Total charge-offs 11,987 6,143 29,723 17,023
______________________________________________________________________________________________________________________
Recoveries on loans and leases previously charged to the allowance
Loans to individuals-residential mortgages 178 218 326 668
Loans to individuals-other 1,376 675 3,451 1,930
Commercial, financial and agricultural 669 1,185 2,143 2,663
Real estate-commercial mortgages 243 50 520 481
Real estate-construction and other 29 105 191 453
Credit card loans 925 876 2,720 2,509
Other 20 5 22 20
______________________________________________________________________________________________________________________
Total recoveries 3,440 3,114 9,373 8,724
______________________________________________________________________________________________________________________
Net charge-offs 8,547 3,029 20,350 8,299
______________________________________________________________________________________________________________________
Balance at end of period $79,310 $74,687 $79,310 $74,687
======================================================================================================================
Gross annualized charge-offs as a percent of average loans and leases .85% .53% .74% .51%
Recoveries as a percent of gross charge-offs 28.70% 50.69% 31.53% 51.25%
Net annualized charge-offs as a percent of average loans and leases .61% .26% .51% .25%
Allowance for loan losses as a percent of loans and leases at
end of period 1.36% 1.55% 1.36% 1.55%
======================================================================================================================
</TABLE>
<PAGE>
Part II: Other Information
Item 1. Legal Proceedings.
Legal proceedings involving FCC were previously
reported in its Annual Report on Form 10-K for
the year ended December 31, 1995. There have
been no material developments since that
filing.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
4.1 - Indenture between FCC and Republic Bank
Dallas, N.A., Trustee, (trusteeship since
transferred to The Bank of New York)
including the form of 12 3/4% Convertible
Debentures due 2000, Series A included as
Exhibit 4.1 to FCC's Annual Report on Form
10-K for the year ended December 31, 1985,
and incorporated herein by reference.
4.2 - Indenture between FCC and Republic Bank
Dallas, N.A., Trustee, (trusteeship since
transferred to The Bank of New York)
including the form of 12 3/4% Convertible
Debentures due 2000, Series B included as
Exhibit 4.2 to FCC's Annual Report on Form
10-K for the year ended December 31, 1985,
and incorporated herein by reference.
10.1 - Form of Employment Agreement between FCC
and Messrs. Arnof, Brooks, Flick, Gaines,
Ryan, Thompson, Wilson and Ms. Lee
included as Exhibit 10.1 to FCC's Annual
Report on Form 10-K for the year ended
December 31,1995, and incorporated herein
by reference.
10.2 - Amended and Restated FCC Supplemental Tax-
Deferred Savings Plan included as Exhibit
10.1 to FCC's Annual Report on Form 10-K
for the year ended December 31, 1994, and
incorporated herein by reference.
10.3 - FCC Amended and Restated Retirement Benefit
Restoration Plan.
10.4 - FCC 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
15 - Letter regarding unaudited interim
financial information
27 - Financial Data Schedule
(b) Reports on Form 8-K.
A report on Form 8-K dated September 20,
1996 was filed by the registrant under
Item 5, Other Events. The document was
filed to disclose FCC's issuance of a
press release dated September 16, 1996,
announcing FCC's earnings estimate for the
Third Quarter of 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
First Commerce Corporation
(Registrant)
Date: November 13, 1996 /s/ Thomas L. Callicutt, Jr.
_________________________________
Thomas L. Callicutt, Jr.
Executive Vice President,
Controller and
Principal Accounting Officer
EXHIBIT 10.3
FIRST COMMERCE CORPORATION
RETIREMENT BENEFIT RESTORATION PLAN
WHEREAS, First Commerce Corporation (the "Company")
adopted effective January 1, 1994, the "First Commerce
Corporation Retirement Benefit Restoration Plan ("Plan"),
which Plan is designed to pay to each eligible employee the
difference between (1) the benefit that the employee would
have received under the Retirement Plan for Employees of
First Commerce Corporation (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 Internal Revenue Code Sections
401(a)(17) and 415, and (2) the benefit he actually receives
under the Retirement Plan; and
WHEREAS, the Company, represented by its Chief
Executive Officer, acting by authority of its Board of
Directors, desires to provide for benefits to an employee
whose employment terminates after a change of control of the
Company, and who would otherwise be ineligible for benefits
under both the Plan and the Retirement Plan because of not
being vested under the Retirement Plan;
NOW, THEREFORE, effective January 1, 1996, the Company
amends and restates the Plan to read in is entirety as
follows:
Section 1. Definitions.
For purposes only of this plan, the Plan and the
Retirement Plan:
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.
Additional definitions appear in the Appendix.
Section 2. Participation.
Every participant in the Retirement Plan who in 1993 or
any year thereafter receives Excess Compensation of $1,000
or more shall become a participant in the Plan
("Participant") 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;
provided, however, that the Entry Date of an Employee has
met the requirements under (a) and (c), but not under (b)
shall be the date on which a Change of Control occurs.
Section 3. Payment of Benefit.
a. The benefit payable under the Plan shall be known
as the "Restoration Benefit".
b. 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.
c. If no benefit is payable under the Retirement Plan
because the Participant is not vested under that plan, a
benefit shall nevertheless be payable under the Plan if a
Change of Control has occurred and the Participant's
Termination of Employment occurs involuntarily and without
Cause, or voluntarily for Good Reason, within 24 months
following the Change of Control. The benefit in that event
shall be payable beginning the month after the Termination
of Employment, in the form of a Life Annuity, if the
Participant is then unmarried, or in the form of a Qualified
Joint and Survivor Annuity, if the Participant is then
married. The terms "Change of Control", "Cause" and "Good
Reason" are defined in the Appendix.
Section 4. Amount of the Benefit.
a. Unless Paragraph (c) of Section 3 applies, 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, 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.
b. If Paragraph (c) of Section 3 applies, the amount
of the Restoration Benefit shall be equal to the benefit
that the Participant would have received under the
Retirement Plan if (1) he had been vested under the
Retirement Plan, (2) Total Compensation were used to
calculate his Accrued Benefit with respect to each year of
participation in the Retirement Plan, and (3) the annual
benefit limitations under Code Section 415 did not apply.
Section 5. Survivor Benefit.
a. The provisions of this Paragraph (a) apply if the
provisions of Paragraph (c) of Section 3 do not apply. 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.
b. The provisions of this Paragraph (b) apply if the
provisions of Paragraph (c) of Section 3 do apply. If the
Participant dies after his termination of employment the
only death benefit will be a survivor annuity if the
Participant was married when the benefit commenced (and
therefore entitled to a Qualified Joint and Survivor Annuity
under Paragraph 3(b)) and the spouse to whom the Participant
was married when the annuity began survived the Participant.
If the Participant dies before his termination of employment
survived by a spouse, the surviving spouse shall receive a
Qualified Preretirement Survivor Annuity equal to the amount
the spouse would have received under the Retirement Plan if
the Participant had been vested under that plan. No other
death benefit shall be paid under the 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 Director of Human Resources of First Commerce
Corporation shall be the Plan Administrator.
b. The Plan Administrator may appoint such agents,
attorneys, accountants, 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 or 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 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 claimant 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, and the claimant
is ultimately successful, all subsequent reasonable
attorney's fees and costs of claimant, 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 _______________,
1996, 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 restated
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 _________________, 1996.
<PAGE>
APPENDIX TO
FIRST COMMERCE CORPORATION
RETIREMENT BENEFIT RESTORATION PLAN
(As restated in September, 1996, effective January 1, 1996)
1. Change of Control. "Change of Control" means
a. The acquisition by any individual, entity or group
within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"34 Act")(a "person") of beneficial ownership (within
the meaning of Rule 13d-3 under the 34 Act) of 40% or
more of either (i) the Company's then outstanding
common stock ("Outstanding Stock") or (ii) the combined
voting power of its then outstanding voting securities
entitled to vote generally in the election of directors
("Outstanding Voting Securities") other than any
acquisition (i) by any employee benefit plan (or
related trust) sponsored or maintained by the Company
or any entity controlled by it or (ii) by any entity
pursuant to a transaction which complies with Section
2(c)(i), (ii) or (iii); or
b. Individuals who as of the date hereof constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof; provided,
however, that any individual becoming a director
subsequent to the date hereof whose election or
nomination was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as a member of the Incumbent
Board unless his or her initial assumption of office
occurs as a result of an actual or threatened contest
with respect to the election or removal of directors or
other actual or threatened solicitation of proxies by
or on behalf of a Person other than the Board; or
c. Consummation of a reorganization, merger or
consolidation, share exchange or sale or other
disposition of all or substantially all of the
Company's assets (a "Combination") unless immediately
thereafter (i) all or substantially all of the
beneficial owners of the Outstanding Stock and
Outstanding Voting Securities immediately prior to such
Combination beneficially own, directly or indirectly,
more than 50% 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 entity resulting from such Combination
(including, without limitation, an entity which as a
result of such transaction owns the Company or all or
substantially all of its assets either directly or
through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior
to such Combination of the Outstanding Stock and
Outstanding Voting Securities, as the case may be, (ii)
no Person (excluding any entity resulting from such
Combination or any employee benefit plan (or related
trust) of the Company or such resulting entity)
beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common
stock of the resulting entity or the combined voting
power of the then outstanding voting securities of such
entity except to the extent that such ownership existed
prior to the Combination and (iii) at least a majority
of the members of the board of directors of the
resulting entity were members of the Incumbent Board at
the time of the execution of the initial agreement or
of the action of the Board providing for such
Combination; or
2. Cause. "Cause" means
a. Participant's willful and continued failure to
perform substantially his duties (other than any such
failure resulting from incapacity due to physical or
mental illness), after a written demand for substantial
performance is delivered to him by the Board or the
Chief Executive Officer of the Company which
specifically identifies the manner in which the Board
or Chief Executive Officer believes that he has not
substantially performed his duties, or
b. Participant's willful engaging in illegal conduct or
gross misconduct.
No act or failure to act, on the Participant's part shall be
considered "willful" unless it is done, or omitted to be
done, by him in bad faith or without reasonable belief that
his action or omission was in the Company's best interests.
Any act, or failure to act, based upon authority given
pursuant to a resolution of the Board or instructions of the
Chief Executive Officer or a senior officer of the Company
or the advice of counsel for the Company shall be
conclusively presumed to be in good faith and in the
Company's best interests. The cessation of Participant's
employment shall not be deemed to be for Cause unless and
until there shall have been delivered to him a copy of a
resolution duly adopted by the vote of not less than three-
quarters of the entire membership of the Board at a meeting
called and held for such purpose (after reasonable notice is
provided to the Participant and he is given an opportunity,
together with counsel, to be heard before the Board),
finding that, in the Board's good faith opinion, the
Participant is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
3. Good Reason. "Good Reason" means:
a. the Company providing assignments that in any
material respect are inconsistent with or result in a
diminution of the Participant's position, authority,
duties and responsibilities, excluding an isolated,
insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly
after receipt of notice thereof given by the
Participant;
b. a reduction of the Participant's compensation and
benefits package for reasons other than an across-the-
board reduction, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt
of notice thereof given by the Participant;
c. the Company's requiring him to be based at any
office or location other than the location where he was
employed immediately preceding the Change of Control,
or any office or location within the State of Louisiana
during the 13-month period beginning on the date of the
Change of Control and less than 35 miles from the
location where he was previously employed (provided
that, in the case of any relocation, the Company pays
all of Participant's expenses reasonably related to
such relocation), or to travel on Company business to
a substantially greater extent than reasonably required
for the performance of his duties;
Any good faith determination of "Good Reason" made by the
Participant shall create a rebuttable presumption that "Good
Reason" exists. Anything in this Agreement to the contrary
notwithstanding, a termination by the Participant for any
reason during the 30-day period immediately following the
first anniversary of the Change of Control shall be deemed
to be a termination for Good Reason for all purposes of this
Agreement.
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.
A participant may also satisfy his or her total
tax liability related to an Incentive by delivering
shares of Common Stock that have been owned by the
participant for at least six months. 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, Incentive previously granted.
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, (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, upon the
occurrence of a "Change of Control."
A "Change of Control" shall be defined as:
(a) The acquisition by any individual, entity
or group within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "34 Act") (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the 34 Act) of 40% or more
of either (i) the Company's then outstanding
common stock ("Outstanding Stock") or (ii) the
combined voting power of its then outstanding
voting securities entitled to vote generally in
the election of directors ("Outstanding Voting
Securities") other than any acquisition (i) by any
employee benefit plan (or related trust) sponsored
or maintained by the Company or any entity
controlled by it or (ii) by any entity pursuant to
a transaction which complies with Section
11.10(c)(i), (ii) or (iii); or
(b) Individuals who as of the date hereof
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority
thereof; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election, or nomination was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered
as a member of the Incumbent Board unless his or
her initial assumption of office occurs as a
result of an actual or threatened contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies
by or on behalf of a Person other than the Board;
or
(c) Consummation of a reorganization, merger
or consolidation, share exchange or sale or other
disposition of all or substantially all of the
Company's assets (a "Combination"), unless
immediately thereafter (i) all or substantially
all of the beneficial owners of the Outstanding
Stock and the Outstanding Voting Securities
immediately prior to such Combination beneficially
own, directly or indirectly, more than 50% 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 entity resulting from such
Combination (including, without limitation, an
entity which as a result of such transaction owns
the Company or all or substantially all of its
assets either directly or through one or more
subsidiaries) in substantially the same
proportions as their ownership immediately prior
to such Combination of the Outstanding Stock and
Outstanding Voting Securities, as the case may be,
(ii) no Person (excluding any entity resulting
from such Combination or any employee benefit plan
(or related trust) of the Company or such
resulting entity) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the
resulting entity or the combined voting power of
the then outstanding voting securities of such
entity except to the extent that such ownership
existed prior to the Combination and (iii) at
least a majority of the members of the board of
directors of the resulting entity were members of
the Incumbent Board at the time of the execution
of the initial agreement or of the action of the
Board providing for such Combination; or
(d) Approval by the shareholders of the
Company's complete liquidation or dissolution,
provided, however, that, if a participant directs
the Committee in writing prior to the occurrence
of a Change of Control (an "Acceleration Notice")
then, with respect to Incentives held by such
participant, restrictions shall lapse and
Incentives shall become exercisable only to the
extent specified in the Acceleration Notice.
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.
EXHIBIT 11
FIRST COMMERCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
_______________________________ ________________________________
1996 1995 1996 1995
_____________ _____________ ____________ _____________
<S> <C> <C> <C> <C>
Primary earnings per share
___________________________
Net income $26,531,000 $27,371,000 $89,731,000 $69,034,000
Preferred dividend requirements (698,000) (1,086,000) (2,116,000) (3,259,000)
______________ _____________ ______________ _______________
Income applicable to common shares $25,833,000 $26,285,000 $87,615,000 $65,775,000
============== ============= ============== ===============
Weighted average number of common shares
outstanding, net of shares held in treasury 37,828,162 37,746,018 38,469,086 37,708,427
Shares from assumed exercise of options,
net of treasury stock method 246,224 157,606 224,440 149,940
______________ _____________ ______________ _______________
38,074,386 37,903,624 38,693,526 37,858,367
============== ============= ============== ===============
Earnings per common share $0.68 $0.69 $2.26 $1.74
Fully diluted earnings per share
_________________________________
Income applicable to common shares $25,833,000 $26,285,000 $87,615,000 $65,775,000
Expenses that would not have been incurred
if assumed conversions had occurred:
Preferred dividend requirements 698,000 1,086,000 2,116,000 3,259,000
Interest expense on convertible
debentures, net of tax 1,667,000 1,734,000 4,967,000 5,149,000
______________ _____________ ______________ _______________
Income applicable to common shares plus
expenses that would not have been incurred
if assumed conversions had occurred $28,198,000 $29,105,000 $94,698,000 $74,183,000
============== ============= =============== ===============
Weighted average number of shares
outstanding, net of shares held in treasury 37,828,162 37,746,018 38,469,086 37,708,427
Shares from assumed exercise of options,
net of treasury stock method 246,224 185,305 239,672 185,305
Shares from assumed conversion of dilutive
convertible notes and debentures:
Preferred stock 1,802,864 2,764,242 1,897,069 2,783,167
Convertible debentures 3,018,034 3,116,166 3,031,726 3,116,166
______________ _____________ ______________ _______________
42,895,284 43,811,731 43,637,553 43,793,065
============== ============= ============== ===============
Earnings per common share $0.66 $0.66 $2.17 $1.68
</TABLE>
EXHIBIT 15
First Commerce Corporation
New Orleans, Louisiana
Gentlemen:
RE: September 30, 1996 Quarterly Report on Form 10-Q
With respect to the subject Quarterly Report, we acknowledge
our awareness of the inclusion therein of our report dated
October 21, 1996 related to our review of interim financial
information and that said report will be included in any
registration statement filed by First Commerce Corporation
through incorporation by reference of the subject Quarterly
Report into such registration statements.
Pursuant to Rule 436(c) under the Securities Act, such
report is not considered a part of a Registration Statement
prepared or certified by an accountant or a report prepared
or certified by an accountant within the meaning of Sections
7 and 11 of the Act.
/s/ ARTHUR ANDERSEN LLP
________________________
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
November 13, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE PERIODS ENDING SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(RESTATED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995
<EXCHANGE-RATE> 1 1
<CASH> 413,389 387,897
<INT-BEARING-DEPOSITS> 131 307
<FED-FUNDS-SOLD> 7,470 28,725
<TRADING-ASSETS> 36,290 12,096
<INVESTMENTS-HELD-FOR-SALE> 2,205,903 2,756,322
<INVESTMENTS-CARRYING> 0 104,608
<INVESTMENTS-MARKET> 0 104,258
<LOANS> 5,832,032 4,823,741
<ALLOWANCE> (79,310) (74,687)
<TOTAL-ASSETS> 8,772,752 8,367,237
<DEPOSITS> 6,849,890 6,661,167
<SHORT-TERM> 995,881 776,876
<LIABILITIES-OTHER> 136,692 114,385
<LONG-TERM> 85,875 89,892
0 0
38,538 58,845
<COMMON> 196,946 191,298
<OTHER-SE> 468,930 474,774
<TOTAL-LIABILITIES-AND-EQUITY> 8,772,752 8,367,237
<INTEREST-LOAN> 356,079 300,281
<INTEREST-INVEST> 112,656 139,107
<INTEREST-OTHER> 2,727 4,435
<INTEREST-TOTAL> 471,462 443,823
<INTEREST-DEPOSIT> 165,139 155,292
<INTEREST-EXPENSE> 197,952 186,565
<INTEREST-INCOME-NET> 273,510 257,258
<LOAN-LOSSES> 23,815 10,792
<SECURITIES-GAINS> (247) (13,281)
<EXPENSE-OTHER> 241,544 241,569
<INCOME-PRETAX> 134,783 104,221
<INCOME-PRE-EXTRAORDINARY> 89,731 69,034
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 89,731 69,034
<EPS-PRIMARY> 2.26 1.74
<EPS-DILUTED> 2.17 1.68
<YIELD-ACTUAL> 0 0
<LOANS-NON> 0 0
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 0 0
<CHARGE-OFFS> 0 0
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 0 0
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
