<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from______to___________.
Commission file number 03502
First National of Nebraska, Inc.
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(Exact name of registrant as specified in its charter)
Nebraska 47-0523079
- ------------------------------------------ ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One First National Center Omaha, NE 68102
- ------------------------------------------ ---------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (402) 341-0500
--------------------
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 .
----- -----
As of August 4, 1997, the number of outstanding shares of the registrant's
common stock ($5.00 par value) was 335,000.
<PAGE>
Part I. Item 1. Financial Statements
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Assets June 30, December 31,
1997 1996
- --------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Cash and due from banks $ 374,865 $ 397,886
Federal funds sold and other short-term
investments 344,825 277,028
- --------------------------------------------------------------------------------
Total cash and cash equivalents 719,690 674,914
Securities available-for-sale (amortized
cost $305,396,000 and $255,653,000) 306,566 256,919
Securities held-to-maturity (fair value
$741,527,000 and $650,897,000) 741,405 649,799
Loans 5,074,366 5,107,041
Less: Allowance for loan losses 117,517 104,812
Unearned income 12,961 11,494
- --------------------------------------------------------------------------------
Net loans 4,943,888 4,990,735
Premises and equipment, net 114,597 111,700
Other assets 280,581 227,990
- --------------------------------------------------------------------------------
Total assets $ 7,106,727 $ 6,912,057
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits:
Noninterest-bearing $ 733,230 $ 721,448
Interest-bearing 5,264,458 5,114,721
- --------------------------------------------------------------------------------
Total deposits 5,997,688 5,836,169
Federal funds purchased and securities sold
under repurchase agreements 151,477 146,015
Commercial paper and commercial paper based
borrowings 260,981 273,298
Other liabilities 74,323 64,733
Long-term debt and other interest-bearing
obligations 56,538 7,260
Capital notes 94,647 96,616
- --------------------------------------------------------------------------------
Total liabilities 6,635,654 6,424,091
Stockholders' equity:
Common stock, $5 par value, 346,767 shares
authorized, 335,000 and 346,767 shares
issued and outstanding, respectively 1,675 1,734
Additional paid-in capital 2,515 2,604
Retained earnings 466,135 482,819
Net unrealized appreciation on available-
for-sale securities, net of tax 748 809
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Total stockholders' equity 471,073 487,966
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Total liabilities and stockholders'
equity $ 7,106,727 $ 6,912,057
================================================================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------
(In Thousands, Except Share and Per Share Data)
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans and
lease financing $185,063 $164,583 $367,442 $327,889
Interest on securities:
Taxable interest income 15,643 13,020 29,177 25,525
Nontaxable interest income 246 275 507 557
Interest on federal funds sold and
other short-term investments 2,039 3,286 5,201 7,015
- ----------------------------------------------------------------------------------------------
Total interest income 202,991 181,164 402,327 360,986
- ----------------------------------------------------------------------------------------------
Interest expense:
Interest on deposits 70,104 60,448 138,151 122,902
Interest on commercial paper and
commercial paper based borrowings 3,907 3,934 7,767 8,161
Interest on federal funds purchased
and U.S. Treasury notes 1,986 1,363 3,544 2,451
Interest on long-term debt, other
obligations and capital notes 2,026 2,077 4,025 4,126
- ----------------------------------------------------------------------------------------------
Total interest expense 78,023 67,822 153,487 137,640
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Net interest income 124,968 113,342 248,840 223,346
Provision for loan losses 47,309 38,776 96,892 76,973
- ----------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 77,659 74,566 151,948 146,373
Noninterest income:
Processing services 30,948 25,667 54,910 48,080
Deposit services 5,917 4,620 11,427 8,758
Trust and investment services 4,896 4,177 9,863 8,152
Commissions 2,329 1,558 8,811 7,525
Miscellaneous 8,064 8,221 15,789 13,734
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Total noninterest income 52,154 44,243 100,800 86,249
- ----------------------------------------------------------------------------------------------
Income before other operating expense 129,813 118,809 252,748 232,622
Noninterest expense:
Salaries and employee benefits 37,453 33,453 76,218 68,489
Communications and supplies 13,264 13,681 27,838 32,357
Loan services purchased 8,734 7,629 16,669 15,267
Purchased processing 5,670 4,424 10,958 9,734
Net occupancy expense of premises 4,878 5,218 10,633 10,383
Equipment rentals, depreciation
and maintenance 7,213 6,270 14,263 12,634
Other professional services purchased 12,166 11,940 23,247 22,233
Miscellaneous 7,988 7,301 15,137 13,309
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Total noninterest expense 97,366 89,916 194,963 184,406
- ----------------------------------------------------------------------------------------------
Income before income taxes 32,447 28,893 57,785 48,216
Income tax expense/(benefit):
Current 12,958 14,060 25,707 25,121
Deferred (352) (2,869) (2,232) (6,205)
- ----------------------------------------------------------------------------------------------
Total income tax expense 12,606 11,191 23,475 18,916
- ----------------------------------------------------------------------------------------------
Net income $ 19,841 $ 17,702 $ 34,310 $ 29,300
==============================================================================================
Average number of common shares outstanding 346,250 346,767 346,507 346,767
==============================================================================================
Net income per common share $57.30 $51.05 $99.02 $84.49
==============================================================================================
Cash dividends declared per common share $16.88 $16.88 $25.32 $28.78
==============================================================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
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Six Months Ended June 30,
1997 1996
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(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 34,310 $ 29,300
Adjustments to reconcile net income to net
cash flows from operating activities:
Provision for loan losses 96,892 76,973
Depreciation and amortization 19,500 17,842
Provision for deferred taxes (2,232) (6,205)
Origination of loans for resale (18,547) (20,898)
Proceeds from the sale of loans 14,580 20,407
Other asset and liability activity, net 326 376
- --------------------------------------------------------------------------------
Net cash flows from operating activities 144,829 117,795
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash received (1) $ -- $ 395
Maturities and sales of securities
available-for-sale 81,530 1,040
Purchases of securities available-for-sale (135,268) (137,267)
Maturities of securities held-to-maturity 87,129 114,916
Purchases of securities held-to-maturity (175,753) (120,064)
Net change in loans (220,722) (122,749)
Purchases of premises and equipment, net (14,157) (19,052)
Securitization and sale of loans 420,330 --
Purchase of loan portfolio (291,460) --
Other, net 1,223 226
- --------------------------------------------------------------------------------
Net cash flows from investing activities (247,148) (282,555)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in customer deposits $ 161,519 $ (54,782)
Net change in federal funds purchased 5,462 7,217
Issuance of debt and capital notes 75,062 27,074
Principal repayments of debt and capital notes (27,753) (24,172)
Net change in commercial paper and commercial
paper based borrowings (16,054) (33,872)
Repurchase of common stock (42,361) --
Cash dividends paid (8,780) (9,980)
- --------------------------------------------------------------------------------
Net cash flows from financing activities 147,095 (88,515)
- --------------------------------------------------------------------------------
Net change in cash and cash equivalents 44,776 (253,275)
Cash and cash equivalents at beginning of period 674,914 618,636
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 719,690 $ 365,361
================================================================================
Cash paid during the year for:
Interest $ 149,847 $ 139,940
Income taxes $ 22,110 $ 23,076
================================================================================
NON-CASH INVESTING AND FINANCING ACTIVITIES
Increase to assets and liabilities from
business acquisitions $ -- $ 723
================================================================================
</TABLE>
See notes to consolidated financial statements.
(1) In business combinations during 1996, the Company assumed liabilities of
$103,000 and non-cash assets of $431,000.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1997
Note A: Basis of Presentation
The accompanying unaudited consolidated financial statements of First National
of Nebraska, Inc. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete consolidated
financial statements. For purposes of comparability, certain prior period
amounts have been reclassified.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the financial statements have
been included. Operating results for the six months ended June 30, 1997, are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. The notes to the consolidated financial statements
contained in the Annual Report on Form 10-K for the year ended December 31, 1996
should be read in conjunction with these consolidated financial statements.
Note B: Earnings per Common Share
Net income per share is calculated by dividing net income by the average number
of common shares outstanding during the period.
Note C: New Accounting Pronouncements
The Financial Accounting Standards Board(FASB) recently issued SFAS No. 130,
Reporting Comprehensive Income, which is effective for fiscal years beginning
after December 15, 1997. This statement establishes standards for reporting and
display of comprehensive income and its components. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events or circumstances from nonowner sources. The
Company expects to adopt these reporting requirements in the first quarter of
1998.
The FASB also recently issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which is effective for financial statements
for periods beginning after December 15, 1997. This statement establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. This statement supersedes FASB No. 14, Financial Reporting for
Segments of a Business Enterprise, but retains the requirement to report
information about major customers. The Company expects to adopt these
disclosure requirements for the annual reporting period ended December 31, 1998.
Part I. Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
- -------
The Company consists of the parent company, which is a Nebraska-based interstate
bank holding company, and its consolidated subsidiaries. Its principal
subsidiaries include First National Bank of Omaha and its wholly-owned
subsidiaries (the "Bank"); First National Bank and Trust Company of Columbus;
First National Bank, North Platte; Platte Valley State Bank and Trust Company,
Kearney; The Fremont National Bank and Trust Company; First National Bank of
Kansas, Overland Park, Kansas; First National Bank South Dakota, Yankton, South
Dakota; and First National of Colorado, Inc., and its wholly-owned Colorado
banking subsidiaries: First National Bank, Fort Collins; Union Colony Bank,
Greeley; and The Bank of Boulder. The Company and First National of Colorado,
Inc. also have nonbanking subsidiaries, which in the aggregate are not material.
5
<PAGE>
In addition to its position as a regional bank holding company, First National
of Nebraska, Inc. was one of the originators of the bank credit card industry
and has over 40 years' experience in this line of business. Through a banking
subsidiary, the Company conducts a significant consumer credit card service
under license arrangements with VISA USA and MasterCard International, Inc. The
Company's credit card customers are located throughout the United States, but
primarily in the Midwest. At December 31, 1996, the Company ranked among the
top 25 card issuing entities based on the amount of managed credit card loans
outstanding. The Company originates new credit card accounts for itself and its
affiliates. In addition, the Company purchased a $267 million credit card
portfolio on June 6, 1997. The Company performs credit card servicing
activities on behalf of its subsidiary banks including data processing, payment
processing, statement rendering, marketing, customer service, credit
administration and card embossing. The Company primarily funds its credit card
loans through the core deposits of its subsidiary banks.
Competitors of the Company include other commercial banks, savings and loan
associations, consumer and commercial finance companies, credit unions and other
financial services companies. The Company's credit card operation competes with
other issuers of credit cards ranging from other national issuers of bank cards
to local retailers which provide their own credit cards.
The Company continues to make substantial investments in data processing
technology for both its own data processing needs and to provide various data
processing services for unaffiliated parties. The services provided include
automated clearinghouse transactions, merchant credit card processing, and check
processing. The Company ranks as one of the larger merchant credit card
processors in the United States with over $15 billion processed in 1996 and $13
billion processed in 1995. It also ranked among the 25 largest automated
clearinghouse processors in the country during 1996 and is one of the largest
check processors in its market area. Furthermore, the Company provides data
processing services to over 45 non-affiliated banks located in ten states. Fee
income continues to increase through the ongoing expansion of these services.
The Company continues to closely monitor the risks and competitive conditions as
they relate to pricing and technological issues associated with these processing
services.
Management's discussion and analysis contains forward looking statements which
reflect management's current views and estimates of future economic
circumstances, industry conditions, company performance and the financial
results. The statements are based on many assumptions and factors, including
general economic conditions, consumer behavior, competitive environment and
related market conditions, operating efficiencies, and actions of governments.
Any changes in such assumptions or factors could produce significantly different
results.
Results of Operations
- ---------------------
Overview:
Net income for the quarter ending June 30, 1997 was $19.8 million, or $57.30 per
common share, increasing 12.1% from $17.7 million, or $51.05 per common share
for the same period in 1996. Net income for the six months ending June 30, 1997
was $34.3 million, or $99.02 per common share, increasing 17.1% from $29.3
million, or $84.49 per common share for the same period in 1996. In spite of an
increase in the provision for loan losses, earnings remain strong due to
continued growth in net interest income and noninterest income which continues
to surpass the increase in operating expenses.
Net interest income:
The Company's primary source of income is net interest income which is defined
as the difference between interest income and fees derived from earning assets
and interest expense on interest-bearing liabilities. Interest income and
expense are affected by changes in the volume and mix of interest-earning assets
and interest-bearing liabilities, in addition to changes in interest rates.
For the quarter ended June 30, 1997, net interest income increased $11.6 million
or 10.3% to $124.9 million compared to $113.3 million for the same period in
1996. For the six months ended June 30, 1997, net interest income increased
$25.5 million or 11.4% to $248.8 million compared to $223.3 million for the same
period in 1996. This increase is primarily attributable to increased earning
assets net of an increase in the volume of interest-bearing liabilities and
decreases in the related yields. The favorable trend of increased net interest
income corresponds to the Company's strong loan growth and to its successful
asset and liability management strategies.
Provision for loan losses:
The Company evaluates the adequacy of its allowance for loan losses on a monthly
basis. This review of the adequacy of the allowance for loan losses is based
upon a review of collateral values, delinquencies, nonaccruals, payment
histories and various other analytical and subjective measures relating to the
various loan portfolios within the Company.
6
<PAGE>
For the quarter ended June 30, 1997, the provision for loan losses increased
$8.5 million or 22.0% to $47.3 million compared to $38.8 million for the same
period in 1996. For the six months ended June 30, 1997, the provision for loan
losses increased $19.9 million or 25.9% to $96.9 million compared to $77.0
million for the same period in 1996. The increase in the provision for loan
losses relates to higher net charge-offs, growth in the loan portfolio, and
strengthening of the loan loss allowance for potential future losses. The
increase in net charge-offs is primarily attributable to the significant rise in
delinquencies on credit card loans which is being experienced throughout the
credit card industry due to increased consumer debt levels and other factors.
The increase is further augmented by the large volume of credit card and other
consumer loans originated in earlier years which continue to mature and
contribute to higher credit loss experience.
Noninterest income:
For the quarter ended June 30, 1997, noninterest income increased $7.9 million
or 17.9% to $52.2 million compared to the same period in 1996. For the six
months ended June 30, 1997, noninterest income increased $14.6 million or 16.9%
to $100.8 million compared to the same period in 1996. A portion of this
increase was due to processing services income increasing by 20.6% for the
quarter and 14.2% for the six months ended June 30, 1997 relating to the growth
in volumes processed from new and existing customers in merchant processing.
Deposit services income increased 28.1% for the quarter and 30.5% for the six
months ended June 30, 1997 due primarily to the growth in total deposits.
Income related to trust and investment services and commissions increased as a
result of the general growth of the Company. The increase in miscellaneous
income for the six months ended June 30, 1997 was due to general business
fluctuations.
Noninterest expense:
For the quarter ended June 30, 1997, noninterest expense increased $7.5 million
or 8.3% to $97.4 million compared to the same period in 1996. For the six
months ended June 30, 1997, noninterest expense increased $10.6 million or 5.7%
to $195.0 million compared to the same period in 1996. A portion of the
increase in noninterest expense is due to salaries and employee benefits, which
increased 12.0% for the quarter and 11.3% for the six months ended June 30, 1997
and relates to overall Company growth. Increases in remaining expense
categories for purchased processing, loan services, equipment expenses, and
miscellaneous expenses also relate to general Company growth including increased
processing volumes and continued investments in technology. These increases are
partially offset by communication and supplies which decreased 3.0% for the
quarter and 14.0% for the six months ended June 30, 1997 due to a reduction in
marketing expenditures. Management continues to focus on expense control in
their operating decisions to improve the efficiencies of the Company.
Asset Quality
- -------------
The Company's loan delinquency rates and net charge-off activity reflect, among
other factors, general economic conditions, the quality of the loans, the
average seasoning of the loans and the success of the Company's collection
efforts. The Company's objective in managing its loan portfolio is to balance
and optimize the profitability of the loans within the context of acceptable
risk characteristics. The Company continually monitors the risks embedded in
the loan portfolio with the use of statistically-based computer simulation
models.
The consumer credit industry continues to experience increased delinquencies and
charge-offs. As a major credit card issuer, the Company also continues to
experience increased net charge-off and delinquency rates. As a result, the
Company has increased its allowance for loan losses by $12.7 million, or 12.1%,
from December 31, 1996 to June 30, 1997. The increased charge-off trends are
likely to continue as the large volume of credit card loans originated in
previous years continue to season. The Company also expects that selected
segments of consumers may continue to experience declines in credit quality.
Therefore, management continues to evaluate credit standards and has reduced
marketing expenditures. Consumer behavior is being closely monitored to
determine if future changes in credit standards or marketing strategies will be
required.
7
<PAGE>
The following table reflects the delinquency rates of the Company's loan
portfolio. An account is contractually delinquent if the minimum payment is not
received by the specified billing date. The overall delinquency rate as a
percentage of total loans was 3.82% at June 30, 1997 compared with 3.86% at
December 31, 1996.
<TABLE>
<CAPTION>
Delinquent Loans:
June 30, 1997 December 31, 1996
-------------------------------------------------
(Amounts in Thousands)
Total Loans % of Loans % of Loans
- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Loans outstanding $5,074,366 $5,107,041
Loans delinquent:
30 - 89 days $119,097 2.35% $123,420 2.42%
90 days or more & still
accruing 74,654 1.47% 73,580 1.44%
-------------------------- ----------------------
Total delinquent
loans $193,751 3.82% $197,000 3.86%
========================== ======================
Nonaccrual loans $5,402 .11% $7,231 .14%
========================== ======================
Credit Cards and Related Plans
- ------------------------------
Loans outstanding $2,748,224 $2,916,392
Loans delinquent:
30 - 89 days $95,584 3.48% $102,538 3.52%
90 days or more & still
accruing 66,677 2.42% 68,827 2.36%
-------------------------- ----------------------
Total delinquent
loans $162,261 5.90% $171,365 5.88%
========================== ======================
Nonaccrual loans -- -- -- --
========================== ======================
</TABLE>
Generally, the Company's policy is to charge off loans when they become 180 days
contractually past due. Net loan charge-offs include the principal amount of
losses resulting from borrowers' unwillingness or inability to pay, in addition
to bankrupt and deceased borrowers, less current period recoveries of previously
charged-off loans. The allowance for loan losses is intended to cover losses
inherent in the Company's loan portfolio as of the reporting date and is
continually monitored using statistically-based computer simulation models. The
provision for loan losses is charged against earnings to cover both current
period net charge-offs and to maintain the allowance at an acceptable level to
cover losses inherent in the portfolio as of the reporting date. Net charge-
offs for the Company's overall portfolio were $95 million for the six months
ended June 30, 1997 compared to $62.2 million for the same period in 1996. Net
charge-offs as a percentage of average loans were 1.85% for the six months ended
June 30, 1997 compared to 1.41% for the same period last year. The allowance as
a percentage of loans has increased to 2.32% for the period ended June 30, 1997
compared to 1.83% for the same period last year.
The following table presents the activity in the Company's allowance for loan
losses with a breakdown of charge-off and recovery activity related to credit
cards and related plans.
<TABLE>
<CAPTION>
Allowance for Loan Losses:
For the Six Months Ended June 30,
1997 1996
---------------------------------
(Amounts in Thousands)
<S> <C> <C>
Balance at January 1 $104,812 $67,740
Addition due to loan acquisition 10,862 --
Provision for credit losses 96,892 76,973
Loans charged off:
Credit cards and related plans (104,127) (69,707)
All other loans (4,002) (1,866)
Loans recovered:
Credit cards and related plans 11,828 8,760
All other loans 1,252 620
---------------- ----------------
Total net charge-offs (95,049) (62,193)
---------------- ----------------
Balance at June 30 $117,517 $82,520
================ ================
Allowance as a percentage
of loans 2.32% 1.83%
Total net charge-offs as a percentage
of average loans 1.85% 1.41%
</TABLE>
8
<PAGE>
Capital Resources
- -----------------
The Company and its banking subsidiaries are required to maintain minimum
capital in accordance with regulatory guidelines. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve quantitative measures
of the Company's assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. These quantitative measures
require the Company to maintain minimum total risk-based capital (as defined in
the regulations) of 8%, Tier 1 risk-based capital (as defined) of 4%, and Tier 1
leverage capital (as defined) of 4%. As of June 30, 1997, the most recent
notification from the OCC categorized the Company's banking subsidiaries as well
capitalized under the framework for prompt corrective action. To be categorized
as well capitalized, the Company's banking subsidiaries must maintain minimum
total risk-based capital of 10%, Tier 1 risk-based capital of 6%, and Tier 1
leverage capital of 5%. There are no conditions or events since that
notification that management believes have changed the institution's category.
The Company intends to maintain sufficient capital in each of its banking
subsidiaries to remain in the well capitalized category.
In 1995, First National Bank of Omaha issued $75 million in 15 year subordinated
capital notes. These subordinated capital notes, along with $20 million in
capital notes outstanding as of June 30, 1997 issued in connection with the
Company's previous acquisitions, count towards meeting the required capital
standards, subject to certain limitations. The Company has historically
retained 85% of net income in capital to fund the growth of future operations
and to maintain minimum capital standards.
On June 27, 1997, the Company repurchased 11,767 shares of the Company's common
stock from Mutual of Omaha Insurance Company at $3,600 per share. The 11,767
shares repurchased were retired decreasing the total number of shares issued and
outstanding to 335,000. In addition, the Company's Senior Management Incentive
Plan purchased 2,750 shares of the Company's common stock from United of Omaha
Life Insurance Company at $3,600 per share. The purchase prices of these
transactions were negotiated at arm's length and reflect the fair value of the
Company's common stock when the purchase agreements were entered into on April
29, 1997. The Company borrowed on an existing line of credit in order to close
the stock repurchase transaction and anticipates retirement of the line of
credit within the next year.
Liquidity and Interest Rate Risk Management
- -------------------------------------------
Adequate liquidity levels are necessary to ensure that sufficient funds are
available for loan growth and deposit withdrawals. These funding demands are
offset by funds generated from loan repayments, investment maturities, and core
deposit growth. The Company's Asset/Liability Committee is responsible for
monitoring the current and forecasted balance sheet structure to ensure
anticipated funding needs can be met at a reasonable cost. Contingency plans
are in place to meet unanticipated funding needs or loss of funding sources.
Domestic retail deposits are used as the primary source of funding for all
banking subsidiaries. In order to maintain flexibility and diversity in
liquidity management the Company also has access to a variety of other funding
tools. These other sources include securities sold under repurchase agreements,
federal funds purchased, commercial paper, securitization, other short-term and
long-term debt, and subordinated capital notes.
At June 30, 1997, the Company had facilities to access the commercial paper
market up to a maximum of $315,000,000, of which $260,981,000 was outstanding
and maturing in 56 days. These issues are supported for liquidity purposes by
loan commitments from various financial institutions.
The Company utilizes credit card-backed securitization vehicles to assist in its
management of liquidity, interest rate risk and capital. Securitization
vehicles provide diversified and cost-effective sources of funding. During the
second quarter, the Company expanded its off-balance sheet securitization in two
transactions. The first securitization during the quarter was via a $170
million commercial paper conduit, while the second securitization was a $250
million floating rate 3-year private placement. Both transactions were issued
via a master trust facility established by the Company in 1995. Total
securitization as of June 30, 1997 was $620 million.
The Company's goal is to maximize profits while effectively managing rather than
eliminating interest rate risk. Since changes in the marketplace cannot be
reliably predicted, the Company uses net interest income simulation modeling to
simulate several possible events. These events include immediate and sustained
shifts in interest rates upward and downward, and gradual and sustained shifts
in interest rates upward and downward. Possible changes in balance sheet
structure over a forecast period of three years are also simulated. The Company
has established guidelines that limit the acceptable potential change in net
interest margin and net income under these balance sheet and interest rate
scenarios. The Company also uses static gap analysis to measure the difference
between rate-sensitive assets and rate-sensitive liabilities.
9
<PAGE>
Part II. Other Information
Items 1,2,3: Not applicable or negative response.
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of Company's stockholders was held on May 16,
1997 for the purpose of adopting Amended and Restated Articles
of Incorporation and Amended and Restated Bylaws and to elect
nine directors for terms of one, two and three years. Proxies
for the meeting were solicited pursuant to Sections 14(a) of the
Securities Exchange Act of 1934, and there was no solicitation
in opposition to management's nominees. Each of management's
nominees for director as listed in the Proxy Statement was
elected. With respect to the adoption of the Amended and
Restated Articles of Incorporation and the Amended and Restated
Bylaws, the voting tabulation was as follows:
Shares Shares Shares
Voted Voted Voted
"FOR" "AGAINST" "ABSTAIN"
Amended and Restated
Articles of Incorporation 277,485 2,444 113
Amended and Restated Bylaws 277,427 2,454 161
Item 5: Not applicable or negative response.
Item 6(a): EXHIBITS.
Amended and Restated Articles of Incorporation and Amended
and Restated Bylaws of the Parent Company filed herewith.
Item 6(b): Not applicable or negative response.
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 NATIONAL OF NEBRASKA, INC.
By /s/ Dennis A. O'Neal
--------------------------------------
Dennis A. O'Neal
Executive Vice President and Treasurer,
Principal Financial and Chief Accounting Officer
Date: 8/8/97
----------------
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
3(i) Amended and Restated Articles of Incorporation of the Parent Company 12, 13
3(ii) Amended and Restated Bylaws of the Parent Company 14-18
</TABLE>
11
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FIRST NATIONAL OF NEBRASKA, INC.
These are the Amended and Restated Articles of Incorporation of First
National of Nebraska, Inc., adopted pursuant to the Business Corporation Act of
the State of Nebraska in effect on the date hereof and supersede the
corporation's original Articles of Incorporation and all amendments thereto:
FIRST: The name of the corporation is First National of Nebraska, Inc.
SECOND: The period of its duration is perpetual.
THIRD: The purposes for which the corporation is organized are: to
acquire, purchase, own, hold, operate, develop, lease, mortgage, pledge,
exchange, sell, invest, transfer, trade, or otherwise deal in real or personal
property, stocks, bonds, securities, choses in action or any interest therein.
The corporation shall have authority to undertake and carry on any lawful
business of any kind whatsoever, and shall have all powers and authorities
granted to a Nebraska business corporation by the laws of the State of Nebraska.
The purposes herein set forth shall each be regarded as independent powers of
the corporation.
FOURTH: The aggregate number of shares which the corporation shall
have authority to issue is 346,767 shares of voting common stock, par value
$5.00 per share.
FIFTH: No shareholders of the corporation of any class or series
shall have any preemptive rights to acquire additional or treasury shares of the
corporation or be entitled as a matter of right to subscribe for or to purchase
any shares of any class or series whether now or hereafter authorized.
SIXTH: Provisions included in these Amended and Restated Articles of
Incorporation for the regulation of the internal affairs of the corporation are
as follows:
(a) General - All shares of common stock shall be of one and the same
-------
class and when issued shall have equal rights of participation in dividends and
assets of the corporation and shall be non-assessable. The holders of common
stock shall be entitled to one vote for each of the shares of such stock held by
them of record at any meeting of shareholders except when there shall be
cumulative voting in the election of directors as provided below. The
shareholders shall not be liable for the debts of the corporation.
(b) Cumulative Voting - In any election of directors of the
-----------------
corporation, each shareholder entitled to vote in such election shall be
entitled to cumulate his votes either (i) by giving to one candidate as many
votes as shall equal the number of directors who are to be elected and for whose
election he has a right to vote multiplied by the number of shares owned by such
shareholder, or (ii) by distributing the total number of his votes, computed as
set out above, among any number of candidates. Any shareholder desiring to
exercise his right of cumulative voting shall give notice thereof to the
Secretary of the corporation in writing delivered at least thirty (30) days
before the meeting at which the vote is to be taken or within five (5) days
after notice of the meeting is mailed, whichever is later, but in no event less
than ten (10) days before the meeting is to be held. Upon receipt of such
notice, the Secretary shall immediately give written notice to the other
shareholders and such other shareholders shall each have the right to cumulate
their votes without giving further notice to the Secretary. All notices
required to be given under this paragraph (b) shall be sent by mail, postage
prepaid, to each shareholder's address as shown in the corporation's current
record of shareholders.
(c) Board of Directors - The number of directors constituting the
Board of Directors shall be eight (8) on the date of the adoption of these
Amended and Restated Articles of Incorporation and thereafter the number shall
be as set forth in or pursuant to the bylaws of the corporation, but shall not
be less than three (3) nor more than nine (9). The Board of Directors shall be
divided by the directors into three classes, designated Classes I, II and III,
which shall be as nearly equal in number as possible. Directors of Class I
shall be elected to hold office for a term expiring at the annual meeting of
shareholders to be held in 1998, directors of Class II shall be elected to hold
office for a term expiring at the annual meeting of shareholders to be held in
1999 and directors of Class III shall be elected to hold office for a term
expiring at the annual meeting of shareholders to be held in 2000. At each
succeeding annual meeting of shareholders following such initial classification
and election, the respective successors of each class shall be elected for
three-year terms. The shareholders of the corporation may remove any director
or the entire Board of Directors.
12
<PAGE>
(d) Director Nominations - Advance notice of nominations for elections
for the election of directors shall be given in the manner and to the extent
provided in the bylaws of the corporation.
(e) Director Vacancies - Vacancies in the Board of Directors resulting
from death, resignation, retirement, disqualification, removal from office or
other cause and newly created directorships resulting from any increase in the
authorized number of directors shall be filled in the manner provided in the
bylaws of the corporation.
(f) Directors and Officers Interest in Contracts - No contract or
--------------------------------------------
transaction between this corporation and any of its directors and officers, or
between this corporation and any other corporation, firm, association, or other
legal entity in which a director or officer of this corporation has any direct
or indirect interest, pecuniary, or otherwise, shall be invalidated by reason of
such fact, or because the interested director or officer was present at the
meeting of the Board of Directors which acted upon or in reference to such
contract or transaction, or because an interested director participated in such
action, nor shall an interested director or officer be liable to account to the
corporation because or by reason of such interest for any amount realized from
or through any such transaction or contract with the corporation, provided that
such transaction or contract either (i) meets the requirements of Neb. Rev.
Stat. (S)(S) 21-20,114 or 20,115 or (ii) is established to have been fair to the
corporation, judged according to the circumstances at the time of commitment.
(g) A director of the corporation shall not be liable to the
corporation or its shareholders for money damages for any action taken, or any
failure to take any action, as a director, except liability for (i) the amount
of a financial benefit received by a director to which he or she is not
entitled; (ii) an intentional infliction of harm on the corporation or its
shareholders; (iii) a violation of Neb. Rev. Stat. (S) 21-2096; or (iv) an
intentional violation of criminal law. If the Business Corporation Act is
amended after the effective date of these Amended and Restated Articles of
Incorporation so as to authorize any further elimination or limitation of the
liability of directors, then the liability of directors of the corporation shall
be so further eliminated or limited. The corporation shall indemnify every
director of the corporation for liability to any person for any action taken, or
any failure to take any action, as a director to the fullest extent permitted by
law.
(h) No amendment to or repeal of any part of this Article shall apply
to or have any effect on the liability or alleged liability of any director, or
on the indemnification available to any director or officer, for or with respect
to any acts or omissions occurring prior to such amendment or repeal.
SEVENTH: The corporation shall maintain a registered office and
registered agent as required by the Business Corporation Act.
DATED as of the 18th day of June, 1997.
FIRST NATIONAL OF NEBRASKA, INC.,
a Nebraska Corporation
By /s/ Bruce R. Lauritzen
----------------------------------
Bruce R. Laurtizen, President
ATTEST:
/s/ F. Phillips Giltner
- --------------------------
F. Phillips Giltner
Chairman and Secretary
13
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
FIRST NATIONAL OF NEBRASKA, INC.
ARTICLE I - SHAREHOLDERS
------------------------
Section 1. Annual Meetings. The annual meeting of the shareholders
- -----------------------------
of the corporation shall be held on such day during the first 180 days of the
calendar year as the Board of Directors may determine.
Section 2. Special Meetings. Special meetings of the shareholders
- ------------------------------
may be called at any time by the Board of Directors, the Chairman of the Board,
or the Chairman of the Executive Committee, and shall be called upon the request
of shareholders holding at least one-tenth of the outstanding stock.
Section 3. Place of Meetings. Each annual and special meeting of the
- -------------------------------
shareholders shall be held at the principal office of the corporation, or at
such other place as shall be designated by the Board of Directors or the
Executive Committee.
Section 4. Notice of Meetings. Written or printed notice stating the
- --------------------------------
place, day and hour of meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be mailed by the Secretary or an
Assistant Secretary not less than thirty nor more than sixty days before the
date of the meeting, to each shareholder of record, addressed to him at his
address as it appears on the stock records of the corporation. Such notice shall
be sent by mail, postage prepaid, to each shareholder's address as shown in the
corporation's current records.
Section 5. Proxies. At all meetings of shareholders, a shareholder may
- ---------------------
vote by proxy executed in writing by the shareholder and filed with the
Secretary of the corporation, bearing date within eleven months prior to the
meeting unless a longer period is provided therein and is permitted by law. A
proxy shall be revocable, if not provided otherwise, by written notice of the
revocation delivered by the shareholder to the Secretary of the corporation.
Section 6. Quorum. A majority of the outstanding shares of the corporation,
- --------------------
appearing in person or represented by proxy, shall constitute a quorum at a
meeting of shareholders.
Section 7. Voting. Except as otherwise provided in the Articles of
- --------------------
Incorporation, in all voting by shareholders each shareholder shall be entitled
one vote for each share of stock standing in the name of such shareholder on the
stock records of the corporation; however, only those whose names appear as
shareholders on the stock records of the corporation, or their proxies or legal
representatives, shall be entitled to vote or to participate in any meeting of
shareholders. Except as otherwise provided in the Articles of Incorporation,
these By-Laws or by law, a majority of the votes cast shall decide any question
that may come before the meeting.
ARTICLE II - DIRECTORS
----------------------
Section 1. Membership. Subject to the rights of the shareholders to
- ------------------------
revise the number of directors, beginning on the date hereof there shall be
eight and only eight members of the Board of Directors, and thereafter the
number of members of the Board of Directors shall be fixed by Board of Directors
resolution. The Board of Directors shall be divided by the directors into three
classes, designated Classes I, II and III, which shall be as nearly equal in
number as possible. Directors of Class I shall be elected to hold office for a
term expiring at the annual meeting of shareholders to be held in 1998,
directors of Class II shall be elected to hold office for a term expiring at the
annual meeting of shareholders to be held in 1999 and directors of Class III
shall be elected to hold office for a term expiring at the annual meeting of
shareholders to be held in 2000. At each succeeding annual meeting of
shareholders following such initial classification and election, the respective
successors of each class shall be elected for three-year terms. The shareholders
of the corporation may remove any director or the entire Board of Directors.
The Executive Committee shall nominate persons for election to the Board of
Directors. Shareholders may also nominate persons for election to the Board of
Directors. All Shareholders must be sent notice, pursuant to Section 4 Article
I of these By-Laws, of all nominations for election to the Board of Directors.
Section 2. General Powers. The business and property of the corporation
- ----------------------------
shall be managed by the Board of Directors and they shall and may exercise all
powers of the corporation except as limited by law and elsewhere by these By-
Laws. They shall have power to make all
14
<PAGE>
necessary rules and regulations for their government and for the regulation of
the business of the corporation which are not inconsistent with the Articles of
Incorporation and these By-Laws, and shall have general management and control
of the corporation.
The Board of Directors shall appoint an Executive Committee as provided in
Article III of these By-Laws, which shall be a standing committee, and which
shall have the powers and authority set forth in Article III and IV of these By-
Laws.
Section 3. Regular Meetings. A regular meeting of the Board of Directors
- ------------------------------
shall be held, without other notice than this By-Law, immediately after and at
the same place as the annual meeting of the shareholders. The Board of Directors
may provide, by resolution, the date and place of the holding of additional
regular meetings. The Secretary shall give each director written notice of such
regular meetings at least ten (10) days prior to each such meeting in the manner
specified below in Section 5 of this Article II.
Section 4. Special Meetings. Special meetings of the Board of Directors
- ------------------------------
may be called by the Executive Committee, the Chairman of the Board of
Directors, the Chairman of the Executive Committee, or upon request of a
majority of the Board, and may be held at such time and place as may be
specified in the notice thereof.
Section 5. Notice of Special Meetings. Notice of each special meeting
- ----------------------------------------
of the Board of Directors, stating the time and place where the meeting is to be
held, shall be given by the Secretary or an Assistant Secretary by mailing the
same to each director at his residence or business address not less than two (2)
days before such meeting.
Any and all requirements for call and notice of special meetings may be
dispensed with if all directors are present at the meeting or if those not
present at the meeting shall at any time waive or have waived notice thereof.
Any director may waive notice of any special meeting, and the attendance of a
director at a meeting shall constitute a waiver of notice of such meeting except
where a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Such notice shall be in writing and shall be delivered in person, by mail or
private carrier, or by telegraph, teletype or other form of wire or wireless
communication.
Section 6. Quorum and Manner of Acting. A majority of the number of
- -----------------------------------------
directors in office shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors. Except as otherwise required by law,
the act of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Any action permitted or
required to be taken at a meeting of the Board of Directors may be taken without
a meeting if a consent in writing setting forth the action so taken shall be
signed by all of the directors. Such consent shall have the same effect as a
unanimous vote. The consent may be executed by the directors in counterparts.
Further, members of the Board of Directors may participate in a meeting of the
Board by means of a conference telephone or similar communications equipment by
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
Section 7. Compensation. The directors shall receive such fees and expenses
- --------------------------
for attendance at meetings of the Board as may be determined by the Board of
Directors.
ARTICLE III - COMMITTEES
------------------------
Section 1. Executive Committee - Composition. The Board of Directors
- -----------------------------------------------
shall appoint from those of its members an Executive Committee consisting of not
less than two nor more than five members, which shall constitute a standing
committee to serve until the next annual meeting of the Board of Directors and
until their successors are designated. The Executive Committee shall designate
one of its members as the Chairman of that Committee. The Board of Directors may
remove any member of the Executive Committee. Any vacancy on the Executive
Committee, however caused, may be filled for the unexpired term by the Board of
Directors at any lawful meeting.
Section 2. Executive Committee - Meetings. A regular meeting of the
- --------------------------------------------
Executive Committee shall be held, without other notice than this By-Law,
immediately after and at the same place as the annual meeting of the Board of
Directors. Other meetings of the Executive Committee shall be held at such
times and places as may be determined by its Chairman or as may be agreed upon
by members of the Executive Committee. A quorum at any meeting of the Executive
Committee shall consist of a majority of the committee, and any action taken by
the committee shall require the vote of a majority of the members who are
present. Notice of meetings shall be given, may be dispensed with, and may be
waived, in the same manner as provided in Section 5 of Article II for special
meetings of the Board of Directors. Any action required to be taken at a
meeting of the Executive Committee may be taken without a meeting if a consent
in writing setting forth the action so taken shall be signed by all of the
members of the committee. Such consent shall have the same effect as a
unanimous vote. The consent may be executed by the members in counterparts.
Further, members of the Board of Directors may participate in a meeting of the
committee by means of a conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each other at the
same time. Participation by such means shall constitute presence in person at a
meeting.
15
<PAGE>
Section 3. Executive Committee - Powers and Authority. At all times when
- --------------------------------------------------------
the Board of Directors is not in session, and to the full extent permitted by
law, the Executive Committee shall have and may exercise all the authority of
the Board of Directors in the management of the business and affairs of the
corporation and may do all things, including actions specified by these By-Laws
to be performed by the Board of Directors, in the same manner and with the same
authority and effect as if such acts had been performed by the whole Board of
Directors.
Any action taken by the Executive Committee to the full extent permitted by law,
shall be deemed to be action taken by the Board of Directors and shall be
binding on the corporation.
Section 4. Executive Committee Powers and Authority Continued. The powers
- ----------------------------------------------------------------
and authority of the Executive Committee shall include general supervision of
all the business affairs of the corporation. The powers and authority of the
Executive Committee shall also include full power and authority to designate the
person or persons to attend, act and vote on behalf of the corporation at any
meeting of security holders of any other corporation in which this corporation
may hold securities. At such meeting, the person or persons so designated shall
possess and may exercise any and all rights and powers incident to the ownership
of such securities which the corporation might have possessed and exercised if
it had been present.
Section 5. Other Committees. There shall be such other committees,
- ------------------------------
consisting of directors, officers and employees of the corporation, as the Board
of Directors may designate from time to time.
Section 6. Compensation. Members of committees shall receive such fees and
- --------------------------
expenses for attendance at committee meetings as may be determined by the Board
of Directors or Executive Committee.
ARTICLE IV - OFFICERS
---------------------
Section 1. Number. The officers of the corporation shall be
- --------------------
a Chairman of the Board of Directors, a President, one or more Vice Presidents,
if and as determined by the Board of Directors, a Secretary and a Treasurer.
Any two or more of said offices may be held by one person at the same time.
Section 2. Election and Tenure. The officers of the corporation shall be
- ---------------------------------
appointed by the Board of Directors at its first regular meeting held after each
annual meeting of the shareholders, or if for any reason officers are not
appointed at such meeting, at a special meeting called for that purpose, and
shall hold office until their successors are appointed and qualified.
Section 3. Duties of Officers. The Executive Committee shall, from time
- --------------------------------
to time, in its discretion, designate and prescribe the scope of authority and
the duties incident to each office.
Section 4. Salaries. The salaries of the officers shall be fixed from
- ----------------------
time to time by the Executive Committee. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation or a member of the Executive Committee.
Section 5. Assistant Officers. The Executive Committee may appoint such
- --------------------------------
assistant officers, from time to time, as it deems appropriate, and may fix
their compensation and the scope of their authority.
ARTICLE V - CAPITAL STOCK
-------------------------
Section 1. Form of Certificates. All certificates of stock shall be in
- ----------------------------------
such form as may be prescribed by the Board of Directors, shall be signed on
behalf of the corporation as required by law and shall be sealed with the
corporation's seal; provided, however, that if the certificate is countersigned
by a transfer agent or any assistant transfer agent, or is registered by a
registrar other than the corporation itself or an employee of the corporation,
such certificates may be signed with the facsimile signatures of the officers
authorized to execute such certificates and may be sealed with a facsimile of
the seal of the corporation. All certificates shall be consecutively numbered or
otherwise identified.
Section 2. Stock Record. The name and address of the person to whom
- --------------------------
certificates representing shares of the capital stock are issued, with the
certificate number, number of shares and date of issue, shall be entered on the
stock transfer records of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled, and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered or canceled, except that in case of a lost, destroyed or mutilated
certificate, a new certificate may be issued in lieu thereof upon such terms and
indemnity to the corporation as the Board of Directors may prescribe.
16
<PAGE>
Section 3. Transfer of Stock. Transfer of shares of the corporation
- -------------------------------
shall be made only on the stock transfer records of the corporation by the
holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the stock records of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes, unless the
corporation establishes a procedure by which the beneficial owner of shares that
are registered in the name of a nominee is recognized by the corporation as the
owner.
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders, such date in any
case to be not more than seventy days and, in case of a meeting of shareholders,
not less than ten days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken.
If no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of the shareholders, or shareholders entitled
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend as adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section
such determination shall apply to any adjournment thereof.
ARTICLE VI - AMENDMENTS
-----------------------
Section 1. Amendment by Stockholders. These By-Laws may be added to,
- ---------------------------------------
amended or repealed, by the majority vote of the entire outstanding stock of the
corporation at any regular meeting of the shareholders, or at any special
meeting if such proposed action has been announced in the call and notice of
such special meeting.
Section 2. Amendment by Board of Directors. Subject to the right of the
- ---------------------------------------------
shareholders to adopt, amend or repeal the By-Laws, the Board of Directors shall
have the power to adopt new or additional By-Laws, including emergency By-Laws,
and to amend or repeal any existing By-Laws by an affirmative vote of a majority
of all directors then holding office, provided that notice of the proposal to
adopt, amend or repeal the By-Laws is given to the Board of Directors not less
than ten (10) days prior to the meeting, or, at any time, by written consent.
ARTICLE VII - INDEMNIFICATION
-----------------------------
Section 1. The corporation shall indemnify any person who was or is a party or
- ---------
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a director
or officer of another corporation, partnership, joint venture, trust, or other
enterprise against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit, or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful; provided, however, in no event shall the corporation indemnify such
person against expenses, penalties, or other payments incurred in an
administrative proceeding or action instituted by an appropriate regulatory
agency having jurisdiction over national bank holding companies which proceeding
or action results in a final order assessing civil money penalties or requiring
affirmative action by such person in the form of payments to the corporation.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
Section 2. The corporation shall indemnify any person who was or is a party or
- ---------
is threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a director
or officer of another corporation, partnership, joint venture, trust, or other
enterprise against expenses, including attorneys' fees, actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for any negligence or misconduct in the performance of his or her duty to
the corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that despite the
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
17
<PAGE>
Section 3. Any indemnification under Section 1 and 2 of this Article, unless
- ---------
ordered by a court, shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director or
officer is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in Section 1 and 2 of this Article. Such
determination shall be made by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such action, suit, or
proceeding, or if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or by the shareholders of the corporation.
Section 4. Expenses incurred in defending a civil or criminal action, suit, or
- ---------
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit, or proceeding as authorized in the manner provided in Section
3 of this Article upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount unless it shall ultimately be determined that he
or she is entitled to be indemnified by the corporation at authorized in this
Article.
Section 5. Nothing contained in this Article shall limit the corporation's
- ---------
ability to reimburse expenses incurred by a director or officer of the
corporation in connection with his or her appearance as a witness in a
proceeding at a time when he or she has not been made a named defendant or
respondent in the proceeding.
Section 6. Any indemnification of a director in accordance with this Article,
- ---------
including any payment or reimbursement of expenses, shall be reported in writing
to the shareholders of the corporation with the notice of the next shareholders'
meeting or prior to such meeting.
Section 7. The corporation may purchase and maintain insurance on behalf of any
- ---------
person who is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust, or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of this Article; provided, however, any such insurance
shall exclude coverage for a formal order assessing civil money penalties or
requiring affirmative action by such person in the form of payments to the
corporation.
Section 8. The indemnification provided by this Article VII (i) shall not be
- ---------
deemed to be exclusive of but shall be in addition to any other rights to which
a person seeking indemnification hereunder may be entitled under any statute,
law or agreement, or under any By-Law or resolution adopted by the board of
directors or shareholders of the corporation, or otherwise, (ii) shall continue
as a person who has ceased to be such director or officer and (iii) shall inure
to the benefit of the heirs, legal representatives, and assigns of such person.
It is the intention of the corporation to indemnify every director and officer
of the corporation for liability to any person for any action taken or any
failure to take any action, as a director or officer to the fullest extent
permitted by law.
RESTATED to reflect amendments through June 18, 1997.
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 374,865
<INT-BEARING-DEPOSITS> 5,264,458
<FED-FUNDS-SOLD> 344,825
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 741,406
<INVESTMENTS-MARKET> 741,527
<LOANS> 5,074,366
<ALLOWANCE> 117,517
<TOTAL-ASSETS> 7,106,727
<DEPOSITS> 5,997,688
<SHORT-TERM> 0
<LIABILITIES-OTHER> 74,323
<LONG-TERM> 151,185<F1>
0
0
<COMMON> 1,675
<OTHER-SE> 469,398
<TOTAL-LIABILITIES-AND-EQUITY> 7,106,727
<INTEREST-LOAN> 367,442
<INTEREST-INVEST> 29,684
<INTEREST-OTHER> 5,201
<INTEREST-TOTAL> 402,327
<INTEREST-DEPOSIT> 138,151
<INTEREST-EXPENSE> 153,486
<INTEREST-INCOME-NET> 248,841
<LOAN-LOSSES> 96,892
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 194,963
<INCOME-PRETAX> 57,785
<INCOME-PRE-EXTRAORDINARY> 34,310
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,310
<EPS-PRIMARY> 99.02
<EPS-DILUTED> 99.02
<YIELD-ACTUAL> 0<F2>
<LOANS-NON> 5,402
<LOANS-PAST> 74,654
<LOANS-TROUBLED> 0<F2>
<LOANS-PROBLEM> 0<F2>
<ALLOWANCE-OPEN> 104,812
<CHARGE-OFFS> 108,129
<RECOVERIES> 13,080
<ALLOWANCE-CLOSE> 117,517
<ALLOWANCE-DOMESTIC> 0<F2>
<ALLOWANCE-FOREIGN> 0<F2>
<ALLOWANCE-UNALLOCATED> 0<F2>
<FN>
<F1>INCLUDES 94,647 IN CAPITAL NOTES.
<F2>THIS INFORMATION IS NOT REQUIRED FOR INTERIM REPORTING PURPOSES.
</FN>
</TABLE>
