<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993 Commission File Number 1-2981
FIRSTAR CORPORATION
WISCONSIN 39-0711710
(State of Incorporation) (I.R.S. Employer
Identification No.)
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Telephone Number (414) 765-4321
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
Common Stock, $1.25 par value New York Stock Exchange, Inc.
New York, New York
Chicago Stock Exchange, Inc.
Chicago, Illinois
10% Notes due June 1, 1996 New York Stock Exchange, Inc.
New York, New York
Preferred Share Purchase Rights New York Stock Exchange, Inc.
New York, New York
Chicago Stock Exchange, Inc.
Chicago, Illinois
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
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.
X Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
As of March 3, 1994, 64,388,319 shares of common stock were outstanding, and
the aggregate market value of the shares (based upon the closing price) held by
nonaffiliates was approximately $1.770 billion.
Documents Incorporated by Reference:
Portions of the 1994 Notice of Annual Meeting and Proxy Statement are
incorporated by reference into Part III of the Form 10-K.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FORM 10-K TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I
Item 1--Business......................................................... 3
Item 2--Properties....................................................... 5
Item 3--Legal Proceedings................................................ 6
Item 4--Submission of Matters to a Vote of Security Holders.............. 6
PART II
Item 5--Market for the Registrant's Common Equity and Related Stockholder
Matters................................................................. 6
Item 6--Selected Financial Data.......................................... 6
Item 7--Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 7
Item 8--Financial Statements and Supplementary Data...................... 26
Item 9--Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................... 54
PART III
Item 10--Directors and Executive Officers of the Registrant.............. 54
Item 11--Executive Compensation.......................................... 54
Item 12--Security Ownership of Certain Beneficial Owners and Management.. 54
Item 13--Certain Relationships and Related Transactions.................. 54
PART IV
Item 14--Exhibits, Financial Statement Schedules and Reports on Form 8-K. 54
SIGNATURES................................................................ 56
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Firstar Corporation is a registered bank holding company incorporated in
Wisconsin in 1929. Firstar Corporation ("Firstar") is the largest bank holding
company headquartered in Wisconsin. Firstar's 17 bank subsidiaries in Wisconsin
had total assets of $9.3 billion at December 31, 1993. Its eleven Iowa banks,
four Illinois banks and one Minnesota bank had total assets of approximately
$2.6 billion, $944 million and $1.1 billion, respectively, as of December 31,
1993. Firstar has one bank in Phoenix, Arizona with total assets of $99
million. Firstar's principal subsidiary, Firstar Bank Milwaukee, N.A., had
total assets of $5.5 billion which represented 40 percent of Firstar's
consolidated assets at December 31, 1993, and is the largest commercial bank in
Wisconsin.
Firstar provides banking services throughout Wisconsin and Iowa and in the
Chicago, Minneapolis-St. Paul and Phoenix metropolitan areas. Its Wisconsin
bank subsidiaries operate in 113 locations, with offices in eight of the ten
largest metropolitan population centers of the state, including 46 offices in
the Milwaukee metropolitan area. Its Iowa bank subsidiaries operate in 42
locations; its Illinois bank subsidiaries in 15 locations; its Minnesota bank
subsidiary in 25 locations; its Arizona bank in three locations; and a trust
subsidiary in Florida in two locations. Firstar's bank subsidiaries provide a
broad range of financial services for companies based in Wisconsin, Iowa,
Illinois and Minnesota, national business organizations, governmental entities
and individuals. These commercial and consumer banking activities include
accepting demand, time and savings deposits; making both secured and unsecured
business and personal loans; and issuing and servicing credit cards. The bank
subsidiaries also engage in correspondent banking and provide trust and
investment services to individual and corporate customers. Firstar Bank
Milwaukee, N.A., Firstar Bank Cedar Rapids, N.A. and Firstar Bank Madison, N.A.
also conduct international banking services consisting of foreign trade
financing, issuance and confirmation of letters of credit, funds collection and
foreign exchange transactions. Nonbank subsidiaries provide retail brokerage
services, trust and investment management services, residential mortgage
banking activities, title insurance, business insurance, consumer and credit
related insurance, and corporate computer and operational services.
At December 31, 1993, Firstar and its subsidiaries employed 7,323 full-time
and 2,345 part-time employees, of which approximately 926 full-time employees
are represented by a union under a collective bargaining agreement that expires
on August 31, 1996. Management considers its relations with its employees to be
good.
COMPETITION
Banking and bank-related services is a highly competitive business. Firstar's
subsidiaries compete primarily in Wisconsin and the Midwestern United States.
Firstar and its subsidiaries have numerous competitors, some of which are
larger and have greater financial resources. Firstar competes with other
commercial banks and financial intermediaries, such as savings banks, savings
and loan associations, credit unions, mortgage companies, leasing companies and
a variety of financial services and advisory companies located throughout the
country.
SUPERVISION
Firstar's business activities as a bank holding company are regulated by the
Federal Reserve Board under the Bank Holding Company Act of 1956 which imposes
various requirements and restrictions on its operations. The activities of
Firstar and those of its banking and nonbanking subsidiaries are limited to the
business of banking and activities closely related or incidental to banking.
3
<PAGE>
The business of banking is highly regulated, and there are various
requirements and restrictions in the laws of the United States and the states
in which the subsidiary banks operate including the requirement to maintain
reserves against deposits and adequate capital to support their operations,
restrictions on the nature and amount of loans which may be made by the banks,
restrictions relating to investment (including loans to and investments in
affiliates), branching and other activities of the banks.
Firstar's subsidiary banks with a national charter are supervised and
examined by the Comptroller of the Currency. The subsidiary banks with a state
charter are supervised and examined by their respective state banking agency
and either by the Federal Reserve if a member bank of the Federal Reserve or by
the FDIC if a nonmember. All of the Firstar subsidiary banks are also subject
to examination by the Federal Deposit Insurance Corporation.
In recent years Congress has enacted significant legislation which has
substantially changed the federal deposit insurance system and the regulatory
environment in which depository institutions and their holding companies
operate. The Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA"), the Comprehensive Thrift and Bank Fraud Prosecution and
Taxpayer Recovery Act of 1990 and the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") have significantly increased the enforcement
powers of the federal regulatory agencies having supervisory authority over
Firstar and its subsidiaries. Certain parts of such legislation, most notably
those which increase deposit insurance assessments and authorize further
increases to recapitalize the bank deposit insurance fund, increase the cost of
doing business for depository institutions and their holding companies. FIRREA
also provides that all commonly controlled FDIC insured depository institutions
may be held liable for any loss incurred by the FDIC resulting from a failure
of, or any assistance given by the FDIC, to any of such commonly controlled
institutions. Federal regulatory agencies have implemented provisions of FDICIA
with respect to taking prompt corrective action when a depository institution's
capital falls to certain levels. Under the new rules, five capital categories
have been established which range from "critically undercapitalized" to "well
capitalized". Failure of a depository institution to maintain a capital level
within the top two categories will result in specific actions from the federal
regulatory agencies. These actions could include the inability to pay
dividends, restricting new business activity, prohibiting bank acquisitions,
asset growth limitations and other restrictions on a case by case basis.
In addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy. Changes to such monetary policies have had a significant effect on
operating results of financial institutions in the past and are expected to
have such an effect in the future; however, the effect of possible future
changes in such policies on the business and operations of Firstar cannot be
determined.
4
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of all the executive officers (14) of Firstar as of
December 31, 1993. All of these officers are elected annually by their
respective boards of directors. All of the officers have been employed by
Firstar and/or one or more of its subsidiaries during the past five years,
except Messrs. Stowe and Schoenke, who were previously employed by other
banking companies and joined Firstar as executive officers in 1989 and 1990,
respectively. There are no family relationships between any of the executive
officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Roger L. Fitzsimonds........... 55 Chairman of the Board and Chief Executive
Officer of Firstar (Since February 1991)
John A. Becker................. 51 President and Chief Operating Officer of
Firstar (Since January 1990)
Chris M. Bauer................. 45 Chairman of the Board and President of
Firstar Bank Milwaukee (Since January 1991)
James R. Lang.................. 50 Chairman of the Board and President of
Firstar Corporation of Iowa (Since April
1991)
Ronald A. Bero................. 58 Senior Executive Vice President of Firstar
(Since September 1989)
Richard W. Schoenke............ 50 President of Firstar Bank of Minnesota
(Since July 1990)
Michael J. Schmitz............. 59 Executive Vice President of Firstar
(Since October 1990)
Jon H. Stowe................... 49 Executive Vice President of Firstar
(Since January 1994)
Blaine E. Rieke................ 60 Chairman of the Board of Firstar Trust
Company (Since November 1981)
William H. Risch............... 55 Senior Vice President-Finance & Treasurer
of Firstar (Since January 1984)
Dennis R. Fredrickson.......... 49 Senior Vice President of Firstar
(Since October 1988)
John R. Heistad................ 47 Senior Vice President and Chief Credit
Officer of Firstar (Since January 1992)
Howard H. Hopwood III.......... 48 Senior Vice President and General Counsel
of Firstar (Since January 1986)
Ronald E. Roder................ 45 Senior Vice President of Firstar Bank
Milwaukee (Since December 1988)
</TABLE>
ITEM 2. PROPERTIES
On December 31, 1993, Firstar had 200 banking locations, of which 147 were
owned and 53 were leased. All of these offices are considered by management to
be well maintained and adequate for the purpose intended. See Note 7 of the
Notes to Consolidated Financial Statements included under Item 8 of this
document for further information on properties.
5
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Firstar and its subsidiaries are subject to various legal actions and
proceedings in the normal course of business, some of which involve substantial
claims for compensatory or punitive damages. Although litigation is subject to
many uncertainties and the ultimate exposure with respect to these matters
cannot be ascertained, management does not believe that the final outcome will
have a material adverse effect on the financial condition of Firstar.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
See Item 6 of this document for information on stock price ranges and
dividends. The principal markets for the quotations of stock prices are the New
York Stock Exchange and Chicago Stock Exchange. There were 9,962 holders of
record of Firstar's $1.25 par value common stock on March 3, 1994.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- --------- --------
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
Net interest revenue........ $568,056 $539,152 $480,596 $ 429,954 $413,102
Provision for loan losses... 24,567 44,821 50,276 49,161 52,362
Net income.................. 204,294 165,985 134,331 117,457 111,135
Per common share:
Net income................. 3.15 2.62 2.14 1.82 1.72
Dividends.................. 1.00 .80 .705 .635 .545
Stockholders' equity....... 17.96 15.94 14.17 12.79 11.65
Average common shares
(000's).................... 63,747 61,879 60,998 61,218 60,164
- --------------------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average assets.... 1.59% 1.36% 1.16% 1.06% 1.07%
Return on average common
equity..................... 18.61 17.43 15.85 14.83 15.65
Equity to assets............ 8.38 7.96 7.44 7.03 7.08
Net loan charge-offs as a
percentage of
average loans.............. .25 .43 .47 .48 .66
Nonperforming assets as a
percentage of
loans and other real
estate..................... .72 1.09 1.43 1.87 1.61
Net interest margin......... 5.21 5.27 5.00 4.76 4.88
- --------------------------------------------------------------------------------
<CAPTION>
(millions of dollars)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET AT DECEMBER 31
Total assets................ $ 13,794 $ 13,169 $ 12,309 $ 12,020 $ 11,163
Investment securities....... 2,834 2,864 2,870 2,642 2,312
Loans:
Commercial................. 5,306 4,803 4,556 4,426 4,222
Consumer................... 3,678 3,308 2,989 2,920 2,649
Total..................... 8,984 8,111 7,545 7,346 6,871
Earning assets.............. 12,117 11,408 10,747 10,326 9,619
Deposits:
Core....................... 10,191 9,947 9,099 8,744 7,977
Other...................... 973 937 964 977 954
Total..................... 11,164 10,884 10,063 9,721 8,931
Long-term debt.............. 126 158 144 185 166
Stockholders' equity........ 1,156 1,048 916 844 790
- --------------------------------------------------------------------------------
STOCK PRICE INFORMATION
High........................ $ 37 1/4 $ 31 7/8 $24 7/16 $16 15/16 $ 17 1/2
Low......................... 29 3/8 23 1/8 12 3/4 11 12 13/16
Close....................... 30 3/4 31 1/2 24 1/8 14 1/8 16 1/4
</TABLE>
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6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
HIGHLIGHTS
Firstar reported record earnings in 1993 of $204.3 million, a 23.1%
improvement over the $166.0 million earned in 1992. On a per common share
basis, 1993 net income increased 20.2% to $3.15 from $2.62 earned in 1992. In
1991, net income was $134.3 million or $2.14 per common share. Firstar has seen
successive quarterly improvements in net income for the past twelve quarters.
Earnings as measured as a percent of average common equity increased to
18.61% in 1993, compared to 17.43% in 1992 and 15.85% in 1991. This performance
level places Firstar within the top 25% of bank holding companies in its peer
group during each of the past three years. This group currently consists of the
29 companies with assets ranging from $10 billion to $25 billion. Return on
average assets has shown similar improvement with the return reaching 1.59% in
1993 compared with 1.36% in 1992 and 1.16% in 1991.
Table 1 highlights the major factors affecting the changes in earnings during
the last two years. Continued improvement in both net interest revenue and
other operating revenue were key factors in the earnings improvement during
both years. Also of benefit was a lower loan loss provision resulting from
lower net charge-offs and reduced nonperforming assets. Operating expenses,
while increasing, were reduced relative to gross revenues resulting in further
improvement in Firstar's efficiency ratio.
TABLE 1
CHANGE IN NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
1993 VS 1992 1992 VS 1991
------------ ------------
<S> <C> <C>
Prior period net income............................... $2.62 $2.14
Changes due to:
Net interest revenue................................. .20 .83
Other operating revenue.............................. .51 .39
Provision for loan losses............................ .34 .10
Personnel costs...................................... (.32) (.28)
Nonpersonnel costs................................... .11 (.28)
Income tax expense................................... (.32) (.29)
Preferred stock dividend............................. .01 .01
----- -----
Current period net income............................. $3.15 $2.62
===== =====
</TABLE>
- --------
Calculation based upon shares outstanding in each year.
The net interest margin remained near record levels in 1993, declining
modestly from the 1992 high of 5.27% to 5.21% in 1993. During 1991 the margin
was 5.00%. Other operating revenue has shown a 13.8% improvement over 1992, led
by increased trust and investment management fees along with gains from the
mortgage banking business. This growth in fee related revenue follows a similar
10.4% rise in 1992. Continued emphasis has been placed on cost control and
operational efficiencies. Operating expenses rose by 5.4% in 1993 and 8.2% in
1992.
Further improvements in asset quality were achieved in 1993. Nonperforming
assets were reduced to $64.9 million at December 31, 1993, compared with $88.8
million and $108.5 million at the end of 1992 and 1991 respectively.
Nonperforming assets now represent .72% of total loans and other real estate.
As a point of comparison, the median of Firstar's peer group is approximately
twice as high. Within this peer group, Firstar ranks third by this measure of
asset quality.
Stockholders' equity was $1.16 billion at the end of 1993. Capital strength,
by all measures, remains strong. Firstar's capital ratios are in the top
quartile of its peer group and it has the highest capital rating by its
regulatory agency.
7
<PAGE>
NET INTEREST REVENUE
Net interest revenue, which comprises interest and loan-related fees less
interest expense, is the principal source of earnings for Firstar. Net interest
revenue is affected by a number of factors including the level, pricing and
maturity of earning assets and interest-bearing liabilities, interest rate
fluctuations and asset quality. Net interest margin is net interest revenue
expressed as a percentage of average earning assets. To permit comparisons, net
interest revenue and margin in the accompanying discussion and tables have been
adjusted to show tax-exempt income, such as interest on municipal securities
and loans, on a taxable-equivalent basis. Table 2 shows the components of net
interest revenue, net income and net interest margin for 1993 and the two prior
years.
TABLE 2
CONDENSED INCOME STATEMENTS--TAXABLE-EQUIVALENT BASIS
<TABLE>
<CAPTION>
CHANGE FROM PRIOR YEAR
-----------------------------------
1993 VS 1992 1992 VS 1991
---------------- -----------------
1993 1992 1991 AMOUNT PERCENT AMOUNT PERCENT
------ ------ -------- ------ ------- ------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest revenue........ $867.0 $898.5 $ 981.7 $(31.5) (3.5)% $ (83.2) (8.5)%
Taxable-equivalent
adjustment............. 29.3 31.7 35.5 (2.4) (7.6) (3.8) (10.7)
------ ------ -------- ------ -------
Interest revenue--
taxable-equivalent.... 896.3 930.2 1,017.2 (33.9) (3.6) (87.0) (8.6)
Interest expense........ 298.9 359.4 501.1 (60.5) (16.8) (141.7) (28.3)
------ ------ -------- ------ -------
Net interest revenue--
taxable-equivalent.... 597.4 570.8 516.1 26.6 4.7 54.7 10.6
Provision for loan
losses................. 24.6 44.8 50.3 (20.2) (45.1) (5.5) (10.9)
Other operating revenue. 342.2 300.8 272.5 41.4 13.8 28.3 10.4
Other operating expense. 587.7 557.6 515.5 30.1 5.4 42.1 8.2
------ ------ -------- ------ -------
Income before income
taxes................. 327.3 269.2 222.8 58.1 21.6 46.4 20.8
Provision for income
taxes.................. 93.7 71.5 53.0 22.2 18.5
Taxable-equivalent
adjustment............. 29.3 31.7 35.5 (2.4) (3.8)
------ ------ -------- ------ -------
Net income............. $204.3 $166.0 $ 134.3 $ 38.3 23.1 $ 31.7 23.6
====== ====== ======== ====== =======
Yield on earning assets. 7.82% 8.58% 9.86% (.76)% (1.28)%
Cost of interest-bearing
liabilities............ 3.34 4.16 5.88 (.82) (1.72)
------ ------ -------- ------ -------
Interest spread......... 4.48 4.42 3.98 .06 .44
Impact of interest-free
funds.................. .73 .85 1.02 (.12) (.17)
------ ------ -------- ------ -------
Net interest margin.... 5.21% 5.27% 5.00% (.06)% .27%
====== ====== ======== ====== =======
</TABLE>
Net interest revenue increased 4.7% to $597.4 million during 1993, which
compares with a 10.6% increase in 1992. The growth in both years benefited from
higher average earning asset balances. During 1993 the positive effect of
increased average earning asset balances was partially offset by the decline in
the net interest margin. In 1992, however, the increased margin contributed
significantly to the improved net interest revenue.
Net interest margin for the current year was 5.21% compared with 5.27% in
1992 and 5.00% in 1991. The margin declined modestly in 1993 but nonetheless
remains strong relative to earlier years. Rates paid on interest bearing
liabilities adjust to general market changes more rapidly than rates on loans
and investments, thus increasing Firstar's interest rate spreads. This spread,
which is the difference between the earning asset rate and the rate paid on
interest bearing liabilities, widened by .06%, or 6 basis points, in 1993
compared to 44 basis points in 1992. A general movement by customers from time
certificates of deposit to lower rate savings and interest bearing transaction
accounts during the past two years has aided the interest rate spread.
Offsetting the benefit of wider spreads was the lower contribution of interest-
free funds supporting earning assets. While the level of earning assets funded
by noninterest-bearing liabilities increased to 21.8% in 1993 from 20.4% in
1992 and 17.4% in 1991, the lower interest rates reduced the earnings
contribution of these funds. This factor reduced the net interest margin by 12
basis points in 1993 and 17 basis points during 1992.
8
<PAGE>
Foregone interest on nonperforming loans and other real estate reduced net
interest revenue by $4.6 million in 1993, $8.3 million in 1992 and $13.2
million in 1991. This resulted in a corresponding reduction in net interest
margin of .03% in 1993 and .05% in 1992 and .11% in 1991. The lower impact is
a reflection of Firstar's reduced level of nonperforming assets.
Table 3 shows the components of interest revenue and expense along with
changes related to volumes and rates. Total interest revenue on a taxable-
equivalent basis declined by 3.6% to $896.3 million in 1993. This resulted
from lower overall interest rates, which was partially offset by the 5.7%
increase in average earning assets. The rate received on earning assets
declined from 8.58% in 1992 to 7.82% in 1993. Likewise, the 5.1% decline in
interest revenue during 1992 was attributable to lower interest rates, despite
increases in average earning assets. The rate on all earning assets declined
from 9.86% in 1991 to 8.58% in 1992. During this three-year period the prime
rate dropped from a high of 10% to the current 6% level.
TABLE 3
ANALYSIS OF INTEREST REVENUE AND EXPENSE
<TABLE>
<CAPTION>
1993 VS 1992 1992 VS 1991
--------------------------- -----------------------------
INTEREST DUE TO DUE TO
---------------------------- TOTAL ----------------- TOTAL ------------------
1993 1992 1991 CHANGE VOLUME RATE CHANGE VOLUME RATE
-------- -------- ---------- -------- ------- -------- --------- ------- ---------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing
deposits with banks.... $ 1,385 $ 2,608 $ 4,238 $ (1,223) $(1,441) $ 218 $ (1,630) $ 564 $ (2,194)
Federal funds sold and
resale agreements...... 4,602 9,791 13,016 (5,189) (4,138) (1,051) (3,225) 2,193 (5,418)
Trading account
securities............. 985 1,012 989 (27) 111 (138) 23 169 (146)
Investment securities... 197,373 215,586 231,148 (18,213) 6,221 (24,434) (15,562) 12,400 (27,962)
Commercial loans........ 385,322 382,129 439,212 3,193 33,766 (30,573) (57,083) 10,905 (67,988)
Consumer loans.......... 306,658 319,102 328,633 (12,444) 27,327 (39,771) (9,531) 22,364 (31,895)
-------- -------- ---------- -------- ---------
Total loans............ 691,980 701,231 767,845 (9,251) 61,111 (70,362) (66,614) 32,347 (98,961)
-------- -------- ---------- -------- ---------
Total interest revenue. 896,325 930,228 1,017,236 (33,903) 51,334 (85,237) (87,008) 49,862 (136,870)
Interest-bearing demand. 23,666 31,977 45,490 (8,311) 3,105 (11,416) (13,513) 7,149 (20,662)
Savings passbook........ 38,214 40,247 48,789 (2,033) 7,306 (9,339) (8,542) 9,262 (17,804)
Consumer time........... 171,282 213,325 288,326 (42,043) (5,917) (36,126) (75,001) (6,098) (68,903)
Commercial time......... 28,472 35,856 56,194 (7,384) (829) (6,555) (20,338) (1,514) (18,824)
-------- -------- ---------- -------- ---------
Total deposits......... 261,634 321,405 438,799 (59,771) 8,359 (68,130) (117,394) 16,072 (133,466)
Short-term borrowed
funds.................. 23,811 23,423 45,434 388 4,028 (3,640) (22,011) (7,036) (14,975)
Long-term debt.......... 13,453 14,541 16,850 (1,088) (1,026) (62) (2,309) (1,880) (429)
-------- -------- ---------- -------- ---------
Total interest expense. 298,898 359,369 501,083 (60,471) 13,049 (73,520) (141,714) 6,712 (148,426)
-------- -------- ---------- -------- ---------
Net interest revenue... $597,427 $570,859 $ 516,153 $ 26,568 31,715 (5,147) $ 54,706 25,486 29,220
======== ======== ========== ======== =========
</TABLE>
- --------
Calculations are computed on a taxable-equivalent basis using a tax rate of
35% in 1993 and 34% in 1992 and 1991. The change attributable to both volume
and rate has been allocated proportionately to the changes due to volume and
rate.
Total interest expense was $298.9 million in 1993, a reduction of 16.8% from
1992. The interest rates on liabilities, declining from 4.16% in 1992 to 3.34%
in 1993, produced the lower expense. During 1992 interest expense declined by
28.3% similarly due to reduced interest rates paid, dropping from 5.88% in
1991 to 4.16% in 1992.
9
<PAGE>
OTHER OPERATING REVENUE
Total other operating revenue amounted to $342.3 million, an increase of
$41.5 million or 13.8% from 1992. The comparable growth during 1992 was 10.4%.
This growth reflects the continuing effort to emphasize non-interest revenue.
This focus provides several benefits to Firstar. Much of Firstar's fee revenue
is not subject to the fluctuations that are inherent in the interest rate
cycle. Firstar's broad customer base provides opportunities for expanded
revenues as the marketplace looks to financial institutions for services beyond
traditional lending and deposit activities. Table 4 shows the composition of
other operating revenue.
TABLE 4
ANALYSIS OF OTHER OPERATING REVENUE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Trust and investment management
fees............................ $110,185 $ 95,926 $ 80,813 $ 70,051 $ 64,131
Service charges on deposit
accounts........................ 74,071 66,301 59,368 50,250 44,078
Credit card service revenue...... 53,316 51,867 54,594 51,562 46,065
Mortgage banking revenue......... 26,774 13,058 7,922 6,129 5,279
Data processing fees............. 21,431 24,215 24,286 24,348 24,851
Insurance revenue................ 10,410 8,440 7,643 7,147 6,792
Brokerage revenue................ 8,718 6,135 3,012 2,113 2,133
International fees............... 5,234 5,151 4,712 4,476 4,147
Electronic funds transfer fees... 3,678 3,135 2,849 2,732 2,339
Safe deposit fees................ 3,323 3,237 3,136 3,058 2,939
Trading securities gains......... 2,074 1,802 1,579 1,559 2,591
Foreign exchange gains........... 1,877 1,752 1,370 667 1,078
Municipal finance fees........... 1,368 1,153 937 1,222 1,201
Investment securities gains
(losses)........................ 182 981 1,619 117 (20)
Other............................ 19,624 17,614 18,695 22,870 17,917
-------- -------- -------- -------- --------
Total........................... $342,265 $300,767 $272,535 $248,301 $225,521
======== ======== ======== ======== ========
</TABLE>
Other operating revenue now represents 36% of Firstar's revenue. An industry
measure of fee revenue prominence is the ratio of this revenue stream to
average assets. During 1993 this ratio was 2.66% compared to 2.46% in 1992 and
2.33% in 1991. These figures place Firstar fifth among the 29 banking
organizations with total assets of $10 billion to $25 billion.
Trust and investment management fees are the single largest source of fee
revenue, contributing $110.2 million, nearly a third of other operating
revenue. This level represents a 14.9% growth in revenue in 1993 which in turn
followed an 18.7% rise in the previous year. This pattern of growth was the
result of the development of new business and increased market value of assets.
Expanded services are being offered through Firstar's banking network.
Additional marketing efforts are also being directed to institutional investors
beyond the Midwest. The introduction of fourteen proprietary mutual funds and
the serving as custodian/transfer agent for 160 publicly registered mutual
funds have enhanced trust revenues. Trust assets under management increased by
8.3% during 1993 to $14.8 billion at the end of the year. Additional assets
held in custody accounts rose by 22.1% to $39.3 billion.
Revenue from service charges on deposit accounts increased 11.7% in 1993 to a
level of $74.1 million, which follows a similar increase in 1992. This growth
resulted from an increase in deposits, along with the repricing of certain
account charges. Another factor was the impact of the lower rate environment on
business accounts, which receive a rate credit for deposit balances in lieu of
cash payments. Additional service charge fees were collected as a result of
lower rate credits to these accounts in both years.
10
<PAGE>
Credit card service revenues are the third largest source of fee revenue
totaling $53.3 million during 1993, which was a 2.8% increase over 1992. During
1992, credit card revenue declined by 5.0%. Increased competition from other
card issuers and some consumer anxiety about economic conditions have reversed
previous growth trends. The favorable introduction of new credit card products
and growth in merchant fee activity have been encouraging trends. Firstar
services 600,000 active card holders, has 32,500 merchant accounts and provides
credit card programs to more than 780 financial institutions. This customer
base, which covers the Upper Midwest and includes Wisconsin, Iowa, Illinois,
Minnesota, Upper Michigan and the Dakotas, provides a market for the sale and
expansion of other financial products.
Revenue from mortgage banking activities increased substantially during 1993,
up 105% to $26.8 million. This income represents mortgage servicing fees, loan
origination fees and gains on loan sales into the secondary market.
Historically low interest rates fueled a refinancing boom. Loan originations
totaled $1.3 billion in 1993 and total loans serviced for others were $2.0
billion at the end of the year. Firstar has expanded its mortgage banking
activities during the last two years through coordinated marketing efforts
within Firstar's banking network.
Data processing fee income declined 11.5% in 1993 after remaining essentially
level during the prior two years. A shrinking customer base due to continuing
bank consolidations through mergers or acquisitions and conversions by smaller
community banks to in-house data processing systems have acted to reduce
revenues. Intense price competition has also occurred due to the shrinking
market for sales and has affected revenue levels through pricing changes and
some loss of customers.
The past two years saw continued growth in insurance activity, with a 23.3%
increase in 1993 compared with 10.4% during 1992. This line of business
generates revenue from the sale of annuities and insurance products and
represents an important element in Firstar's strategy to continually expand fee
revenue.
Brokerage revenue increased by 42.1% during 1993 to $8.7 million. This
follows a 1992 increase of 103.7%. This rapid growth reflects the expanded
marketing effort throughout the Firstar banking system and favorable market
conditions.
The remaining sources of other operating revenue derive from a wide range of
services and collectively increased by 3.9% in 1993 and 1.7% during 1992,
excluding the effect of $2 million of nonrecurring revenue in 1993.
11
<PAGE>
OTHER OPERATING EXPENSES
Total operating expense increased by 5.4% to $587.7 million in 1993 compared
with an increase of 8.2% in 1992. Information on the components of other
operating expense is shown in Table 5.
TABLE 5
ANALYSIS OF OTHER OPERATING EXPENSE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Salaries........................... $257,405 $237,997 $221,780 $205,082 $191,017
Employee benefits.................. 59,443 49,610 44,977 40,489 41,568
-------- -------- -------- -------- --------
Total personnel expense........... 316,848 287,607 266,757 245,571 232,585
Net occupancy expense.............. 48,731 44,408 42,252 35,708 36,618
Equipment expense.................. 48,139 48,720 42,483 39,774 38,422
Business development............... 24,063 23,055 20,883 16,960 16,704
F.D.I.C. insurance................. 23,670 22,488 19,325 10,360 6,734
Stationery and supplies............ 19,060 18,123 16,767 15,591 15,856
Delivery........................... 15,452 15,840 15,149 13,141 12,629
Professional fees.................. 15,336 14,040 14,688 15,431 12,313
Information processing expense..... 14,996 14,544 14,836 14,048 11,354
Amortization of intangibles........ 12,717 15,520 8,676 9,006 7,635
Employee education/recruiting...... 7,730 5,982 4,258 4,224 4,316
Federal Reserve processing fees.... 5,033 5,370 4,992 5,210 4,088
Commissions and service fees....... 4,631 6,264 4,330 4,021 3,204
Wire communication................. 4,586 4,411 4,250 4,246 4,124
Processing and other losses........ 3,972 3,314 3,222 2,713 2,565
Credit card assessment fees........ 3,851 3,475 3,133 2,739 2,312
Net other real estate expense...... 2,056 4,303 10,537 9,837 2,360
Published information.............. 2,051 2,216 2,099 2,253 1,977
Insurance.......................... 1,240 1,211 1,510 1,867 1,648
Other.............................. 13,582 16,675 15,389 12,100 12,064
-------- -------- -------- -------- --------
Total nonpersonnel expense........ 270,896 269,959 248,779 219,229 196,923
-------- -------- -------- -------- --------
Total other operating expense..... $587,744 $557,566 $515,536 $464,800 $429,508
======== ======== ======== ======== ========
</TABLE>
Personnel costs, which include salaries and fringe benefits, are the largest
component of operating expenses, representing more than half of operating
costs. This expense rose by 10.2% in 1993 compared with 7.8% in 1992. Salaries
rose by 8.2% in 1993 and 7.3% in 1992. In addition to normal merit increases,
the staffing level has risen from 7,709 full-time equivalent employees at
December 31, 1991 to 8,246 at year-end 1992 and 8,608 at year-end 1993.
Approximately half of this staffing growth was attributable to bank
acquisitions.
Employee benefit costs rose by 19.8% in 1993 after increasing by 10.3% in
1992. Firstar adopted Statement of Financial Accounting Standards No. 106,
"Accounting for Postretirement Benefits Other Than Pensions" in 1993. The
statement requires employers to recognize postretirement benefits on an accrual
basis over employee service periods, as contrasted to the expensed-as-incurred
method of accounting. Excluding the impact of Statement No. 106, which
increased costs by $7.0 million, employee benefit costs rose by 5.7% during
1993.
The Financial Accounting Standards Board also issued Statement No. 112,
"Employers' Accounting for Postemployment Benefits", which is effective in
1994. The statement requires employers to recognize benefits
12
<PAGE>
provided to former employees after employment but before retirement. These
postemployment benefits include salary continuation, severance benefits and
benefit continuation. The statement will not affect Firstar's current
accounting practice with respect to these payments.
Net occupancy expense increased by 9.7% in 1993 and 5.1% in 1992. The
addition of new banks and costs associated with office closings/restructuring
have affected the increase in 1993 and 1992. Office closing/restructuring
charges added $2.2 million, $1.5 million and $3.3 million to expense in 1993,
1992 and 1991, respectively.
Equipment expense declined by 1.2% after increasing by 14.7% in 1992. Firstar
has invested in upgraded central data processing equipment as a result of the
growth of Firstar through bank acquisitions and strong growth of fee service
businesses. Ensuring that Firstar data processing capabilities are up-to-date
is critical to deliver quality services in a cost-effective manner to
customers.
Business development costs rose by 4.4% in 1993 and 10.4% in 1992. Increased
marketing and advertising expenses associated with expansion into new markets,
office consolidation programs and changing bank names caused the rise in
expenses.
FDIC insurance is an uncontrollable cost, with the premium established by the
federal regulatory agency. This expense has more than tripled since 1989. The
FDIC set new premium schedules in 1993 which specified varying premium amounts
based upon capitalization levels and soundness criteria. Firstar's capital
strength has permitted payments at the lowest rate levels.
The amortization of intangibles includes amounts associated with goodwill,
core deposit intangibles and purchased mortgage loan servicing rights. During
1993 and 1992 additional amortization of mortgage servicing rights was taken
due to the high volume of the underlying mortgage loans which were refinanced.
Expense associated with the amortization of mortgage servicing rights was $5.2
million in 1993, $8.3 million in 1992 and $1.6 million in 1991. The remaining
unamortized mortgage loan service rights were $2.4 million at the end of 1993.
Expenses associated with foreclosed real estate were further reduced during
1993, decreasing to $2.1 million from $4.3 million in 1992 and $10.5 million in
1991. Included in these expenses are costs associated with the loss on sale and
reduction in the book value of the properties of $.8 million in 1993, $1.3
million in 1992 and $8.3 million in 1991. The remaining costs represent the net
expense of operating the properties.
All other expenses include a wide range of items and remained level in 1993
and increased by 6.5% in 1992.
A measure of the success in managing operating expense is expressed in the
ratio of expense to revenue and is referred to as the efficiency ratio. The
objective is to reduce this ratio through revenue growth, cost control or a
combination of both. This ratio was 62.6% in 1993, 64.0% in 1992 and 65.5% in
1991 and places Firstar above the median level of its peer companies. Firstar
continues to seek ways to improve its efficiency.
13
<PAGE>
PROVISIONS FOR LOAN LOSSES
The provision for loan losses is used to cover actual loan losses and to
adjust the size of the reserve relative to the amount and quality of loans. In
determining the adequacy of the reserve, management considers the financial
strength of borrowers, loan collateral, current and anticipated economic
conditions and other factors. The 1993 provision for loan losses was $24.6
million, compared with $44.8 million in 1992 and $50.3 million in 1991. The
reduced level of nonperforming assets and lower net charge-offs have permitted
Firstar to reduce its provision for loan losses.
INCOME TAXES
Income tax expense was $93.7 million in 1993, compared to $71.5 million in
1992 and $53.0 million in 1991. The effective tax rate was 31.4% in 1993, 30.1%
in 1992 and 28.3% in 1991. The effective tax rate rose in 1993 due to a 1%
increase in the federal corporate tax rate. Additionally, in both 1993 and
1992, a lower level of tax-exempt municipal interest income served to increase
the effective tax rate.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Statement No. 109
changes the method of accounting for income taxes from the deferral method to
the asset and liability approach. Under previous rules, the tax effects of
timing differences between financial reporting and taxable income were
deferred. Under Statement No. 109, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Enacted tax rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled are used.
Firstar adopted Statement No. 109 in 1993. The cumulative effect on earnings
of adoption resulted in an increase to earnings of $2.3 million and is reported
as a component of the provision for income taxes.
BALANCE SHEET ANALYSIS
Changes in the balance sheet of a financial institution reflect both the
forces of the marketplace and the company's response to these conditions.
Firstar's strategy in managing balance sheet growth is based upon the goals of
enhancing soundness and providing a broad range of services for customers.
Total assets at the end of 1993 reached $13.8 billion, an increase of $625
million or 4.7% over a year earlier. Average total assets for 1993 were $12.9
billion, an increase of 5.6% over 1992.
Table 6 shows the geographic distribution of Firstar's banking assets.
Firstar has expanded beyond its Wisconsin base through select acquisitions.
Assets outside of Wisconsin now represent 36% of consolidated assets. Firstar's
acquisition activity will focus on attractive markets in the upper Midwest that
will complement the existing Firstar banking network. The combination of
internal growth and acquisitions provides new opportunities to build and
diversify Firstar's earnings within an economically stable region.
14
<PAGE>
TABLE 6
SUBSIDIARY AVERAGE ASSETS
<TABLE>
<CAPTION>
1993 1992 1991
------------------ ------------------ -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Bank groups:
Wisconsin--lead bank.... $ 4,879.2 37.9% $ 4,478.5 36.8% $ 4,152.0 35.7%
Wisconsin--other banks.. 3,533.8 27.5 3,268.9 26.9 3,038.7 26.2
Iowa banks.............. 2,501.2 19.5 2,576.2 21.2 2,616.6 22.5
Minnesota bank.......... 1,074.0 8.4 1,037.3 8.5 1,025.4 8.8
Illinois banks.......... 915.8 7.1 749.0 6.2 622.4 5.4
Arizona bank............ 88.9 .7 82.9 .6 73.4 .6
--------- ----- --------- ----- --------- -----
Subtotal............... 12,992.9 101.1 12,192.8 100.2 11,528.5 99.2
Trust and investment
subsidiaries........... 96.7 .7 78.5 .6 57.7 .5
Nonbank subsidiaries.... 23.1 .2 37.6 .3 20.6 .2
Parent
company/eliminations... (255.5) (2.0) (139.1) (1.1) 15.7 .1
--------- ----- --------- ----- --------- -----
Total.................. $12,857.2 100.0% $12,169.8 100.0% $11,622.5 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
LOANS AND INVESTMENTS
Earning assets, shown in Table 7, averaged $11.5 billion, an increase of $620
million, or 5.7% over 1992. Loans, the largest category of earning assets,
represented 72.7% of earning assets as compared to 70.4% in 1992. On average,
loans totaled $8.3 billion, an increase of $698 million or 9.1% over 1992.
Excluding the impact of loans added through bank acquisitions, average loans
grew by 5.1%.
TABLE 7
AVERAGE EARNING ASSETS
<TABLE>
<CAPTION>
1993 1992 1991
----------------- ----------------- ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Commercial and
industrial............. $ 2,287.4 20.0% $ 2,003.7 18.5% $ 2,042.8 19.8%
Real estate............. 1,860.7 16.2 1,711.7 15.8 1,511.0 14.6
Foreign................. 21.9 .2 19.6 .2 24.2 .2
Other................... 766.6 6.7 784.8 7.2 821.3 8.0
--------- ----- --------- ----- --------- -----
Commercial loans....... 4,936.6 43.1 4,519.8 41.7 4,399.3 42.6
Credit card............. 500.9 4.4 520.6 4.8 565.8 5.5
Real estate--mortgage... 1,291.1 11.3 1,197.1 11.0 1,083.4 10.5
Home equity............. 416.5 3.6 325.2 3.0 *
Other................... 1,187.9 10.3 1,072.3 9.9 1,267.9 12.3
--------- ----- --------- ----- --------- -----
Consumer loans......... 3,396.4 29.6 3,115.2 28.7 2,917.1 28.3
--------- ----- --------- ----- --------- -----
Total loans............ 8,333.0 72.7 7,635.0 70.4 7,316.4 70.9
Investment securities... 2,929.0 25.6 2,845.0 26.2 2,694.7 26.1
Interest-bearing
deposits with banks.... 33.0 .3 67.9 .6 59.0 .6
Federal funds sold and
resale agreements...... 147.8 1.3 277.1 2.6 232.3 2.3
Trading account
securities............. 17.3 .1 15.5 .2 13.1 .1
--------- ----- --------- ----- --------- -----
Total.................. $11,460.1 100.0% $10,840.5 100.0% $10,315.5 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
- -----------
*Comparable data not available
15
<PAGE>
Commercial loans, which account for 59% of the loan portfolio, increased by
$417 million, or 9.2% on average, to $4.9 billion during 1993. Excluding bank
acquisitions which occurred during the past two years, commercial loans have
increased by 7.0%. This represents a significant change from 1992 where
internally generated loan growth was just over 1%. The Wisconsin banks have
experienced commercial loan growth of over 9% during 1993 while the Iowa banks'
commercial loans rose by 4%.
Consumer loans averaged $3.4 billion, an increase of $281 million, or 9.0%
over 1992. Acquisitions added $212 million of this increase. Consumer loans
rose by 2.3% excluding this factor.
The level of credit card loans outstanding has declined during the last two
years. Average balances were 3.8% lower in 1993 compared to 1992 which in turn
was 8.0% lower than 1991. This trend is in part due to increased competitive
pressures from new card issuers. Also a factor has been consumers' reluctance
to increase personal debt combined with the opportunity afforded consumers to
convert unsecured consumer debt to home equity secured loans at a much lower
interest rate.
Short-term investments, which include interest-bearing deposits with banks,
trading account securities, and federal funds sold and resale agreements,
averaged $198 million in 1993, a decrease of $162 million, or 45.0%, from a
year earlier. This decrease in part funded the increased loan demand.
Investment securities represent 26% of earning assets. They averaged $2.9
billion during 1993, an increase of $84 million, or 3.0% over 1992. Tables 8
and 9 show the maturity range and changing mix of the investment portfolio. The
average maturity of the portfolio was 2.2 years at the end of 1993. Current low
interest rates do not make it advantageous to purchase longer maturity
securities.
TABLE 8
MATURITY RANGE AND AVERAGE YIELD OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
TOTAL
DUE WITHIN ONE TO FIVE FIVE TO TEN AFTER TEN DECEMBER 31,
ONE YEAR YEARS YEARS YEARS 1993 AVERAGE
------------- --------------- ------------- ------------- --------------- MATURITY
AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE YEARS
-------- ---- ---------- ---- -------- ---- ------- ----- ---------- ---- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
federal agencies....... $311,704 7.37% $1,088,245 5.43% $ 10,043 8.91% $ 925 7.71% $1,410,917 5.90% 2.2
Mortgage backed
obligations of federal
agencies............... 110,107 7.39 182,483 7.55 37,009 8.54 3,138 7.50 332,737 7.60 2.7
State and political
subdivisions........... 332,529 5.73 451,846 7.87 106,904 8.04 14,117 10.04 905,396 7.13 2.5
Corporate debt.......... 26,527 6.88 42,086 6.74 1,446 6.61 435 8.27 70,494 6.80 1.3
Other................... 101,016 3.01 101,016 3.01
-------- ---------- -------- ------- ----------
Subtotal............... $881,883 6.23 $1,764,660 6.31 $155,402 8.20 $18,615 9.46 2,820,560 6.31 2.2
======== ========== ======== =======
Equity securities....... 13,745 6.33
----------
Total.................. $2,834,305 6.31
==========
</TABLE>
- -----------
Rates are calculated on a taxable-equivalent basis using a tax rate of 35%. The
maturity information on mortgage-backed obligations is based on anticipated
payments.
The Financial Accounting Standards Board issued in 1993, Statement No. 115
"Accounting for Certain Investments in Debt and Equity Securities". This
statement established categories of investment securities which include held to
maturity and available for sale. The latter securities are carried at market
value and the former at amortized cost. Firstar adopted Statement No. 115 as of
December 31, 1993. Firstar reviewed its investment policy and goals in
conjunction with the statement and has classified its entire portfolio as to be
held to maturity. Future purchases of securities may be classified as available
for sale.
16
<PAGE>
TABLE 9
INVESTMENT SECURITIES
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
U.S Treasury and federal
agencies............... $1,410,917 $1,131,715 $1,183,770 $1,247,864 $1,175,919
Mortgage backed
obligations of federal
agencies............... 332,737 385,215 410,826 395,186 305,840
State and political
subdivisions........... 905,396 952,377 885,349 779,290 662,455
Corporate debt.......... 70,494 244,821 287,326 195,171 148,488
Equity securities....... 13,745 13,713 10,968 10,224 8,369
Other................... 101,016 136,174 92,019 13,968 10,725
---------- ---------- ---------- ---------- ----------
Total.................. $2,834,305 $2,864,015 $2,870,258 $2,641,703 $2,311,796
========== ========== ========== ========== ==========
</TABLE>
FUND SOURCES
Average fund sources, consisting of deposits and borrowed funds, increased by
$532 million, or 4.9%, to $11.5 billion in 1993. Total deposits averaged $10.5
billion, an increase of $416 million, or 4.1% over 1992. Bank acquisitions
accounted for the deposit growth. A change in the mix of deposits has occurred
as customers have moved deposits to passbook and demand accounts to maintain
liquidity. A future consequence of this movement of deposits may be an
increased sensitivity to rising interest rates if these deposits flow back to
term certificates or nonbank investment alternatives. The changing
relationships of fund sources are shown in Table 10.
TABLE 10
AVERAGE FUND SOURCES
<TABLE>
<CAPTION>
1993 1992 1991
----------------- ----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts..... $ 3,949.9 34.4% $ 3,604.2 32.9% $ 3,087.7 29.3%
Savings passbook......... 1,490.2 13.0 1,239.4 11.3 1,017.3 9.7
Money market accounts.... 1,063.8 9.3 1,048.7 9.6 949.4 9.0
Certificates of deposit.. 3,107.3 27.0 3,280.4 29.9 3,485.3 33.2
--------- ----- --------- ----- --------- -----
Total core deposits..... 9,611.2 83.7 9,172.7 83.7 8,539.7 81.2
Commercial time deposits. 921.5 8.0 943.8 8.6 970.7 9.2
--------- ----- --------- ----- --------- -----
Total deposits.......... 10,532.7 91.7 10,116.5 92.3 9,510.4 90.4
Short-term borrowed
funds................... 822.6 7.2 692.9 6.3 840.8 8.0
Long-term debt........... 133.1 1.1 146.7 1.4 167.8 1.6
--------- ----- --------- ----- --------- -----
Total................... $11,488.4 100.0% $10,956.1 100.0% $10,519.0 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
Core deposits, which include transaction accounts and consumer deposits, are
Firstar's predominant and most stable source of funds. These deposits equaled
$9.6 billion, an increase of $439 million, or 4.8% over 1992. Core deposits
represent 84% of average fund sources. Firstar's expanding member bank network
allows it to attract core deposits from its many markets.
Commercial deposits were reduced by $22 million on average which was offset
by increased levels of short-term borrowed funds which rose by $130 million.
The net increase in non-core deposit funds was used to meet the increased loan
demand of Firstar's customers.
17
<PAGE>
CREDIT RISK MANAGEMENT
Since the mid-1980's, credit management has been refined through procedural
and personnel changes. Emphasis on credit quality standards and diversification
of risk have been key strategies. The benefits of this program are seen in the
significant reductions in nonperforming assets and overall credit quality
achieved during the past several years. During this period nonperforming assets
as a percentage of loans and other real estate have declined from 1.87% in 1990
to .72% at the end of 1993. Put in perspective of Firstar's peer group of
banks, this placed Firstar near the top 10% for asset quality.
Nonperforming assets consist of loans that are not accruing interest, loans
with renegotiated credit terms and collateral acquired in settlement of
nonperforming loans. The composition of these assets is shown in Table 11.
These nonperforming assets totaled $64.9 million at December 31, 1993 and
represented .72% of Firstar's $9.0 billion of loans and other real estate. This
is a $23.9 million, or 27%, reduction from a year earlier.
TABLE 11
NONPERFORMING ASSETS AND PAST DUE LOANS
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------
1993 1992 1991 1990 1989
------- ------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Commercial................... $21,243 $24,640 $ 30,506 $ 35,488 $ 31,987
Commercial--real estate...... 25,477 21,750 26,673 45,718 33,403
Consumer..................... 6,417 7,997 7,190 7,130 3,991
Foreign...................... 42 43 36
------- ------- -------- -------- --------
Total nonaccrual loans...... 53,137 54,387 64,411 88,379 69,417
Renegotiated loans:
Commercial................... 823 1,899 2,821 1,769 3,588
Commercial--real estate...... 690 542 1,418 4,039 5,343
------- ------- -------- -------- --------
Total renegotiated loans.... 1,513 2,441 4,239 5,808 8,931
Other real estate*............ 10,215 31,978 39,880 43,963 32,967
------- ------- -------- -------- --------
Total nonperforming assets.. $64,865 $88,806 $108,530 $138,150 $111,315
======= ======= ======== ======== ========
Nonperforming assets as a
percentage of:
Loans and other real estate.. .72% 1.09% 1.43% 1.87% 1.61%
Total assets................. .47 .67 .88 1.15 1.00
Loans past due 90 days:
Commercial................... $ 5,521 $ 5,020 $ 5,621 $ 8,326 $ 8,310
Commercial--real estate...... 3,934 3,248 9,016 3,518 7,920
Consumer..................... 12,348 12,359 13,591 12,524 10,511
Foreign...................... 50 27
------- ------- -------- -------- --------
Total loans past due 90
days....................... $21,803 $20,627 $ 28,228 $ 24,418 $ 26,768
======= ======= ======== ======== ========
</TABLE>
- --------
*Nonperforming loans which were included in other real estate under "in
substance foreclosure" accounting rules were $10.5 million, $10.5 million, and
$5.0 million at December 31, 1992, 1991 and 1990, respectively. Such "in
substance foreclosed" loans were reclassified to loans in 1993.
18
<PAGE>
Commercial real estate related nonperforming assets totaled $36.4 million at
the end of 1993, a reduction of 33% from a year earlier. These nonperforming
assets represented 1.86% of their respective loan category. Firstar experienced
an increase in real estate related nonperforming assets several years ago,
although to a much lesser extent than many other financial institutions. These
assets reached a high of $93.7 million at the end of 1990. As can be seen,
significant progress has been made in reducing this category of nonperforming
assets.
The remaining commercial loan portfolio had a nonperforming asset ratio of
.66%, down from .89% a year earlier. This is reflective of the overall
financial strength of Firstar's commercial borrowers.
Nonperforming consumer loans have also declined from previously higher
levels. At year-end 1993, they represented a very minimal .17% of outstandings.
While further reductions of nonperforming assets may not be likely, the
attainment of this low level is an indication of Firstar's overall high asset
quality. It is Firstar's goal to remain within the top 25% of its peer group in
asset quality measures.
Loans ninety days or more past due on December 31, 1993, totaled $21.8
million, compared with $20.6 million a year earlier. These loans are on a full
accrual basis and are judged by management to be collectible in full. In
addition, Firstar had $23 million of loans at December 31, 1993, on which
interest is accruing, but, because of existing economic conditions or
circumstances of the borrower, doubts exist as to the ability of the borrower
to comply with the present loan terms. While these loans are identified as
requiring additional monitoring, they do not necessarily represent future
nonperforming assets.
Additional indicators of asset quality can be found in the geographic
distribution, industry diversification and type of lending represented in the
loan portfolio. Credit policies have been changed over the past several years
to reduce vulnerability to potential adverse economic trends. Marketing efforts
have been directed to Firstar's primary market segments which are consumer,
small business and middle market customers in communities where Firstar banks
are located. This emphasis on smaller, locally based credits brings with it a
diversified group of customers without any significant industry concentration.
Firstar does not participate in any significant syndicated lending or highly
leveraged transactions.
Commercial real estate lending includes construction loans, income property
loans and other commercial loans where real estate is involved as collateral.
Midwestern real estate did not experience the rapid price appreciation that
occurred in other areas, spurring over-investment in development projects and
subsequent collapse of demand. Consequently, the earlier recessionary economy
has not put as much pressure on some of Firstar's borrowers. Policy limits
control this type of lending. Approximately sixty percent of these loans
represent owner-occupied commercial properties. The remaining portion involves
loans to developers and investors. The average loan size in the developer
portion of the portfolio was $260,000 and reflects the regional focus and
customer diversification of the portfolio.
The reserve for loan losses is reviewed and adjusted quarterly, subject to
evaluation of economic conditions and expectations, historical experience and
the risk rating of individual loans. Table 12 shows the activity affecting the
reserve for loan losses for the last five years. The reserve totaled $174.9
million at the end of 1993, compared with $168.5 million a year earlier.
Total net charge-offs of $20.7 million represented .25% of average loans
during 1993, a reduction of 37.6% from 1992. This places Firstar among the
lowest charge-off levels in its peer group. This compares with charge-offs of
$33.1 million or .43% of loans during 1992 and $34.3 million or a .47% charge-
off level during 1991. Not included in these charge-off totals, but
nevertheless associated with the credit loss, were additional writedowns or
losses on other real estate of $.8 million in 1993, $1.3 million in 1992 and
$8.3 million in 1991.
19
<PAGE>
As a regional financial institution, Firstar lends to a diversified group of
Midwestern borrowers and, to a much lesser degree, to national companies with
Midwest operations. Net charge-offs in this commercial segment of the portfolio
were $6.1 million in 1993, or .20% of average loans. This compares with $11.8
million of net charge-offs in 1992, representing .42% of loans. This level of
charge-offs is significantly lower than prior years and again, is reflective of
the economic strength of the marketplace and Firstar's lending policies.
Commercial real estate loans net charge-offs also declined in 1993 and
represented a nominal .03% of outstandings. This level compares with .16% in
1992 and the high of .78% during 1990. The loan charge-off levels within this
category result from both the improved economy and earlier periods' recognition
of losses by Firstar. Future charge-off levels should not differ significantly
from Firstar's overall non-real estate commercial lending experience.
TABLE 12
RESERVE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
year....................... $168,482 $150,628 $134,222 $116,177 $106,187
Loan charge-offs:
Commercial................. 12,142 18,565 15,110 16,346 25,756
Commercial--real estate.... 3,050 6,135 4,227 12,614 7,583
Consumer................... 6,399 7,049 9,754 7,941 6,237
Consumer--real estate...... 915 1,534 1,187 662 427
Credit card................ 14,989 17,779 19,172 12,078 10,325
Foreign.................... 6,555
-------- -------- -------- -------- --------
Total charge-offs......... 37,495 51,062 49,450 49,641 56,883
Loan recoveries:
Commercial................. 6,084 6,789 5,160 6,627 4,884
Commercial--real estate.... 2,448 3,439 845 1,482 1,243
Consumer................... 3,359 3,383 2,557 2,276 1,760
Consumer--real estate...... 232 368 350 115 69
Credit card................ 4,113 3,555 2,760 2,665 2,394
Foreign.................... 604 428 3,479 3,204 3,197
-------- -------- -------- -------- --------
Total recoveries.......... 16,840 17,962 15,151 16,369 13,547
-------- -------- -------- -------- --------
Net loan charge-offs........ 20,655 33,100 34,299 33,272 43,336
Provision for loan losses... 24,567 44,821 50,276 49,161 52,362
Reserves of acquired banks.. 2,479 6,133 429 2,156 964
-------- -------- -------- -------- --------
Balance at end of year.... $174,873 $168,482 $150,628 $134,222 $116,177
======== ======== ======== ======== ========
Reserve to year-end loans... 1.95% 2.08% 2.00% 1.83% 1.69%
Net charge-offs to average
loans:
Commercial................. .20% .42% .35% .35% .77%
Commercial--real estate.... .03 .16 .22 .78 .48
Foreign.................... (2.76) (2.18) (14.36) (12.29) 4.82
Total commercial.......... .12 .31 .22 .42 .74
Consumer................... .26 .34 .57 .47 .39
Consumer--real estate...... .04 .08 .08 .06 .04
Credit card................ 2.17 2.73 2.90 1.73 1.62
Total consumer............ .43 .61 .84 .57 .52
Total loans............... .25 .43 .47 .48 .66
</TABLE>
20
<PAGE>
Consumer lending includes loans to individuals in communities served by
Firstar's banks. These loans include both open-ended credit arrangements
subject to an overall limit per customer, such as credit card and home equity
loans, and closed-end loans subject to specific contractual payment schedules,
such as installment loans and residential mortgages. Consumer net charge-offs
were $14.6 million in 1993, compared with $19.1 million in 1992 and $24.4
million in 1991. The net charge-offs of .43% in 1993 compares with .61% and
.84% in 1992 and 1991, respectively. Credit card net charge-offs have declined
from 2.90% in 1991 to 2.17% during 1993 reflecting both lower charge-offs and
higher recovery rates. This progressive reduction in consumer charge-off levels
reinforces the conclusion about the economic strength of Firstar's marketplace.
Consumer net charge-offs for 1993 are, in fact, at a seven year low. Consumer
charge-offs are expected to remain at or near this level.
TABLE 13
COMPOSITION OF LOANS
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Commercial and
industrial............. $2,470,454 $2,086,146 $1,987,897 $2,054,802 $1,909,719
Real estate--
construction........... 209,181 236,794 278,971 256,506 335,478
Real estate--mortgage... 1,739,608 1,564,001 1,336,556 1,234,978 1,033,689
Foreign................. 31,269 20,546 22,077 21,885 30,917
Other................... 855,249 895,667 930,675 857,459 912,152
---------- ---------- ---------- ---------- ----------
Commercial loans....... 5,305,761 4,803,154 4,556,176 4,425,630 4,221,955
Credit card............. 546,051 532,787 581,863 606,276 556,678
Real estate--mortgage... 1,363,671 1,318,179 1,067,716 1,021,554 863,886
Home equity............. 445,135 375,427 289,386 * *
Other................... 1,323,200 1,081,944 1,049,519 1,292,653 1,228,605
---------- ---------- ---------- ---------- ----------
Consumer loans......... 3,678,057 3,308,337 2,988,484 2,920,483 2,649,169
---------- ---------- ---------- ---------- ----------
Total loans............ $8,983,818 $8,111,491 $7,544,660 $7,346,113 $6,871,124
========== ========== ========== ========== ==========
</TABLE>
- -----------
*Comparable data not available
The Financial Accounting Standards Board issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", which is effective in 1995.
The statement establishes procedures for determining the appropriate reserve
for loan losses for loans deemed impaired. The calculation of reserve levels
would be based upon the discounted present value of expected cash flows
received from the debtor or other measures of value such as market prices or
collateral values. The adoption of this statement should not have any
significant impact on the current level of the reserve for loan losses or
operating results.
21
<PAGE>
LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
Two objectives of Firstar's asset and liability management strategy include
the maintenance of appropriate liquidity and management of interest rate risk.
Liquidity management aligns sources and uses of funds to meet the cash flow
requirements of customers and Firstar. Interest rate risk management seeks to
generate growth in net interest revenue and manage exposure to risks
associated with interest rate movements and provide for acceptable and
predictable results. Although conceptually distinct, liquidity and interest
rate sensitivity must be managed together since action taken with respect to
one often influences the other.
The scheduled maturity of loans can provide a source of asset liquidity.
Table 14 shows the range of loan maturities as of December 31, 1993. Short-
term investments, such as federal funds, repurchase agreements and interest-
bearing deposits, are another source of liquidity. These investments stood at
$287 million at the end of 1993. The investment securities portfolio provides
liquidity through scheduled maturities, as shown in Table 8, and the ability
to use these securities in borrowing transactions.
TABLE 14
MATURITY DISTRIBUTION OF LOANS
<TABLE>
<CAPTION>
TOTAL
DUE WITHIN ONE TO AFTER FIVE DECEMBER 31,
ONE YEAR FIVE YEARS YEARS 1993
---------- ---------- ---------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C>
Commercial........................ $2,667,487 $2,066,835 $ 571,439 $5,305,761
Consumer.......................... 775,570 2,105,308 797,179 3,678,057
---------- ---------- ---------- ----------
Total............................ $3,443,057 $4,172,143 $1,368,618 $8,983,818
========== ========== ========== ==========
</TABLE>
- --------
Of the above loans due after one year, $3,903,916,000 have predetermined
interest rates and $1,636,845,000 have floating or adjustable interest rates.
TABLE 15
MATURITY RANGE OF TIME DEPOSITS
<TABLE>
<CAPTION>
TOTAL
DUE WITHIN THREE TO SIX TO AFTER DECEMBER 31,
THREE MONTHS SIX MONTHS TWELVE MONTHS TWELVE MONTHS 1993
------------ ---------- ------------- ------------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Certificates of deposit
of $100,000 or more.... $219,669 $95,385 $54,138 $ 93,604 $462,796
Other time deposits of
$100,000 or more....... 7,404 4,083 6,533 8,657 26,677
-------- ------- ------- -------- --------
Total.................. $227,073 $99,468 $60,671 $102,261 $489,473
======== ======= ======= ======== ========
</TABLE>
The requirement for liquidity is diminished by the predominance of core
deposits, which account for 84% of Firstar's fund sources. Stable core
deposits do not require significant amounts of liquidity to meet the net
withdrawal demands of customers on a short or intermediate term basis. Other
sources of liquidity are short-term borrowed funds and commercial time
deposits, which totaled $2.1 billion at the end of 1993 and consist primarily
of funds from customers who use other Firstar services. Firstar's ability to
refinance maturing amounts and, when necessary, increase this funding base is
a significant factor in its liquidity management.
The absolute level and volatility of interest rates can have a significant
impact on earnings. The objective of interest risk management is to identify
and manage the sensitivity of net interest revenue to changing interest rates.
Firstar's Asset-Liability Committee has established a guideline which limits
to 5% the amount of earnings that may be placed at risk over the next twelve
months if interest rates move unexpectedly within certain ranges. To ensure
compliance with these risk limits, the committee regularly monitors the level
of sensitivity. At the end of 1993 Firstar's forecast for 1994 net interest
revenue indicated that its position was well within this limit.
22
<PAGE>
Firstar uses simulation modeling as the primary tool in measuring interest
rate risk and managing interest rate sensitivity. Simulation modeling
incorporates the dynamics of changing balance sheet mix, interest rate
movements and the related impact on net interest revenue. This simulation
testing is done over a one-year and two-year time horizon.
The simulation model is supplemented with a more traditional tool used in the
banking industry for measurement of interest rate risk known as the gap
analysis. This measures the difference between assets and liabilities repricing
or maturing within specified time periods. The gap analysis does however, have
some limitations such as not reflecting degree of rate sensitivity in a given
financial instrument. A positive gap indicates that there are more rate
sensitive assets than rate sensitive liabilities repricing within a given time
frame. A positive gap would generally imply a favorable impact on net income in
periods of rising rates. Conversely, a negative gap indicates a liability
sensitive position. Table 16 shows Firstar's interest sensitivity under a
traditional gap approach.
TABLE 16
ASSET AND LIABILITY INTEREST SENSITIVITY
DECEMBER 31, 1993
<TABLE>
<CAPTION>
1-30 31-90 91-180 181-365 TOTAL
DAYS DAYS DAYS DAYS ONE YEAR
------ ----- ------ ------- --------
(millions of dollars)
<S> <C> <C> <C> <C> <C>
Assets:
Loans................................... $3,233 $ 476 $533 $ 838 $5,080
Investment securities................... 175 155 137 415 882
Interest-bearing deposits with banks.... 4 4
Short-term investments.................. 295 295
Interest rate swaps..................... 20 85 12 117
------ ----- ---- ------ ------
Total.................................. 3,727 716 682 1,253 6,378
Liabilities:
Interest-bearing demand accounts........ 836 836
Passbooks............................... 316 316
Money market accounts................... 1,564 1,564
Less than one year certificates......... 184 272 304 79 839
Other deposits.......................... 180 277 343 597 1,397
Borrowed funds.......................... 931 108 61 12 1,112
Interest rate swaps..................... 100 160 260
------ ----- ---- ------ ------
Total.................................. 4,111 817 708 688 6,324
------ ----- ---- ------ ------
Interest sensitive gap................... $ (384) $(101) $(26) $ 565 $ 54
====== ===== ==== ====== ======
</TABLE>
23
<PAGE>
Interest rate sensitivity can be managed by adjusting the mix of assets and
liabilities. Where this is not practical or cost effective, off-balance sheet
instruments can be utilized. Firstar uses interest rate swaps, caps and floors
in this process. The use of these instruments allows Firstar to change interest
rate sensitivity while retaining the ability to offer products that satisfy
customer needs. Interest rate instruments have been used to alter the rate
characteristics of both loans and deposits. Table 17 shows information on
interest rate risk management instruments in effect at the end of 1993. The
notional amount of these agreements was $1.3 billion. Additionally, Firstar has
$1.3 billion of interest rate instruments for which it serves as an
intermediary for customers. Notional principal amounts are the basis for the
exchange of interest payments. Under a typical interest rate swap agreement,
one party pays a fixed rate of interest on a notional amount to a second party,
which in turn pays the first party a variable rate of interest on the same
notional amount. Interest rate caps and floors require one party to pay another
party if a variable interest rate is above or below a preset level. The net
cash flow exchanged in these transactions increased net interest margin by five
basis points in 1993. These off balance sheet transactions were constructed as
hedges of existing balance sheet items and, to the extent that the hedges were
effective, they served to offset reductions in the net interest margin
associated with the hedged balances.
Firstar's simulation modeling indicated a modest vulnerability to 1994's net
interest margin if interest rates would decline from current levels. The
interest rate instruments in effect at year-end 1993 were constructed to
contribute approximately seven basis points to net interest margin in a low
rate scenario. The low rate scenario assumed a reduction of the prime interest
rate from the current 6% level to 4.75% by the end of the year. The modeling
indicates that this contribution from interest rate instruments will decline as
rates increase. This reduced impact however, would be offset by wider spreads
between earning asset rates and deposit rates. Therefore, a gradual increase in
interest rates should not adversely impact Firstar's net interest revenue.
TABLE 17
INTEREST RATE RISK MANAGEMENT INSTRUMENTS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
AVERAGE AVERAGE WEIGHTED UNREALIZED
NOTIONAL RATE RATE AVERAGE MARKET
AMOUNT RECEIVED PAID MATURITY VALUE
---------- -------- ------- -------- -----------
(millions) (thousands)
<S> <C> <C> <C> <C> <C>
Swaps:
Receive fixed rate pay
variable rate........... $ 260 5.71% 3.52%(1) 2.3 yrs $ 362
Receive variable rate pay
fixed rate.............. 117 3.08 (2) 4.54 .8 (999)
Receive variable rate pay
variable rate........... 720 3.69 (3) 3.40 3.5 (820)
Caps...................... 120 (4) 1.1 405
Floors.................... 60 (5) 3.6 957
------ -----
$1,277 $ (95)
====== =====
</TABLE>
- --------
(1) Rate paid varies primarily with the three month LIBOR rate
(2) Rate received varies primarily with the Federal funds rate
(3) Rate received includes a fixed spread over three month LIBOR with
limitations on periodic increases
(4) Receipt of payments start if the three month LIBOR rate exceeds a weighted
average rate of 3.92%
(5) Receipt of payments start if the three month LIBOR rate is below a weighted
average rate of 4.67%
CAPITAL
Total stockholders' equity increased 10.3% to $1.16 billion as of December
31, 1993. Stockholders' equity represented 8.38% of total assets at the end of
1993 compared to 7.96% a year earlier.
Firstar redeemed its adjustable rate preferred stock at the end of 1993 at a
price of $103 per share, or $51.5 million. This action removed a higher cost
equity component.
24
<PAGE>
Dividends paid to common stockholders totaled $63.7 million, or $1.00 per
share, a 25% increase over 1992. This represented a 32% payout of net income
for 1993. It is Firstar's target to maintain a dividend payout level
approximately equal to the median of its peer group.
Bank regulatory agencies have established capital adequacy standards which
are used extensively in their monitoring and control of the industry. These
standards relate capital to level of risk by assigning different weightings to
assets and certain off-balance sheet activity. Capital is measured by two risk-
based ratios: Tier I capital and total capital, which includes Tier II capital.
The rules require that companies have minimum ratios of 4% and 8% for Tier I
and total capital, respectively. As of December 31, 1993, Firstar had Tier I
capital of 11.08% and total capital of 13.18%, significantly exceeding
regulatory minimum standards. The components of these capital levels are shown
in Table 18.
Additionally, a Tier I leverage ratio is also used by bank regulators as
another measure of capital strength. This ratio compares Tier I capital to
total reported assets reduced by goodwill. The regulatory minimum level of this
ratio is 3%, and it acts as a constraint on the degree to which a company can
leverage its equity base. Firstar's Tier I leverage ratio was 8.30% at December
31, 1993.
The Federal Deposit Insurance Corporation Improvement Act of 1991 provided
additional guidance that considers capital levels and other factors. The
guidelines established five supervisory groupings of capital adequacy. Firstar
is considered "well capitalized" which is the highest group.
Maintaining a strong capital position is important to Firstar's long-term
strategies which emphasize soundness, profitability and growth. Higher capital
levels contribute to overall financial soundness as a cushion against cyclical
economic trends which can effect the banking industry. Strong capital levels
also will permit future growth through both internal asset generation and bank
acquisitions.
TABLE 18
CAPITAL COMPONENTS AND RATIOS
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------
1993 1992 1991
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity....................... $1,155,897 $1,048,388 $ 916,339
Minority interest in subsidiaries.......... 2,214 1,979 2,284
Less goodwill.............................. (72,602) (76,992) (76,432)
---------- ---------- ----------
Total Tier I capital...................... 1,085,509 973,375 842,191
Allowable reserve for loan losses.......... 123,953 114,837 114,677
Allowable long-term debt................... 81,486 107,010 123,064
---------- ---------- ----------
Total Tier II capital..................... 205,439 221,847 237,741
---------- ---------- ----------
Total capital............................. $1,290,948 $1,195,222 $1,079,932
========== ========== ==========
Risk-adjusted assets........................ $9,792,746 $9,056,307 $9,061,792
Tier I capital to risk-adjusted assets...... 11.08% 10.75% 9.29%
Total capital to risk-adjusted assets....... 13.18 13.20 11.92
Tier I leverage ratio....................... 8.30 7.71 7.13
</TABLE>
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 AVERAGE BALANCES
------------------------ ------------------------
1993 1992 1993 1992
----------- ----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks.... $ 1,228,957 $ 1,289,950 $ 938,407 $ 855,297
Interest-bearing deposits
with banks................ 4,328 183,183 33,043 67,864
Federal funds sold and
resale agreements......... 282,517 228,161 147,744 277,075
Trading account securities. 12,491 20,873 17,332 15,514
Investment securities
(market value $2,894,594
and $2,942,911 on December
31, 1993 and 1992)........ 2,834,305 2,864,015 2,929,035 2,844,977
Loans...................... 8,983,818 8,111,491 8,332,963 7,634,934
Reserve for loan losses.... (174,873) (168,482) (173,224) (160,642)
----------- ----------- ----------- -----------
Loans--net............... 8,808,945 7,943,009 8,159,739 7,474,292
Bank premises and
equipment................. 264,569 257,007 259,064 250,425
Customer acceptance
liability................. 17,412 19,879 19,962 24,050
Other assets............... 340,471 362,840 352,913 360,319
----------- ----------- ----------- -----------
Total assets............. $13,793,995 $13,168,917 $12,857,239 $12,169,813
=========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Demand.................... $ 3,064,314 $ 2,781,522 $ 2,531,844 $ 2,323,260
Interest-bearing demand... 1,557,145 1,487,408 1,418,061 1,280,893
Savings passbook.......... 1,528,222 1,365,968 1,490,209 1,239,367
Consumer time............. 4,041,411 4,312,523 4,171,099 4,329,151
Commercial time........... 972,522 936,692 921,476 943,854
----------- ----------- ----------- -----------
Total deposits........... 11,163,614 10,884,113 10,532,689 10,116,525
Short-term borrowed funds.. 1,112,490 861,525 822,580 692,879
Long-term debt............. 126,275 157,921 133,135 146,748
Bank acceptances
outstanding............... 17,412 19,879 19,962 24,050
Other liabilities.......... 218,307 197,091 218,683 208,723
----------- ----------- ----------- -----------
Total liabilities........ 12,638,098 12,120,529 11,727,049 11,188,925
Stockholders' equity:
Preferred stock........... 500 495 500
Common stock.............. 81,149 79,080 80,401 78,134
Issued: 1993, 64,919,422
shares
1992, 63,263,451
shares
Capital surplus........... 149,882 179,483 189,718 169,869
Retained earnings......... 928,559 794,213 863,311 737,123
Treasury stock, at cost... (3,034) (4,888) (3,343) (4,738)
Held: 1993, 558,603
shares
1992, 623,472 shares
Restricted stock.......... (659) (392)
----------- ----------- ----------- -----------
Total stockholders'
equity.................. 1,155,897 1,048,388 1,130,190 980,888
----------- ----------- ----------- -----------
Total liabilities and
stockholders' equity.... $13,793,995 $13,168,917 $12,857,239 $12,169,813
=========== =========== =========== ===========
</TABLE>
- -----------
The average balances are not covered by the Independent Auditors' Report.
See accompanying notes to consolidated financial statements.
26
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars,
except per share data)
<S> <C> <C> <C>
INTEREST REVENUE
Loans................................................ $685,530 $693,594 $757,069
Investment securities:
Taxable............................................. 129,574 140,632 155,801
Nontaxable.......................................... 45,078 51,104 50,776
-------- -------- --------
Total investment securities........................ 174,652 191,736 206,577
Interest-bearing deposits with banks................. 1,385 2,608 4,238
Federal funds sold and resale agreements............. 4,602 9,791 13,016
Trading account securities........................... 785 792 779
-------- -------- --------
Total interest revenue............................. 866,954 898,521 981,679
INTEREST EXPENSE
Deposits:
Interest-bearing demand............................. 23,666 31,977 45,490
Savings passbook.................................... 38,214 40,247 48,789
Consumer time....................................... 171,282 213,325 288,326
Commercial time..................................... 28,472 35,856 56,194
-------- -------- --------
Total deposits..................................... 261,634 321,405 438,799
Short-term borrowed funds............................ 23,811 23,423 45,434
Long-term debt....................................... 13,453 14,541 16,850
-------- -------- --------
Total interest expense............................. 298,898 359,369 501,083
-------- -------- --------
NET INTEREST REVENUE................................. 568,056 539,152 480,596
Provision for loan losses............................ 24,567 44,821 50,276
-------- -------- --------
NET INTEREST REVENUE AFTER LOAN LOSS PROVISION....... 543,489 494,331 430,320
OTHER OPERATING REVENUE
Trust and investment management fees................. 110,185 95,926 80,813
Service charges on deposit accounts.................. 74,071 66,301 59,368
Credit card service revenue.......................... 53,316 51,867 54,594
Mortgage banking revenue............................. 26,774 13,058 7,922
Data processing fees................................. 21,431 24,215 24,286
Investment securities gains.......................... 182 981 1,619
Other revenue........................................ 56,306 48,419 43,933
-------- -------- --------
Total other operating revenue...................... 342,265 300,767 272,535
OTHER OPERATING EXPENSE
Salaries............................................. 257,405 237,997 221,780
Employee benefits.................................... 59,443 49,610 44,977
Net occupancy expense................................ 48,731 44,408 42,252
Equipment expense.................................... 48,139 48,720 42,483
Net other real estate expense........................ 2,056 4,303 10,537
Other expense........................................ 171,970 172,528 153,507
-------- -------- --------
Total other operating expense...................... 587,744 557,566 515,536
-------- -------- --------
INCOME BEFORE INCOME TAXES........................... 298,010 237,532 187,319
Provision for income taxes........................... 93,716 71,547 52,988
-------- -------- --------
NET INCOME........................................... $204,294 $165,985 $134,331
======== ======== ========
Net income applicable to common stock................ $201,028 $162,238 $130,277
PER COMMON SHARE
Net income........................................... $ 3.15 $ 2.62 $ 2.14
Dividends............................................ 1.00 .80 .705
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK TREASURY STOCK
---------------- ------------------- CAPITAL RETAINED RESTRICTED -----------------
SHARES AMOUNT SHARES AMOUNT SURPLUS EARNINGS STOCK SHARES AMOUNT TOTAL
-------- ------ ---------- ------- -------- -------- ---------- -------- ------- ----------
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1990.................. 500,000 $500 62,728,680 $78,411 $174,719 $594,211 $(562) (605,972) $(2,802) $ 844,477
Net income............. 134,331 134,331
Cash dividends:
Preferred stock,
series B ($8.2075 per
share)............... (4,104) (4,104)
Common stock ($.705
per share)........... (40,425) (40,425)
Common stock of pooled
bank prior to
acquisition.......... (2,581) (2,581)
Retirement of common
shares................ (1,390,682) (1,738) (18,974) (20,712)
Common stock issued:
Bank acquisition...... 266,130 332 3,146 3,478
Employee benefit
plans................ 90,148 113 990 68,144 939 2,042
Other................. 21,004 26 142 168
Treasury stock
purchased............. (45,820) (897) (897)
Amortization of
restricted stock...... 562 562
-------- ---- ---------- ------- -------- -------- ----- -------- ------- ----------
BALANCE AT DECEMBER 31,
1991.................. 500,000 500 61,715,280 77,144 160,023 681,432 0 (583,648) (2,760) 916,339
Net income............. 165,985 165,985
Cash dividends:
Preferred stock,
series B ($7.5502 per
share)............... (3,775) (3,775)
Common stock ($.80 per
share)............... (49,429) (49,429)
Common stock issued:
Bank acquisitions..... 1,307,016 1,634 15,812 690,262 19,948 37,394
Employee benefit
plans................ 147,124 184 2,947 50,520 416 3,547
Other................. 94,031 118 701 819
Treasury stock
purchased............. (780,606) (22,492) (22,492)
-------- ---- ---------- ------- -------- -------- ----- -------- ------- ----------
BALANCE AT DECEMBER 31,
1992.................. 500,000 500 63,263,451 79,080 179,483 794,213 0 (623,472) (4,888) 1,048,388
Net income............. 204,294 204,294
Cash dividends:
Preferred stock,
series B ($7.4419 per
share)............... (3,720) (3,720)
Common stock ($1.00
per share)........... (63,733) (63,733)
Redemption of preferred
stock................. (500,000) (500) (48,505) (2,495) (51,500)
Common stock issued:
Bank acquisitions..... 1,018,734 1,273 12,234 105,069 3,098 16,605
Employee benefit
plans................ 104,043 130 1,920 935 31 2,081
Other................. 502,959 628 3,858 4,486
Treasury stock
purchased............. (41,135) (1,275) (1,275)
Restricted stock
granted............... 30,235 38 892 (930) 0
Amortization of
restricted stock...... 271 271
-------- ---- ---------- ------- -------- -------- ----- -------- ------- ----------
BALANCE AT DECEMBER 31,
1993.................. 0 $ 0 64,919,422 $81,149 $149,882 $928,559 $(659) (558,603) $(3,034) $1,155,897
======== ==== ========== ======= ======== ======== ===== ======== ======= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------
1993 1992 1991
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................. $ 204,294 $ 165,985 $ 134,331
Adjustments:
Provision for loan losses................. 24,567 44,821 50,276
Depreciation, amortization and accretion.. 29,530 47,571 27,288
Net decrease (increase) in trading
securities............................... 8,382 (4,824) 9,649
Net increase in loans held for resale..... (52,143) (92,471) (49,199)
Losses (gains) on securities and other
assets................................... 1,249 (2,710) 6,923
Deferred income taxes..................... (15,162) (10,061) (5,526)
Decrease in other assets.................. 10,963 14,045 17,592
Increase (decrease) in other liabilities.. 26,739 (19,246) 9,328
Other net................................. 211 (6,123) (1,961)
---------- ---------- ----------
Net cash provided by operating
activities.............................. 238,630 136,987 198,701
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds
sold and resale agreements................ (52,756) 74,567 (19,471)
Net decrease (increase) in interest-bearing
deposits with banks....................... 178,855 (37,826) 18,576
Sales of investment securities............. 4,155 92,461 143,095
Maturities of investment securities........ 1,467,156 1,714,272 1,081,730
Purchases of investment securities......... (1,380,307) (1,719,290) (1,432,968)
Net increase in loans...................... (693,323) (102,818) (186,183)
Net cash from acquisitions................. 11,695 6,713 1,127
Proceeds from sales of other real estate... 15,818 6,832 28,407
Purchases of bank premises and equipment... (36,141) (43,093) (41,906)
Proceeds from sales of bank premises and
equipment................................. 458 2,486 2,451
---------- ---------- ----------
Net cash used in investing activities.... (484,390) (5,696) (405,142)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits................... 85,116 259,999 292,707
Net increase (decrease) in short-term
borrowed funds............................ 245,803 (79,984) (110,360)
Repayment of long-term debt................ (27,337) (18,899) (47,867)
Proceeds from long-term debt............... 3,750
Cash dividends............................. (67,453) (53,204) (47,110)
Preferred stock redemption................. (51,500)
Common stock transactions.................. 138 (19,788) (20,761)
---------- ---------- ----------
Net cash provided by financing
activities.............................. 184,767 88,124 70,359
---------- ---------- ----------
NET (DECREASE) INCREASE IN CASH AND DUE
FROM BANKS................................ (60,993) 219,415 (136,082)
Cash and due from banks at beginning of
year...................................... 1,289,950 1,070,535 1,206,617
---------- ---------- ----------
Cash and due from banks at end of year..... $1,228,957 $1,289,950 $1,070,535
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest.................................. $ 303,069 $ 372,713 $ 510,295
Income taxes.............................. 107,525 74,483 52,801
Transfers to other real estate from loans.. 4,964 17,263 32,382
Acquisitions:
Assets acquired........................... 218,592 655,095 56,133
Cash paid for purchase of stock........... $ $ (12,730) $ (410)
Cash acquired............................. 11,695 19,443 1,537
---------- ---------- ----------
Net cash from acquisitions................ $ 11,695 $ 6,713 $ 1,127
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1992 AND 1991
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of Firstar Corporation and its
subsidiaries are summarized as follows:
Principles of consolidation--The consolidated financial statements include
the accounts of Firstar and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Results of
operations of companies purchased are included from the date of acquisition.
Financial statements have been restated to include companies acquired under
pooling of interests when material. Certain prior year amounts have been
reclassified to conform to current year classifications.
Securities--Purchases of investment securities are made with the intent and
ability to hold them to maturity and are carried at cost, adjusted for
amortization of premium and accretion of discount using a level yield method.
Gains or losses on sales of investment securities are computed on the basis of
specific identification of the adjusted cost of each security. Securities to be
held for indefinite periods of time and not intended to be held to maturity or
on a long-term basis are classified as available for sale and carried at market
value. Securities held for indefinite periods of time may include securities
that management intends to use as part of its asset/liability management
strategy or have been acquired in business acquisitions and are designated to
be sold. Trading account securities are carried at market. Valuation
adjustments are included in other revenue in the consolidated statements of
income.
Loans--Loans, which include lease financing receivables, are stated at the
principal amount. Interest is accrued on all loans not discounted by applying
the interest rate to the amount outstanding. On discounted loans, income is
recognized on a basis which results in approximately level rates of return over
the term of the loans. Loan origination and commitment fees and certain direct
loan origination costs are being deferred where material and the net amount
amortized as an adjustment of the related loans' yield. These amounts are being
amortized over the contractual life of the related loans. Where it is not
reasonable to expect that income will be realized, accrual of income ceases and
these loans are placed on a "cash basis" for purposes of income recognition.
Loans upon which foreclosure action is commenced or for which borrowers have
begun bankruptcy proceedings are reviewed individually as to continuation of
interest accrual. Mortgage loans held for sale are carried at the lower of
aggregate cost or market, after consideration of related loan sale commitments.
Reserve for loan losses--The reserve for loan losses is maintained at a level
adequate to provide for potential loan losses through charges to operating
expense. The reserve is based upon a continuing review of loans which includes
consideration of actual net loan loss experience, changes in the size and
character of the loan portfolio, identification of problem situations which may
affect the borrowers' ability to repay and evaluation of current economic
conditions. Loan losses are recognized through charges to the reserve.
Installment and credit card loan losses are charged to the reserve based upon
fixed delinquency periods. All other loans are evaluated individually and
charged to the reserve to the extent that outstanding principal balances are
deemed uncollectible. Any subsequent recoveries are added to the reserve.
Other real estate--Other real estate, the balance of which is included in
other assets, includes primarily properties acquired through loan foreclosure
proceedings or acceptance of deeds in lieu of foreclosure. These properties are
recorded at the lower of the carrying value of the related loans or the fair
market value of the real estate acquired less the estimated costs to sell the
real estate. Initial valuation adjustments, if any, are charged against the
reserve for loans losses. Subsequent revaluations of the properties, which
indicate reduced value, are recognized through charges to operations. Revenues
and expenditures related to holding and operating these properties are included
in other operating expense.
30
<PAGE>
Bank premises and equipment--Bank premises and equipment are stated at cost
less depreciation, which has been accumulated on the straight-line basis.
Intangible assets--Intangible assets attributable to the value of core
deposits and goodwill acquired are included in other assets and are amortized
over fifteen to twenty-five years, on a straight-line basis. The value of
mortgage servicing rights acquired is amortized in relation to the servicing
revenue expected to be earned.
Income taxes--Firstar and its subsidiaries file a consolidated federal income
tax return. The effect of items of income and expense that are recognized for
financial reporting purposes in periods other than those in which they are
recognized for tax purposes are reflected as a current or deferred tax asset or
liability based on current tax laws. Accordingly, income taxes provided in the
consolidated statements of income include charges or credits for deferred
income taxes related to temporary differences.
Foreign currency translation--Monetary assets and liabilities recorded in
foreign currencies are translated at the rate of exchange in effect at each
year-end. Income statement items are translated monthly using the average rate
for the month. Exchange adjustments, including gain or loss on forward exchange
contracts, are charged or credited to income currently.
Cash and cash equivalents--For purposes of the consolidated statements of
cash flows, cash and cash equivalents are considered to include the balance
sheet caption cash and due from banks.
Interest rate swaps and other agreements--Firstar enters into interest rate
swaps and other agreements to manage its interest rate exposure and to serve as
a financial intermediary for matched transactions. Transactions designated as
hedges of assets or liabilities are recorded using the accrual method and
settlements are classified as interest income or expense in the consolidated
statements of income according to the type of earning assets or interest
bearing liability that the agreement hedges. Fee income from matched
transactions for which Firstar serves as a financial intermediary is recognized
over the lives of the related agreements and is classified as other income in
the consolidated statements of income.
Income per common share--Net income per common share is based on the weighted
average number of shares of common stock outstanding during each year, after
giving effect to common stock splits and the amortization of restricted stock.
The weighted average shares were 63,747,000 in 1993, 61,879,000 in 1992 and
60,998,000 in 1991. For calculation purposes, earnings are reduced by preferred
stock dividends. Common stock equivalents are not significant in any year
presented.
31
<PAGE>
NOTE 2. MERGERS AND ACQUISITIONS
The following table summarizes completed acquisitions:
<TABLE>
<CAPTION>
TOTAL AQUISITION METHOD OF
NAME OF INSTITUTION ASSETS DATE CONSIDERATION ACCOUNTING
- ------------------- ------ -------------- ----------------- ----------
(millions of dollars)
<S> <C> <C> <C> <C>
1993:
Bank of Athens.............. $ 102 August 1993 447,655 shares Pooling of
Athens, WI of common stock interests
Deerfield State Bank........ 120 February 1993 676,317 shares Pooling of
Deerfield, IL of common stock interests
------
Total..................... $ 222
======
1992:
Federated Bank, S.S.B....... $ 413 September 1992 Cash $12.7 Purchase
Wauwatosa, WI 734,616 shares
of common stock
Citizens National Bank of
Lake Geneva................ 49 August 1992 262,958 shares Pooling of
Lake Geneva, WI of common stock interests
First National Bank of
Geneva..................... 193 June 1992 999,704 shares Pooling of
Geneva, IL of common stock interests
------
Total..................... $ 655
======
1991:
Northwestern State Bank..... $ 56 December 1991 266,130 shares Pooling of
Cumberland, WI of common stock interests
Banks of Iowa, Inc.......... 2,674 April 1991 15,655,022 shares Pooling of
Des Moines, IA of common stock interests
------
Total..................... $2,730
======
</TABLE>
The effect of the four 1993 and 1992 bank acquisitions, accounted for as
pooling of interests, was not material to prior years' reported operating
results and, accordingly, previously reported results have not been restated.
In 1994 Firstar announced a merger agreement with First Southeast Banking
Corp., a $423 million bank holding company in Lake Geneva, WI. The transaction
will be accounted for as a pooling of interests with the issuance of 1,807,577
shares of Firstar common stock.
32
<PAGE>
NOTE 3. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, are summarized as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1993 1992 1991
------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Goodwill............................................. $72,602 $ 76,992 $ 76,432
Core deposit intangibles............................. 20,119 22,821 25,523
Mortgage servicing rights............................ 2,357 6,464 12,300
------- -------- --------
Total............................................... $95,078 $106,277 $114,255
======= ======== ========
Amortization of intangibles during year.............. $12,717 $ 15,520 $ 8,676
</TABLE>
Firstar recorded additional amortization of mortgage servicing rights in the
amount of $3,088,000 in 1993 and $6,500,000 in 1992 due to increased prepayment
rates on serviced loans.
NOTE 4. INVESTMENT SECURITIES
The amortized cost and approximate market values of investment securities are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies. $1,410,917 $24,639 $(2,477) $1,433,079
Mortgage backed obligations of
federal agencies.................. 332,737 15,041 (700) 347,078
State and political subdivisions... 905,396 24,287 (1,340) 928,343
Corporate debt..................... 70,494 1,067 (228) 71,333
Equity securities.................. 13,745 13,745
Other.............................. 101,016 101,016
---------- ------- ------- ----------
Total............................. $2,834,305 $65,034 $(4,745) $2,894,594
========== ======= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1992
-------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies. $1,131,715 $35,468 $ (524) $1,166,659
Mortgage backed obligations of
federal agencies.................. 385,215 19,808 (164) 404,859
State and political subdivisions... 952,377 22,772 (1,291) 973,858
Corporate debt..................... 244,821 3,326 (499) 247,648
Equity securities.................. 13,713 13,713
Other.............................. 136,174 136,174
---------- ------- ------- ----------
Total............................. $2,864,015 $81,374 $(2,478) $2,942,911
========== ======= ======= ==========
</TABLE>
33
<PAGE>
The amortized cost and approximate market value of investment securities at
December 31, 1993, by contractual maturity, are shown below. Maturities of
mortgage backed obligations were estimated based on anticipated payments.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
---------------------
AMORTIZED MARKET
COST VALUE
---------- ----------
(thousands of
dollars)
<S> <C> <C>
Due in one year or less.................................. $ 881,883 $ 893,683
Due after one year through five years.................... 1,764,660 1,805,492
Due after five years through ten years................... 155,402 162,272
Due after 10 years....................................... 18,615 19,402
---------- ----------
2,820,560 2,880,849
Equity securities........................................ 13,745 13,745
---------- ----------
Total................................................... $2,834,305 $2,894,594
========== ==========
</TABLE>
Securities held for sale at December 31, 1992 were $21.0 million. Gross gains
of $232,000, $1,106,000 and $1,644,000 and gross losses of $50,000, $125,000
and $25,000 were realized on investment securities sales in 1993, 1992 and
1991, respectively.
The amortized cost of investment securities pledged to secure public or trust
deposits, securities sold under repurchase agreements and for other purposes as
required or permitted by law was $712,696,000 at December 31, 1993 and
$598,983,000 at December 31, 1992.
The Financial Accounting Standards Board issued Statement No. 115 "Accounting
for Certain Investments in Debt and Equity Securities". This statement
established categories of investment securities that include securities that
are held to maturity and securities that are available for sale. Firstar
adopted Statement No. 115 on December 31, 1993. None of Firstar's current
investment portfolio is classified as available for sale.
NOTE 5. LOANS
The composition of loans, including lease financing receivables, is
summarized below. Loans are presented net of unearned discount which amounted
to $10,938,000 and $15,432,000 at December 31, 1993 and 1992, respectively.
Commercial loans pledged to secure public deposits were $15,444,000 on December
31, 1993 and $21,676,000 on December 31, 1992. Firstar serviced $2,045 million,
$1,672 million and $1,407 million of mortgage loans for other investors as of
December 31, 1993, 1992 and 1991, respectively. Residential mortgage loans held
for resale were $229,250,000 and $177,107,000 on December 31, 1993 and 1992,
respectively.
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1993 1992
---------- ----------
(thousands of
dollars)
<S> <C> <C>
Commercial and industrial................................ $2,470,454 $2,086,146
Real estate--construction................................ 209,181 236,794
Real estate--mortgage.................................... 1,739,608 1,564,001
Foreign.................................................. 31,269 20,546
Other.................................................... 855,249 895,667
---------- ----------
Commercial.............................................. 5,305,761 4,803,154
Credit card.............................................. 546,051 532,787
Real estate--mortgage.................................... 1,363,671 1,318,179
Home equity.............................................. 445,135 375,427
Other.................................................... 1,323,200 1,081,944
---------- ----------
Consumer................................................ 3,678,057 3,308,337
---------- ----------
Total................................................... $8,983,818 $8,111,491
========== ==========
</TABLE>
34
<PAGE>
Loans on which income is recognized only as cash payments are received or is
accrued at less than the original contract rate are summarized below.
Nonperforming loans which were classified as "in substance foreclosure" and
included in other real estate were $10.5 million at both December 31, 1992 and
1991. Such "in substance foreclosed" loans were reclassified to loans in 1993.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Commercial....................................... $ 48,233 $ 48,690 $ 61,460
Consumer......................................... 6,417 8,138 7,190
-------- -------- --------
Total........................................... $ 54,650 $ 56,828 $ 68,650
======== ======== ========
The effect of nonperforming loans on interest revenue was as follows:
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Interest at original contract rate............... $ 6,586 $ 7,593 $ 10,744
Interest collected............................... 2,567 1,721 2,042
-------- -------- --------
Net reduction of interest revenue............... $ 4,019 $ 5,872 $ 8,702
======== ======== ========
Certain executive officers, directors, shareholders, and their associates of
Firstar and significant subsidiaries are loan customers of the banking
subsidiaries. Loans outstanding to such parties were $95.0 million on December
31, 1993 and $77.3 million on December 31, 1992. During 1993 new loans of $35.6
million were made and loan payments of $17.9 million were received. These loans
were made in the ordinary course of business and on substantially the same terms
as those prevailing for comparable transactions with other persons.
NOTE 6. RESERVE FOR LOAN LOSSES
An analysis of the reserve for loan losses is as follows:
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Balance at beginning of year..................... $168,482 $150,628 $134,222
Provision for loan losses........................ 24,567 44,821 50,276
Loan recoveries.................................. 16,840 17,962 15,151
Loan charge-offs................................. (37,495) (51,062) (49,450)
Reserves of acquired banks....................... 2,479 6,133 429
-------- -------- --------
Balance at end of year.......................... $174,873 $168,482 $150,628
======== ======== ========
Charge-offs, net of recoveries, as a percentage
of average loans................................ .25% .43% .47%
Reserve as a percentage of year-end loans........ 1.95 2.08 2.00
</TABLE>
The Financial Accounting Standards Board issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", which is effective in 1995.
The statement establishes procedures for determining the appropriate reserve
for loan losses for loans deemed impaired. The calculation of reserve levels
would be based upon the discounted present value of expected cash flows
received from the debtor or other measures of value such as market prices or
collateral values. The adoption of this statement should not have any
significant impact on the current level of the reserve for loan losses or
operating results.
35
<PAGE>
NOTE 7. BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1993 1992
-------- --------
(thousands of
dollars)
<S> <C> <C>
Land........................................................ $ 31,373 $ 30,035
Bank premises............................................... 253,062 239,644
Equipment................................................... 228,187 205,540
-------- --------
Subtotal................................................... 512,622 475,219
Accumulated depreciation.................................... (248,053) (218,212)
-------- --------
Total...................................................... $264,569 $257,007
======== ========
</TABLE>
Depreciation charged to other operating expense amounted to $34,385,000,
$33,418,000 and $31,252,000 in 1993, 1992 and 1991, respectively. Rental
expense for bank premises and equipment amounted to $30,079,000, $28,843,000
and $26,896,000 in 1993, 1992 and 1991, respectively. Contingent rentals and
sublease rental income amounts were not significant.
Occupancy expense is net of amortization of a total of $68 million of pre-tax
deferred gain on a building sale which is being amortized through 1997, at
which time the related leaseback expires. This amortization was $6,312,000 in
1993, 1992, and 1991.
Firstar and its subsidiaries are obligated under noncancellable operating
leases for various bank premises and equipment. These leases expire
intermittently over the years through 2034. The minimum rental commitments
under noncancellable leases for the next five years are shown below.
<TABLE>
<CAPTION>
PERIOD AMOUNT
------ -------
(thousands of
dollars)
<S> <C> <C>
Bank premises and equipment..................................... 1994 $22,046
1995 20,329
1996 18,614
1997 18,146
1998 3,806
</TABLE>
NOTE 8. SHORT-TERM BORROWED FUNDS
Short-term borrowed funds are summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Federal funds purchased and repurchase
agreements:
At December 31............................... $1,032,438 $785,967 $792,568
Average during year.......................... 745,865 622,227 734,710
Maximum month-end balance.................... 1,051,567 808,393 827,197
Average rate at year-end..................... 2.90% 2.62% 3.63%
Average rate during year..................... 2.84 3.32 5.40
</TABLE>
Federal funds purchased, which totaled $675 million at December 31, 1993,
generally represent one-day borrowings obtained primarily from financial
institutions in Firstar's marketplace in conjunction with their customer
correspondent relationships with the subsidiary banks. Securities sold under
repurchase agreements, which totaled $357 million at December 31, 1993,
represent borrowings maturing within one year that are secured by U.S. Treasury
and federal agency securities. Other short-term borrowed funds comprise
primarily treasury, tax and loan notes.
36
<PAGE>
NOTE 9. LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1993 1992
-------- --------
(thousands of
dollars)
<S> <C> <C>
10 1/4% subordinated notes................................... $ 78,405 $ 78,715
10% notes.................................................... 44,200 44,200
Convertible notes............................................ 4,422
Advances from Federal Home Loan Bank......................... 26,076
Other debt................................................... 3,670 4,508
-------- --------
Total....................................................... $126,275 $157,921
======== ========
</TABLE>
Firstar issued $100,000,000 of 10 1/4% notes under an indenture dated as of
May 1, 1988. The notes, which are subordinated to all unsubordinated
indebtedness of Firstar for borrowed money, are unsecured and mature May 1,
1998. The indenture contains a provision which restricts the disposition of or
subjecting to lien any common stock of certain subsidiaries.
Firstar issued $50,000,000 of 10% notes under an indenture dated as of June
1, 1986. The notes are unsecured and mature June 1, 1996. The indenture
contains a provision which restricts the disposition of or subjecting to lien
any common stock of certain subsidiaries.
The convertible notes matured in 1993 and were converted into 502,959 shares
of Firstar common stock. The Federal Home Loan Bank advances were repaid in
1993.
Other debt at December 31, 1993 includes debentures of $757,000 which bear
interest at 12% and mature in 1994 and notes of $2,706,000 which bear interest
at 11.50% and mature in 1996.
Long-term debt has aggregate maturities for the five years 1994 through 1998
as follows: $832,000 in 1994, $75,000 in 1995, $46,906,000 in 1996 and
$78,462,000 in 1998.
Firstar has repurchased portions of the 10 1/4% and 10% notes and incurred
losses of $57,000, $605,000, $943,000 in 1993, 1992 and 1991, respectively.
NOTE 10. STOCKHOLDERS' EQUITY
The authorized and outstanding shares of Firstar are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1993 1992
----------- -----------
<S> <C> <C>
Preferred stock, $1.00 par value:
Authorized--series B and C............................. 2,500,000 2,500,000
Outstanding--series B.................................. 500,000
Common stock, $1.25 par value:
Authorized............................................. 120,000,000 120,000,000
Outstanding (net of treasury stock).................... 64,360,819 62,639,979
</TABLE>
In June 1986 Firstar issued 500,000 shares of adjustable rate cumulative
preferred stock, series B. Firstar Corporation redeemed all of its series B
preferred stock on December 29, 1993 at $103 per share plus accrued dividends.
Dividends deducted from net income for purposes of determining net income
applicable to common stockholders were $3,266,000 in 1993, $3,747,000 in 1992,
and $4,054,000 in 1991.
37
<PAGE>
In January 1989 Firstar adopted a shareholder rights plan. Under the rights
plan each share of common stock entitles its holder to one-half right. Under
certain conditions, each right entitles the holder to purchase one one-
hundredth of a share of series C preferred stock at a price of $85, subject to
adjustment. The rights will only be exercisable if a person or group has
acquired, or announced an intention to acquire, 20% or more of the outstanding
shares of Firstar common stock. Under certain circumstances, including the
existence of a 20% acquiring party, each holder of a right, other than the
acquiring party, will be entitled to purchase at the exercise price Firstar
common shares having a market value of two times the exercise price. In the
event of the acquisition of Firstar by another company subsequent to a party
acquiring 20% or more of Firstar common stock, each holder of a right is
entitled to receive the acquiring company's common shares having a market value
of two times the exercise price. The rights may be redeemed at a price of $.01
per right prior to the existence of a 20% acquiring party, and thereafter, may
be exchanged for one common share per right prior to the existence of a 50%
acquiring party. The rights will expire on January 19, 1999. The rights do not
have voting or dividend rights and until they become exercisable, have no
dilutive effect on the earnings of Firstar. Under the rights plan, the Board of
Directors of Firstar may reduce the thresholds applicable to the rights from
20% to not less than 10%.
Preferred shares, when issued, rank prior to common shares both as to
dividends and liquidation but have no general voting rights. The series C
preferred stock, none of which is outstanding, is entitled to 100 votes per
share and other rights such that the value of a one one-hundredth interest in a
series C preferred share should approximate the value of one common share.
In conjunction with long-term incentive plans, 30,235 shares of restricted
common stock are being held in escrow for executive officers as of December 31,
1993. The shares cannot be sold prior to the end of a three-year period and are
subject to adjustment in accordance with the terms of the award.
NOTE 11. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
Firstar has an incentive stock plan that provides for a maximum grant of
2,600,000 stock options, stock appreciation rights and/or shares of stock. The
options expire ten years and one month after the date of grant.
The following table summarizes option activity under these plans:
<TABLE>
<CAPTION>
NUMBER OF SHARES OPTION PRICE
---------------- ---------------
<S> <C> <C>
Options outstanding at December 31, 1990 766,344 $2.91 to $15.81
Granted....................................... 455,000 13.38
Exercised..................................... (130,968) 2.91 to 15.81
Cancelled..................................... (8,200) 13.38 to 15.81
---------
Options outstanding at December 31, 1991 1,082,176 3.06 to 15.81
Granted....................................... 354,800 25.13
Exercised..................................... (155,914) 3.06 to 25.13
Cancelled..................................... (19,200) 13.38 to 25.13
---------
Options outstanding at December 31, 1992 1,261,862 4.37 to 25.13
Granted....................................... 310,600 32.50
Exercised..................................... (104,978) 4.37 to 15.81
Cancelled..................................... (30,000) 13.38 to 32.50
---------
Options outstanding at December 31, 1993....... 1,437,484 5.68 to 32.50
=========
</TABLE>
At December 31, 1993, options to acquire 797,884 shares were exercisable. In
1994 options to acquire 368,900 shares of common stock at $30.88 to $31.25 per
share were issued.
38
<PAGE>
Under stock appreciation rights plans, rights were granted to certain
officers of Firstar and its subsidiaries. The rights entitled holders to
receive shares of Firstar common stock and cash pursuant to a formula based
upon the market performance of the stock. All remaining rights matured in 1992.
Firstar accrued as compensation expense a percentage of net market appreciation
based on the number of years from origination. Compensation amounting to
$182,000 and $1,761,000 was recognized by Firstar in accordance with this
method in 1992 and 1991, respectively. No additional rights will be awarded
under these plans.
NOTE 12. OTHER OPERATING REVENUE AND EXPENSE
A summary of other operating revenue is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Insurance revenue................................... $ 10,410 $ 8,440 $ 7,643
Brokerage revenue................................... 8,718 6,135 3,012
Other............................................... 37,178 33,844 33,278
-------- -------- --------
Total.............................................. $ 56,306 $ 48,419 $ 43,933
======== ======== ========
A summary of other operating expense is as follows:
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Business development................................ $ 24,063 $ 23,055 $ 20,883
F.D.I.C. insurance.................................. 23,670 22,488 19,325
Stationery and supplies............................. 19,060 18,123 16,767
Delivery............................................ 15,452 15,840 15,149
Professional fees................................... 15,336 14,040 14,688
Information processing expense...................... 14,996 14,544 14,836
Amortization of intangibles......................... 12,717 15,520 8,676
Other............................................... 46,676 48,918 43,183
-------- -------- --------
Total.............................................. $171,970 $172,528 $153,507
======== ======== ========
</TABLE>
39
<PAGE>
NOTE 13. EMPLOYEE BENEFIT PLANS
Firstar and its subsidiaries have non-contributory defined benefit pension
plans covering substantially all employees. The benefits are based upon years
of service and the employee's compensation during the last five years of
employment. The funding policy is to contribute annually the minimum amount
necessary to satisfy federal minimum funding standards. Plan assets are
primarily invested in listed stocks and U.S. Treasury and federal agency
securities. The table below summarizes data relative to the plans.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation....................... $168,978 $145,806 $121,691
Accumulated benefit obligation.................. 172,742 148,892 130,906
Projected benefit obligation.................... 215,931 190,405 174,335
Plan assets at fair value........................ 205,941 190,667 183,587
Plan assets (less than) in excess of projected
benefit obligation.............................. (9,990) 262 9,252
Unrecognized prior service cost.................. (2,360) (859) 761
Unrecognized net asset........................... (7,147) (8,381) (9,615)
Unrecognized net loss (gain)..................... 4,341 (5,857) (13,035)
-------- -------- --------
Pension liability.............................. $(15,156) $(14,835) $(12,637)
======== ======== ========
Net pension expense comprised the following:
Service cost.................................... $ 7,176 $ 6,739 $ 6,694
Interest cost on projected benefit obligation... 15,705 14,389 13,122
Return on plan assets........................... (20,008) (13,133) (36,478)
Net amortization and deferral................... 2,994 (2,870) 21,548
Special termination benefits.................... 640
-------- -------- --------
Net pension expense............................ $ 5,867 $ 5,125 $ 5,526
======== ======== ========
Assumptions used in actuarial values:
Discount rate................................... 7.75% 8.25% 8.50%
Rates of increase in compensation levels........ 5.50 6.00 6.00
Expected rate of return on plan assets.......... 9.50 9.50 9.50
Firstar also has unfunded pension plans covering certain employees. Interest
rates used in calculating the actuarial values are essentially the same as in
the previously described plans. The table below summarizes data relative to the
plans.
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Projected benefit obligation..................... $ (9,275) $ (6,257) $ (5,534)
Unrecognized transition obligation............... 232 275 318
Unrecognized net loss............................ 3,847 1,486 1,139
-------- -------- --------
Pension liability.............................. $ (5,196) $ (4,496) $ (4,077)
======== ======== ========
Net pension expense comprised the following:
Service cost.................................... $ 218 $ 131 $ 117
Interest cost on projected benefit obligation... 612 474 437
Net amortization and deferral................... 211 122 99
-------- -------- --------
Net pension expense............................ $ 1,041 $ 727 $ 653
======== ======== ========
</TABLE>
40
<PAGE>
Firstar has a profit sharing plan under which eligible employees can
participate by contributing a portion of their salary for investment in one or
more trust funds. Contributions are made to the account of each participant
based upon profitability or at the discretion of the board of directors.
Amounts expensed in connection with this plan were $9,667,000 in 1993,
$8,539,000 in 1992 and $7,167,000 in 1991.
In addition to pension benefits, certain health care benefits are made
available to active and retired employees. Firstar adopted Statement of
Financial Accounting Standards No. 106, "Accounting for Postretirement Benefits
Other Than Pensions" in 1993. The statement requires employers to recognize
postretirement benefits on an accrual basis over employee service periods as
contrasted with the expensed-as- incurred method of accounting. The
implementation of this statement resulted in a net increase of $7.0 million in
annual costs in 1993. The table below summarizes data relative to this benefit
program. The program is unfunded and the transition obligation is being
amortized over 20 years.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------
(thousands of dollars)
<S> <C>
Accumulated postretirement benefit obligation:
Retirees.............................................. $(33,507)
Fully eligible active plan participants............... (18,056)
Other active plan participants........................ (20,354)
--------
Total................................................ (71,917)
Unrecognized transition obligation.................... 56,099
Unrecognized net loss................................. 8,854
--------
Postretirement benefit liability..................... $ (6,964)
========
Net postretirement benefit expense comprised the
following:
Service cost.......................................... $ 1,515
Interest cost......................................... 4,938
Amortization of transition obligation................. 2,953
--------
Net postretirement benefit expense................... $ 9,406
========
</TABLE>
For measurement purposes, a 12% annual rate of increase in the per capita
cost of covered health care benefits was assumed, decreasing to 7% by 2008 and
remaining at that level thereafter. The health care cost trend rate assumption
has a significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement accumulated benefit obligation by
$11,915,000 and the aggregate of the service and interest cost components of
net postretirement benefit cost by $1,785,000. The weighted average discount
rate used in determining the accumulated postretirement benefit obligation was
7.75%.
NOTE 14. INCOME TAXES
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes", was issued by the Financial Accounting Standards Board in February 1992
and adopted by Firstar on January 1, 1993. Statement 109 requires a change from
the income statement approach under APB Opinion 11 to the asset and liability
method of accounting for income taxes. Under the asset and liability method of
Statement 109, deferred income taxes are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred taxes of a change in tax rates is recognized in income in
the period that includes the enactment date.
41
<PAGE>
The taxes applicable to net income were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
-------- ------- -------
(thousands of dollars)
<S> <C> <C> <C>
Current income taxes:
Federal........................................... $ 90,048 $66,746 $45,442
State and other................................... 18,830 14,862 13,072
-------- ------- -------
Subtotal......................................... 108,878 81,608 58,514
Deferred income taxes (benefit):
Federal........................................... (11,340) (9,229) (4,826)
State and other................................... (1,543) (832) (700)
-------- ------- -------
Subtotal......................................... (12,883) (10,061) (5,526)
Cumulative effect of change in accounting
principle......................................... (2,279)
-------- ------- -------
Provision for income taxes....................... $ 93,716 $71,547 $52,988
======== ======= =======
</TABLE>
Income tax expense differed from the amount computed by applying the federal
statutory rate of 35% in 1993 and 34% in 1992 and 1991 to income before taxes
as a result of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
-------- ------- -------
(thousands of dollars)
<S> <C> <C> <C>
Tax expense at statutory rate...................... $104,498 $80,991 $63,899
Increase (reduction) in taxes resulting from:
Change in the beginning-of-year balance of the
valuation allowance for deferred tax assets
allocated to income tax expense.................. 195
Adjustment to deferred tax assets and liabilities
for enacted changes in tax laws and rates........ (1,586)
Tax exempt income................................. (18,486) (20,882) (22,086)
State and local taxes--net of federal income tax
benefit.......................................... 11,390 9,260 8,166
Amortization of acquisition premium............... 1,663 2,433 2,718
Other--net........................................ (1,679) (255) 291
Cumulative effect of change in accounting
principle......................................... (2,279)
-------- ------- -------
Provision for income taxes........................ $ 93,716 $71,547 $52,988
======== ======= =======
</TABLE>
The significant components of deferred income tax expense are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, 1993
----------------------
(thousands of dollars)
<S> <C>
Deferred tax expense (exclusive of the effects of other
components listed below)............................... $(11,492)
Adjustments to deferred tax assets and liabilities for
enacted changes in tax laws and rates.................. (1,586)
Change in balance of the valuation allowance for
deferred tax assets.................................... 195
--------
Total.................................................. $(12,883)
========
</TABLE>
42
<PAGE>
For the years ended December 31, 1992 and 1991, deferred income tax benefits
of $10,061,000 and $5,526,000, respectively, resulted from timing differences
in the recognition of income and expense for income tax and financial reporting
purposes. The sources and tax effects of those timing differences are presented
below:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
-----------------
1992 1991
-------- -------
(thousands of
dollars)
<S> <C> <C>
Deduction for loan losses................................... $ (5,987) $(5,266)
Foreclosed properties....................................... (2,119) 30
Gain on the sale of building................................ 2,475 2,475
Other--net.................................................. (4,430) (2,765)
-------- -------
Total...................................................... $(10,061) $(5,526)
======== =======
</TABLE>
The significant components of the net deferred tax asset were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------
(thousands of dollars)
<S> <C>
Deferred tax assets:
Pension costs.......................................... $ 9,683
Reserve for loan losses................................ 73,903
Other real estate...................................... 5,748
Deferred gain on sale of building...................... 13,382
Deferred compensation.................................. 10,649
State and federal net operating loss carryforwards..... 13,439
Other--net............................................. 3,664
--------
Gross deferred tax assets............................. 130,468
Less valuation allowance............................... (14,186)
--------
Subtotal.............................................. 116,282
Deferred tax liabilities:
Depreciation of bank premises and equipment............ (14,154)
Equipment leased to customers.......................... (15,829)
Difference in basis of certain acquired assets
accounted for as a purchase........................... (9,822)
--------
Gross deferred tax liabilities........................ (39,805)
--------
Net deferred tax asset................................ $ 76,477
========
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1993 was
$13,991,000. The net change in the valuation allowance for the year ended
December 31, 1993 was an increase of $195,000. The valuation allowance has been
recognized primarily to offset deferred tax assets related to state net
operating loss carryforwards of subsidiaries totaling approximately
$156,000,000 which expire at various times within the next 15 years. If
realized, the tax benefit for these items will reduce current tax expense for
that period.
Other assets include net deferred income tax charges of $76,477,000 at
December 31, 1993 and $61,315,000 at December 31, 1992.
43
<PAGE>
NOTE 15. COMMITMENTS AND CONTINGENT LIABILITIES
Firstar is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, commitments to sell
mortgages, contracts to buy or sell securities and foreign currency, mortgage
loans sold with recourse, interest rate caps and floors written and interest
rate swaps. Those instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amounts recognized in the consolidated
balance sheets. The contract or notional amounts of those instruments reflect
the extent of involvement Firstar has in particular classes of financial
instruments.
Firstar's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit,
commitments to sell mortgages, contracts to buy or sell investment securities
and foreign currency, mortgage loans sold with recourse and standby letters of
credit is represented by the contractual notional amount of those instruments.
Firstar uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. Firstar evaluates
each customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary upon extension of credit, is based on
management's credit evaluation of the party. For interest rate caps, floors
and swap transactions, the contract or notional amounts do not represent
exposure to credit loss. Firstar controls the credit risk of its interest rate
agreements through credit approvals, limits and monitoring procedures.
A summary of significant off-balance sheet financial agreements at December
31, 1993 and 1992 follows:
<TABLE>
<CAPTION>
CONTRACT OR
NOTIONAL
AMOUNT
-------------
DECEMBER 31
-------------
1993 1992
------ ------
(millions of
dollars)
<S> <C> <C>
Financial instruments whose contract amounts represent credit
risk:
Commitments to extend credit................................... $3,763 $3,153
Credit card lines.............................................. 1,364 1,311
Standby and commercial letters of credit....................... 349 335
Mortgage loans sold with recourse.............................. 21 30
Other.......................................................... 92 43
Financial instruments whose notional or contract amounts exceed
the amount of credit risk:
Commitments to sell mortgages.................................. 202 231
Interest rate swap agreements:
As hedges against interest rate risk.......................... 1,097 200
As an intermediary for customers.............................. 1,252 533
Interest rate caps and floors written:
As hedges against interest rate risk.......................... 180 80
As an intermediary for customers.............................. 72 27
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is not a violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements.
Credit card commitments are unsecured agreements to extend credit. Such
commitments are reviewed periodically, at which time the commitments may be
maintained, increased, decreased or canceled depending upon evaluation of the
customer's credit worthiness and other considerations.
Standby and commercial letters of credit are conditional commitments issued
by Firstar to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and similar
transactions.
44
<PAGE>
Firstar originates and sells residential mortgage loans as a part of various
mortgage-backed security programs sponsored by United States government
agencies or government-sponsored agencies, such as the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association and the
Government National Mortgage Association. These sales are often subject to
certain recourse provisions in the event of default by the borrower.
Other financial instruments include agreements to purchase or sell investment
securities and agreements to purchase or sell foreign currency.
Firstar enters into both mandatory and optional commitments to sell groups of
residential mortgage loans that it originates or purchases as part of its
mortgage banking activities. Firstar commits to sell the loans at specified
prices in a future period typically within 90 days. The risk associated with
these commitments consists primarily of loans not closing in sufficient volumes
and at appropriate yields to meet the sale commitments.
Firstar enters into interest rate swaps, caps, and floors to hedge its own
interest rate risk and to act as an intermediary on behalf of its customers.
Under a typical swap agreement, one party pays a fixed rate of interest on a
notional amount to a second party who in turn pays a variable rate of interest
on the same notional amount. Credit risk associated with interest rate swaps is
dependent upon the ability of the counterparty to perform its payment
obligation under the agreement. Firstar performs normal credit reviews on its
swap counterparties. Where Firstar acts as an intermediary for customers, it
enters into positions that essentially offset one another.
Firstar and its subsidiaries are subject to various legal actions and
proceedings in the normal course of business, some of which involve substantial
claims for compensatory or punitive damages. Although litigation is subject to
many uncertainties and the ultimate exposure with respect to these matters
cannot be ascertained, management does not believe that the final outcome will
have a material adverse effect on the financial condition of Firstar.
NOTE 16. REGULATORY RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND CASH
Federal regulations require Firstar to maintain as reserves, minimum cash
balances based on deposit levels at subsidiary banks. Cash balances restricted
from usage due to these requirements were $267 million and $238 million at
December 31, 1993 and 1992, respectively.
Firstar's subsidiary banks are restricted by regulation as to the amount of
funds which can be transferred to the parent in the form of loans and
dividends. As of December 31, 1993, $117 million could be loaned to Firstar by
the subsidiary banks subject to strict collateral requirements, and $216
million could be paid to Firstar by the subsidiary banks in the form of
dividends. In addition each subsidiary bank could pay dividends to Firstar in
an amount which approximates Firstar's equity in their 1994 net income. The
payment of dividends by any subsidiary bank may also be affected by other
factors beyond this regulatory limitation, such as maintenance of adequate
capital for such subsidiary bank.
45
<PAGE>
NOTE 17. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires that Firstar disclose estimated fair
values for its financial instruments. Fair value estimates were based on
relevant market data and information about the various financial instruments.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time Firstar's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of
Firstar's financial instruments, fair value estimates are based on judgements
regarding current economic conditions, risk characteristics of various
financial instruments, future expected loss experience and other factors. These
estimates are subjective and involve uncertainties and matters of significant
judgement and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities which are not considered
financial instruments. Significant assets that are not considered financial
instruments include goodwill, core deposit intangibles, certain customer
relationships and fixed assets. In addition, the tax ramifications related to
the realization of the unrealized gains and losses can have a significant
effect on fair value estimates and have not been considered.
Fair value estimates, methods and assumptions are set forth below for
Firstar's financial instruments.
Cash and short-term investments--The carrying amounts for short-term
investments (which include interest-bearing deposits with banks, federal funds
sold and resale agreements) approximate fair value because they mature in 90
days or less and do not represent unanticipated credit concerns.
Investment and trading account securities--Estimated fair value for
investment and trading account securities is based on quoted market prices. The
fair value of certain small issues and municipal securities which are not
readily available through market quotations is assumed to equal carrying value
as these securities generally have short terms. These securities do not
represent a significant portion of the portfolio.
Loans--Fair values were estimated for loans with similar financial
characteristics. The commercial loan portfolio was separated into credit risk
categories by variable and fixed rate loans. The fair value of performing
loans, except for internally criticized commercial and lease financing loans,
was calculated by discounting cash flows using an estimated discount rate that
reflects current market rates, the type of loan, credit risk inherent in the
loan category and repricing characteristics. Fair value for criticized
commercial loans was calculated by reducing the carrying value by an amount
that reflects the estimated principal loss. This loss was based on internal
credit analysis of specific borrowers taking into consideration past loan loss
experience and trends in loan quality. For lease financing loans, carrying
value was considered to approximate fair value.
The fair value of credit card loans was estimated using the net present value
method. Credit card portfolios are not actively traded and the discount rate
used reflects an estimated rate of return based on the credit quality of the
portfolio. This estimate does not include the value that relates to estimated
cash flows from new loans generated from existing cardholders over the
remaining life of the portfolio. For residential mortgages, fair value was
estimated by discounting cash flows adjusted for anticipated prepayments using
discount rates based on current market rates for similar loans.
Deposits--The fair value of deposits with no stated maturity, such as
interest bearing and non-interest bearing demand, savings and money market
accounts, is equal to the amount payable on demand. The fair value of
certificates of deposit is based on the discounted value of contractual cash
flows using current market rates for similar types of deposits.
46
<PAGE>
Borrowed funds--The carrying value of short-term borrowed funds approximate
fair value as they are payable within three months or less. The estimated fair
value of long-term debt is based on broker quotations, when available. Debt for
which quoted prices were not available was valued using cash flows discounted
at a current market rate for similar types of debt.
Off-balance sheet items--The fair value of interest rate swap agreements is
based on the present value of the swap using dealer quotes. Fair values for
caps and floors were obtained using an option pricing model which reflects
industry pricing standards. These values represent the estimated amount Firstar
would receive or pay to terminate the contracts or agreements taking into
account current interest rates and market volatility. The fair value of these
agreements were $1 million and $3 million at December 31, 1993 and 1992,
respectively. The fair value of commitments to extend credit and standby
letters of credit was estimated using fees currently charged to enter into
similar agreements. The fair value of credit card lines is based on cardholder
fees currently being charged. The estimated fair value for commitments to
extend credit, standby letters of credit and credit card lines at December 31,
1993 and 1992 were $15 million and $17 million, respectively.
The estimated fair value of Firstar's financial instruments is summarized as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1992
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments... $1,515,802 $1,515,802 $1,701,294 $1,701,294
Trading account securities........ 12,491 12,491 20,873 20,873
Investment securities............. 2,834,305 2,894,594 2,864,015 2,942,911
Loans, net of allowance for loan
losses........................... 8,808,945 9,022,477 7,943,009 8,142,781
Financial liabilities:
Deposits without stated
maturities....................... 7,714,095 7,714,095 7,205,797 7,205,797
Deposits with stated maturities... 3,449,519 3,474,675 3,678,316 3,715,885
Short-term borrowed funds......... 1,112,490 1,112,490 861,525 861,525
Long-term debt.................... 126,275 145,018 157,921 183,808
</TABLE>
47
<PAGE>
NOTE 18. PARENT CORPORATION CONDENSED FINANCIAL STATEMENTS
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1993 1992
---------- ----------
(thousands of
dollars)
<S> <C> <C>
Assets:
Cash and due from banks................................. $ 124 $ 66
Short-term investments.................................. 52,485 34,150
Commercial loans........................................ 694 1,100
Subsidiary loans........................................ 33,018 38,996
Investment in subsidiaries.............................. 1,206,978 1,104,015
Other assets............................................ 6,166 13,187
---------- ----------
Total assets........................................... $1,299,465 $1,191,514
========== ==========
Liabilities and stockholders' equity:
Long-term debt.......................................... $ 125,311 $ 130,043
Other liabilities....................................... 18,257 13,083
Stockholders' equity.................................... 1,155,897 1,048,388
---------- ----------
Total liabilities and stockholders' equity............. $1,299,465 $1,191,514
========== ==========
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------
1993 1992 1991
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Revenue:
Dividends from subsidiaries...................... $139,543 $ 92,611 $ 91,082
Fees from subsidiaries........................... 21,727 20,245 15,733
Investment and loan income....................... 3,784 3,834 4,847
Other revenue.................................... 1,673 148 128
-------- -------- --------
Total revenue................................... 166,727 116,838 111,790
Expense:
Interest......................................... 13,045 13,578 14,874
Salaries and employee benefits................... 15,267 14,182 10,117
Other expense.................................... 10,669 13,530 12,467
-------- -------- --------
Total expense................................... 38,981 41,290 37,458
Income before income taxes and equity in
undistributed income of subsidiaries............. 127,746 75,548 74,332
Provision for income tax expense (benefits)....... 8,151 (5,216) (5,659)
-------- -------- --------
Income before equity in undistributed income of
subsidiaries..................................... 119,595 80,764 79,991
Equity in undistributed income of subsidiaries.... 84,699 85,221 54,340
-------- -------- --------
Net income...................................... $204,294 $165,985 $134,331
======== ======== ========
</TABLE>
48
<PAGE>
NOTE 18. PARENT CORPORATION CONDENSED FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1993 1992 1991
--------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 204,294 $165,985 $134,331
Adjustments:
Equity in undistributed income of subsidiaries. (84,699) (85,221) (54,340)
Depreciation, amortization and accretion....... 733 729 701
Decrease (increase) in other assets............ 10,527 (4,397) 1,570
Increase in other liabilities.................. 3,153 785 1,160
Other net...................................... 406 1,216 958
--------- -------- --------
Net cash provided by operating activities..... 134,414 79,097 84,380
Cash flows from investing activities:
Net (increase) decrease in short-term
investments................................... (18,335) 23,615 38,565
Net decrease (increase) in commercial loans.... 174 (1,513)
Net decrease (increase) in loans to
subsidiaries.................................. 5,978 2,566 (34,812)
Expenditures for premises and equipment........ (902) (328) (338)
Funds invested in acquisitions................. (12,730)
Capital contributions to subsidiaries.......... (710) (10,300) (650)
Purchase of minority shares of subsidiaries.... (591) (779) (712)
Net (increase) decrease in intercompany
receivables................................... (956) 168 294
Other net...................................... 167 (451) (1,746)
--------- -------- --------
Net cash (used in) provided by investing
activities................................... (15,175) 248 601
Cash flows from financing activities:
Repayment of long-term debt.................... (366) (6,428) (20,606)
Cash dividends................................. (67,453) (53,204) (44,529)
Preferred stock redemption..................... (51,500)
Common stock transactions...................... 138 (19,788) (20,761)
--------- -------- --------
Net cash used in financing activities......... (119,181) (79,420) (85,896)
--------- -------- --------
Net increase (decrease) in cash and due from
banks.......................................... 58 (75) (915)
Cash and due from banks at beginning of year.... 66 141 1,056
--------- -------- --------
Cash and due from banks at end of year.......... $ 124 $ 66 $ 141
========= ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for interest......... $ 12,829 $ 13,672 $ 15,039
</TABLE>
49
<PAGE>
LOGO
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Firstar Corporation:
We have audited the accompanying consolidated balance sheets of Firstar
Corporation and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1993. These
consolidated financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Firstar
Corporation and subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in notes 13, 14 and 4 to the consolidated financial statements,
Firstar Corporation adopted the provisions of Statement of Financial Accounting
Standards Nos. 106, 109 and 115, respectively, in 1993.
LOGO
KPMG PEAT MARWICK
Milwaukee, Wisconsin
January 20, 1994
50
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
SUMMARY OF QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
1993
-----------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(thousands of dollars, except per
share data)
<S> <C> <C> <C> <C>
Interest revenue........................... $217,901 $216,253 $216,549 $216,251
Interest expense........................... 78,149 75,409 74,037 71,303
-------- -------- -------- --------
NET INTEREST REVENUE....................... 139,752 140,844 142,512 144,948
Provision for loan losses.................. 6,334 5,328 6,789 6,116
Other operating revenue.................... 79,325 84,285 88,058 90,597
Other operating expense.................... 141,739 144,882 147,885 153,238
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES................. 71,004 74,919 75,896 76,191
Provision for income taxes................. 20,978 24,522 24,541 23,675
-------- -------- -------- --------
NET INCOME................................. $ 50,026 $ 50,397 $ 51,355 $ 52,516
======== ======== ======== ========
PER COMMON SHARE
Net income................................. $ .78 $ .78 $ .79 $ .80
Dividends.................................. .22 .26 .26 .26
Stock price ranges:
high...................................... 35 7/8 37 1/4 34 1/8 35 3/8
low....................................... 29 7/8 29 1/2 31 5/8 29 3/8
close..................................... 33 7/8 32 1/2 33 5/8 30 3/4
<CAPTION>
1992
-----------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(thousands of dollars, except per
share data)
<S> <C> <C> <C> <C>
Interest revenue........................... $228,656 $225,186 $220,914 $223,765
Interest expense........................... 98,962 91,557 85,616 83,234
-------- -------- -------- --------
NET INTEREST REVENUE....................... 129,694 133,629 135,298 140,531
Provision for loan losses.................. 12,214 11,959 10,340 10,308
Other operating revenue.................... 71,786 71,686 77,405 79,890
Other operating expense.................... 136,690 132,754 139,555 148,567
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES................. 52,576 60,602 62,808 61,546
Provision for income taxes................. 15,513 19,591 19,647 16,796
-------- -------- -------- --------
NET INCOME................................. $ 37,063 $ 41,011 $ 43,161 $ 44,750
======== ======== ======== ========
PER COMMON SHARE
Net income................................. $ .59 $ .65 $ .68 $ .70
Dividends.................................. .18 .20 .20 .22
Stock price ranges:
high...................................... 26 3/4 27 9/16 29 5/8 31 7/8
low....................................... 23 5/16 23 1/8 26 15/16 25 3/8
close..................................... 24 15/16 27 7/16 27 3/4 31 1/2
</TABLE>
51
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL RATIOS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(thousands of dollars, except per share
data)
<S> <C> <C> <C> <C> <C>
INTEREST REVENUE
Loans........................ $685,530 $693,594 $757,069 $769,384 $746,803
Investment securities........ 174,652 191,736 206,577 195,366 166,544
Other........................ 6,772 13,191 18,033 28,288 41,123
-------- -------- -------- -------- --------
Total interest revenue...... 866,954 898,521 981,679 993,038 954,470
INTEREST EXPENSE
Deposits..................... 261,634 321,405 438,799 474,114 450,166
Short-term borrowed funds.... 23,811 23,423 45,434 70,410 73,507
Long-term debt............... 13,453 14,541 16,850 18,560 17,695
-------- -------- -------- -------- --------
Total interest expense...... 298,898 359,369 501,083 563,084 541,368
-------- -------- -------- -------- --------
NET INTEREST REVENUE......... 568,056 539,152 480,596 429,954 413,102
Provision for loan losses.... 24,567 44,821 50,276 49,161 52,362
-------- -------- -------- -------- --------
NET INTEREST REVENUE AFTER
LOAN LOSS PROVISION......... 543,489 494,331 430,320 380,793 360,740
OTHER OPERATING REVENUE
Trust and investment
management fees............. 110,185 95,926 80,813 70,051 64,131
Service charges on deposit
accounts.................... 74,071 66,301 59,368 50,250 44,078
Credit card service revenue.. 53,316 51,867 54,594 51,562 46,065
Other........................ 104,693 86,673 77,760 76,438 71,247
-------- -------- -------- -------- --------
Total other operating
revenue.................... 342,265 300,767 272,535 248,301 225,521
OTHER OPERATING EXPENSE
Salaries and employee
benefits.................... 316,848 287,607 266,757 245,571 232,585
Net occupancy expense........ 48,731 44,408 42,252 35,708 36,618
Equipment expense............ 48,139 48,720 42,483 39,774 38,422
Other........................ 174,026 176,831 164,044 143,747 121,883
-------- -------- -------- -------- --------
Total other operating
expense.................... 587,744 557,566 515,536 464,800 429,508
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES... 298,010 237,532 187,319 164,294 156,753
Provision for income taxes... 93,716 71,547 52,988 46,837 45,618
-------- -------- -------- -------- --------
NET INCOME................... $204,294 $165,985 $134,331 $117,457 $111,135
======== ======== ======== ======== ========
Per common share:
Net income.................. $ 3.15 $ 2.62 $ 2.14 $ 1.82 $ 1.72
Dividends................... 1.00 .80 .705 .635 .545
Return on average total
assets...................... 1.59% 1.36% 1.16% 1.06% 1.07%
Return on average common
equity...................... 18.61 17.43 15.85 14.83 15.65
Dividend payout ratio........ 31.75 30.53 32.94 34.89 31.69
Equity as a percentage of
assets:
At year-end................. 8.38 7.96 7.44 7.03 7.08
Average for the year........ 8.79 8.06 7.50 7.41 7.24
Full-time equivalent staff
(at year-end)............... 8,608 8,246 7,709 7,791 7,776
Number of common stockholders
(at year-end)............... 9,990 9,652 8,742 9,422 9,453
Average common shares
outstanding (000's)......... 63,747 61,879 60,998 61,218 60,164
</TABLE>
52
<PAGE>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST REVENUE AND RATE ANALYSIS
<TABLE>
<CAPTION>
1993 1992 1991
----------------------------- ----------------------------- ------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
----------- -------- ------- ----------- -------- ------- ----------- --------- -------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits with
banks............ $ 33,043 $ 1,385 4.19% $ 67,864 $ 2,608 3.84% $ 59,003 $ 4,238 7.18%
Federal funds
sold and resale
agreements....... 147,744 4,602 3.11 277,075 9,791 3.53 232,272 13,016 5.60
Trading account
securities....... 17,332 985 5.68 15,514 1,012 6.52 13,089 989 7.56
Investment
securities:
Taxable......... 2,005,584 129,593 6.46 1,913,174 140,652 7.35 1,881,714 155,821 8.28
Nontaxable...... 923,451 67,780 7.34 931,803 74,934 8.04 813,033 75,327 9.26
----------- -------- ----------- -------- ----------- ---------
Total investment
securities...... 2,929,035 197,373 6.74 2,844,977 215,586 7.58 2,694,747 231,148 8.58
Loans:
Commercial...... 4,936,620 385,322 7.81 4,519,772 382,129 8.45 4,399,308 439,212 9.98
Consumer........ 3,396,343 306,658 9.03 3,115,162 319,102 10.24 2,917,125 328,633 11.27
----------- -------- ----------- -------- ----------- ---------
Total loans..... 8,332,963 691,980 8.30 7,634,934 701,231 9.18 7,316,433 767,845 10.49
----------- -------- ----------- -------- ----------- ---------
Interest earning
assets.......... 11,460,117 896,325 7.82 10,840,364 930,228 8.58 10,315,544 1,017,236 9.86
Reserve for loan
losses........... (173,224) (160,642) (144,714)
Cash and due from
banks............ 938,407 855,297 810,141
Other assets..... 631,939 634,794 641,521
----------- ----------- -----------
Total assets.... $12,857,239 $12,169,813 $11,622,492
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
demand........... $ 1,418,061 $ 23,666 1.67% $ 1,280,893 $ 31,977 2.50% $ 1,086,022 $ 45,490 4.19%
Savings passbook. 1,490,209 38,214 2.56 1,239,367 40,247 3.25 1,017,324 48,789 4.80
Consumer time.... 4,171,099 171,282 4.11 4,329,151 213,325 4.93 4,434,678 288,326 6.50
Commercial time.. 921,476 28,472 3.09 943,854 35,856 3.80 970,666 56,194 5.79
Short-term
borrowed funds... 822,580 23,811 2.89 692,879 23,423 3.38 840,780 45,434 5.40
Long-term debt... 133,135 13,453 10.10 146,748 14,541 9.91 167,833 16,850 10.04
----------- -------- ----------- -------- ----------- ---------
Interest-bearing
liabilities..... 8,956,560 298,898 3.34 8,632,892 359,369 4.16 8,517,303 501,083 5.88
Demand deposits.. 2,531,844 2,323,260 2,001,692
Other
liabilities...... 238,645 232,773 231,662
Stockholders'
equity........... 1,130,190 980,888 871,835
----------- ----------- -----------
Total
liabilities and
stockholders'
equity.......... $12,857,239 $12,169,813 $11,622,492
=========== =========== ===========
Net interest
revenue/margin... $597,427 5.21% $570,859 5.27% $ 516,153 5.00%
======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
1990 1989
------------------------------ -----------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
----------- --------- ------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits with
banks............ $ 64,772 $ 5,668 8.75% $ 98,914 $ 9,215 9.32%
Federal funds
sold and resale
agreements....... 265,280 21,572 8.13 334,456 30,536 9.13
Trading account
securities....... 15,068 1,331 8.83 18,880 1,669 8.84
Investment
securities:
Taxable......... 1,701,890 147,506 8.67 1,575,206 134,532 8.54
Nontaxable...... 734,592 71,133 9.68 483,962 47,941 9.91
----------- --------- ----------- --------
Total investment
securities...... 2,436,482 218,639 8.97 2,059,168 182,473 8.86
Loans:
Commercial...... 4,247,266 462,684 10.89 4,114,226 461,109 11.21
Consumer........ 2,754,243 319,319 11.59 2,474,474 300,466 12.14
----------- --------- ----------- --------
Total loans..... 7,001,509 782,003 11.17 6,588,700 761,575 11.56
----------- --------- ----------- --------
Interest earning
assets.......... 9,783,111 1,029,213 10.52 9,100,118 985,468 10.83
Reserve for loan
losses........... (124,955) (115,078)
Cash and due from
banks............ 838,644 812,252
Other assets..... 607,499 557,200
----------- -----------
Total assets.... $11,104,299 $10,354,492
=========== ===========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
demand........... $ 958,890 $ 44,370 4.63% $ 875,501 $ 41,699 4.76%
Savings passbook. 945,242 48,199 5.10 915,325 46,343 5.06
Consumer time.... 4,206,338 312,597 7.43 3,819,432 287,438 7.53
Commercial time.. 972,565 68,948 7.09 947,501 74,686 7.88
Short-term
borrowed funds... 913,330 70,410 7.71 834,389 73,507 8.81
Long-term debt... 181,797 18,560 10.21 171,198 17,695 10.34
----------- --------- ----------- --------
Interest-bearing
liabilities..... 8,178,162 563,084 6.89 7,563,346 541,368 7.16
Demand deposits.. 1,877,794 1,806,507
Other
liabilities...... 225,920 234,554
Stockholders'
equity........... 822,423 750,085
----------- -----------
Total
liabilities and
stockholders'
equity.......... $11,104,299 $10,354,492
=========== ===========
Net interest
revenue/margin... $ 466,129 4.76% $444,100 4.88%
========= ========
</TABLE>
- ------
Interest and rates are calculated on a taxable equivalent basis, using a tax
rate of 35% in 1993 and 34% in 1992, 1991, 1990 and 1989. The rate calculations
include the effect of certain loans on which income is recognized only as cash
payments are received or is accrued at less than the original contract rate.
53
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Notice of the 1994 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
The executive officers of Firstar Corporation are listed under Item 1 of this
document.
ITEM 11. EXECUTIVE COMPENSATION
The Notice of the 1994 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Notice of the 1994 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Notice of the 1994 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)1. FINANCIAL STATEMENTS
The following financial statements of Firstar Corporation are filed as a part
of this document underItem 8. Financial Statements and Supplementary Data.
Consolidated Balance Sheets as of December 31, 1993 and 1992
Consolidated Statements of Income for the Years Ended December 31, 1993,
1992 and 1991
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows for the Years Ended December 31,
1993, 1992 and 1991
Notes to Consolidated Financial Statements
Independent Auditors' Report
(A)2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been included in the consolidated
financial statements or are either not applicable or not significant.
54
<PAGE>
(A)3. EXHIBITS
<TABLE>
<C> <S> <C>
3(i) Articles of incorporation of Firstar Corporation (incorporated
by reference to Exhibit 19 of the Form 10-Q of Firstar for the
quarter ended September 30, 1992)
3(ii) By-Laws of Firstar Corporation (incorporated by reference to
Exhibit 3.2 of the Form 10-K for the year ended December 31,
1991)
4.2 Indenture dated as of June 1, 1986 between Firstar Corporation
and Chemical Bank, as Trustee, relating to 10% Notes due June
1, 1996 (incorporated by reference to Exhibit 4(b) to
Amendment No. 1 to Registration No. 33-5932 of Firstar)
4.3 Indenture dated as of May 1, 1988 between Firstar Corporation
and Chemical Bank, as Trustee, relating to 10 1/4%
Subordinated Notes due May 1, 1998 (incorporated by reference
to Exhibit 4(a) to Amendment No. 1 to Registration No. 33-
21527 of Firstar)
4.4 Shareholder Rights Plan of Firstar Corporation (incorporated
by reference to Exhibit 4 of Form 8-K dated January 19, 1989
of Firstar)
10.1 Collective Bargaining Agreement between Firstar Bank
Milwaukee, N.A. and Firstar Bank Milwaukee Employees
Association dated July 30, 1993 (incorporated by reference to
Exhibit 10.1 of the Form 10-Q of Firstar for the quarter ended
September 30, 1993)
10.3 Directors' Deferred Compensation Plan, as amended
(incorporated by reference to Exhibit 10.3 of the Annual
Report Form 10-K of Firstar for the year ended December 31,
1988)
10.4* Key Executive Employment and Severance Agreement, as amended
(incorporated by reference to Exhibit 10.4 of the Form 10-Q of
Firstar for the quarter ended September 30, 1993)
10.5 Security Financial Services, Inc. 1979 Stock Option Plan, as
amended, assumed by Firstar (incorporated by reference to
Exhibit 4.1 of Registration No. 33-3432 of Firstar)
10.6 Security Financial Services, Inc. 1984 Incentive Stock Option
Plan, as amended, assumed by Firstar (incorporated by
reference to Exhibit 4.2 of Registration No. 33-3432 of
Firstar)
10.7* 1988 Incentive Stock Plan, as amended (incorporated by
reference to Exhibit 10.7 of the Form 10-Q of Firstar for the
quarter ended September 30, 1993)
10.8* Annual Executive Incentive Plan, as amended (incorporated by
reference to Exhibit 10.8 of the Annual Report Form 10-K of
Firstar for the year ended December 31, 1989)
10.9* Long-Term Incentive Plan, as amended (incorporated by
reference to Exhibit 10.9 of the Form 10-Q of Firstar for the
quarter ended September 30, 1993)
10.10 Form of Indemnity Agreement between Firstar Corporation and
its directors (incorporated by reference to Exhibit 10 of the
Quarterly Report on Form 10-Q of Firstar for the quarter ended
September 30, 1988)
21. Subsidiaries of Firstar Corporation
23. Consent of Independent Auditors
24. Powers of Attorney
</TABLE>
A copy of the exhibits listed herein can be obtained by writing to Mr.
William H. Risch, Senior Vice President-Finance and Treasurer, Firstar
Corporation, P.O. Box 532, Milwaukee, Wisconsin 53201.
*Executive Compensation Plans
(B) No reports on Form 8-K were filed during the fourth quarter of 1993.
55
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FIRSTAR CORPORATION
LOGO
-------------------------------------
Roger L. Fitzsimonds
March 18, 1994 Chairman and Chief Executive Officer
Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
March 18, 1994
LOGO
- -------------------------------------
Roger L. Fitzsimonds
Chairman, Chief Executive Officer
and director
March 18, 1994
- -------------------------------------
LOGO
John A. Becker
President, Chief Operating Officer
and director
March 18, 1994
LOGO
- -------------------------------------
William H. Risch
Senior Vice President-Finance and
Treasurer
(principal finance and accounting
officer)
DIRECTORS
Michael E. Batten* John H. Hendee, Jr.* George W. Mead
George M. Chester, Jr.* Jerry M. Hiegel* II*
Roger H. Derusha* Joe Hladky* Guy A. Osborn*
James L. Forbes* James H. Keyes* Judith D. Pyle*
Holmes Foster* Sheldon B. Lubar* Clifford V.
Joseph F. Heil, Jr.* Daniel F. McKeithan, Jr.* Smith, Jr.*
William W.
Wirtz*
March 18, 1994
LOGO
*By__________________________________
William H. Risch
Attorney-in-Fact
56
<PAGE>
Exhibit 21
Subsidiaries of the Registrant
-----------------------------------------------------------------------------
Firstar Corporation has no parents. The following list shows the name of each
subsidiary of Firstar and the state or juristiction of the incorporation.
<TABLE>
<CAPTION>
State or
Other Jurisdiction
in which Incorporated
Name of Subsidiary or Organized
------------------ ---------------------
<S> <C>
1 Firstar Bank Milwaukee, N.A. United States
1 Firstar Bank Appleton Wisconsin
1 Firstar Bank Eau Claire, N.A. United States
1 Firstar Bank Fond du Lac, N.A. United States
1 Firstar Bank Grantsburg, N.A. United States
1 Firstar Bank Green Bay Wisconsin
1 Firstar Bank Lake Geneva, N.A. United States
1 Firstar Bank Madison, N.A. United States
1 Firstar Bank Manitowoc Wisconsin
1 Firstar Bank Minocqua Wisconsin
1 Firstar Bank Oshkosh, N.A. United States
1 Firstar Bank Portage Wisconsin
1 Firstar Bank Racine Wisconsin
1 Firstar Bank Rice Lake, N.A. United States
1 Firstar Bank Sheboygan, N.A. United States
1 Firstar Bank Wausau, N.A. United States
1 Firstar Bank Wisconsin Rapids, N.A. United States
1 Bank of Athens Wisconsin
5 Firstar Bank Ames Iowa
5 Firstar Bank Burlington, N.A. United States
5 Firstar Bank Cedar Falls Iowa
5 Firstar Bank Cedar Rapids, N.A. United States
5 Firstar Bank Council Bluffs Iowa
5 Firstar Bank Davenport, N.A. United States
5 Firstar Bank Des Moines, N.A. United States
5 Firstar Bank Mount Pleasant Iowa
5 Firstar Bank Ottumwa Iowa
5 Firstar Bank Red Oak, N.A. United States
5 Firstar Bank Sioux City, N.A. United States
3 Firstar Bank of Minnesota, N.A. United States
2 Firstar Bank DuPage Illinois
2 Firstar Bank West, N.A. United States
2 Firstar Bank North Shore Illinois
2 Firstar Bank Park Forest Illinois
4 Firstar Metropolitan Bank & Trust Arizona
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
State or
Other Jurisdiction
in which Incorporated
Name of Subsidiary or Organized
------------------ ---------------------
<S> <C>
Firstar Corporation of Wisconsin Wisconsin
Firstar Corporation of Illinois Illinois
Firstar Corporation of Minnesota Minnesota
Firstar Corporation of Arizona Arizona
Firstar Corporation of Iowa Iowa
1 Firstar Trust Company Wisconsin
1 Firstar Trust Company of Florida, N.A. United States
2 Firstar Trust Company of Illinois Illinois
3 Firstar Trust Company of Minnesota Minnesota
Firstar Investment Research & Management Company Wisconsin
Elan Insurance Services, Inc. Wisconsin
6 Elan Investment Services, Inc. Wisconsin
Elan Life Insurance Company, Inc. Arizona
Elan Title Services, Inc. Wisconsin
6 Firstar Community Investment Corporation Wisconsin
Firstar Development Corporation Delaware
6 Firstar Leasing Services Corporation Wisconsin
6 Firstar Mortgage Corporation Wisconsin
6 FM Properties of Wisconsin, Inc. Wisconsin
6 CSFM Corporation Wisconsin
Firstar Home Mortgage Corporation Wisconsin
6 Firstar Information Services Corporation Wisconsin
5 Banks of Iowa Capital Corporation Iowa
5 Banks of Iowa Credit Corporation Iowa
Federated Insurance Services Corporation Wisconsin
6 Hopkins Bonding Corporation Wisconsin
7 CRC Corporation Wisconsin
5 Firstar CSC Corporation Iowa
6 DPC of Milwaukee, Inc. Wisconsin
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
State or
Other Jurisdiction
in which Incorporated
Name of Subsidiary or Organized
------------------ ---------------------
<S> <C>
Appleton Capital Corporation Nevada
BOA Investment Corporation Nevada
Eau Claire Capital Corporation Nevada
Fond du Lac Capital Corporation Nevada
Grantsburg Capital Corporation Nevada
Green Bay Capital Corporation Nevada
Lake Geneva Capital Corporation Nevada
Madison Capital Corporation Nevada
Manitowoc Capital Corporation Nevada
Milwaukee Capital Corporation Nevada
Minocqua Capital Corporation Nevada
Oshkosh Capital Corporation Nevada
Portage Capital Corporation Nevada
Racine Capital Corporation Nevada
Rice Lake Capital Corporation Nevada
Sheboygan Capital Corporation Nevada
Wausau Capital Corporation Nevada
Wisconsin Rapids Capital Corporation Nevada
Burlington Capital Corporation Nevada
Cedar Rapids Capital Corporation Nevada
Davenport Capital Corporation Nevada
Des Moines Capital Corporation Nevada
Red Oak Capital Corporation Nevada
Sioux City Capital Corporation Nevada
</TABLE>
Notes
1 Subsidiary of Firstar Corporation of Wisconsin
2 Subsidiary of Firstar Corporation of Illinois
3 Subsidiary of Firstar Corporation of Minnesota
4 Subsidiary of Firstar Corporation of Arizona
5 Subsidiary of Firstar Corporation of Iowa
6 Subsidiary of Firstar Bank Milwaukee, N.A.
7 Subsidiary of Firstar Bank Madison, N.A.
All Capital Corporations are subsidiaries of their respective banks
<PAGE>
Exhibit 23
The Board of Directors
Firstar Corporation:
We consent to incorporation by reference in the Registration Statements Nos. 33-
38830, 33-41030, 33-3432 and 33-19830 on Form S-8 of Firstar Corporation of our
report dated January 20, 1994, relating to the consolidated balance sheets of
Firstar Corporation and subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three-year period ended December 31, 1993, which
report appears in the December 31, 1993, Annual Report on Form 10-K of Firstar
Corporation.
KPMG PEAT MARWICK
Milwaukee, Wisconsin
March 18, 1994
<PAGE>
Exhibit 24
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
19th day of January, 1994.
/s/ Michael E. Batten SEAL
------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
7th day of February, 1994.
/s/ George M. Chester, Jr. SEAL
---------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
17th day of January, 1994.
/s/ Roger H. Derusha SEAL
-----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
20th day of January, 1994.
/s/ James L. Forbes SEAL
------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
26th day of January, 1994.
/s/ Holmes Foster SEAL
----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
24th day of January, 1994.
/s/ Joseph F. Heil, Jr. SEAL
-------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
15th day of January, 1994.
/s/ John H. Hendee, Jr. SEAL
------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
19th day of January, 1994.
/s/ Jerry M. Hiegel SEAL
------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
20th day of January, 1994.
/s/ Joe Hladky SEAL
-----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
17th day of February, 1994.
/s/ James H. Keyes SEAL
----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
20th day of January, 1994.
/s/ Sheldon B. Lubar SEAL
-----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
24th day of January, 1994.
/s/ Daniel F. McKeithan, Jr. SEAL
-------------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
14th day of January, 1994.
/s/ George W. Mead II SEAL
-------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
19th day of January, 1994.
/s/ Guy A. Osborn SEAL
----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
27th day of January, 1994.
/s/ Judith D. Pyle SEAL
-----------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
28th day of January, 1994.
/s/ Clifford V. Smith, Jr. SEAL
-----------------------------
<PAGE>
POWER OF ATTORNEY
Firstar Corporation
(Commission File No. 1-2981)
FIRSTAR CORPORATION
Annual Report on Form 10-K
--------------------------
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities and Exchange Act of 1934, an Annual
Report on Form 10-K for the fiscal year ended December 31, 1993; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, WILLIAM H. RISCH AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
31st day of January, 1994.
/s/ William W. Wirtz SEAL
------------------------
