FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER 1-2981
FIRSTAR CORPORATION
(Exact Name of Registrant as Specified in its Charter)
WISCONSIN 39-0711710
(State of Incorporation) (I.R.S. EMPLOYER
Identification No.)
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Telephone Number (414) 765-5748
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 precedeing
12 months and (2) has been subject to such filing requirements for the
past 90 days.
As of October 28, 1996, 75,184,426 shares of common stock were outstanding.
FIRSTAR CORPORATION
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flows 3
Supplemental Footnotes 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Additional Financial Data 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 17
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------
September 30 December 31 September 30
(thousands of dollars) 1996 1995 1995
- ------------------------------------------------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,402,393 $ 1,310,746 $ 1,087,667
Interest-bearing deposits with banks 6,206 5,467 5,906
Federal funds sold and resale agreements 199,399 109,945 118,099
Trading securities 6,757 10,029 7,931
Securities held to maturity (market value $2,282,608,
$2,492,346 and $4,104,637 on September 30, 1996,
December 31, 1995 and September 30, 1995) 2,262,745 2,427,030 4,040,354
Securities available for sale 2,018,230 2,047,848 221,995
Loans:
Commercial and industrial 3,373,991 3,078,148 3,270,594
Real estate 3,006,468 2,849,388 2,879,927
Other 1,003,490 1,038,677 993,710
------------ ------------ ------------
Commercial loans 7,383,949 6,966,213 7,144,231
Credit card 627,888 619,868 554,004
Real estate - mortgage 2,709,693 2,722,531 2,654,531
Home equity 1,080,396 935,907 913,899
Other 1,413,737 1,387,994 1,409,668
------------ ------------ ------------
Consumer loans 5,831,714 5,666,300 5,532,102
------------ ------------ ------------
Total loans 13,215,663 12,632,513 12,676,333
Reserve for loan losses (214,510) (195,283) (200,545)
------------ ------------ ------------
Loans - net 13,001,153 12,437,230 12,475,788
Bank premises and equipment 356,263 349,233 343,799
Customer acceptance liability 18,400 16,060 12,546
Other assets 643,058 454,712 469,931
------------ ------------ ------------
Total assets $ 19,914,604 $ 19,168,300 $ 18,784,016
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 3,497,517 $ 3,461,462 $ 3,093,148
Interest-bearing demand 1,539,302 1,602,350 1,501,412
Money market accounts 2,670,292 2,335,429 2,161,537
Savings passbook 1,566,107 1,634,430 1,695,095
Certificates of deposit 5,551,666 5,277,975 5,361,374
------------ ------------ ------------
Total deposits 14,824,884 14,311,646 13,812,566
Short-term borrowed funds 2,549,526 2,303,159 2,445,899
Other debt 601,720 734,021 727,217
Bank acceptances outstanding 18,400 16,060 12,546
Other liabilities 275,258 278,594 271,221
------------ ------------ ------------
Total liabilities 18,269,788 17,643,480 17,269,449
Stockholders' equity:
Preferred stock 11,424 15,344 17,453
Common stock 94,266 94,266 96,441
Issued: September 30, 1996, 75,194,380 shares
Issued: December 31, 1995, 75,413,098 shares
Issued: September 30, 1995, 74,851,062 shares
Capital surplus 139,696 147,502 215,667
Retained earnings 1,393,020 1,298,857 1,252,859
Treasury stock (2,320) (64,834) (68,558)
Held: September 30, 1996, 218,718 shares
Held: December 31, 1995, 2,186,834 shares
Held: September 30, 1995, 2,297,615 shares
Restricted stock (8) (442) (609)
Unrealized gains on securities available for sale 8,738 34,127 1,314
------------ ------------ ------------
Total stockholders' equity 1,644,816 1,524,820 1,514,567
------------ ------------ ------------
Total liabilities and stockholders' equity $ 19,914,604 $ 19,168,300 $ 18,784,016
============ ============ ============
-1-
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
(thousands of dollars, except per share data) 1996 1995 1996 1995
- --------------------------------------------- ---------------------- ----------------------
(unaudited)
<S> <C> <C> <C> <C>
INTEREST REVENUE
Loans $ 283,309 $ 271,034 $ 831,564 $ 801,110
Securities 65,828 64,379 198,857 188,305
Interest-bearing deposits with banks 108 188 365 847
Federal funds sold and resale agreements 1,829 3,705 3,527 9,878
Trading securities 19 171 260 635
---------- ---------- ---------- ----------
Total interest revenue 351,093 339,477 1,034,573 1,000,775
INTEREST EXPENSE
Deposits 118,222 112,125 346,729 329,081
Short-term borrowed funds 32,876 35,113 95,334 101,857
Other debt 10,054 11,135 33,968 31,099
---------- ---------- ---------- ----------
Total interest expense 161,152 158,373 476,031 462,037
---------- ---------- ---------- ----------
NET INTEREST REVENUE 189,941 181,104 558,542 538,738
Provision for loan losses 8,908 5,778 28,963 28,901
---------- ---------- ---------- ----------
NET INTEREST REVENUE AFTER
LOAN LOSS PROVISION 181,033 175,326 529,579 509,837
OTHER OPERATING REVENUE
Trust and investment management fees 36,810 32,814 108,388 96,931
Service charges on deposit accounts 22,506 20,499 65,200 60,284
Credit card service revenue 18,654 16,376 52,091 45,148
Data processing fees 4,687 4,041 13,851 13,557
Securities gains (losses) 22 313 64 (5,748)
Other revenue 30,672 27,011 85,035 75,712
---------- ---------- ---------- ----------
Total other operating revenue 113,351 101,054 324,629 285,884
OTHER OPERATING EXPENSE
Salaries 78,234 80,805 236,908 244,101
Employee benefits 17,338 18,442 56,087 57,180
Equipment expense 16,250 14,805 47,855 43,625
Net occupancy expense 16,782 14,022 47,356 42,973
Net foreclosed assets expense (income) 126 (536) 662 (684)
Restructuring expense 0 0 50,237 23,151
SAIF Assessments 7,969 0 7,969 0
Other expense 50,313 46,952 137,390 147,909
---------- ---------- ---------- ----------
Total other operating expense 187,012 174,490 584,464 558,255
INCOME BEFORE INCOME TAXES 107,372 101,890 269,744 237,466
Applicable income taxes 38,100 34,813 93,191 80,322
---------- ---------- ---------- ----------
NET INCOME $ 69,272 $ 67,077 $ 176,553 $ 157,144
========== ========== ========== ==========
Net income applicable to common stock $ 69,072 $ 66,771 $ 175,885 $ 155,891
========== ========== ========== ==========
PER COMMON SHARE
Net income $.93 $.88 $2.39 $2.05
Dividends .38 .34 1.10 .98
-2-
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30
(thousands of dollars) 1996 1995
- -------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 176,553 $ 157,144
Adjustments:
Provision for loan losses 28,963 28,901
Depreciation, amortization, and accretion 53,118 33,308
Net decrease in trading securities 5,879 21,119
Net decrease (increase) in loans held for resale 194,694 (133,531)
(Gains) losses on sale of assets (1,161) 7,009
Increase in other assets (34,227) (25,718)
Decrease in other liabilities (21,637) (12,916)
Other, net 5,087 3,910
------------- --------------
Net cash provided by operating activities 407,269 79,226
Cash Flows from Investing Activities:
Net (increase) decrease in federal funds sold and resale agreements (67,549) 233,205
Net (increase) decrease in interest-bearing deposits with banks (739) 26,628
Purchase of securities available for sale (289,284) (5,332)
Sale of securities available for sale 253,438 238,370
Maturities of securities available for sale 283,934 93,608
Maturities of securities held to maturity 301,791 494,309
Purchase of securities held to maturity (129,601) (1,049,417)
Net decrease (increase) in loans 153,333 (652,836)
Cash acquired in acquisitions 99,456 294
Proceeds from sale of foreclosed assets 6,048 10,239
Purchase of bank premises and equipment (36,783) (38,586)
Proceeds from sale of bank premises and equipment 2,999 2,920
------------- --------------
Net cash provided by (used in) investing activities 577,043 (646,598)
Cash Flows from Financing Activities:
Net (decrease) increase in deposits (611,380) 329,423
Net increase in short-term borrowed funds 139,112 198,148
Issuance of long-term debt 0 224,869
Repayment of long-term debt (161,965) (21,540)
Common/treasury stock repurchases (191,920) (8,350)
Common/treasury stock issued 15,879 (84,035)
Cash dividends (82,391) (75,590)
------------- --------------
Net cash (used in) provided by financing activities (892,665) 562,925
Net decrease in cash and due from banks 91,647 (4,447)
Cash and due from banks at beginning of period 1,310,746 1,092,114
------------- --------------
Cash and due from banks at end of period $ 1,402,393 $ 1,087,667
============= ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 481,485 $ 444,207
Income taxes 96,547 79,702
Transfer to foreclosed assets from loans $ 6,333 $ 7,458
-3-
</TABLE>
FIRSTAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FOOTNOTES (unaudited)
- -----------------------------------------------------
(thousands of dollars except as otherwise indicated)
1. The financial data presented herein are unaudited, but in the opinion
of management, reflect all adjustments which are necessary for a fair
presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference
should be made to the financial statements contained in the
registrant's annual report on Form 10-K for the year ended December
31, 1995.
2. Mergers and Acquisitions
On January 26, 1996, Firstar Corporation completed the acquisition of
Harvest Financial Corp., a $353 million thrift based in Dubuque, Iowa.
The total number of shares of Firstar common stock issued was 887,204
shares. The transaction was accounted for as a purchase.
On July 12, 1996, Firstar Corporation completed the acquisition of
American Bancorporation, Inc., and its parent, Jacob Schmidt Company,
a $1.2 billion bank holding company. The transaction was accounted
for as a purchase with the issuance of 4,000,000 shares of Firstar
treasury stock and payment of $38.6 million in cash.
3. Securities
The amortized cost and approximate market values of securities
are as follows:
<TABLE>
<CAPTION>
September 30, 1996
--------------------------------------------------
Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury and federal agencies $ 1,503 $ 0 $ 0 $ 1,503
Mortgage backed obligations of federal agencies 1,136,207 20,846 (8,593) 1,148,460
State and political subdivisions 1,113,468 13,374 (5,749) 1,121,093
Corporate debt 11,489 27 (42) 11,474
Other 78 0 0 78
----------- ----------- ----------- -----------
Total $ 2,262,745 $ 34,247 $ (14,384)$ 2,282,608
=========== =========== =========== ===========
Securities available for sale:
U.S. Treasury and federal agencies $ 1,840,009 $ 22,631 $ (8,323)$ 1,854,317
Mortgage backed obligations of federal agencies 11,345 106 (278) 11,173
State and political subdivisions 8,550 38 (40) 8,548
Corporate debt 140 0 (1) 139
Equity securities 109,309 0 0 109,309
Money market mutual funds 34,744 0 0 34,744
----------- ----------- ----------- -----------
Total $ 2,004,097 $ 22,775 $ (8,642)$ 2,018,230
=========== =========== =========== ===========
</TABLE>
4. Nonperforming Assets and Past Due Loans
<TABLE>
<CAPTION>
September 30 December 31 September 30
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Nonaccrual loans:
Commercial $ 29,732 $ 26,239 $ 24,103
Commercial - real estate 35,193 46,959 42,837
Consumer 17,271 16,187 14,159
----------- ----------- -----------
82,196 89,385 81,099
Renegotiated loans:
Commercial 0 40 41
Commercial - real estate 1,362 1,336 1,579
----------- ----------- -----------
1,362 1,376 1,620
Foreclosed assets 8,887 7,141 7,979
----------- ----------- -----------
Total $ 92,445 $ 97,902 $ 90,698
=========== =========== ===========
Nonperforming assets as a percent of:
Loans and foreclosed assets .70 % .77 % .72 %
Total assets .46 .51 .48
Loans past due 90 days and still accruing
Commercial $ 40,055 $ 21,039 $ 20,077
Commercial - eeal estate 19,438 9,287 12,465
Consumer 23,233 19,084 21,042
----------- ----------- -----------
Total $ 82,726 $ 49,410 $ 53,584
=========== =========== ===========
-4-
</TABLE>
5. Reserve for Loan Losses
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- ------------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - beginning of period $ 205,041 $ 199,423 $ 195,283 $ 190,552
Provision for loan losses 8,908 5,778 28,963 28,901
Loan recoveries 6,158 5,894 19,527 14,376
Loan charge-offs (15,106) (10,550) (43,229) (34,149)
Reserves of acquired banks 9,509 0 13,966 865
--------- ----------- ----------- -----------
Balance - end of period $ 214,510 $ 200,545 $ 214,510 $ 200,545
========= =========== =========== ===========
Net charge-offs to average loans .27 % .15 % .25 % .22 %
Reserve to period-end loans 1.62 1.58 1.62 1.58
</TABLE>
6. Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - beginning of period $ 1,415,777 $ 1,541,159 $ 1,524,820 $ 1,512,685
Net income 69,272 67,077 176,553 157,144
Common/treasury stock issued 184,350 2,039 235,717 18,996
Common stock retired 0 0 (11) (24,688)
Preferred stock redemption 0 0 0 (8,350)
Treasury stock purchased (2,027) (68,940) (184,593) (68,940)
Restricted stock transactions 8 (38) 110 942
Change in unrealized gains(losses) on 0 0 0 0
securities available for sale 6,187 (387) (25,389) 2,368
Dividends - common stock (28,554) (26,038) (81,722) (74,338)
- preferred stock (197) (305) (669) (1,252)
------------------------ ------------------------
Balance - end of period $ 1,644,816 $ 1,514,567 $ 1,644,816 $ 1,514,567
======================== ========================
</TABLE>
-5-
FIRSTAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FOOTNOTES (unaudited)
- ---------------------------- -----------------------
7. Derivative Financial Instruments
The following table summarizes the various types of interest rate
contracts that Firstar uses for the purpose of managing interest
rate risk.
<TABLE>
<CAPTION>
September 30, 1996
--------------------------------------------------------------
Market
12-31-95 Average Average Weighted Value
Notional Notional Receive Pay Average Asset
Amount Amount Rate Rate Maturity (Liability)
--------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(millions)
Interest rate swaps
Receive fixed rate
Index amortizing $ 269 $ 134 5.16 % 5.63 % 1.4 yr $ (1.2)
Other 55 32 7.42 5.49 0.9 0.1
Receive variable 37 62 5.41 6.70 1.1 (0.6)
Interest rate floors* 601 591 4.88 2.9 2.5
Interest rate caps* 100 50 6.00 0.1
--------- --------- -----------
$ 1,062 $ 869 $ 0.8
========= ========= ===========
*Interest rate floors and caps provide for the receipt of payments
when the index interest rate is below or above the predetermined
interest rate.
<\TABLE.
8. New Accounting Rules
The Financial Accounting Standards Board issued Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of", which Firstar adopted in 1996. The statement
requires that long-lived assets and certain identifiable intangibles to
be held and used by a company be reviewed for impairment whenever events
or circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of this statement did not have any significant
impact on the results of operations.
-6-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Firstar Corporation's net income for the first nine months of 1996 was
$176.6 million, or $2.39 per common share, up from the $157.1 million, or
$2.05 per common share, for the same period last year. This represented
a 16.6% increase in earnings per share. Return on common equity was
15.35% for the first nine months of the year, compared with 13.86% for the same
period last year, while return on average assets was 1.24% compared to
1.16% during the first nine months of last year.
Net income for the third quarter totaled $69.3 million, or $.93 per
common share, up from $67.1 million, or $.88 per common for the same
quarter of 1995. This represented a 5.7% increase in earnings per
share. Return on common equity was 17.27% in the third quarter of 1996
compared to 17.45% in the same period of last year. Return on average
assets was 1.41% compared with 1.45% last year.
Table 1 shows the components of net income and net interest margin.
</TABLE>
<TABLE>
<CAPTION>
Table 1. Condensed income statements - taxable equivalent basis
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------- ----------------------------------------
1996 1995 Change 1996 1995 Change
----------- ----------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
(millions of dollars) (millions of dollars)
Interest revenue $ 351.1 $ 339.5 $ 11.6 $ 1,034.6 $ 1,000.8 $ 33.8
Taxable-equivalent adjustment 8.4 8.5 (0.1) 25.4 25.0 0.4
----------- ----------- --------- ------------ ------------ ------------
Interest revenue - taxable-equivalent 359.5 348.0 11.5 1,060.0 1,025.8 34.2
Interest expense 161.1 158.4 2.7 476.0 462.1 13.9
----------- ----------- --------- ------------ ------------ ------------
Net interest revenue - taxable-equiv 198.4 189.6 8.8 584.0 563.7 20.3
Provision for loan losses 8.9 5.8 3.1 29.0 28.9 0.1
Other operating revenue 113.3 101.1 12.2 324.6 285.9 38.7
Other operating expense 187.0 174.5 12.5 584.4 558.3 26.1
----------- ----------- --------- ------------ ------------ ------------
Income before income taxes 115.8 110.4 5.4 295.2 262.4 32.8
Provision for income taxes 38.1 34.8 3.3 93.2 80.3 12.9
Taxable-equivalent adjustment 8.4 8.5 (0.1) 25.4 25.0 0.4
----------- ----------- --------- ------------ ------------ ------------
Net income $ 69.3 $ 67.1 $ 2.2 $ 176.6 $ 157.1 $ 19.5
=========== =========== ========= ============ ============ ============
Yield on earning assets 8.10 % 8.16 % (0.06)% 8.14 % 8.24 % (0.10)
Cost of interest-bearing liabilities 4.51 4.57 (0.06) 4.49 4.57 (0.08)
----------- ----------- --------- ------------ ------------ ------------
Interest spread 3.59 3.59 0.00 3.65 3.67 (0.02)
Impact of interest-free funds 0.88 0.86 0.02 0.84 0.86 (0.02)
----------- ----------- --------- ------------ ------------ ------------
Net interest margin 4.47 % 4.45 % 0.02 % 4.49 % 4.53 % (0.04)
=========== =========== ========= ============ ============ ============
</TABLE>
Both years' earnings included one-time charges which reduced
reported net income. The current year's earnings include a $30.3
million, or $.41 per share, after-tax charge associated with a corporate
restructuring which was recorded in the first quarter. The third
quarter of 1996 included the Savings Association Insurance Fund (SAIF) charge
of six cents per share. This banking industry wide SAIF assessment will
recapitalize the savings and loan deposit insurance fund and was based
upon deposits that Firstar acquired through several savings and loan
acquisitions over the past four years. During the first half of 1995
charges totaling $27.6 million, or $.36 per share were taken in connection
with several bank acquisitions. Excluding both years' one-time charges,
earnings per share rose 18.7% over the first nine months of 1995 to $2.86
per share from $2.41. Return on equity, excluding these charges, would
have been 18.40% in 1996 and 16.32% in 1995. Table 2 shows the detail
of these charges.
-7-
<TABLE>
<CAPTION>
Table 2. Restructuring costs
Three months ended September 30 Nine months ended September 30
-------------------------- -------------------------------
1996 1995 1996 1995
-------------------------- -------------------------------
<S> <C> <C> <C> <C>
(thousands of dollars) (thousands of dollars)
Additional loan loss provisions $ 0 $ 0 $ 0 $ 13,612
Losses on sales of securities 0 0 0 6,263
Restructuring expenses:
Employee severence 0 0 22,457 11,899
Facilities and equipment 0 0 5,502 4,801
Other 0 0 22,278 6,451
SAIF assessment 7,969 0 7,969 0
----------- --------- ------------ ------------
7,969 0 58,206 23,151
----------- --------- ------------ ------------
Total pre-tax costs 7,969 0 58,206 43,026
Income tax benefit 3,356 0 23,282 15,393
----------- --------- ------------ ------------
Total $ 4,613 $ 0 $ 34,924 $ 27,633
=========== ========= ============ ============
Per common share impact $ 0.06 $ 0.00 $ 0.47 $ 0.36
</TABLE>
In the first quarter of 1996 Firstar recorded a $50.2 million pre-tax charge
in connection with Firstar Forward, the corporate wide restructuring program.
This program is expected to add $140 million to annualized pre-tax earnings
when fully implemented by mid-1997. The charge included severance accruals of
$22.4 million associated with staff reductions of approximately 1,450 people,
fixed asset write-downs of $5.5 million, and other project costs of $22.3
million. The total charge consists of $44.1 million in anticipated cash
expenditures and $6.1 million of non-cash asset writedowns. Approximately
three-quarters of these cash expenditures have been made as of
September 30, 1996.
In the first half of 1995, certain merger and restructuring charges were
taken in connection with completed bank acquisitions. These expenses
totaled $43.0 million pre-tax. Additional loan loss provisions of $13.6
million were taken to increase the acquisition banks' loan loss reserve levels
to conform with Firstar's policy. Also, securities not compatible with
Firstar's investment policy were sold with a resulting loss of $6.3 million.
These funds, totaling $146 million, were redeployed in the securities
portfolio with a resulting increase in the net yield which recovered the
loss within one year. Acquisition related restructuring charges totaling
$23.2 million are included in operating expenses. Included in these charges
were $11.9 million of costs associated with the severance of approximately 500
employees, $4.8 million related with office closing and write-off of unusable
equipment, and $6.4 million of other costs associated with the mergers. The
restructuring charge of $23.2 million consists of $17.3 million in
anticipated cash expenditures and $5.9 million of non-cash write-downs. Cash
payments have reduced this restructuring accrual to approximately $1.9 million
as of September 30, 1996.
Net interest revenue during the first nine months of 1996, on a taxable
equivalent basis, was $584.0 million which was $20.3 million, or 3.6%, above
the level of the same period last year. The net interest margin was 4.49%
during the first nine months compared to 4.53% a year earlier. The increase in
net interest revenue was attributable to the higher average earning asset
balances, which was partially offset by the reduced net interest margin.
-8-
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 increased by 3.4% to $1.060 billion during the first
nine months of 1996 compared to the same period last year. This resulted from a
4.5% increase in average earning assets, partially offset by reductions in
the interest rate earned. The rate received on earning assets decreased
from 8.24% in the first nine months of 1995 to 8.14% in the same period of
1996. Loan revenue increased $30.1 million, or 3.8%, from the same period
last year. The increased loan revenue was the result of a 5.4% increase
in average loan balances from the same period last year which was partially
offset by lower rates.
Total interest expense was $476.0 million during the first nine months of
1996, an increase of $14.0 million, or 2.4%, from the same period last year.
Interest rates on liabilities decreased from 4.57% in 1995 to 4.49% in 1996.
Interest expense on total deposits increased $17.6 million, or 5.4%, in the
first nine months of 1996 compared to the same period last year, due to a change
in mix to higher costing deposit accounts. Interest expense on borrowed
funds declined by $3.6 million due to lower interest rates partially offset
by higher average balances.
Net cash flows of off-balance sheet derivative instruments used to manage
interest rate risk reduced net interest revenue by $1.3 million and net
interest margin by .01% during the first nine months of 1996. This compares
to a decrease in net interest revenue of $8.0 million and a decrease in net
interest margin of .06% during the same period in 1995.
The objective of Firstar's asset/liability management policy is to maintain
adequate capital and liquidity and to manage interest rate risk to produce an
acceptable level of net interest revenue. The policy is to employ an asset
liability management strategy which limits the potential impact of projected
interest rate changes to 5% of net income over the subsequent four quarters.
Using the most recent simulation modeling, Firstar was within these
guidelines. The recently completed asset-liability forecast shows that
consolidated net interest revenue is expected to remain stable under our most
likely rate scenario. This rate scenario assumes an average prime rate of
8.00% compared with the current prime rate of 8.25%.
Table 3. Analysis of interest revenue and expense
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------------------------------------------
Interest Total Due to
------------------------ --------------------------
1996 1995 Change Volume Rate
----------- ----------- ------------ ------------ ------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits
with banks $ 365 $ 847 $ (482)$ (345)$ (137)
Federal funds sold and
resale agreements 3,527 9,878 (6,351) (5,835) (516)
Trading securities 303 762 (459) (245) (214)
Securities 219,289 207,835 11,454 11,914 (460)
Commercial loans 460,518 451,453 9,065 22,341 (13,276)
Consumer loans 376,016 354,973 21,043 20,701 342
----------- ----------- ------------
Total loans 836,534 806,426 30,108 42,932 (12,824)
----------- ----------- ------------
Total interest revenue 1,060,018 1,025,748 34,270 45,711 (11,441)
Interest-bearing demand 16,118 18,321 (2,203) (425) (1,778)
Money market accounts 75,160 62,096 13,064 13,982 (918)
Savings passbook 30,515 33,489 (2,974) (2,533) (441)
Certificates of deposit 224,936 215,175 9,761 6,056 3,705
----------- ----------- ------------
Total deposits 346,729 329,081 17,648 13,403 4,245
Short-term borrowed funds 95,334 101,857 (6,523) 4,002 (10,525)
Long-term debt 33,968 31,099 2,869 6,290 (3,421)
----------- ----------- ------------
Total interest expense 476,031 462,037 13,994 21,664 (7,670)
----------- ----------- ------------
Net interest revenue $ 583,987 $ 563,711 $ 20,276 25,159 (4,883)
=========== =========== ============
Calculations are computed on a taxable-equivalent basis using a tax rate of 35%. The change attributable
to both volume and rate has been allocated proportionately to the changes due to volume
and rate.
-9-
</TABLE>
The provision for loan losses of $29.0 million was level with last year.
As discussed previously, $13.6 million of 1995's provision related to a
merger adjustment to loan loss reserve levels. Net charge-offs for the
first nine months were at a level of .25% of average outstanding loans compared
to .22% a year earlier. The reserve for loan losses represented 1.62% of total
loans at September 30, 1996, up from 1.58% a year earlier.
Consumer loan losses have shown increases over the past year with the charge
- -off rate rising from .32% of loans in the first quarter of 1995 to .55% in
the current quarter. This trend is more evident in the credit card area where
charge-off levels rose from 1.76% to 4.06% between the two periods. Increased
consumer debt loads and delinquency rates have been experienced throughout the
country. Firstar expects credit card charge-offs to continue to increase from
the current level up to 4.50% to 5.00% during the next two quarters before
beginning to decline to the 4.00% to 4.25% range. The commercial loan charge-
off rate for the third quarter of this year was .05%. While commercial loan
charge-offs have fluctuated during the past several quarters, they remain at
an overall low level. Table 4 shows information on loan charge-offs.
Nonperforming assets were $92.4 million at September 30, 1996 which amounted to
.77% of total loans and foreclosed assets. This was an $5.0 million decrease
from the prior quarter and an increase of $1.7 million from a year earlier.
Loans past due more than 90 days increased by $33.3 million from the prior
quarter end to $82.7 million on September 30, 1996. Approximately one-half of
this increase was due to loan documentation involving loan renewals which were
subsequently resolved. Additionally, the completion of a bank acquisition in
the third quarter added $6.0 million in past due loans.
<TABLE>
<CAPTION>
Table 4. Net loan charge-offs
Quarter ended
--------------------------------------------------------------------------------------------
9-30-96 6-30-96 3-31-96 12-31-95 9-30-95 6-30-95 3-31-95
----------- ----------- --------- ------------ ------------ ------------ ------------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Credit card 6,343 $ 5,674 $ 4,746 $ 4,215 $ 2,121 $ 2,468 $ 2,387
Other consumer 1,618 2,722 1,072 4,625 2,464 1,425 1,768
----------- ----------- --------- ------------ ------------ ------------ ------------
Total consumer 7,961 8,396 5,818 8,840 4,585 3,893 4,155
Commercial 987 266 274 4,277 71 2,886 4,183
----------- ----------- --------- ------------ ------------ ------------ ------------
Total net charge-offs 8,948 $ 8,662 $ 6,092 $ 13,117 $ 4,656 $ 6,779 $ 8,338
=========== =========== ========= ============ ============ ============ ============
Net charge-offs as a % of
Credit card 4.06 3.81 % 3.20 % 2.43 % 1.95 % 1.81 % 1.76 %
Other consumer 0.12 0.22 0.08 0.42 0.15 0.09 0.15
Total consumer 0.55 0.60 0.41 0.63 0.33 0.26 0.32
Commercial 0.05 0.02 0.02 0.25 -- 0.19 0.26
Total loans 0.27 0.27 0.19 0.42 0.15 0.22 0.28
</TABLE>
-10-
Other operating revenue, excluding securities gain and losses, increased by
11.3% to a level of $324.6 million in the first nine months of 1996 compared to
the same period last year. Table 5 shows the composition of other operating
revenue.
<TABLE>
<CAPTION>
Table 5. Other operating revenue
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------- -----------------------------------------
1996 1995 Change 1996 1995 Change
----------- ----------- --------- ------------ ------------ ------------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Trust and investment management fees $ 36,810 $ 32,814 12.2 % $ 108,388 $ 96,931 11.8 %
Service charges on deposit accounts 22,506 20,499 9.8 65,200 60,284 8.2
Credit card service revenue 18,654 16,376 13.9 52,091 45,148 15.4
Mortgage loan servicing 6,873 5,902 16.5 17,723 17,790 (0.4)
Mortgage loan origination 6,170 4,945 24.8 19,384 10,341 87.4
Data processing fees 4,687 4,041 16.0 13,851 13,557 2.2
Insurance revenue 3,881 3,312 17.2 8,389 8,927 (6.0)
Brokerage revenue 2,905 3,002 (3.2) 9,968 7,921 25.8
International fees 1,565 1,567 (0.1) 4,342 4,464 (2.7)
Foreign exchange gains 586 709 (17.3) 1,844 1,839 0.3
ATM fees 1,412 1,299 8.7 3,983 3,873 2.8
Safe deposit fees 901 1,039 (13.3) 3,010 3,175 (5.2)
Trading securities gains 635 505 25.7 1,549 1,725 (10.2)
Other 5,744 4,731 21.4 14,843 15,657 (5.2)
----------- ----------- ------------ ------------
Subotal 113,329 100,741 12.5 324,565 291,632 11.3
Securities (losses) gains 22 313 64 (5,748)
Total ----------- ----------- ------------ ------------
$ 113,351 $ 101,054 12.2 % $ 324,629 $ 285,884 13.6 %
=========== =========== ============ ============
</TABLE>
Other operating revenue represents 37% of total revenue. An industry
measure of fee revenue prominence is the ratio of this revenue stream to
average assets. During the first nine months of 1996 this ratio was 2.27%
compared to 2.15 % during the same period last year.
Trust and investment management fees are the single largest source of fee
revenue, contributing $108.4 million, or 33%, of other operating revenue. This
level represents an 11.8% growth in revenue during the first nine months of 1996
compared to the same period last year. Trust and investment assets under
management were $20.8 billion on September 30, 1996, a 16.3% increase from the
year earlier level due to both the result of general market appreciation and
additional net new business. Additionally, assets held in custody rose by 26.9%
to a level of $66.6 billion during the same time period.
Revenue from service charges on deposit accounts at $65.2 million for the
first nine months of 1996 was 8.2% higher than last year.
Credit card service revenues are the third largest source of fee revenue,
totaling $52.1 million during the first nine months of 1996, which was an 15.4%
increase over the same period last year. The introduction of new credit card
products, increased merchant fee revenue and the repricing of service charges
have all contributed to this revenue growth.
Revenue from mortgage loan origination activities increased 87.4% from the
year earlier level. Origination revenue consists of both fees collected
and gains realized on the sale of loans. Fees rose $7.1 million to a level
of $12.7 million in the first nine months of 1996 while loan gains increased
$1.9 million to $6.7 million. Mortgage interest rates have increased since the
first quarter and origination volumes have declined somewhat. Mortgage
loan servicing revenues were unchanged at $17.7 million. Sales of servicing
rights contributed $5.3 million of revenue in the first nine months of this
year and $5.6 million in the same period of last year.
The remaining sources of other operating revenue derive from a wide range of
services and aggregated $61.8 million, essentially level with the same
period of 1995. Last year's revenue included $2.1 million of nonrecurring
items.
-11-
Other operating expense increased to a level of $584.5 million for the first
nine months of 1996. Excluding the restructuring charges and SAIF assessment,
expenses declined by 1.7%. Personnel costs decreased by 2.8% to a level
of $293.0 million. Nonpersonnel expense, excluding the one-time charges,
declined by 0.2%. The detail of other operating expense is shown in Table 6.
Full-time equivalent personnel headcount was 8,420 on September 30, 1996,
down from 9,524 one year earlier. Staff reductions have occurred under the
corporate wide restructuring program currently being implemented. Approximately
300 FTEs have been added during this period as a result of bank acquisitions.
This net staff reduction is seen in the lowered salary and fringe benefits
expense levels between the two periods.
Net occupancy expense increased $4.4 million, or 10.2% in the first nine
months of 1996 compared to the same period last year. The increase was due
in part to bank acquisitions occurring this year. Equipment expense increased
$4.4 million, or 9.7% during the first nine months of 1996 compared to the same
period last year. The increase in equipment expense was due to data processing
system upgrades resulting from investments in new technology and increased
processing volumes from bank acquisitions.
In the third quarter of 1995, the FDIC reduced the rate charged for deposit
insurance to all BIF insured banks and refunded excess premiums paid. The
current rate is $2,000 per year for each insured bank compared with the $.23
per $100 of deposits previously charged. Firstar also has deposits subject to
SAIF insurance totaling approximately $1.5 billion. The insurance rate on
these deposits remains at $.23 per $100 of deposits, thus creating a blended
rate. These new rates reduced FDIC expense from $14.4 million in the first
nine months of 1995 to $2.1 million this year. As part of the legislation
which resulted in the SAIF assessment which recapitalized the savings and
loan insurance fund, a new rate schedule for deposit insurance will be
implemented in 1997. This will result in an annualized net expense
reduction of approximately $800 thousand in 1997.
The efficiency ratio, which is the ratio of expense to revenue, was 57.9% in
the first nine months of 1996 compared to 62.6% a year earlier. Firstar has
initiated a corporate restructuring program with a goal of reaching a 55%
efficiency ratio in 1997.
<TABLE>
<CAPTION>
Table 6. Other operating expense
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------- ----------------------------------------
1996 1995 Change 1996 1995 Change
----------- ----------- ----------- ------------ ------------ -----------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 78,234 $ 80,805 (3.2)% $ 236,908 $ 244,101 (2.9)%
Employee benefits 17,338 18,442 (6.0) 56,087 57,180 (1.9)
----------- ----------- ------------ ------------
Total personnel expense 95,572 99,247 (3.7) 292,995 301,281 (2.8)
Net occupancy expense 16,782 14,022 19.7 47,356 42,973 10.2
Equipment expense 16,250 14,805 9.8 47,855 43,625 9.7
Business development 6,875 7,360 (6.6) 18,683 21,182 (11.8)
F.D.I.C. insurance 398 (354) (212.4) 2,130 14,352 (85.2)
Stationery and supplies 5,769 5,371 7.4 17,814 15,240 16.9
Delivery 4,956 4,824 2.7 14,471 14,052 3.0
Professional fees 6,159 4,415 39.5 15,591 13,912 12.1
Information processing expense 5,550 5,608 (1.0) 15,371 16,485 (6.8)
Amortization of intangibles 5,102 3,508 45.4 12,491 9,353 33.6
Employee education/recruiting 1,836 1,709 7.4 4,670 6,157 (24.2)
Federal Reserve processing fees 1,222 978 24.9 3,095 3,398 (8.9)
Commissions and service fees 1,451 991 46.4 4,381 4,335 1.1
Wire communication 1,755 2,054 (14.6) 5,448 5,530 (1.5)
Processing and other losses 1,541 3,715 (58.5) 5,198 5,922 (12.2)
Credit card assessment fees 1,561 1,390 12.3 4,355 3,584 21.5
Net foreclosed assets expense(income) 126 (536) 662 (684)
Published information 691 550 25.6 1,932 1,734 11.4
Insurance 579 634 (8.7) 1,118 1,674 (33.2)
Other 4,868 4,199 15.9 10,642 10,999 (3.2)
----------- ----------- ------------ ------------
Total nonpersonnel expense 83,471 75,243 10.9 233,263 233,823 (0.2)
Restructuring charges 0 0 50,237 23,151
SAIF assessment 7,969 0 7,969 0
----------- ----------- ------------ ------------
Total other operating expense $ 187,012 $ 174,490 7.2 % $ 584,464 $ 558,255 4.7 %
=========== =========== ============ ============
</TABLE>
-12-
Total assets on September 30, 1996 were $19.9 billion, up $746 million from
December 31, 1995 and up $1.13 billion from a year earlier. Earning assets
totaled $17.5 billion, up $457 million, or 2.7% from year end. Earning
assets have increased $1.08 billion, or 3.7%, from a year earlier.
Approximately $1 billion in total assets was added through two bank
acquisitions which closed in 1996.
Loans totaled $13.2 billion on September 30, 1996 an increase of $583
million from year end 1995 and $539 million from a year earlier. Bank
acquisitions which occurred in the first and third quarters of 1996 added
approximately $900 million of loans. Exclusive of acquisition related impact,
loans declined by 2.5% from year end and 2.8% from a year ago.
Commercial loans totaled $7.4 billion on September 30, 1996, a decline of
$152 million, or 2.2%, from year end and $330 million, or 4.6%, from a year
earlier, exclusive of the effect of the bank acquisitions. Commercial loan
growth has been weak during the past several quarters. Commercial loans are,
however, expected to resume a more normal growth rate reflective of the overall
good economic climate in Firstar's marketplace.
Consumer loans were $5.8 billion on September 30, 1996, a decline of $189
million, or 3.3%, from year end, excluding loans added from the bank
acquisitions. Consumer loans decreased $55 million, or 0.8%, from a year
earlier. Good growth has been evident in charge card loans, which are up
12.6% from a year ago and home equity loans which rose 12%. Residential
mortgage loans, excluding loans from bank acquisitions and loans held for
sale have declined by over $114 million from September 30, 1995 due to loan
repayments, consumer preference for longer term secondary market mortgages,
and a decision by Firstar to price portfolio mortgages at higher spreads to
Treasury rates.
Total securities, including both those designated as available for sale and
those held to maturity were $4.3 billion at September 30,1996 compared with
$4.5 billion at year end and $4.3 billion a year earlier.
Fund sources, consisting of deposits and borrowed funds, were $18.0 billion
on September 30, 1996. Total deposits were $14.8 billion, a decrease of
$359 million, or 2.5%, from year end levels and an increase of $141 million
or 1.0%, from a year ago excluding the impact of the bank acquisitions.
Increased competition for consumer deposits and heightened consumer
sensitivity to interest rates have limited Firstar's deposit growth.
Borrowed funds were $3.2 billion on September 30, 1996, an increase of $114
million from year end and a decrease of $22 million from a year earlier.
Borrowed funds have remained somewhat level as deposit balances have been
adequate to fund the modest growth in earning assets.
-13-
Stockholders' equity totaled $1.645 billion at the end of the third quarter,
an increase of $229 million from the prior quarter and $141 million from the
total at September 30,1995. During the third quarter of 1996 , 4 million
shares of common stock were reissued in a bank acquisition which increased
stockholders' equity by $180 million. Firstar has repurchased 7.8 million
shares of its common stock over the past fifteen months. Of this total, 1.8
million were permanently retired; 4.9 million were reissued in bank
acquisitions; and 1.1 million were reissued for stock options and conversions.
Firstar's capital management plan strives to match longer term capital needs
while maintaining sound capital levels. Management intends to manage the
capital levels of the Corporation at the top quartile ratio of its peers.
Firstar has in the past conducted common stock buyback programs to manage
equity levels and will continue to consider such options in the future to
maintain its capital ratios at top quartile while enhancing the return on
equity.
The board of directors declared a quarterly dividend to common stockholders
of $.38 per share payable November 15 to stockholders of record October 28.
The board also declared a quarterly dividend of $8.75 per Series D preferred
share payable December 30 to stockholders of record December 15.
<TABLE>
<CAPTION>
Table 7. Capital components and ratios
September 30 December 31 September 30
1996 1995 1995
------------ ------------ ------------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity $ 1,644,816 $ 1,524,820 $ 1,514,567
Unrealized (gains) losses on securities available for sale (8,738) (34,127) (1,314)
Minority interest in subsidiaries 2,278 3,171 3,020
Less goodwill (189,814) (107,298) (108,381)
------------ ------------ ------------
Total Tier I capital 1,448,542 1,386,566 1,407,892
Allowable reserve for loan losses 177,724 167,564 165,563
Allowable long-term debt 75,668 111,336 134,336
------------ ------------ ------------
Total Tier II capital 253,392 278,900 299,899
------------ ------------ ------------
Total capital $ 1,701,934 $ 1,665,466 $ 1,707,791
============ ============ ============
Risk-adjusted assets $ 14,181,132 $ 13,377,391 $ 13,210,045
Tier I capital to risk-adjusted assets 10.21 % 10.36 % 10.66 %
Total capital to risk-adjusted assets 12.00 12.45 12.93
Tier I leverage ratio 7.49 7.52 7.71
</TABLE>
The foregoing discussion under Item 2 included forecasts (which generally
were stated as expected results) concerning revenues, expenses and other
business results which are based on estimates. There are numerous factors
such as changes in interest rates, levels of consumer bankruptcies, customer
loan and deposit preferences, and other economic conditions that could change
future results and no assurance can be given that these forecasts will be
achieved.
-14-
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (unaudited)
- ----------------------------------------------------------------------------------------------------
Selected Financial Data
(thousands of dollars, except per share)
Quarter ended Nine Months ended
September 30 September 30
---------------------- ------------------------------
1996 1995 1996 1995
---------------------- ------------------------------
<S> <C> <C> <C> <C>
Earnings and Dividends
Net income $ 69,272 $ 67,077 $ 176,553 $ 157,144
Per common share:
Net income 0.93 0.88 2.39 2.05
Dividends 0.38 0.34 1.10 0.98
Stockholders' equity 0.00 0.00 21.72 20.00
Performance Ratios
Return on average assets 1.41 % 1.45 % 1.24 % 1.16 %
Return on average common equity 17.27 17.45 15.35 13.86
Dividend payout ratio 40.86 38.64 46.03 47.80
Equity to assets 0.00 0.00 8.26 8.06
Net loan charge-offs as a percentage
of average loans 0.27 0.15 0.25 0.22
Nonperforming assets as a
percentage of loans and foreclosed
assets 0.00 0.00 0.70 0.72
Net interest margin 4.47 4.45 4.49 4.53
Efficiency ratio* 57.44 60.09 57.92 62.56
Fee revenue as a percentage
of average assets 2.31 2.17 2.27 2.15
Statistical Data
Full-time equivalent staff (at quarter end) 0 0 8,420 9,524
Average common shares
outstanding (000's) 74,708 75,887 73,642 76,085
Actual common shares
outstanding (000's at quarter end) 0 0 75,194 74,851
Stock Price Information
High $ 49.125 $ 38.375 $ 49.750 $ 38.375
Low 42.875 32.500 36.625 26.250
Close 48.875 37.125 48.875 37.125
*Adjusted for restructuring costs and SAIF assessment
-15-
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (Unaudited)
- --------------------------------------------------------------------------------------------------------
Consolidated Average Balance Sheets, Net Interest Revenue and Rate Analysis
(Thousands of Dollars)
Quarter ended September 30
------------------------------------------------------------------------
1996 1995
------------------------------------- ----------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-bearing deposits
with banks $ 8,820 $ 108 4.87 % $ 9,199 $ 188 8.11 %
Federal funds sold and
resale agreements 121,716 1,829 5.98 243,729 3,705 6.03
Trading securities 8,799 35 1.58 11,892 197 6.57
Securities:
Taxable 3,215,682 52,411 6.50 3,152,223 51,132 6.46
Nontaxable 1,116,720 20,150 7.22 1,083,815 19,937 7.36
----------- ---------- ----------- ----------
Total securities 4,332,402 72,561 6.69 4,236,038 71,069 6.69
Loans:
Commercial 7,420,958 158,365 8.49 6,961,988 151,574 8.64
Consumer 5,789,922 126,606 8.72 5,498,765 121,264 8.78
----------- ---------- ----------- ----------
Total loans 13,210,880 284,971 8.59 12,460,753 272,838 8.70
----------- ---------- ----------- ----------
Interest earning assets 17,682,617 359,504 8.10 16,961,611 347,997 8.16
Reserve for loan losses (213,171) (200,960)
Cash and due from banks 1,069,877 782,588
Other assets 971,524 835,638
----------- -----------
Total assets $ 19,510,847 $ 18,378,877
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,562,501 $ 5,509 1.40 % $ 1,550,721 $ 4,593 1.18 %
Money market accounts 2,644,523 26,594 4.00 2,121,584 20,604 3.85
Savings passbook 1,599,096 10,004 2.49 1,724,086 9,724 2.24
Certificates of deposit 5,346,708 76,115 5.66 5,386,854 77,204 5.69
Short-term borrowed funds 2,390,207 32,876 5.47 2,359,997 35,113 5.90
Other debt 681,269 10,054 5.90 608,838 11,135 7.31
----------- ---------- ----------- ----------
Interest-bearing liabilities 14,224,304 161,152 4.51 13,752,080 158,373 4.57
Demand deposits 3,393,956 2,796,011
Other liabilities 290,192 294,626
Stockholders' equity 1,602,395 1,536,160
----------- -----------
Total liabilities and
stockholders' equity $ 19,510,847 $ 18,378,877
=========== ===========
Net interest
revenue/margin $ 198,352 4.47 % $ 189,624 4.45 %
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30
------------------------------------- ----------------------------------
1996 1995
----------------------------------- ----------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-bearing deposits
with banks $ 9,938 $ 365 4.91 % $ 18,757 $ 847 6.04 %
Federal funds sold and
resale agreements 82,070 3,527 5.74 217,209 9,878 6.08
Trading securities 8,924 303 4.54 14,729 762 6.92
Securities:
Taxable 3,271,382 157,943 6.44 3,099,859 148,686 6.40
Nontaxable 1,124,249 61,346 7.28 1,056,970 59,149 7.46
----------- ---------- ----------- ----------
Total securities 4,395,631 219,289 6.66 4,156,829 207,835 6.67
Loans:
Commercial 7,145,606 460,518 8.61 6,802,663 451,453 8.87
Consumer 5,734,525 376,016 8.75 5,418,816 354,973 8.75
----------- ---------- ----------- ----------
Total loans 12,880,131 836,534 8.67 12,221,479 806,426 8.82
----------- ---------- ----------- ----------
Interest earning assets 17,376,694 1,060,018 8.14 16,629,003 1,025,748 8.24
Reserve for loan losses (205,119) (196,364)
Cash and due from banks 1,039,184 845,474
Other assets 882,847 824,039
----------- -----------
Total assets $ 19,093,606 $ 18,102,152
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,544,880 $ 16,118 1.39 % $ 1,582,602 $ 18,321 1.55 %
Money market accounts 2,529,782 75,160 3.97 2,060,825 62,096 4.03
Savings passbook 1,616,297 30,515 2.52 1,750,191 33,489 2.56
Certificates of deposit 5,379,349 224,936 5.59 5,247,463 215,175 5.48
Short-term borrowed funds 2,395,337 95,334 5.32 2,302,189 101,857 5.92
Other debt 687,748 33,968 6.59 568,743 31,099 7.29
----------- ---------- ----------- ----------
Interest-bearing liabilities 14,153,393 476,031 4.49 13,512,013 462,037 4.57
Demand deposits 3,111,532 2,767,655
Other liabilities 285,290 296,678
Stockholders' equity 1,543,391 1,525,806
----------- -----------
Total liabilities and
stockholders' equity $ 19,093,606 $ 18,102,152
=========== ===========
Net interest
revenue/margin $ 583,987 4.49 % $ 563,711 4.53 %
========== ==========
-16-
</TABLE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits to Part 1 of Form 10-Q
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FIRSTAR CORPORATION
/s/ Jeffrey B. Weeden
------------------
Jeffrey B. Weeden
Senior Vice President-Finance and
Accounting (Chief Financial Officer)
November 13, 1996
-17-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 1,402,393
<INT-BEARING-DEPOSITS> 6,206
<FED-FUNDS-SOLD> 199,399
<TRADING-ASSETS> 6,757
<INVESTMENTS-HELD-FOR-SALE> 2,018,230
<INVESTMENTS-CARRYING> 2,262,745
<INVESTMENTS-MARKET> 2,282,608
<LOANS> 13,215,663
<ALLOWANCE> 214,510
<TOTAL-ASSETS> 19,914,604
<DEPOSITS> 14,824,884
<SHORT-TERM> 2,549,526
<LIABILITIES-OTHER> 293,658
<LONG-TERM> 601,720
<COMMON> 94,226
0
11,424
<OTHER-SE> 1,539,126
<TOTAL-LIABILITIES-AND-EQUITY> 19,914,604
<INTEREST-LOAN> 283,309
<INTEREST-INVEST> 65,828
<INTEREST-OTHER> 1,956
<INTEREST-TOTAL> 351,093
<INTEREST-DEPOSIT> 118,222
<INTEREST-EXPENSE> 161,152
<INTEREST-INCOME-NET> 189,941
<LOAN-LOSSES> 8,908
<SECURITIES-GAINS> 22
<EXPENSE-OTHER> 187,012
<INCOME-PRETAX> 107,372
<INCOME-PRE-EXTRAORDINARY> 69,272
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,272
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.93
<YIELD-ACTUAL> 4.47
<LOANS-NON> 82,196
<LOANS-PAST> 82,726
<LOANS-TROUBLED> 1,362
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 195,283
<CHARGE-OFFS> 43,229
<RECOVERIES> 19,527
<ALLOWANCE-CLOSE> 214,510
<ALLOWANCE-DOMESTIC> 213,918
<ALLOWANCE-FOREIGN> 592
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
