<PAGE> 1
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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, 1995 Commission File Number 1-2981
------------------------
FIRSTAR CORPORATION
WISCONSIN
(State of Incorporation)
39-0711710
(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.
Chicago Stock Exchange, Inc.
Preferred Stock, Series D Nasdaq
10% Notes due June 1, 1996 New York Stock Exchange, Inc.
Preferred Share Purchase Rights New York Stock Exchange, Inc.
Chicago Stock Exchange, Inc.
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
------------------------
Indicated 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.
As of February 29, 1996, 73,428,812 shares of common stock were
outstanding, and the aggregate market value of the shares (based upon the
closing price) held by nonaffiliates was approximately $2.9 billion.
Documents Incorporated by Reference:
Portions of the 1996 Notice of Annual Meeting and Proxy Statement are
incorporated by reference into Part III of the Form 10-K.
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<PAGE> 2
FORM 10-K TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I
Item 1 - Business.................................................................. 2
Item 2 - Properties................................................................ 5
Item 3 - Legal Proceedings......................................................... 5
Item 4 - Submission of Matters to a Vote of Security Holders....................... 5
PART II
Item 5 - Market for the Registrant's Common Equity and Related Stockholder
Matters.......................................................................... 5
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................................................................ 57
PART III
Item 10 - Directors and Executive Officers of the Registrant........................ 57
Item 11 - Executive Compensation.................................................... 57
Item 12 - Security Ownership of Certain Beneficial Owners and Management............ 57
Item 13 - Certain Relationships and Related Transactions............................ 57
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K........... 57
Signatures.......................................................................... 60
</TABLE>
1
<PAGE> 3
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 14 bank subsidiaries in Wisconsin
had total assets of $11.4 billion at December 31, 1995. Its one Iowa bank, one
Illinois bank and one Minnesota bank had total assets of approximately $2.9
billion, $2.9 billion and $2.4 billion, respectively, as of December 31, 1995.
Firstar has one bank in Phoenix, Arizona with total assets of $152 million.
Firstar's principal subsidiary, Firstar Bank Milwaukee, N.A., had total assets
of $7.1 billion which represented 37 percent of Firstar's consolidated assets at
December 31, 1995, 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 125 locations, with offices in eight of the ten largest
metropolitan population centers of the state, including 45 offices in the
Milwaukee metropolitan area. Its Iowa bank subsidiary operates in 44 locations;
its Illinois bank subsidiary in 41 locations; its Minnesota bank subsidiary in
31 locations; and its Arizona bank in three locations. Firstar also provides
trust services in its five-state banking locations and in Florida at 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 management services to
individual and corporate customers. Bank subsidiaries 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.
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.
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
2
<PAGE> 4
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 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.
3
<PAGE> 5
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of all the executive officers (17) of Firstar as of
December 31, 1995. 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. There
are no family relationships between any of the executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- --------------------------------------------
<S> <C> <C>
Roger L. Fitzsimonds...................... 57 Chairman of the Board and Chief Executive
Officer of Firstar (Since February 1991)
John A. Becker............................ 53 President and Chief Operating Officer of
Firstar
(Since January 1990)
Chris M. Bauer............................ 47 Senior Executive Vice President of Firstar
(Since January 1996)
Michael J. Bills.......................... 52 Senior Executive Vice President of Firstar
(Since January 1996)
Richard W. Schoenke....................... 52 Senior Executive Vice President of Firstar
(Since January 1996)
Ronald A. Bero............................ 60 Senior Executive Vice President of Firstar
(Since September 1989)
James R. Lang............................. 52 Chairman of the Board and President of
Firstar Corporation of Iowa (Since April
1991)
Jay B. Williams........................... 44 President of Firstar Bank Illinois
(Since January 1995)
Michael J. Schmitz........................ 61 Executive Vice President of Firstar
(Since October 1990)
Jon H. Stowe.............................. 51 Executive Vice President of Firstar
(Since January 1995)
Blaine E. Rieke........................... 62 Chairman of the Board of Firstar Trust
Company
(Since November 1981)
William H. Risch.......................... 57 Senior Vice President-Finance & Treasurer of
Firstar (Since January 1984)
Dennis R. Fredrickson..................... 51 Senior Vice President of Firstar
(Since October 1988)
Larry A. Greves........................... 48 Senior Vice President of Firstar
(Since January 1992)
John R. Heistad........................... 49 Senior Vice President and Chief Credit
Officer of Firstar (Since January 1992)
Howard H. Hopwood III..................... 50 Senior Vice President and General Counsel of
Firstar (Since January 1986)
Ronald E. Roder........................... 47 Senior Vice President of Firstar Bank
Milwaukee
(Since December 1988)
</TABLE>
4
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ITEM 2. PROPERTIES
On December 31, 1995, Firstar had 244 banking locations, of which 164 were
owned and 80 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.
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 11,688 holders of
record of Firstar's $1.25 par value Common Stock on February 29, 1996.
5
<PAGE> 7
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(thousands of dollars, except per share)
<S> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
Net interest revenue...................... $725,947 $698,838 $659,939 $626,371 $555,209
Provision for loan losses................. 36,756 23,891 29,090 50,733 55,221
Other operating revenue................... 392,197 370,619 392,918 347,936 311,641
Other operating expense................... 734,122 706,185 689,274 655,444 595,505
Net income................................ 228,913 226,673 227,938 185,999 154,415
Per common share:
Net income.............................. 3.00 2.98 2.99 2.50 2.11
Dividends............................... 1.32 1.16 1.00 .80 .705
Stockholders' equity.................... 20.61 19.45 17.78 15.83 14.16
Average common shares (000's)............. 75,716 75,195 74,131 71,992 70,832
- -----------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average assets.................. 1.26% 1.37% 1.49% 1.29% 1.12%
Return on average common equity........... 15.11 15.96 17.81 16.65 15.71
Equity to assets.......................... 7.95 8.41 8.28 7.94 7.35
Total risk-based capital.................. 12.45 13.18 13.17 13.10 11.74
Net loan charge-offs as a percentage of
average loans........................... .27 .25 .25 .40 .43
Nonperforming assets as a percentage of
loans and foreclosed assets............. .77 .69 .81 1.17 1.50
Net interest margin....................... 4.55 4.89 5.04 5.11 4.84
Efficiency ratio*......................... 61.43 61.75 63.53 65.13 66.02
Fee revenue as a percentage of average
assets.................................. 2.18 2.26 2.56 2.39 2.22
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(millions of dollars)
BALANCE SHEET AT DECEMBER 31
Total assets.............................. $ 19,168 $ 17,994 $ 16,412 $ 15,561 $ 14,549
Securities................................ 4,475 3,974 3,360 3,279 3,347
Loans:
Commercial loans........................ 6,966 6,710 5,996 5,472 5,162
Consumer loans.......................... 5,666 5,196 4,829 4,344 3,835
Total loans.......................... 12,632 11,906 10,825 9,816 8,997
Earning assets............................ 17,233 16,293 14,551 13,617 12,812
Deposits:
Core deposits........................... 13,403 12,818 12,689 12,311 11,441
Other deposits.......................... 909 591 444 445 548
Total deposits....................... 14,312 13,409 13,133 12,756 11,989
Short-term borrowed funds................. 2,303 2,196 1,178 900 1,004
Long-term debt............................ 734 574 486 426 209
Stockholders' equity...................... 1,525 1,513 1,359 1,237 1,070
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STOCK PRICE INFORMATION
High...................................... $ 41 $ 35 3/8 $ 37 1/4 $ 31 7/8 $24 7/16
Low....................................... 26 1/4 25 1/8 29 3/8 23 1/8 12 3/4
Close..................................... 39 5/8 26 7/8 30 3/4 31 1/2 24 1/8
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</TABLE>
* The calculation excludes acquisition related restructuring charges in 1995 and
the check kiting loss in 1994.
6
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Firstar acquired two banking organizations in 1995 under pooling of
interests accounting procedures. Consequently, all financial information for
prior years has been restated to include the results of operations of these
companies.
This discussion includes forecasts concerning revenues, expenses and other
business results which are based upon estimates. There are numerous factors such
as changes in economic conditions that could adversely affect actual results.
Therefore, there will be differences between these forecasts and actual results
and no assurance can be given that these forecasts will be realized.
HIGHLIGHTS
Firstar reported earnings in 1995 of $228.9 million, a 1.0% increase over
the $226.7 million earned in 1994. On a per common share basis, 1995 net income
increased to $3.00 from $2.98 earned in 1994. In 1993, net income was $227.9
million, or $2.99 per common share.
While net income has increased in 1995, the effect of a higher
stockholders' equity base reduced the return on equity in 1995. Return on
average common equity declined to 15.11% in 1995 compared with 15.96% in 1994
and 17.81% in 1993. While Firstar's return on equity has been below the top
quartile during the past three years, significant improvement was made during
the latter half of 1995, placing Firstar again in the top quartile level of its
peer group. Return on average assets for 1995 was 1.26% compared with 1.37% in
1994 and 1.49% in 1993.
Earnings have been relatively level during the past two years due to
unusual expenses in both 1995 and 1994. A merger and restructuring charge of $43
million pre-tax was taken in 1995 in connection with four bank acquisitions
which reduced net income by $.36 per common share. These charges included
increased loan loss provisions, losses on the sale of securities, employee
severance costs and other related expenses. During 1994 a $22 million pre-tax
charge was recorded for a check kiting fraud. This loss reduced 1994 net income
by $.17 per common share. Exclusive of these items, operating earnings would
have shown steady growth of 5.4% in 1994 and 6.7% in 1995.
Major factors affecting underlying earning trends during the past three
years were:
- Net interest margin declined to 4.55% in 1995 from 4.89% in 1994. During
1993 the margin was 5.04%.
- Strong loan growth of 9.6% in 1995 and 10.9% in 1994 offset the effects
of the decline in margins, helping increase net interest revenue in both
years.
- Growth in major fee revenue businesses continued, with trust and
investment management fees up 10% in 1995 and 7% in 1994. Credit card
revenue was up a very strong 12% during 1995. Mortgage banking revenue,
while up 8.5% during 1995, remains below the record high levels of 1993
as a result of market driven volume declines.
- Operating expenses before special charges increased by 3.9% during 1995
after declining by under 1% in 1994.
Total nonperforming assets were $97.9 million at the end of the year, an
increase of 18.6% from year-end 1994. Nonperforming assets now represent .77% of
total loans and foreclosed assets compared with .69% a year earlier.
Stockholders' equity stood at $1.5 billion at the end of 1995. Market
capitalization was $2.9 billion. Firstar initiated a stock buyback program in
the latter half of 1995 which resulted in the repurchase of 3.9 million shares
at a cost of $147 million. Capital strength, by all measures, remains strong.
7
<PAGE> 9
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 margins 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 1 shows the components of net
interest revenue, net income and net interest margin for the last three years.
TABLE 1
CONDENSED INCOME STATEMENTS -- TAXABLE-EQUIVALENT BASIS
<TABLE>
<CAPTION>
CHANGE FROM PRIOR YEAR
---------------------------------------
1995 VS 1994 1994 VS 1993
----------------- -----------------
1995 1994 1993 AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- ------ ------- ------ -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest revenue..................... $1,347.8 $1,119.7 $1,028.0 $228.1 20.4% $91.7 8.9%
Taxable-equivalent adjustment........ 33.4 35.0 32.5 (1.6) (4.6) 2.5 7.7
-------- -------- -------- ----- -----
Interest
revenue--taxable-equivalent...... 1,381.2 1,154.7 1,060.5 226.5 19.6 94.2 8.9
Interest expense..................... 621.8 420.9 368.1 200.9 47.7 52.8 14.3
-------- -------- -------- ----- -----
Net interest revenue--
taxable-equivalent............... 759.4 733.8 692.4 25.6 3.5 41.4 6.0
Provision for loan losses............ 36.8 23.9 29.1 12.9 54.0 (5.2) (17.9)
Other operating revenue.............. 392.2 370.6 392.9 21.6 5.8 (22.3) (5.7)
Other operating expense.............. 734.1 706.1 689.2 28.0 4.0 16.9 2.5
-------- -------- -------- ----- -----
Income before income taxes......... 380.7 374.4 367.0 6.3 1.7 7.4 2.0
Provision for income taxes........... 118.4 112.7 106.6 5.7 6.1
Taxable-equivalent adjustment........ 33.4 35.0 32.5 (1.6) 2.5
-------- -------- -------- ----- -----
Net income......................... $ 228.9 $ 226.7 $ 227.9 $ 2.2 1.0 $(1.2) (.5)
======== ======== ======== ===== =====
Yield on earning assets.............. 8.28% 7.69% 7.72% .59% (.03)%
Cost of interest-bearing
liabilities........................ 4.59 3.51 3.37 1.08 .14
-------- -------- -------- ----- -----
Interest spread...................... 3.69 4.18 4.35 (.49) (.17)
Impact of interest-free funds........ .86 .71 .69 .15 .02
-------- -------- -------- ----- -----
Net interest margin................ 4.55% 4.89% 5.04% (.34)% (.15)%
======== ======== ======== ===== =====
</TABLE>
During 1995, net interest revenue increased 3.5% to $759.4 million. This
follows a 6.0% increase in 1994. The growth in both years benefited from higher
average earning asset balances, driven principally by continued strong loan
growth. This positive impact was somewhat offset by a reduction in the net
interest margin in both years.
The net interest margin for 1995 was 4.55% compared with 4.89% in 1994 and
5.04% in 1993. The margin has been compressed during the past two years by the
rising cost of funds which has not been fully offset by increased yield on
earning assets. Interest rates increased dramatically during 1994 with the prime
rate rising from 6.00% at the beginning of the year to 8.50% at the end of the
year. During 1995 the prime rate remained within a narrow band between 8.50% to
9.00%.
Rates paid on fund sources increased by 1.08% or 108 basis points, in 1995
reflecting the run up of interest rates in 1994 which effect is more fully seen
in the 1995 average rates paid. On the asset side, rate increases of only 59
basis points were achieved. The impact of interest free funds supporting earning
assets benefited net interest margin by 15 basis points in 1995 reflecting the
increased volume of these deposits in a higher rate environment. The 15 basis
point decline in net interest margin in 1994 resulted principally from a
8
<PAGE> 10
14 basis point increase in the cost of funds. Firstar expects its 1996 net
interest margin to remain in the same range as experienced in 1995.
Foregone interest on nonperforming loans and foreclosed assets reduced net
interest revenue by $5.4 million in 1995, $5.7 million in 1994 and $6.8 million
in 1993. This resulted in corresponding reductions in net interest margin of
.03% in 1995 and .03% in 1994 and .04% in 1993. This nominal impact is a
reflection of Firstar's continued low level of nonperforming assets.
Table 2 shows the components of interest revenue and expense along with
changes related to volumes and rates. Total interest revenue increased by 19.6%
to $1.38 billion in 1995. This resulted from higher average earning assets, up
11.2%, and the increased yield on earning assets. Interest income on loans rose
by 18.1% due to both loan growth and higher rates. Securities income increased
with the higher average balance levels. During 1994, total interest revenue
increased by 8.9% to $1.15 billion. This increase was nearly entirely average
balance driven, with earning assets rising by 9.3%. Interest income on
commercial loans rose by 18.7% due to both higher balances and interest rates.
Consumer loan interest, while up 2.9%, was impacted by a lower net interest rate
which was 66 basis points less than 1993. This reduced rate on consumer loans
reflects the refinancing activity and general lower rates available in 1993.
Securities income declined in 1994 as higher rate investments matured and were
replaced with securities with then currently lower market yields.
TABLE 2
ANALYSIS OF INTEREST REVENUE AND EXPENSE
<TABLE>
<CAPTION>
1995 VS 1994 1994 VS 1993
------------------------------ ----------------------------
INTEREST DUE TO DUE TO
------------------------------------ TOTAL ------------------- TOTAL ------------------
1995 1994 1993 CHANGE VOLUME RATE CHANGE VOLUME RATE
---------- ---------- ---------- -------- -------- -------- ------- ------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits
with banks.............. $ 967 $ 1,297 $ 2,667 $ (330) $ (537) $ 207 $(1,370) $(1,953) $ 583
Federal funds sold and
resale agreements....... 10,534 9,645 5,119 889 (2,293) 3,182 4,526 2,001 2,525
Trading securities........ 968 1,560 985 (592) (537) (55) 575 307 268
Securities................ 280,045 220,713 222,920 59,332 43,909 15,423 (2,207) 9,551 (11,758)
Commercial loans.......... 609,248 513,254 432,271 95,994 51,107 44,887 80,983 48,413 32,570
Consumer loans............ 479,492 408,239 396,560 71,253 41,077 30,176 11,679 42,337 (30,658)
---------- ---------- ---------- -------- -------
Total loans........... 1,088,740 921,493 828,831 167,247 92,193 75,054 92,662 90,789 1,873
---------- ---------- ---------- -------- -------
Total interest
revenue............. 1,381,254 1,154,708 1,060,522 226,546 135,202 91,344 94,186 97,921 (3,735)
Interest-bearing demand... 23,831 21,065 29,366 2,766 (892) 3,658 (8,301) 212 (8,513)
Money market accounts..... 85,231 57,274 49,583 27,957 2,433 25,524 7,691 1,750 5,941
Savings passbook.......... 44,509 43,887 45,330 622 (3,034) 3,656 (1,443) 2,491 (3,934)
Certificates of deposit... 291,135 199,743 191,579 91,392 43,131 48,261 8,164 5,419 2,745
---------- ---------- ---------- -------- -------
Total deposits........ 444,706 321,969 315,858 122,737 25,306 97,431 6,111 9,728 (3,617)
Short-term borrowed
funds................... 133,151 67,622 25,189 65,529 34,927 30,602 42,433 27,411 15,022
Long-term debt............ 43,982 31,315 27,068 12,667 8,736 3,931 4,247 3,654 593
---------- ---------- ---------- -------- -------
Total interest
expense............. 621,839 420,906 368,115 200,933 59,506 141,427 52,791 37,477 15,314
---------- ---------- ---------- -------- -------
Net interest
revenue............. $ 759,415 $ 733,802 $ 692,407 $ 25,613 84,110 (58,497) $41,395 62,692 (21,297)
========== ========== ========== ======== =======
</TABLE>
- ------------
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.
Total interest expense increased by 47.7% in 1995, to $621.8 million.
Interest expense on deposits increased 38.1% as interest rates were increased to
remain competitive in the market. Interest cost for short-term borrowed funds
nearly doubled as increased reliance was placed upon this higher cost funding
source. Total interest expense increased by 14.3% during 1994 to a level of
$420.9 million. This was principally due to the increased cost of short-term
borrowed funds. Both higher usage of this funding source and its associated
increased interest rate were factors.
9
<PAGE> 11
OTHER OPERATING REVENUE
Total other operating revenue, excluding securities gains and losses,
increased by 5.8% to a level of $395.7 million in 1995. This compares with a
4.2% decline in 1994 attributable to reduced mortgage banking activities.
Firstar continues to emphasize growth in fee revenue. 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 3 shows the composition of other operating revenues.
TABLE 3
ANALYSIS OF OTHER OPERATING REVENUE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1995 VS 1994 1994 VS 1993
-------------------------------- ------------------ -------------------
1995 1994 1993 AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- ------- ------- -------- -------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Trust and investment management
fees............................ $132,377 $120,349 $112,521 $12,028 10.0% $ 7,828 7.0%
Service charges on deposit
accounts........................ 80,891 81,980 83,060 (1,089) (1.3) (1,080) (1.3)
Credit card service revenue....... 62,990 56,265 53,728 6,725 12.0 2,537 4.7
Mortgage servicing................ 22,631 18,105 17,636 4,526 25.0 469 2.7
Mortgage origination.............. 15,848 17,374 40,241 (1,526) (8.8) (22,867) (56.8)
-------- -------- -------- ------- -------
Mortgage banking revenue........ 38,479 35,479 57,877 3,000 8.5 (22,398) (38.7)
Data processing fees.............. 17,924 20,263 21,431 (2,339) (11.5) (1,168) (5.5)
Insurance revenue................. 11,730 12,188 11,420 (458) (3.8) 768 6.7
Brokerage revenue................. 10,874 9,505 12,038 1,369 14.4 (2,533) (21.0)
International fees................ 5,999 5,878 5,265 121 2.1 613 11.6
Electronic funds transfer fees.... 5,085 5,350 4,743 (265) (5.0) 607 12.8
Safe deposit fees................. 4,207 3,960 3,880 247 6.2 80 2.1
Foreign exchange gains............ 2,426 2,063 1,900 363 17.6 163 8.6
Municipal finance fees............ 936 991 1,368 (55) (5.5) (377) (27.6)
Other............................. 21,775 19,792 21,193 1,983 10.0 (1,401) (6.6)
-------- -------- -------- ------- -------
Subtotal...................... 395,693 374,063 390,424 21,630 5.8 (16,361) (4.2)
Trading securities gains.......... 2,234 139 2,074 2,095 1,507.2 (1,935) (93.3)
Securities (losses) gains......... (5,730) (3,583) 420 (2,147) 59.9 (4,003) (953.1)
-------- -------- -------- ------- -------
Total other operating
revenue..................... $392,197 $370,619 $392,918 $21,578 5.8 $(22,299) (5.7)
======== ======== ======== ======= =======
</TABLE>
Other operating revenue now represents 34% of Firstar's revenue. An
industry measure of fee revenue prominence is the ratio of this revenue to
average assets. During 1995 this ratio was 2.18% compared to 2.26% in 1994 and
2.56% in 1993. While fee revenue has increased, the effect of the larger 10%
growth in average assets in 1995 is shown in the reduction of this ratio.
Firstar continues to remain in the top quartile of its peer group by this
measure of fee revenue.
Trust and investment management fees are the single largest source of fee
revenue, contributing $132.4 million, or one-third of other operating revenue.
This level represents a 10.0% growth in revenue in 1995 which in turn followed a
7.0% growth recorded in 1994. The general rise in the market value of assets
contributed to the growth achieved in 1995. In addition, expanded services are
being offered through Firstar's banking network and additional marketing efforts
are also being directed to institutional investors beyond the Midwest. Trust
assets under management increased by 19.8% during 1995 to a level of $18.1
billion at the end of the year. Assets held in custody accounts were $55.3
billion at year-end 1995, a 43.4% increase from last year.
Revenue from service charges on deposit accounts declined by 1.3% in both
of the last two years and currently is at a level of $80.9 million. This
reduction was primarily due to higher rate credits given to business customers
for services, thus reducing the level of cash payments necessary.
Credit card service revenues are the third largest source of fee revenue. A
significant growth rate of 12.0% was achieved during 1995, increasing revenue to
$63.0 million. This follows a smaller increase of 4.7% in 1994.
10
<PAGE> 12
The introduction of new credit card products, increased merchant fee revenues
and the repricing of service charges have all contributed to this revenue
growth. Firstar services 590,000 active card holders, has 34,000 merchant
accounts and provides credit card programs to more than 800 financial
institutions. This customer base, which covers the upper Midwest and includes
Wisconsin, Iowa, Illinois, Minnesota, Upper Michigan, Nebraska and the Dakotas,
provides a market for the sale and expansion of other financial products.
Revenue from mortgage banking activities has fluctuated during the last
three years as a result of general market driven factors. Revenue from mortgage
originations reached $40.2 million in 1993, during which period the record low
interest rates drove up refinancing volumes. Mortgage origination revenues in
1995 were $15.8 million reflecting reduced volumes. Loan origination volumes
were $1.4 billion in 1995 compared with $1.7 billion in 1994 and $2.8 billion in
1993. Mortgage loan servicing revenue has shown increases during this period,
increasing 25.0% in 1995 and 2.7% in 1994. Included in servicing revenue were
gains on the sales of servicing rights of $7.1 million in 1995, $3.6 million in
1994 and $3.3 million in 1993. Mortgage loans serviced for others were $3.3
billion at the end of 1995, compared with $3.9 billion a year earlier.
Firstar adopted Financial Accounting Standards Board Statement No. 122,
"Accounting for Mortgage Servicing Rights" as of January 1, 1995. This statement
requires that separate assets be recognized for the rights to service mortgage
loans for others whether those servicing rights were purchased or related to
loans originated by the company. Firstar capitalized $6.3 million in originated
service rights in 1995. Further information on mortgage servicing rights
activities is included in Note 3 to the Consolidated Financial Statements.
Data processing fee income declined 11.5% in 1995 and 5.5% in 1994. 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.
Brokerage services increased by 14.4% during 1995. This followed a market
driven decline of 21.0% in 1994.
Securities losses of $5.7 million and $3.6 million were realized in 1995
and 1994, respectively. These losses were generated by the partial liquidation
of merged banks' portfolios to bring them in line with Firstar's investment
policies.
The remaining sources of other operating revenue are derived from a wide
range of services and collectively increased by 8.0% in 1995 after a 2.9%
decline in 1994.
11
<PAGE> 13
OTHER OPERATING EXPENSES
Total operating expenses increased 4.0% to $734.1 million in 1995 compared
with an increase of 2.5% in 1994. Information on the components of other
operating expense is shown in Table 4.
TABLE 4
ANALYSIS OF OTHER OPERATING EXPENSE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1995 VS 1994 1994 VS 1993
-------------------------------- ------------------- ------------------
1995 1994 1993 AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- -------- ------- ------- -------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries............................. $323,163 $312,120 $301,171 $ 11,043 3.5% $10,949 3.6%
Employee benefits.................... 72,198 68,841 67,343 3,357 4.9 1,498 2.2
-------- -------- -------- -------- -------
Total personnel expense............ 395,361 380,961 368,514 14,400 3.8 12,447 3.4
Equipment expense.................... 58,700 54,556 53,123 4,144 7.6 1,433 2.7
Net occupancy expense................ 57,992 52,984 58,328 5,008 9.5 (5,344) (9.2)
Business development................. 29,413 26,602 27,911 2,811 10.6 (1,309) (4.7)
Information processing expense....... 21,918 20,957 19,034 961 4.6 1,923 10.1
Stationery and supplies.............. 21,284 18,087 20,956 3,197 17.7 (2,869) (13.7)
Professional fees.................... 20,491 17,937 18,355 2,554 14.2 (418) (2.3)
Delivery............................. 19,192 16,122 17,919 3,070 19.0 (1,797) (10.0)
F.D.I.C. insurance................... 16,531 28,361 27,898 (11,830) (41.7) 463 1.7
Amortization of intangibles.......... 12,709 11,746 18,738 963 8.2 (6,992) (37.3)
Employee education/recruiting........ 8,389 7,977 8,323 412 5.2 (346) (4.2)
Wire communication................... 7,418 6,656 5,830 762 11.4 826 14.2
Commissions and service fees......... 5,799 6,777 5,601 (978) (14.4) 1,176 21.0
Processing and other losses.......... 5,102 4,051 4,353 1,051 25.9 (302) (6.9)
Credit card assessment fees.......... 5,011 4,209 3,851 802 19.1 358 9.3
Federal Reserve processing fees...... 4,695 4,814 5,368 (119) (2.5) (554) (10.3)
Published information................ 2,277 2,144 2,262 133 6.2 (118) (5.2)
Insurance............................ 1,601 1,747 2,185 (146) (8.4) (438) (20.0)
Other................................ 17,369 18,050 18,371 (681) (3.8) (321) (1.7)
-------- -------- -------- -------- -------
Subtotal........................... 711,252 684,738 686,920 26,514 3.9 (2,182) (.3)
Net foreclosed assets (income)
expense............................ (281) (553) 2,354 272 (49.2) (2,907) (123.5)
Check kiting loss.................... 22,000 (22,000) (100.0) 22,000
Restructuring expense................ 23,151 23,151
-------- -------- -------- -------- -------
Total other operating expense...... $734,122 $706,185 $689,274 $ 27,937 4.0 $16,911 2.5
======== ======== ======== ======== =======
</TABLE>
Personnel costs, which include salaries and fringe benefits, are the
largest component of operating expenses, representing more than one-half of
operating costs. This expense rose by 3.8% in 1995 compared to 3.4% in 1994.
Salary increases during the past two years were in the 3.5% range. Full-time
equivalent staffing has declined by approximately 600 people during this period
as a result of staff reductions at acquired banks. Employee benefits increased
by 4.9% in 1995 and 2.2% in 1994.
Equipment expense increased by 7.6% in 1995 compared with 2.7% in 1994.
Firstar continues to invest in upgraded data processing equipment, ensuring that
its data processing capabilities are up-to-date in order to provide quality
service in a cost effective manner.
Net occupancy expense increased by 9.5% in 1995, which followed a 9.2%
decline in 1994. These comparisons were affected by a partial acceleration of a
deferred gain on a building sale of $2.1 million in 1994 and costs associated
with office closings of $2.2 million in 1993.
FDIC insurance is an uncontrollable cost, with the premium established by
the federal regulatory agency. The FDIC sets varying premium amounts based upon
capitalization levels and soundness criteria. Firstar's capital strength has
permitted payments at the lowest rate levels. The FDIC substantially reduced
premium requirements in 1995 as seen in the 41.7% reduction in this expense. The
FDIC is considering further changes to the rate structure in 1996 of both bank
insured (BIF) and savings and loan insured (SAIF) deposits. Firstar has $1.1
billion of SAIF deposits acquired in acquisitions of savings institutions. These
deposits may be
12
<PAGE> 14
subject to either higher insurance rates or a one-time assessment to fully fund
the SAIF pool. The one-time assessment could exceed $11 million.
The amortization of intangibles includes amounts associated with goodwill,
core deposit intangibles and mortgage loan servicing rights. During 1993,
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 $1.6 million
in 1995, $1.5 million in 1994 and $9.2 million in 1993. This expense fluctuates
with changing interest rates and loan prepayment trends. The remaining
unamortized mortgage loan servicing rights were $9.5 million at the end of 1995.
All other operating expenses, excluding certain unusual costs in Table 4,
increased by 8.9% in 1995 after declining by 2.6% in 1994. Costs incurred in
1995 related to the consolidation of subsidiary banks in Illinois, Iowa and
Minnesota were a contributing factor in this year's expense increases.
During 1995, certain merger and restructuring charges were taken in
connection with four completed acquisitions. These expenses totaled $43.0
million and are detailed in Table 5.
TABLE 5
ACQUISITION RELATED RESTRUCTURING COSTS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
----------------------
(thousands of dollars)
<S> <C>
Additional loan loss provisions........................................... $ 13,612
Losses on sales of securities............................................. 6,263
Restructuring expenses:
Employee severance...................................................... 11,899
Facilities and equipment................................................ 4,801
Professional fees....................................................... 2,531
Other................................................................... 3,920
-------
23,151
-------
Total pre-tax costs....................................................... 43,026
Income tax benefit........................................................ 15,393
-------
Total................................................................... $ 27,633
=======
Per common share impact................................................... $ 0.36
</TABLE>
Acquisition related restructuring charges totaling $23.2 million are
included in other 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 closings and write-off of unusable equipment,
$2.5 million of professional fees and $3.9 million of other costs associated
with the mergers. The restructuring charge of $23.2 million consisted of $17.3
million in anticipated cash expenditures and $5.9 million of non-cash asset
write-downs. Cash payments during 1995 have reduced the restructuring accrual to
approximately $6.9 million.
A $22 million check kiting loss that was recorded in 1994 involved two
affiliated commercial customers who conducted fraudulent check transactions.
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. Excluding the restructuring charges and check kiting loss,
this ratio was 61.4% in 1995, 61.7% in 1994 and 63.5% in 1993.
In January 1996, Firstar announced plans to simplify and streamline its
operations with a goal to improve its efficiency and customer service. Once
fully implemented by mid 1997, these improvements are expected to add $140
million in annualized pre-tax earnings and result in an efficiency ratio of 55%
or less for 1997. A
13
<PAGE> 15
restructuring charge of $31 million after-tax will be taken in the first quarter
of 1996 to cover costs associated with this project.
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 1995 provision for loan losses was $36.8
million, compared with $23.9 million in 1994 and $29.1 million in 1993. During
1995, additional loan loss provisions of $13.6 million were taken to increase
the newly acquired banks' loan loss levels to conform with Firstar's loan loss
reserve policies.
INCOME TAXES
Income tax expense was $118.4 million in 1995, compared to $112.7 million
in 1994 and $106.6 million in 1993. The effective tax rate was 34.1% in 1995,
33.2% in 1994 and 31.9% in 1993. The effective tax rate rose in 1995 as compared
to 1994 due to a reduction in tax-exempt municipal interest income, an increase
in state tax expense and an increase in nondeductible intangible amortization
expense. The effective tax rate rose in 1994 as compared to 1993 due to the
benefit of the adoption of Financial Accounting Standards Statement No. 109 in
1993 and the benefit of the enacted changes in tax laws and rates in 1993.
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 1995 reached $19.2 billion, an increase of $1.2
billion or 6.5% over a year earlier. Average total assets for 1995 were $18.2
billion, an increase of 10.1% over 1994.
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 45% 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.
TABLE 6
SUBSIDIARY AVERAGE ASSETS
<TABLE>
<CAPTION>
1995 1994 1993
-------------------- -------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Bank groups:
Wisconsin--lead bank................ $ 5,800.8 31.8% $ 5,221.1 31.5% $ 4,926.5 32.2%
Wisconsin--banks.................... 4,058.1 22.3 3,669.7 22.2 3,249.4 21.2
Iowa bank........................... 2,674.5 14.7 2,554.3 15.4 2,483.5 16.2
Minnesota bank...................... 2,389.3 13.1 2,163.8 13.1 1,960.3 12.8
Illinois bank....................... 2,834.0 15.5 2,651.8 16.0 2,447.1 16.0
Arizona bank........................ 104.6 .6 93.9 .6 87.2 .6
Credit card bank.................... 191.6 1.1
--------- ------- --------- ------- --------- -------
Subtotal......................... 18,052.9 99.1 16,354.6 98.8 15,154.0 99.0
Trust and investment management
subsidiaries........................ 93.0 .5 98.2 .6 77.3 .5
Parent/other subsidiaries............. 69.5 .4 92.2 .6 77.6 .5
--------- ------- --------- ------- --------- -------
Total............................ $18,215.4 100.0% $16,545.0 100.0% $15,308.9 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
- ------------
Assets have been adjusted for intercompany amounts.
14
<PAGE> 16
Significant acquisition activity occurred during 1995 and early 1996.
Firstar completed three mergers and announced two additional transactions which
will add to its existing franchises.
The acquisition of First Colonial Bankshares Corporation, a $1.8 billion
bank holding company with 30 offices in the Chicago area was completed on
January 31, 1995, and gives Firstar a $2.9 billion banking franchise with 40
offices in the Chicago area market.
In April 1995, the acquisition of Investors Bank Corp., a $1.1 billion
thrift with 12 offices and a large mortgage banking business in the
Minneapolis/St. Paul market was completed. This transaction, doubled both the
size of Firstar's Minnesota banking operations and corporate wide mortgage
banking business.
In March 1995, the acquisition of First Moline Financial Corp. added $86
million in assets to Firstar Bank Iowa.
On January 26, 1996, the acquisition of Harvest Financial Corp., a $353
million thrift based in Dubuque, Iowa was completed.
Firstar announced in January 1996, an agreement to acquire American
Bancorporation, Inc., headquartered in St. Paul, Minnesota. This transaction
will add $1.2 billion in assets to Firstar's existing Minnesota operation,
creating a banking organization with $3.6 billion in assets.
LOANS AND INVESTMENTS
Earning assets, shown in Table 7, averaged $16.7 billion, an increase of
$1.7 billion, or 11.2% over 1994. Loans, the largest category of earning assets,
represented 73.7% of earning assets as compared with 74.7% in 1994. On average,
loans totaled $12.3 billion, an increase of $1.1 billion or 9.6% over 1994.
Excluding the effect of residential mortgage loans that were securitized and
transferred to the securities portfolio in 1994, average loans grew by 12.5% in
1995. This followed an increase in average loans of 10.9% during 1994. This
growth was especially strong in the Wisconsin and Minnesota market which
recorded loan growth of 11% and 14%, respectively. Loan growth has moderated
during the latter part of 1995 and it is expected that this trend will continue
into 1996.
TABLE 7
AVERAGE EARNING ASSETS
<TABLE>
<CAPTION>
1995 1994 1993
-------------------- -------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Commercial and industrial.......... $ 3,054.2 18.3% $ 2,742.1 18.3% $ 2,463.7 17.9%
Real estate........................ 2,817.9 16.9 2,591.4 17.2 2,343.7 17.0
Foreign............................ 35.8 .2 29.1 .2 21.9 .2
Other.............................. 930.4 5.6 880.6 5.9 808.6 5.9
--------- ----- --------- ----- --------- -----
Commercial loans.............. 6,838.3 41.0 6,243.2 41.6 5,637.9 41.0
Credit card........................ 554.7 3.3 510.5 3.4 502.7 3.7
Real estate--mortgage.............. 2,617.8 15.7 2,336.3 15.6 2,128.0 15.5
Home equity........................ 859.5 5.2 692.2 4.6 608.6 4.4
Other.............................. 1,421.4 8.5 1,433.7 9.5 1,233.6 9.0
--------- ----- --------- ----- --------- -----
Consumer loans................ 5,453.4 32.7 4,972.7 33.1 4,472.9 32.6
--------- ----- --------- ----- --------- -----
Total loans................... 12,291.7 73.7 11,215.9 74.7 10,110.8 73.6
Securities held to maturity........ 3,927.7 23.5 3,214.7 21.4 3,377.7 24.6
Securities available for sale...... 267.6 1.6 311.9 2.1 .6
Trading securities................. 14.2 .1 22.1 .1 17.3 .1
Interest-bearing deposits with
banks............................ 15.7 .1 24.9 .2 64.8 .5
Federal funds sold and resale
agreements....................... 173.5 1.0 219.5 1.5 165.1 1.2
--------- ----- --------- ----- --------- -----
Total......................... $16,690.4 100.0% $15,009.0 100.0% $13,736.3 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
15
<PAGE> 17
Commercial loans, which account for 56% of the loan portfolio, increased by
$595 million, or 9.5% on average, to $6.8 billion during 1995. This follows the
10.7% growth seen in 1994.
Consumer loans averaged $5.5 billion, an increase of $481 million or 9.7%
over 1994. Excluding the impact of residential loans securitized in 1994,
consumer loans grew at a very strong 16.3% during 1995. Consumer loan growth in
1994 was 11.2%. Increased levels of residential mortgages and home equity loans
were significant factors in the 1995 growth. Residential mortgage loans have
increased as Firstar has chosen to retain in its portfolio a larger portion of
originated short-term and variable rate mortgages. Good growth in credit card
balances was also a contributing factor.
The securities portfolio increased by $669 million, or 19.0% on average
during 1995 to a level of $4.2 billion. Approximately one half of this increase
was the result of the securitization of mortgage loans and their movement to the
securities portfolio. Tables 8 and 9 show the maturity range and changing mix of
the securities portfolio. At year-end 1995, Firstar classified an additional
$1.8 billion of securities as available for sale. While these securities are
considered available for sale, it is not anticipated that any disposition of
these securities will occur in the near term. The average maturity of the
portfolio was just over four years as of the end of 1995, up from 3.8 years at
December 31, 1994. Short-term investments, which include interest-bearing
deposits with banks, trading account securities, and federal funds sold and
resale agreements, averaged $203 million during 1995, a reduction of $63 million
from 1994.
TABLE 8
MATURITY RANGE AND AVERAGE YIELD OF SECURITIES
<TABLE>
<CAPTION>
DUE WITHIN FIVE TO TEN TOTAL
ONE YEAR ONE TO FIVE YEARS YEARS AFTER TEN YEARS DECEMBER 31, 1995
--------------- ----------------- --------------- --------------- -----------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------- ---- ---------- ---- -------- ---- -------- ---- ---------- ----
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held to
maturity:
U.S. Treasury and federal
agencies............... $ 751 5.77% $ 1,395 4.79% $ % $ % $ 2,146 5.12%
Mortgage backed
obligations of federal
agencies............... 171,774 7.21 516,788 7.37 373,826 7.31 204,070 6.81 1,266,458 7.23
State and political
subdivisions........... 160,714 7.55 490,519 7.23 432,837 7.73 57,917 7.76 1,141,987 7.49
Corporate debt........... 3,903 7.03 9,043 8.85 2,312 7.23 332 7.19 15,590 6.83
Other.................... 849 8.65 849 8.65
-------- ---------- -------- -------- ----------
Total................ $337,991 7.37 $1,017,745 7.31 $808,975 7.53 $262,319 7.02 $2,427,030 7.35
======== ========== ======== ======== ==========
Securities available for
sale:
U.S. Treasury and federal
agencies............... $432,128 5.12% $ 825,892 5.33% $659,705 7.15% $ % $1,917,725 5.88%
Mortgage backed
obligations of federal
agencies............... 3,013 6.05 5,108 5.56 1,070 6.17 596 5.47 9,787 5.68
State and political
subdivisions........... 1,232 7.55 6,044 6.94 555 3.53 7,831 6.80
Corporate debt........... 643 8.72 553 7.84 1,196 8.32
Other.................... 18,542 5.24 18,542 5.24
-------- ---------- -------- -------- ----------
Total................ $455,558 5.14 $ 837,597 5.34 $660,775 7.15 $ 1,151 4.49 1,955,081 5.88
======== ========== ======== ========
Equity securities........ 92,767 6.52
----------
$2,047,848 5.91
==========
</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.
16
<PAGE> 18
TABLE 9
SECURITIES
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Securities held to maturity:
U.S Treasury and federal agencies.......... $ 2,146 $1,612,188 $1,510,216 $1,282,749 $1,436,274
Mortgage backed obligations of federal
agencies................................. 1,266,458 867,990 361,784 514,455 550,693
State and political subdivisions........... 1,141,987 1,069,755 1,036,236 1,042,376 943,773
Corporate debt............................. 15,590 79,891 108,429 276,635 307,179
Equity securities.......................... 26,422 16,919
Other...................................... 849 1,139 1,118 136,675 92,019
---------- ---------- ---------- ---------- ----------
Total.................................. $2,427,030 $3,630,963 $3,017,783 $3,279,312 $3,346,857
========== ========== ========== ========== ==========
Securities available for sale:
U.S Treasury and federal agencies.......... $1,917,725 $ 202,435 $ 79,200
Mortgage backed obligations of federal
agencies................................. 9,787 12,060 93,427
State and political subdivisions........... 7,831 7,720 33,231
Corporate debt............................. 1,196 504 3,587
Equity securities.......................... 92,767 57,621 32,122
Money market mutual funds.................. 18,542 62,313 100,402
---------- ---------- ----------
Total.................................. $2,047,848 $ 342,653 $ 341,969
========== ========== ==========
</TABLE>
FUND SOURCES
Average fund sources, consisting of deposits and borrowed funds, increased
by $1.5 billion, or 10.4%, to $16.4 billion in 1995. Total deposits averaged
$13.5 billion, an increase of $728 million, or 5.7%. Bank acquisitions accounted
for about one-half of this increase in average deposits. Table 10 shows the
composition of Firstar's fund sources.
TABLE 10
AVERAGE FUND SOURCES
<TABLE>
<CAPTION>
1995 1994 1993
-------------------- -------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts.................. $ 4,399.0 26.8% $ 4,481.2 30.2% $ 4,425.6 32.2%
Savings passbook...................... 1,731.3 10.6 1,854.9 12.4 1,755.1 12.8
Money market accounts................. 2,110.5 12.9 2,027.5 13.7 1,960.1 14.3
Certificates of deposit............... 4,384.0 26.7 3,882.3 26.2 3,877.1 28.3
--------- ------ --------- ------ --------- ------
Total core deposits.............. 12,624.8 77.0 12,245.9 82.5 12,017.9 87.6
Other time deposits................... 877.6 5.4 528.6 3.6 413.6 3.0
--------- ------ --------- ------ --------- ------
Total deposits................... 13,502.4 82.4 12,774.5 86.1 12,431.5 90.6
Short-term borrowed funds............. 2,275.8 13.9 1,591.3 10.7 865.3 6.3
Long-term debt........................ 610.9 3.7 477.4 3.2 421.5 3.1
--------- ------ --------- ------ --------- ------
Total............................ $16,389.1 100.0% $14,843.2 100.0% $13,718.3 100.0%
========= ====== ========= ====== ========= ======
</TABLE>
Core deposits, which include transaction accounts and other stable time
deposits, are Firstar's prime source of funding. These deposits averaged $12.6
billion in 1995, an increase of $379 million or 3.1%. Most of this increase was
attributable to bank acquisitions. Core deposits have declined from 88% of fund
sources in 1993 to 77% in 1995. Increased competition for consumer deposits and
heightened consumer sensitivity to interest rates have limited Firstar's core
deposit growth. Continued emphasis will be placed on generating core deposits
through competitive pricing of deposit products.
17
<PAGE> 19
More reliance was placed on purchased fund sources during the last two
years to support the growth in loan balances. Other time deposits, primarily
certificates of deposit over $100,000, increased $349 million, to $878 million
on average during 1995. Short-term borrowed funds were increased by $685 million
to an average level of $2.3 billion. Long-term debt was increased by $134
million to an average level of $611 million. Continued reliance on these
alternative funding sources will be necessary.
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 foreclosed assets have declined from 1.50% in 1991
to .77% at the end of 1995.
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 $97.9 million at December 31, 1995 and represented
.77% of Firstar's $12.6 billion of loans and foreclosed assets. This is a $15.3
million increase from a year earlier. Nonperforming assets have gone up in part
due to the application of Firstar's credit review policies to the loan
portfolios of the recently acquired banks.
TABLE 11
NONPERFORMING ASSETS AND PAST DUE LOANS
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Commercial................................. $26,239 $29,710 $24,591 $ 31,265 $ 35,683
Commercial--real estate.................... 46,959 28,993 30,963 27,379 35,443
Consumer................................... 16,187 9,831 10,881 13,245 13,144
------- ------- ------- -------- --------
Total nonaccrual loans.................. 89,385 68,534 66,435 71,889 84,270
Renegotiated loans:
Commercial................................. 40 71 823 1,904 2,865
Commercial--real estate.................... 1,336 674 697 741 1,418
------- ------- ------- -------- --------
Total renegotiated loans................ 1,376 745 1,520 2,645 4,283
Foreclosed assets*........................... 7,141 13,282 19,881 40,571 47,168
------- ------- ------- -------- --------
Total nonperforming assets.............. $97,902 $82,561 $87,836 $115,105 $135,721
======= ======= ======= ======== ========
Nonperforming assets as a percentage of:
Loans and foreclosed assets................ .77% .69% .81% 1.17% 1.50%
Total assets............................... .51 .46 .54 .74 .93
Loans past due 90 days:
Commercial................................. $21,039 $ 7,432 $ 7,453 $ 5,445 $ 7,343
Commercial--real estate.................... 9,287 3,760 4,441 6,893 10,795
Consumer................................... 19,084 15,709 13,758 13,286 14,419
------- ------- ------- -------- --------
Total loans past due 90 days............ $49,410 $26,901 $25,652 $ 25,624 $ 32,557
======= ======= ======= ======== ========
</TABLE>
- ------------
* Nonperforming loans which were included in foreclosed assets under "in
substance foreclosure" accounting rules were $10.5 million and $10.5 million
at December 31, 1992 and 1991, respectively. Such "in substance foreclosed"
loans were reclassified to loans in 1993.
18
<PAGE> 20
Commercial real estate related nonperforming assets totaled $55.4 million
at the end of 1995, an increase of $12.5 million from a year earlier. These
nonperforming assets represented 1.94% 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 stood at $84.0 million at the end of 1991. 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
.64% compared to .76% a year earlier. This is reflective of the overall
consistent financial strength of Firstar's commercial borrowers.
Nonperforming consumer loans have increased by $6.4 million to $16.2
million at the end of 1995. This represented .29% of consumer loans compared to
.19% a year earlier. While consumer nonperforming loans remain at a very minimal
level, the increase from year-to-year reflects the impact of consumers taking on
increased debt burdens in the past two years.
Loans ninety days or more past due on December 31, 1995, totaled $49.4
million, compared with $26.9 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 $20 million of loans at December 31, 1995, on which
interest is accruing, but, because of existing economic conditions or
circumstances of the borrower, doubt exists 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.
19
<PAGE> 21
The reserve for loan losses is reviewed and adjusted quarterly, subject to
evaluation of economic conditions and expectations, historical experience and
risk ratings of individual loans. Table 12 shows the activity affecting the
reserve for loan losses for the last five years. The reserve totaled $195.3
million at the end of 1995, compared with $190.6 million a year earlier.
TABLE 12
RESERVE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Balance at beginning of year.............. $190,552 $189,714 $183,251 $163,197 $145,470
Loan charge-offs:
Commercial.............................. 13,417 21,081 15,090 21,461 18,578
Commercial--real estate................. 7,246 3,374 4,611 6,488 4,336
Consumer................................ 13,915 8,040 6,763 7,782 10,583
Consumer--real estate................... 1,671 766 1,301 1,894 1,286
Credit card............................. 16,614 14,248 15,073 17,852 19,219
Foreign................................. 219
-------- -------- -------- -------- --------
Total charge-offs.................... 52,863 47,728 42,838 55,477 54,002
Loan recoveries:
Commercial.............................. 7,463 7,077 6,590 7,174 5,644
Commercial--real estate................. 1,782 2,764 2,587 3,508 846
Consumer................................ 4,864 4,190 3,539 3,599 2,763
Consumer--real estate................... 434 741 291 399 587
Credit card............................. 5,423 4,380 4,121 3,557 2,761
Foreign................................. 7 809 604 428 3,479
-------- -------- -------- -------- --------
Total recoveries..................... 19,973 19,961 17,732 18,665 16,080
-------- -------- -------- -------- --------
Net loan charge-offs...................... 32,890 27,767 25,106 36,812 37,922
Provision for loan losses................. 36,756 23,891 29,090 50,733 55,220
Reserves of acquired banks................ 865 4,714 2,479 6,133 429
-------- -------- -------- -------- --------
Total balance at end of year......... $195,283 $190,552 $189,714 $183,251 $163,197
======== ======== ======== ======== ========
Reserve to year-end loans................. 1.55% 1.60% 1.75% 1.87% 1.81%
Net charge-offs to average loans:
Commercial.............................. .15% .39% .26% *% *%
Commercial--real estate................. .19 .02 .09 * *
Foreign................................. (.02) (2.03) (2.76) (2.18) (14.36)
Total commercial loans............... .17 .22 .18 .33 .26
Consumer................................ .64 .27 .26 * *
Consumer--real estate................... .04 .04 * *
Credit card............................. 2.02 1.93 2.18 2.74 2.90
Total consumer loans................. .39 .28 .34 .49 .66
Total loans.......................... .27 .25 .25 .40 .43
</TABLE>
- ------------
* Comparable data not available
Total net charge-offs of $32.9 million represented .27% of average loans
during 1995, up slightly from the .25% level of both 1994 and 1993.
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 $6.0 million, or .15% of average loans. This is a reduction from the $14.0
million of net charge-offs in 1994, representing .39% of loans.
20
<PAGE> 22
Commercial real estate loans net charge-offs were $5.5 million in 1995 or
.19% of average loans. This was an increase from the unusually low levels of the
prior two years. Current charge-off levels in this area are consistent with the
overall charge-off level of other commercial lending areas.
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 $21.5
million in 1995, compared with $13.7 million in 1994 and $15.2 million in 1993.
The net charge-offs of .39% in 1995 compares with .28% and .34% in 1994 and
1993, respectively. Consumer delinquency rates have increased over the past
several quarters as the economic cycle progresses. Increased consumer
charge-offs may continue as evidenced by the higher level of consumer nonaccrual
and past due loans at December 31, 1995.
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.
Asset liquidity is generally provided by short-term investments such as
interest bearing deposits with other banks, federal funds sold and repurchase
agreements. These investments totaled $115 million at December 31, 1995.
Securities that have been designated as available for sale were $2.0 billion at
the end of 1995 and can be sold to meet liquidity needs. The remaining
securities portfolio, which is held to maturity, provides liquidity through
scheduled maturities and the ability to use these securities in repurchase
agreements.
TABLE 13
COMPOSITION OF LOANS
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Commercial and industrial....... $ 3,078,148 $ 2,944,565 $ 2,641,967 $2,258,366 $2,202,680
Real estate--construction....... 387,378 329,717 262,476 290,889 318,449
Real estate--mortgage........... 2,462,010 2,472,042 2,166,390 1,962,954 1,636,346
Foreign......................... 46,387 32,395 31,269 20,546 22,077
Other........................... 992,290 931,488 894,101 939,652 982,067
----------- ----------- ----------- ---------- ----------
Commercial loans.............. 6,966,213 6,710,207 5,996,203 5,472,407 5,161,619
Credit card..................... 619,868 575,278 547,769 534,697 584,299
Real estate--mortgage........... 2,722,531 2,382,857 2,268,470 2,115,274 1,709,903
Home equity..................... 935,907 767,540 645,002 555,370 411,856
Other........................... 1,387,994 1,469,946 1,367,377 1,138,656 1,128,883
----------- ----------- ----------- ---------- ----------
Consumer loans................ 5,666,300 5,195,621 4,828,618 4,343,997 3,834,941
----------- ----------- ----------- ---------- ----------
Total loans................... $12,632,513 $11,905,828 $10,824,821 $9,816,404 $8,996,560
=========== =========== =========== ========== ==========
</TABLE>
21
<PAGE> 23
TABLE 14
MATURITY DISTRIBUTION OF LOANS
<TABLE>
<CAPTION>
TOTAL
DUE WITHIN ONE TO FIVE AFTER FIVE DECEMBER 31,
ONE YEAR YEARS YEARS 1995
---------- ----------- ---------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C>
Commercial................................... $3,099,842 $ 2,918,123 $ 948,248 $ 6,966,213
Consumer..................................... 1,338,538 2,896,936 1,430,826 5,666,300
---------- ---------- ---------- -----------
Total...................................... $4,438,380 $ 5,815,059 $2,379,074 $ 12,632,513
========== ========== ========== ===========
</TABLE>
- ------------
The maturity is based upon contractual terms and Firstar may, however, extend
the maturity at prevailing rates and terms in the normal course of business.
Of the above loans due after one year, $5,752,998,000 have predetermined
interest rates and $2,441,135,000 have floating or adjustable interest rates.
TABLE 15
MATURITY RANGE OF TIME DEPOSITS
<TABLE>
<CAPTION>
TOTAL
DUE WITHIN THREE TO SIX TO TWELVE AFTER TWELVE DECEMBER 31,
THREE MONTHS SIX MONTHS MONTHS MONTHS 1995
------------ ---------- ------------- ------------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Certificates of deposit of
$100,000 or more............. $565,224 $152,275 $ 155,287 $ 133,207 $1,005,993
Other time deposits of $100,000
or more...................... 8,424 3,794 6,708 9,688 28,614
-------- -------- -------- -------- ----------
Total..................... $573,648 $156,069 $ 161,995 $ 142,895 $1,034,607
======== ======== ======== ======== ==========
</TABLE>
The requirement of liquidity is diminished by the predominance of core
deposits, which account for 77% 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, Federal Home Loan Bank borrowings and
time deposits which totaled $3.7 billion at the end of 1995. Firstar's ability
to refinance maturing amounts and, when necessary, increase this funding base is
a significant factor in its liquidity management.
Additionally, Firstar has access to capital markets through the issuance of
debt or commercial paper. Long term debt was increased in 1995 with the issuance
of $100 million of five year notes. Firstar also has in place a $125 million
line of credit at the end of 1995 and further intends to increase this line of
credit to a level of $225 million. These funds will be used to repurchase common
stock, repay outstanding indebtedness and for other corporate purposes.
The absolute level and volatility of interest rates can have a significant
impact on earnings. The objective of interest rate risk management is to
identify and manage the sensitivity of net interest revenue to changing interest
rates. Firstar uses computer simulation modeling as its primary method of
quantifying and evaluating interest rate risk. Simulation modeling is performed
at least quarterly and is used to quantify the impact on net interest revenue of
various assumptions about interest rate and balance sheet changes and the use of
off-balance sheet derivatives and financial instruments. The use of simulation
modeling also enables Firstar to develop and test alternative asset and
liability management strategies. Interest rate risk and the results of the
simulation modeling is reviewed quarterly by bank, regional and corporate
committees who assess the interest rate risk position and approve corresponding
strategies. The objective of Firstar's asset liability management policy is to
maintain adequate capital and liquidity and manage interest rate risk to produce
an acceptable level of net interest revenue. Firstar's guideline 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. In the most recent simulation, net interest revenue was forecast for
1996 under four interest rate
22
<PAGE> 24
scenarios. First, if current rates continued unchanged with a prime rate of
8.50%, and then under most likely, high and low interest rate scenarios in which
prime rate changes to 7.35%, 10.50% and 7.00% respectively, by the fourth
quarter of 1996.
Compared to 1995, under these four scenarios net interest revenue in 1996
is simulated to increase by $11 million if rates in the fourth quarter of 1995
remained throughout 1996. Under the most likely and low scenarios, net interest
revenue in 1996 is simulated to increase by $17 million and $19 million,
respectively, compared to 1995. Under the high scenario, net interest revenue is
simulated to decline by $3 million compared to 1995.
The simulation model is supplemented with a 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 limitations
such as not reflecting the magnitude with which assets or liabilities may
reprice within a given interest rate scenario. 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
<TABLE>
<CAPTION>
NON-RATE
1-30 31-90 91-180 181-365 TOTAL SENSITIVE &
DAYS DAYS DAYS DAYS ONE YEAR OVER 1 YEAR TOTAL
------ ------ ------ ------- -------- ----------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans............................ $4,062 $1,105 $ 614 $ 1,099 $6,880 $ 5,753 $12,633
Securities....................... 259 82 128 325 794 3,681 4,475
Interest-bearing deposits with
banks.......................... 5 5 5
Short-term investments........... 120 120 120
Other assets..................... 2,130 2,130
Less: Reserve for loan losses.... (195) (195)
------ ------ ------ ------ ------ ------- -------
Total assets................ 4,446 1,187 742 1,424 7,799 11,369 19,168
Non-interest-bearing demand
deposits....................... 300 300 3,161 3,461
Interest-bearing demand
accounts....................... 200 200 400 1,202 1,602
Passbooks........................ 150 150 300 1,334 1,634
Money market accounts............ 605 605 1,730 2,335
Less than one year
certificates................... 292 354 457 342 1,445 1,445
Other deposits................... 649 466 537 910 2,562 1,272 3,834
Borrowed funds................... 2,043 110 143 110 2,406 631 3,037
Other liabilities................ 295 295
Stockholders' equity............. 1,525 1,525
------ ------ ------ ------ ------ ------- -------
Total liabilities and
stockholders' equity...... 4,239 1,280 1,137 1,362 8,018 11,150 19,168
Interest sensitive gap........... 207 (93) (395) 62 (219) 219
Interest rate swaps.............. (122) (164) (286)
------ ------ ------ ------ ------
Adjusted interest sensitive
gap............................ $ 85 $ (257) $ (395) $ 62 $ (505)
====== ====== ====== ====== ======
Cumulative adjusted interest
sensitive gap.................. $ 85 $ (172) $ (567) $ (505)
</TABLE>
Firstar seeks to manage interest rate risk by adjusting the pricing and
levels of assets and liabilities with the use of off-balance sheet derivative
financial instruments. Firstar enters into interest rate swaps, caps and
23
<PAGE> 25
floors as part of this process. These derivative instruments synthetically alter
the repricing characteristics of designated assets and liabilities. Firstar's
off-balance sheet financial derivative portfolio has a notional amount of $1.1
billion as of December 31, 1995. Additional information on derivative financial
instruments is included in Notes 17 and 18 to the Consolidated Financial
Statements.
Net cash flows of off-balance sheet derivative instruments used to manage
interest rate risk reduced net interest revenue by $9.1 million during 1995.
This compared with a contribution to net interest revenue of $1.0 million during
1994 and $5.7 million in 1993. Expressed in terms of net interest margin, the
impact of the derivative portfolio reduced margin by .05% in 1995 and increased
margin by .01% and .05% in 1994 and 1993, respectively.
CAPITAL
Total stockholders' equity was $1.5 billion at the end of 1995.
Stockholders' equity was 7.95% of total assets at the end of 1995 compared to
8.41% a year earlier. During the last half of 1995, Firstar initiated a stock
repurchase program which resulted in the purchase of 3,883,000 shares of stock
at a total cost of $147 million. Of this amount, 1,750,000 shares were retired
and the remaining shares were held as treasury stock to be used for purchase
business acquisitions and stock options plans. Firstar also intends to
repurchase additional shares in 1996 for reissuance in the acquisition of
American Bancorporation Inc. The goal of this program was to realign Firstar's
capital position to better match longer term capital needs while maintaining
sound capital levels and enhancing the return on equity.
Dividends paid to common stockholders totaled $99.8 million, or $1.32 per
share, a 14% increase over 1994. This represented a 44% payout of net income for
1995. It is Firstar's target to maintain a dividend payout level approximately
equal to the median of its peer group which approximates 35%.
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, 1995, Firstar had
Tier I capital of 10.36% and total capital of 12.45%, significantly exceeding
regulatory minimum standards. The components of these capital levels are shown
in Table 17.
TABLE 17
CAPITAL COMPONENTS AND RATIOS
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------
1995 1994 1993
----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity............................ $ 1,524,820 $ 1,512,685 $ 1,359,314
Adjustment for unrealized (gains) losses on
securities available for sale................ (34,127) 1,054 (1,100)
Minority interest in subsidiaries............... 3,171 2,920 2,214
Less goodwill................................... (107,298) (107,967) (98,527)
----------- ----------- -----------
Total tier I capital......................... 1,386,566 1,408,692 1,261,901
Allowable reserve for loan losses............... 167,564 156,426 144,187
Allowable long-term debt........................ 111,336 79,705 107,051
----------- ----------- -----------
Total tier II capital........................ 278,900 236,131 251,238
----------- ----------- -----------
Total capital................................ $ 1,665,466 $ 1,644,823 $ 1,513,139
=========== =========== ===========
Risk-adjusted assets.............................. $13,377,391 $12,479,987 $11,489,435
Tier I capital to risk-adjusted assets............ 10.36% 11.29% 10.98%
Total capital to risk-adjusted assets............. 12.45 13.18 13.17
Tier I leverage ratio............................. 7.52 8.15 8.05
</TABLE>
24
<PAGE> 26
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 7.52% at December 31, 1995.
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.
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 is effective 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. Firstar does not
expect that the adoption of this statement will have any significant impact on
the results of operations.
The Financial Accounting Standards Board issued Statement No. 123,
"Accounting for Stock Based Compensation", which is effective in 1996. The
statement requires that a fair value based method be used to value employee
compensation plans that include stock based awards. The statement permits a
company to either recognize compensation expense under SFAS No. 123 or continue
to use the prior accounting rules which did not consider the market value of
stock in certain award plans. If adoption of the statement's fair value
procedures are not used in the computation of compensation expense in the income
statement, the company must disclose in a footnote to the financial statements
the pro-forma impact of adoption. Firstar will not be adopting SFAS No. 123 for
purposes of calculating stock based compensation expense. The effect of adopting
this statement would not be material to Firstar's results of operations.
25
<PAGE> 27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 AVERAGE BALANCES
------------------------- -------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks..................... $ 1,310,746 $ 1,092,114 $ 895,767 $ 954,489
Interest-bearing deposits with banks........ 5,467 33,532 15,668 24,843
Federal funds sold and resale agreements.... 109,945 351,304 173,541 219,521
Trading securities.......................... 10,029 29,050 14,243 22,123
Securities held to maturity (market value
$2,492,346 and $3,518,672 on December 31,
1995 and 1994)............................ 2,427,030 3,630,963 3,927,678 3,214,674
Securities available for sale............... 2,047,848 342,653 267,579 311,940
Loans....................................... 12,632,513 11,905,828 12,291,674 11,215,862
Reserve for loan losses..................... (195,283) (190,552) (197,181) (191,441)
----------- ----------- ----------- -----------
Loans-net.............................. 12,437,230 11,715,276 12,094,493 11,024,421
Bank premises and equipment................. 349,233 335,078 342,580 312,031
Customer acceptance liability............... 16,060 13,466 23,447 20,162
Other assets................................ 454,712 450,770 460,404 440,831
----------- ----------- ----------- -----------
Total assets........................... $19,168,300 $17,994,206 $18,215,400 $16,545,035
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand.................................... $ 3,461,462 $ 3,113,103 $ 2,827,623 $ 2,837,257
Interest-bearing demand................... 1,602,350 1,714,368 1,571,378 1,643,922
Money market accounts..................... 2,335,429 2,086,665 2,110,503 2,027,485
Savings passbook.......................... 1,634,430 1,822,836 1,731,344 1,854,944
Certificates of deposit................... 5,277,975 4,672,243 5,261,589 4,410,873
----------- ----------- ----------- -----------
Total deposits......................... 14,311,646 13,409,215 13,502,437 12,774,481
Short-term borrowed funds................... 2,303,159 2,196,478 2,275,739 1,591,305
Long-term debt.............................. 734,021 573,545 610,889 477,405
Bank acceptances outstanding................ 16,060 13,466 23,447 20,162
Other liabilities........................... 278,594 288,817 277,495 247,936
----------- ----------- ----------- -----------
Total liabilities...................... 17,643,480 16,481,521 16,690,007 15,111,289
Stockholders' equity:
Preferred stock........................... 15,344 26,979 20,572 27,669
Common stock.............................. 94,266 96,465 96,090 94,911
Issued: 1995, 75,413,098 shares........
1994, 77,171,835 shares........
Capital surplus........................... 147,502 230,453 210,947 215,828
Retained earnings......................... 1,298,857 1,172,062 1,223,846 1,105,174
Treasury stock, at cost................... (64,834) (10,669) (26,195) (7,719)
Held: 1995, 2,186,834 shares...........
1994, 792,303 shares.............
Restricted stock.......................... (442) (1,551) (875) (1,652)
Unrealized gains (losses) on securities
available for sale..................... 34,127 (1,054) 1,008 (465)
----------- ----------- ----------- -----------
Total stockholders' equity............. 1,524,820 1,512,685 1,525,393 1,433,746
----------- ----------- ----------- -----------
Total liabilities and stockholders'
equity............................... $19,168,300 $17,994,206 $18,215,400 $16,545,035
=========== =========== =========== ===========
</TABLE>
- ------------
The average balances are not covered by the Independent Auditors' Report.
See accompanying notes to consolidated financial statements.
26
<PAGE> 28
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
---------- ---------- ----------
(thousands of dollars, except per
share data)
<S> <C> <C> <C>
INTEREST REVENUE
Loans.................................................... $1,081,685 $ 914,311 $ 824,082
Securities:
Taxable................................................ 200,465 142,029 144,460
Nontaxable............................................. 53,329 51,251 50,931
---------- ---------- ----------
Total securities.................................... 253,794 193,280 195,391
Interest-bearing deposits with banks..................... 967 1,297 2,677
Federal funds sold and resale agreements................. 10,534 9,645 5,119
Trading securities....................................... 806 1,211 785
---------- ---------- ----------
Total interest revenue.............................. 1,347,786 1,119,744 1,028,054
INTEREST EXPENSE
Deposits:
Interest-bearing demand................................ 23,831 21,065 29,366
Money market accounts.................................. 85,231 57,274 49,583
Savings passbook....................................... 44,509 43,887 45,330
Certificates of deposit................................ 291,135 199,743 191,579
---------- ---------- ----------
Total deposits...................................... 444,706 321,969 315,858
Short-term borrowed funds................................ 133,151 67,622 25,189
Long-term debt........................................... 43,982 31,315 27,068
---------- ---------- ----------
Total interest expense.............................. 621,839 420,906 368,115
---------- ---------- ----------
NET INTEREST REVENUE..................................... 725,947 698,838 659,939
Provision for loan losses................................ 36,756 23,891 29,090
---------- ---------- ----------
NET INTEREST REVENUE AFTER LOAN LOSS PROVISION........... 689,191 674,947 630,849
OTHER OPERATING REVENUE
Trust and investment management fees..................... 132,377 120,349 112,521
Service charges on deposit accounts...................... 80,891 81,980 83,060
Credit card service revenue.............................. 62,990 56,265 53,728
Mortgage banking revenue................................. 38,479 35,479 57,877
Data processing fees..................................... 17,924 20,263 21,431
Securities (losses) gains................................ (5,730) (3,583) 420
Other revenue............................................ 65,266 59,866 63,881
---------- ---------- ----------
Total other operating revenue....................... 392,197 370,619 392,918
OTHER OPERATING EXPENSE
Salaries................................................. 323,163 312,120 301,171
Employee benefits........................................ 72,198 68,841 67,343
Equipment expense........................................ 58,700 54,556 53,123
Net occupancy expense.................................... 57,992 52,984 58,328
Net foreclosed assets (income) expense................... (281) (553) 2,354
Other expense............................................ 222,350 218,237 206,955
---------- ---------- ----------
Total other operating expense....................... 734,122 706,185 689,274
---------- ---------- ----------
INCOME BEFORE INCOME TAXES............................... 347,266 339,381 334,493
Provision for income taxes............................... 118,353 112,708 106,555
---------- ---------- ----------
NET INCOME............................................... $ 228,913 $ 226,673 $ 227,938
========== ========== ==========
Net income applicable to common stock.................... $ 227,392 $ 224,450 $ 221,932
PER COMMON SHARE
Net income............................................... $ 3.00 $ 2.98 $ 2.99
Dividends................................................ 1.32 1.16 1.00
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE> 29
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET
UNREALIZED
PREFERRED COMMON CAPITAL RETAINED GAIN/ RESTRICTED TREASURY
STOCK STOCK SURPLUS EARNINGS (LOSS) STOCK STOCK TOTAL
--------- ------- -------- ---------- ---------- ---------- -------- ----------
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992............. $81,849 $91,022 $188,027 $ 881,364 $ 0 $ (450) $ (4,888) $1,236,924
Net income............................... 227,938 227,938
Cash dividends:
Preferred stock, series B ($7.4419 per
share)............................... (3,720) (3,720)
Common stock ($1.00 per share)......... (63,733) (63,733)
Pooled affiliates...................... (9,177) (9,177)
Redemption of 500,000 shares of preferred
stock.................................. (49,005) (2,495) (51,500)
Redemption of 68,907 shares of preferred
stock of pooled affiliate.............. (3,928) (345) (4,273)
Issued 1,123,803 shares of common stock
for bank acquisitions.................. 1,273 12,234 3,098 16,605
Issued 104,978 shares of common stock for
employee benefit plans................. 130 1,920 31 2,081
Issued 502,959 shares of common stock for
other purposes......................... 628 3,858 4,486
Pooled affiliates 211,328 shares of net
common stock activity.................. 264 3,239 3,503
Purchased 41,135 shares of treasury
stock.................................. (1,275) (1,275)
Granted 30,235 shares of restricted
stock.................................. 38 892 (930) 0
Amortization of restricted stock......... 271 271
Pooled affiliate amortization/adjustment
of restricted stock.................... 310 (226) 84
Pooled affiliate stock split 721,231
shares issued.......................... 901 (901) 0
Pooled affiliate implementation of change
in accounting for unrealized gains on
securities available for sale.......... 1,100 1,100
------- ------- -------- ---------- ------- ------- -------- ----------
BALANCE AT DECEMBER 31, 1993............. 28,916 94,256 209,234 1,030,177 1,100 (1,335) (3,034) 1,359,314
Net income............................... 226,673 226,673
Cash dividends:
Common stock ($1.16 per share)......... (75,081) (75,081)
Pooled affiliates...................... (9,707) (9,707)
Pooled affiliate converted 8,975 shares
of preference stock into 89,591 shares
of common stock........................ (1,937) 112 1,825 0
Issued 1,801,541 shares of common stock
for bank acquisitions.................. 2,078 22,735 4,551 29,364
Issued 85,384 shares of common stock for
employee benefit plans................. 105 1,563 36 1,704
Pooled affiliates (92,643) shares of net
common stock activity.................. (116 ) (5,494) (5,610)
Purchased 374,308 shares of treasury
stock.................................. (12,222) (12,222)
Unrealized losses on securities available
for sale............................... (988) (988)
Pooled affiliate change in unrealized
loss on securities available for
sale................................... (1,166) (1,166)
Pooled affiliate granted 24,293 shares of
restricted stock....................... 30 533 (563) 0
Amortization/adjustment of restricted
stock.................................. (113) 224 111
Pooled affiliate amortization/adjustment
of restricted stock.................... 170 123 293
------- ------- -------- ---------- ------- ------- -------- ----------
BALANCE AT DECEMBER 31, 1994............. 26,979 96,465 230,453 1,172,062 (1,054) (1,551) (10,669) 1,512,685
Net income............................... 228,913 228,913
Cash dividends:
Preferred stock, series D ($35.00 per
share)............................... (1,247) (1,247)
Preferred stock ($.90 per share)....... (274) (274)
Common stock ($1.32 per share)......... (99,838) (99,838)
Converted 8,087 shares of preferred stock
into 173,537 shares of common stock.... (4,044) 80 (123) 4,087 0
Redemption of 303,640 shares of preferred
stock.................................. (7,591) (759) (8,350)
Retired 2,625,699 shares of common
stock.................................. (3,283 ) (90,670) (93,953)
Issued 313,650 shares of common stock for
bank acquisitions...................... 1,207 8,069 9,276
Issued 889,940 shares of common stock for
employee benefit plans................. 689 5,057 12,509 18,255
Issued 251,902 shares of common stock for
note conversion........................ 315 1,185 1,500
Purchased 2,156,598 shares of treasury
stock.................................. (78,830) (78,830)
Unrealized gains on securities available
for sale............................... 35,181 35,181
Amortization/adjustment of restricted
stock.................................. 393 1,109 1,502
------- ------- -------- ---------- ------- ------- -------- ----------
BALANCE AT DECEMBER 31, 1995............. $15,344 $94,266 $147,502 $1,298,857 $ 34,127 $ (442) $(64,834) $1,524,820
======= ======= ======== ========== ======= ======= ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE> 30
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................ $ 228,913 $ 226,673 $ 227,938
Adjustments:
Provision for loan losses........................... 36,756 23,891 29,090
Depreciation, amortization and accretion............ 50,520 44,211 46,873
Net decrease (increase) in trading securities....... 19,021 (16,559) 8,382
Net (increase) decrease in loans held for resale.... (278,563) 275,326 (72,055)
Loss (gain) on securities and other assets.......... 3,866 (9,164) (12,964)
Deferred income taxes............................... 35,378 558 (9,531)
(Increase) decrease in other assets................. (29,392) 31,910 5,484
(Decrease) increase in other liabilities............ (3,983) 30,045 24,818
Other net........................................... 3,044 (5,827) (1,437)
----------- ----------- -----------
Net cash provided by operating activities........ 65,560 601,064 246,598
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in federal funds sold and
resale agreements................................... 241,359 (58,072) (40,291)
Net decrease (increase) in interest-bearing deposits
with banks.......................................... 28,065 (25,166) 208,815
Sales of securities held to maturity.................. 17,541 10,753
Sales of securities available for sale................ 270,984 131,801
Maturities of securities held to maturity............. 666,169 1,066,192 1,866,343
Maturities of securities available for sale........... 156,018
Purchases of securities held to maturity.............. (1,410,008) (1,662,474) (1,901,786)
Purchases of securities available for sale............ (90,936) (6,539)
Net increase in loans................................. (521,197) (1,070,168) (804,646)
Net cash from acquisitions............................ 294 25,884 11,695
Proceeds from sales of foreclosed assets.............. 12,074 18,243 20,623
Purchases of bank premises and equipment.............. (55,369) (58,735) (43,235)
Proceeds from sales of bank premises and equipment.... 4,638 1,125 458
----------- ----------- -----------
Net cash used in investing activities............ (680,368) (1,637,909) (671,271)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits................... 828,503 (247,949) 179,769
Net increase in short-term borrowed funds............. 103,908 1,094,553 371,760
Repayment of long-term debt........................... (25,127) (31,706) (39,442)
Proceeds from long-term debt.......................... 186,760 43,690 3,263
Cash dividends........................................ (101,359) (84,788) (76,630)
Preferred stock redemption............................ (8,350) (55,773)
Common stock transactions............................. (150,895) (17,999) 3,641
----------- ----------- -----------
Net cash provided by financing activities........ 833,440 755,801 386,588
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS.... 218,632 (281,044) (38,085)
Cash and due from banks at beginning of year.......... 1,092,114 1,373,158 1,411,243
----------- ----------- -----------
Cash and due from banks at end of year................ $ 1,310,746 $ 1,092,114 $ 1,373,158
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest............................................ $ 600,006 $ 407,182 $ 373,314
Income taxes........................................ 116,443 113,463 121,207
Transfers to foreclosed assets from loans............. 9,166 10,708 9,326
Acquisitions:
Assets acquired..................................... 85,762 610,541 218,592
Cash paid for purchase of stock..................... $ $ (29,101) $
Cash acquired....................................... 294 54,985 11,695
----------- ----------- -----------
Net cash from acquisitions....................... $ 294 $ 25,884 $ 11,695
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 31
FIRSTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business--Firstar Corporation is a registered bank holding
company providing financial services through 244 locations in Wisconsin,
Illinois, Minnesota, Iowa and Arizona. These banking activities include
accepting demand, time and savings deposits; making both secured and unsecured
business and personal loans; providing trust and investment management services
to individuals and corporate customers; providing correspondent banking services
to other financial institutions; conducting mortgage banking activities;
providing international banking services; conducting retail brokerage
operations; providing mutual fund custody services; and other related banking
activities.
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.
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, branching and other activities of the
banks.
Principles of presentation--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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Securities--Purchases of securities that are made with the positive intent
and ability to hold them to maturity are carried at cost, adjusted for
amortization of premium and accretion of discount using a level yield method.
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. Valuation adjustments are recorded as an adjustment to
stockholders' equity. 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. Gains or losses on sales of securities are computed on
the basis of specific identification of the adjusted cost of each security.
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
30
<PAGE> 32
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. With respect to loans which are deemed impaired, the calculation of
reserve levels is 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. Firstar considers all nonaccrual and restructured commercial
loans to be impaired. 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.
Foreclosed assets--Foreclosed assets, 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 foreclosed asset acquired less the estimated costs to sell
the foreclosed asset. Initial valuation adjustments, if any, are charged against
the reserve for loan losses. Subsequent reevaluations of the properties, which
indicate reduced value, are recognized through charges to operating expense.
Revenues and expenditures related to holding and operating these properties are
included in other operating expense.
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 is amortized in relation to the servicing revenue
expected to be earned. Firstar periodically evaluates the carrying value and
remaining amortization periods of intangible assets for impairment. Adjustments
are recorded when the benefit of the intangible asset decreases due to
disposition of branches or deposits with regard to goodwill and core deposit
premium. The evaluation of mortgage servicing rights takes into consideration
certain risk characteristics including loan type, note rate, prepayment trends
and external market factors.
Income taxes--Firstar and its subsidiaries file a consolidated federal
income tax return. Income taxes are accounted for using the asset and liability
method. Under this method, deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between
the financial statement carrying amount of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Foreign currency transactions--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. Firstar enters into forward exchange contracts on behalf of its
customers and hedges its risk by entering into offsetting transactions with
other counterparties. The fair value of these transactions are included in other
assets and liabilities and the related gain or loss is recorded in other
revenue.
Derivative and other financial instruments--Firstar uses interest rate
swaps, caps and floors to manage its interest rate risks arising from recorded
financial assets and liabilities. These instruments are accounted for on an
accrual basis when the instrument can be demonstrated to effectively change the
cash flows of a designated asset or liability and such asset or liability
exposes Firstar to interest rate risk.
31
<PAGE> 33
Amounts to be paid or received under interest rate swaps, caps and floors
are recognized as interest income or expense of the related asset or liability.
Gains and losses on early termination of these instruments are deferred and
amortized as an adjustment to yield on the related asset or liability over the
shorter of the remaining contract life or the maturity of the related asset or
liability. If the related asset or liability is sold or otherwise liquidated,
the instrument is marked to market, with resultant gains and losses recognized
in income. Interest rate swaps, caps and floors that do not meet this criteria
are carried at market value with changes therein recognized in income. Fees paid
or received in connection with caps and floors are deferred and amortized to
income or expense over the life of the instrument.
Interest rate swaps, caps and floors entered into as an intermediary are
accounted for at market value. Realized gains and losses and changes in market
value are recognized in other operating income.
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.
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 75,716,000 in 1995, 75,195,000 in 1994
and 74,131,000 in 1993. For calculation purposes, earnings are reduced by
preferred stock dividends. Common stock equivalents are not significant in any
year presented.
NOTE 2. MERGERS AND ACQUISITIONS
The following table summarizes completed acquisitions:
<TABLE>
<CAPTION>
TOTAL METHOD OF
NAME OF INSTITUTION ASSETS ACQUISITION DATE CONSIDERATION ACCOUNTING
- ----------------------------------------- ------ ---------------- --------------- ----------
(millions of dollars)
<S> <C> <C> <C> <C>
1995:
Investors Bank Corp.
Wayzata, MN......................... $1,134 April 1995 3,006,923 Pooling of
shares interests
of common stock
First Moline Financial Corp.
Moline, IL.......................... 86 March 1995 313,650 shares Purchase
of common stock
First Colonial Bankshares Corporation
Chicago, IL......................... 1,780 January 1995 7,700,767 Pooling of
shares interests
of common stock
------
$3,000
======
1994:
First Southeast Banking Corp.
Lake Geneva, WI..................... $ 423 October 1994 1,801,577 Pooling of
shares interests
of common stock
------
$ 423
======
1993:
Bank of Athens
Athens, WI.......................... $ 102 August 1993 447,655 shares Pooling of
of common stock interests
Deerfield State Bank
Deerfield, IL....................... 120 February 1993 676,317 shares Pooling of
of common stock interests
------
$ 222
======
</TABLE>
32
<PAGE> 34
On January 26, 1996, Firstar completed its acquisition of Harvest Financial
Corp., the holding company for Harvest Savings Bank F.S.B., a $353 million
thrift based in Dubuque, IA. The total number of shares of Firstar common stock
issued was 887,204 shares. Firstar Corporation will account for the transaction
as a purchase.
In January 1996, Firstar announced an acquisition agreement with American
Bancorporation, Inc., a $1.2 billion bank holding company in St. Paul, MN. The
transaction will be accounted for as a purchase with the payment of cash and
stock valued at $220 million.
NOTE 3. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, are summarized as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Goodwill.................................................. $107,298 $107,967 $ 98,527
Core deposit intangibles.................................. 15,161 17,538 20,519
Mortgage servicing rights................................. 9,538 7,238 6,810
-------- -------- --------
Total................................................... $131,997 $132,743 $125,856
======== ======== ========
Amortization of intangibles during year................... $ 12,709 $ 11,746 $ 18,738
</TABLE>
Firstar adopted Financial Accounting Standards Board Statement No. 122,
"Accounting for Mortgage Servicing Rights" as of January 1, 1995. This statement
requires that separate assets be recognized for the rights to service mortgage
loans for others whether those servicing rights are purchased or related to
loans originated by the company. The fair value of capitalized mortgage
servicing rights was $12.7 million on December 31, 1995. Changes in capitalized
mortgage servicing rights is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Balance--beginning of year................................ $ 7,238 $ 6,810 $ 14,083
Originated servicing rights capitalized................... 6,308
Purchased servicing rights capitalized.................... 788 2,447 1,032
Excess servicing rights capitalized....................... 1,082 2,289
Amortization of servicing rights.......................... (1,641) (1,455) (9,249)
Sales of servicing rights................................. (3,155) (1,646) (1,345)
Allowance for impairment..................................
-------- -------- --------
Balance--end of year...................................... $ 9,538 $ 7,238 $ 6,810
======== ======== ========
</TABLE>
33
<PAGE> 35
NOTE 4. SECURITIES
The amortized cost and approximate market values of securities are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury and federal agencies............ $ 2,146 $ 5 $ (5) $ 2,146
Mortgage backed obligations of federal
agencies................................... 1,266,458 46,694 (192) 1,312,960
State and political subdivisions.............. 1,141,987 21,988 (3,223) 1,160,752
Corporate debt................................ 15,590 85 (36) 15,639
Other......................................... 849 849
---------- ------- --------- ----------
Total...................................... $2,427,030 $ 68,772 $ (3,456) $2,492,346
========== ======= ========= ==========
Securities available for sale:
U.S. Treasury and federal agencies............ $1,862,825 $ 59,043 $ (4,143) $1,917,725
Mortgage backed obligations of federal
agencies................................... 9,891 131 (235) 9,787
State and political subdivisions.............. 7,796 80 (45) 7,831
Corporate debt................................ 1,186 11 (1) 1,196
Equity securities............................. 92,767 92,767
Money market mutual funds..................... 18,542 18,542
---------- ------- --------- ----------
Total...................................... $1,993,007 $ 59,265 $ (4,424) $2,047,848
========== ======= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1994
----------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury and federal agencies............ $1,612,188 $ 1,001 $ (65,163) $1,548,026
Mortgage backed obligations of federal
agencies................................... 867,990 1,889 (31,865) 838,014
State and political subdivisions.............. 1,069,755 6,913 (23,715) 1,052,953
Corporate debt................................ 79,891 103 (1,454) 78,540
Other......................................... 1,139 1,139
---------- ------- --------- ----------
Total...................................... $3,630,963 $ 9,906 $ (122,197) $3,518,672
========== ======= ========= ==========
Securities available for sale:
U.S. Treasury and federal agencies............ $ 203,470 $ 10 $ (1,045) $ 202,435
Mortgage backed obligations of federal
agencies................................... 12,672 103 (715) 12,060
State and political subdivisions.............. 7,754 59 (93) 7,720
Corporate debt................................ 504 504
Equity securities............................. 57,621 57,621
Money market mutual funds..................... 62,313 62,313
---------- ------- --------- ----------
Total...................................... $ 344,334 $ 172 $ (1,853) $ 342,653
========== ======= ========= ==========
</TABLE>
Securities with an amortized cost of $1,786,351,000 were transferred into
available for sale from held to maturity on December 31, 1995. This was done in
accordance with Financial Accounting Standards Board implementation guidance
which permitted a one-time reassessment of securities classification under SFAS
No. 115.
34
<PAGE> 36
The amortized cost and approximate market value of securities at December
31, 1995, by contractual maturity, are shown below. Maturities of mortgage
backed obligations were estimated based on anticipated payments.
<TABLE>
<CAPTION>
SECURITIES SECURITIES
HELD TO MATURITY AVAILABLE FOR SALE
------------------------ ------------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Due in one year or less....................... $ 337,991 $ 345,358 $ 455,899 $ 455,558
Due after one year through five years......... 1,017,745 1,044,212 831,973 837,597
Due after five years through ten years........ 808,975 834,417 611,228 660,775
Due after 10 years............................ 262,319 268,359 1,140 1,151
---------- ---------- ---------- ----------
$2,427,030 $2,492,346 1,900,240 1,955,081
========== ==========
Equity securities............................. 92,767 92,767
---------- ----------
Total.................................... $1,993,007 $2,047,848
========== ==========
</TABLE>
Gross gains of $487,000, $718,000 and $476,000 and gross losses of
$6,217,000, $4,301,000 and $56,000 were realized on securities sales in 1995,
1994 and 1993, respectively.
The amortized cost of securities pledged to secure public or trust
deposits, securities sold under repurchase agreements and for other purposes as
required or permitted by law was $1,823,494,000 at December 31, 1995 and
$947,461,000 at December 31, 1994.
NOTE 5. LOANS
The composition of loans, including lease financing receivables, is
summarized below. Loans are presented net of unearned discount which amounted to
$18,443,000 and $24,116,000 at December 31, 1995 and 1994, respectively.
Commercial loans pledged to secure public deposits were $150,657,000 on December
31, 1995 and $5,526,000 on December 31, 1994. Firstar serviced $3,267 million,
$3,871 million and $3,514 million of mortgage loans for other investors as of
December 31, 1995, 1994 and 1993, respectively. Residential mortgage loans held
for resale were $144,682,000 and $39,296,000 on December 31, 1995 and 1994,
respectively.
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1995 1994
----------- -----------
(thousands of dollars)
<S> <C> <C>
Commercial and industrial.......................................... $ 3,078,148 $ 2,944,565
Real estate--construction.......................................... 387,378 329,717
Real estate--mortgage.............................................. 2,462,010 2,472,042
Foreign............................................................ 46,387 32,395
Other.............................................................. 992,290 931,488
----------- -----------
Commercial....................................................... 6,966,213 6,710,207
Credit card........................................................ 619,868 575,278
Real estate--mortgage.............................................. 2,722,531 2,382,857
Home equity........................................................ 935,907 767,540
Other.............................................................. 1,387,994 1,469,946
----------- -----------
Consumer......................................................... 5,666,300 5,195,621
----------- -----------
Total......................................................... $12,632,513 $11,905,828
=========== ===========
</TABLE>
35
<PAGE> 37
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.
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Commercial.............................................. $ 74,574 $ 59,448 $ 57,074
Consumer................................................ 16,187 9,831 10,880
------- ------- -------
Total.............................................. $ 90,761 $ 69,279 $ 67,954
======= ======= =======
</TABLE>
The effect of nonperforming loans on interest revenue was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Interest at original contract rate...................... $ 8,348 $ 8,229 $ 7,949
Interest collected...................................... 3,768 3,844 2,919
------- ------- -------
Net reduction of interest revenue.................. $ 4,580 $ 4,385 $ 5,030
======= ======= =======
</TABLE>
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 $98.2 million on December
31, 1995 and $85.5 million on December 31, 1994. During 1995 new loans of $15.8
million were made and loan payments of $3.2 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:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Balance at beginning of year............................ $190,552 $189,714 $183,251
Provision for loan losses............................... 36,756 23,891 29,090
Loan recoveries......................................... 19,973 19,961 17,732
Loan charge-offs........................................ (52,863) (47,728) (42,838)
Reserves of acquired banks.............................. 865 4,714 2,479
-------- -------- --------
Balance at end of year.................................. $195,283 $190,552 $189,714
======== ======== ========
Charge-offs, net of recoveries, as a percentage of
average loans......................................... .27% .25% .25%
Reserve as a percentage of year-end loans............... 1.55 1.60 1.75
</TABLE>
In 1995, Firstar adopted the Financial Accounting Standards Board Statement
Nos. 114 and 118, "Accounting by Creditors for Impairment of a Loan". The
Statement established procedures for determining the appropriate reserve for
loan losses for loans deemed impaired. These impaired loans total $74.6 million
on December 31, 1995. Of this amount, loans with a carrying value of $43.9
million had associated impairment reserves of $9.0 million. The remaining
impaired loans were not subject to reserve allocations under SFAS No. 114
because the net realizable value of the loans exceeded the carrying value.
During 1995 the average balances of impaired loans were $68.4 million and $3.2
million of interest income was recorded on a cash basis.
36
<PAGE> 38
NOTE 7. BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1995 1994
---------- ----------
(thousands of dollars)
<S> <C> <C>
Land.............................................................. $ 43,076 $ 43,655
Bank premises..................................................... 332,142 318,216
Equipment......................................................... 285,605 274,274
-------- --------
Subtotal........................................................ 660,823 636,145
Accumulated depreciation.......................................... (311,590) (301,067)
-------- --------
Total........................................................... $ 349,233 $ 335,078
======== ========
</TABLE>
Depreciation charged to other operating expense amounted to $42,684,000,
$40,003,000 and $39,721,000 in 1995, 1994 and 1993, respectively. Rental expense
for bank premises and equipment amounted to $34,057,000, $35,804,000 and
$35,648,000 in 1995, 1994 and 1993, 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 $6,240,000 in
1995, $9,029,000 in 1994 and $6,312,000 in 1993.
Firstar and its subsidiaries are obligated under noncancelable operating
leases for various bank premises and equipment. These leases expire
intermittently over the years through 2034. The minimum rental commitments under
noncancelable leases for the next five years are shown below:
<TABLE>
<CAPTION>
PERIOD AMOUNT
---------- ----------
(thousands of dollars)
<S> <C> <C>
Bank premises and equipment....................................... 1996 $ 23,198
1997 22,953
1998 21,096
1999 20,033
2000 18,250
</TABLE>
NOTE 8. SHORT-TERM BORROWED FUNDS
Short-term borrowed funds are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Federal funds purchased and repurchase agreements:
At December 31..................................... $1,980,442 $2,133,709 $1,076,316
Average during year................................ 1,994,281 1,530,644 777,185
Maximum month-end balance.......................... 2,407,507 2,133,709 1,087,606
Average rate at year-end........................... 5.44% 5.59% 2.90%
Average rate during year........................... 5.83 4.28 2.84
</TABLE>
Federal funds purchased, which totaled $1,189 million at December 31, 1995,
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 $791 million at December 31, 1995,
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 and Federal Home Loan Bank notes. Firstar
additionally has a $125 million line of credit agreement in place which expires
in August 1999. The credit agreement has certain restrictive covenants and
requires payment of quarterly fees based upon both the commitment amount and
usage levels. No advances were outstanding under this line at the end of 1995.
37
<PAGE> 39
NOTE 9. LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1995 1994
---------- ----------
(thousands of dollars)
<S> <C> <C>
Federal Home Loan Bank notes...................................... $486,760 $400,000
7.15% subordinated notes.......................................... 100,000
10.25% subordinated notes......................................... 78,340 78,340
10% notes......................................................... 43,910 43,910
9.25% subordinated notes.......................................... 23,000
Other debt........................................................ 25,011 28,295
-------- --------
Total........................................................... $734,021 $573,545
======== ========
</TABLE>
Notes payable to the Federal Home Loan Bank are collateralized by Federal
Home Loan Bank stock and first mortgage real estate loans. The notes mature from
1996 through 2005 and have a variable interest rate with an average of 5.93% as
of December 31, 1995.
Firstar issued $100,000,000 of 7.15% notes under an indenture dated as of
August 28, 1995. The notes, which are subordinated to all unsubordinated
indebtedness of Firstar for borrowed money, are unsecured and mature September
1, 2000. The notes may be redeemed on or after September 1, 1998. The indenture
contains a provision which restricts the disposition of or subjecting to lien
any common stock of certain subsidiaries.
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 notes may be redeemed on or after September 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.
Other debt at December 31, 1995 includes notes of $2,706,000 which bear
interest at 11.50% and mature in 1996, loans sold under repurchase agreements of
$5,000,000, $10,000,000 and $5,000,000, which mature in 1998, 1999 and 2002,
respectively, and bearing interest at a variable LIBOR based rate, and
capitalized lease obligations of $2,009,000.
Long-term debt has aggregate maturities for the five years 1996 through
2000 as follows: $102,937 in 1996, $280,090 in 1997, $103,499 in 1998, $10,113
in 1999 and $229,630 in 2000.
38
<PAGE> 40
NOTE 10. STOCKHOLDERS' EQUITY
The authorized and outstanding shares of Firstar are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Preferred stock, $1.00 par value
Authorized--series C.......................................... 2,500,000 2,500,000
Preferred stock from acquired banks:
Series D
Authorized................................................. 40,250 40,250
Outstanding................................................ 30,688 38,775
Investors Bank Corp.
Authorized................................................. 1,000,000
Outstanding................................................ 303,640
Common stock, $1.25 par value:
Authorized.................................................... 120,000,000 120,000,000
Outstanding (net of treasury stock)........................... 73,226,264 76,379,532
</TABLE>
Under the Firstar Shareholder 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.
On January 31, 1995, Firstar converted 38,775 shares of First Colonial
Bankshares Corporation Series C preference stock, represented by 775,500
depository shares, into like shares of its Series D preferred stock in
connection with the acquisition of First Colonial Bankshares Corporation. Each
share receives annual dividends of $35 and is convertible into 21.46 shares of
common stock. Shares may be redeemed after June 30, 1997 at $500 per share.
Dividends deducted from net income for purposes of determining net income
applicable to common stockholders were $1,248,000 in 1995, $1,389,000 in 1994
and $1,409,000 in 1993.
Investors Bank Corp. in November, 1991 issued 303,640 shares of preferred
stock in units consisting of one share of preferred stock and one warrant to
purchase one half share of Investor Bank Corp. common stock. Each share received
annual dividends of $3.1875 until October, 1993 and are at an annual rate of
$2.75 thereafter. Dividends deducted from net income for purposes of determining
net income applicable to common stockholders were $273,000 in 1995, $835,000 in
1994 and $946,000 in 1993. These shares were redeemed for $27.50 per share with
the merger of Investors Bank Corp. and Firstar. The warrants of Investors Bank
Corp. were converted into warrants to purchase Firstar common stock. The
warrants permit the purchase of 80,780 shares of common stock at a price of
$12.75 per share as of December 31, 1995. The warrants expire on November 13,
1996.
39
<PAGE> 41
First Colonial Bankshares Corporation converted in March 1994, all issued
and outstanding shares of their Series B preference stock into 57,938 shares of
common stock. Dividends deducted from net income for purposes of determining net
applicable for common stock was $102,000 in 1993.
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,
1995. The shares cannot be sold prior to the end of the vesting period and are
subject to adjustment in accordance with the terms of the award.
Firstar reacquired 3,883,200 shares of its common stock during the latter
half of 1995 of which 1,750,000 were retired and the remaining shares were
placed in treasury stock. These treasury shares may be issued for future
purchase business combinations, for stock option plans and other purposes.
NOTE 11. STOCK OPTIONS
Firstar has an incentive stock plan that provides for a maximum grant of
5,600,000 stock options, stock appreciation rights and/or shares of stock. The
options expire ten years and one month after the date of grant.
Firstar in connection with bank acquisitions, converted existing options
for shares of the acquired banks into an equivalent number of options for shares
of Firstar common stock. As of December 31, 1995 these options totalled 792,248
with an exercise price of $4.54 to $25.99. No additional stock options will be
awarded under these plans.
The following table summarizes option activity under these plans:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OPTION PRICE
--------- ---------------
<S> <C> <C>
Options outstanding at December 31, 1992.......................... 2,627,047 $ 2.88 to 25.13
Granted......................................................... 633,086 12.32 to 32.50
Exercised....................................................... (328,031) 2.88 to 21.68
Cancelled....................................................... (119,230) 5.19 to 32.50
---------
Options outstanding at December 31, 1993.......................... 2,812,872 2.88 to 32.50
Granted......................................................... 549,258 19.59 to 31.25
Assumed through acquisitions.................................... 27,832 9.36 to 15.72
Exercised....................................................... (262,093) 2.88 to 25.13
Cancelled....................................................... (48,205) 2.88 to 32.50
---------
Options outstanding at December 31, 1994.......................... 3,079,664 4.11 to 32.50
Granted......................................................... 492,600 27.38 to 27.50
Assumed through acquisitions.................................... 2,906 9.44
Exercised....................................................... (769,389) 4.11 to 32.50
Cancelled....................................................... (76,933) 11.12 to 32.50
---------
Options outstanding at December 31, 1995.......................... 2,728,848 4.54 to 32.50
=========
</TABLE>
At December 31, 1995, 1,817,781 options to acquire common stock were
exercisable, including all options of acquired banks whose options vested on the
merger date. In January 1996, options to acquire 487,900 shares of common stock
at $40.00 per share were granted.
40
<PAGE> 42
NOTE 12. OTHER OPERATING EXPENSE
A summary of other operating expense is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Business development..................................... $ 29,413 $ 26,602 $ 27,911
Information processing expense........................... 21,918 20,957 19,034
Stationery and supplies.................................. 21,284 18,087 20,956
Professional fees........................................ 20,491 17,937 18,355
Delivery................................................. 19,192 16,122 17,919
F.D.I.C. insurance....................................... 16,531 28,361 27,898
Check kiting loss........................................ 22,000
Restructuring expense.................................... 23,151
Other.................................................... 70,370 68,171 74,882
-------- -------- --------
Total.................................................. $222,350 $218,237 $206,955
======== ======== ========
</TABLE>
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
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.............................. $216,261 $175,537 $168,978
Accumulated benefit obligation......................... 221,716 179,086 172,742
Projected benefit obligation........................... 280,328 218,660 215,931
Plan assets at fair value................................ 237,195 195,436 205,941
Plan assets less than projected benefit obligation....... (43,133) (23,224) (9,990)
Unrecognized prior service cost.......................... (1,791) (2,075) (2,360)
Unrecognized net asset................................... (4,680) (5,914) (7,147)
Unrecognized net loss.................................... 36,373 18,797 4,341
-------- -------- --------
Pension liability................................... $(13,231) $(12,416) $(15,156)
======== ======== ========
Net pension expense comprised the following:
Service cost........................................... $ 7,526 $ 7,852 $ 7,176
Interest cost on projected benefit obligation.......... 18,863 16,355 15,705
Actual loss (return) on plan assets.................... (46,230) 8,725 (20,008)
Net amortization and deferral.......................... 28,519 (26,755) 2,994
-------- -------- --------
Net pension expense................................. $ 8,678 $ 6,177 $ 5,867
======== ======== ========
Assumptions used in actuarial values:
Discount rate.......................................... 7.50% 8.50% 7.75%
Rates of increase in compensation levels............... 5.50 5.50 5.50
Expected rate of return on plan assets................. 9.00 9.00 9.50
</TABLE>
41
<PAGE> 43
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.
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Projected benefit obligation............................. $(12,497) $(12,238) $(9,275 )
Unrecognized prior service cost.......................... 2,572 2,779
Unrecognized transition obligation....................... 146 189 232
Unrecognized net loss.................................... 2,068 2,641 3,847
-------- -------- -------
Pension liability................................... $ (7,711) $ (6,629) $(5,196 )
======== ======== =======
Net pension expense comprised the following:
Service cost........................................... $ 294 $ 436 $ 218
Interest cost on projected benefit obligation.......... 835 916 612
Net amortization and deferral.......................... 260 416 211
-------- -------- -------
Net pension expense................................. $ 1,389 $ 1,768 $ 1,041
======== ======== =======
</TABLE>
First Colonial Bankshares Corporation's pension plan existed as a defined
plan until October 31, 1989, the effective date of the plan curtailment. Under
the curtailment, a plan participant's account is maintained by the plan and is
accessible only when the participant attains age 59 1/2 or upon separation from
the Company. Payouts under the plan are made at the greater of the participant's
account balance on the date of curtailment increased annually by 8%, or an
amount based upon the accrued benefit as of the date of the curtailment
discounted at the current pension Benefit Guaranty Corporation's rate. The table
below summarizes the plan's funded status.
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.............................. $ 1,134 $ 1,511 $ 2,193
Projected benefit obligation........................... 1,134 1,511 2,193
Plan assets at fair value................................ 1,574 2,114 2,492
Plan assets in excess of projected benefit obligation.... 440 603 299
Unrecognized net loss.................................... 525 673 1,125
------ ------ ------
Prepaid pension cost................................ $ 965 $ 1,276 $ 1,424
====== ====== ======
Net pension expense comprised the following:
Interest cost on projected benefit obligation.......... $ 112 $ 143 $ 149
Actual loss (return) on plan assets.................... (169) 33 (134 )
Net amortization and deferral.......................... 48 (155) 14
------ ------ ------
Net periodic pension expense........................ (9) 21 29
Loss recognized on settlements...................... 320 128 182
------ ------ ------
Total pension expense............................. $ 311 $ 149 $ 211
====== ====== ======
Assumptions used in actuarial values:
Discount rate.......................................... 7.50% 8.25% 7.00 %
Expected rate of return on plan assets................. 8.00 8.00 8.00
</TABLE>
Firstar has profit sharing plans 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 $11,370,000 in 1995, $11,804,000 in
1994 and $11,507,000 in 1993.
42
<PAGE> 44
In addition to pension benefits, certain health care benefits are made
available to active and retired employees. 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
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................... $(40,893) $(41,029) $(33,507)
Fully eligible active plan participants................ (6,478) (7,340) (18,056)
Other active plan participants......................... (12,641) (13,290) (20,354)
------ ------ ------
Total............................................. (60,012) (61,659) (71,917)
Unrecognized transition obligation..................... 50,194 53,146 56,099
Unrecognized net (gain) loss........................... (7,528) (4,872) 8,854
------ ------ ------
Postretirement benefit liability.................. $(17,346) $(13,385) $ (6,964)
====== ====== ======
Net postretirement benefit expense comprised the
following:
Service cost........................................... $ 787 $ 1,220 $ 1,515
Interest cost.......................................... 3,753 4,721 4,938
Amortization of transition obligation.................. 2,093 2,953 2,953
------ ------ ------
Net postretirement benefit expense................ $ 6,633 $ 8,894 $ 9,406
====== ====== ======
</TABLE>
For measurement purposes, a 9.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed, decreasing to 5.5% by 2004 and
remaining at that level thereafter. The health care cost trend rate assumption
has an 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 $8,574,000 and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost by $1,142,000. The discount rate used in determining
the accumulated postretirement benefit obligation was 7.50%, 8.50% and 7.75% at
December 31, 1995, 1994 and 1993, respectively.
43
<PAGE> 45
NOTE 14. INCOME TAXES
The taxes applicable to income before income taxes were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Current income taxes:
Federal................................................ $106,087 $ 87,136 $ 95,271
State and other........................................ 24,535 18,788 20,940
-------- -------- --------
Subtotal............................................ 130,622 105,924 116,211
Deferred income taxes (benefit):
Federal................................................ (9,208) 6,126 (6,454)
State and other........................................ (3,061) 658 (798)
-------- -------- --------
Subtotal............................................ (12,269) 6,784 (7,252)
Cumulative effect of change in accounting principle...... (2,404)
-------- -------- --------
Provision for income taxes.......................... $118,353 $112,708 $106,555
======== ======== ========
</TABLE>
The actual provision for income taxes differed from the amount computed by
applying the federal statutory rate of 35% to income before income taxes as
shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Tax expense at statutory rate............................ $121,543 $118,783 $117,261
Increase (reduction) in taxes resulting from:
Tax-exempt income...................................... (20,897) (21,095) (20,563)
State and local taxes--net of federal income tax
benefit............................................. 13,958 12,640 13,092
Amortization of nondeductible intangibles.............. 2,919 2,558 2,265
Cumulative effect of change in accounting principle.... (2,404)
Adjustment to deferred tax assets and liabilities for
enacted changes in tax laws and rates............... (1,586)
Other--net............................................. 830 (178) (1,510)
-------- -------- --------
Provision for income taxes.......................... $118,353 $112,708 $106,555
======== ======== ========
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Deferred tax expense (exclusive of the effects of other
components listed below)............................... $(11,836) $ 6,254 $ (6,364)
Adjustment to deferred tax assets and liabilities for
enacted changes in tax laws and rates.................. (1,586)
Change in beginning of year valuation allowance due to
effective
tax planning strategies................................ (1,008) (105)
Change in valuation allowance due to creation/utilization
of
net operating losses................................... 575 635 698
-------- -------- --------
Total............................................... $(12,269) $ 6,784 $ (7,252)
======== ======== ========
</TABLE>
44
<PAGE> 46
The significant components of the net deferred tax asset were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Deferred tax liabilities:
Equipment leased to customers.......................... $(13,239) $(14,180) $(16,478)
Bank premises and equipment............................ (12,427) (12,383) (13,050)
Acquired assets accounted for as a purchase............ (9,104) (10,922) (10,993)
Securities available for sale.......................... (20,144) (733)
Deferred tax assets:
Reserve for loan losses................................ 78,533 76,664 75,016
Pension and post-retirement benefits................... 15,129 11,570 8,628
State and federal net operating loss carryforwards..... 11,235 10,335 8,965
Deferred compensation.................................. 11,390 7,104 6,977
Deferred gain on sale of building...................... 5,223 7,721 11,338
Securities available for sale.......................... 636
Other--net............................................. 6,088 5,297 12,829
-------- -------- --------
Subtotal............................................ 72,684 81,842 82,499
Valuation allowance...................................... (10,611) (11,044) (9,271)
-------- -------- --------
Net deferred tax asset.............................. $ 62,073 $ 70,798 $ 73,228
======== ======== ========
</TABLE>
The change in net deferred tax asset includes $20,780,000 of tax expense in
1995 and $1,369,000 of tax benefit in 1994 allocated directly to stockholders'
equity for unrealized gains (losses) on securities available for sale recorded
in accordance with SFAS No. 115. Other changes relate to acquisitions.
The valuation allowance was decreased $433,000 in 1995 and increased
$530,000 in 1994. Also a valuation allowance of $1,243,000 was added in 1994 due
to the acquisition of First Southeast Banking Corp. The valuation allowance has
been recognized primarily to offset deferred tax assets related to state net
operating loss carryforwards totaling approximately $204,675,000 which expire at
various times within the next 15 years.
The net deferred tax asset is included in other assets. Amounts originally
reported for 1994 have been reclassified to reflect actual tax return results.
NOTE 15. COMMITMENTS AND CONTINGENT LIABILITIES
Firstar has outstanding at any time a significant number of commitments to
extend credits to its customers. These commitments include revolving credit
agreements, term loan commitments, short-term borrowing agreements and standby
letters of credit. These commitments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amounts recognized in the
consolidated balance sheets.
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.
45
<PAGE> 47
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.
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.
The following is a summary of such commitments at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1995 1994
------ ------
(thousands of dollars)
<S> <C> <C>
Commitments to extend credit......................................... $4,559 $4,461
Credit card lines.................................................... 2,098 1,543
Standby and commercial letters of credit............................. 445 422
Mortgage loans sold with recourse.................................... 220 36
</TABLE>
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 $201 million and $253 million at
December 31, 1995 and 1994, 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, 1995, $163 million could be loaned to Firstar by the
subsidiary banks subject to strict collateral requirements, and $248 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 1996 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 each
subsidiary bank.
46
<PAGE> 48
NOTE 17. DERIVATIVE FINANCIAL INSTRUMENTS
Rate Risk Management
As part of its asset and liability management, Firstar uses various types
of interest rate contracts for the purpose of managing its interest rate risks.
The use of interest rate contracts enables Firstar to synthetically alter the
repricing characteristics of designated earning assets and interest-bearing
liabilities. The following tables summarize the notional amounts of interest
rate contracts at December 31, 1995, used by Firstar in its asset and liability
management process:
<TABLE>
<CAPTION>
INTEREST RATE SWAPS
-------------------------------------------
RECEIVE FIXED RATE TOTAL
------------------- INTEREST
INDEX RECEIVE PERIODIC CAPS AND RATE
AMORTIZING OTHER VARIABLE CAPS FLOORS CONTRACTS
---------- ----- -------- -------- -------- ---------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
December 31, 1993........................ $205 $ 60 $ 186 $ 715 $180 $ 1,346
Additions.............................. 90 50 5 210 241 596
Maturities............................. (35) (115) (40) (190)
---- ---- ----- ----- ---- ------
December 31, 1994........................ 295 75 76 925 381 1,752
Additions.............................. 5 400 405
Maturities............................. (26) (20) (44) (5) (80) (175)
Terminations........................... (920) (920)
---- ---- ----- ----- ---- ------
December 31, 1995........................ $269 $ 55 $ 37 $ 0 $701 $ 1,062
==== ==== ===== ===== ==== ======
</TABLE>
Index amortizing interest rate swaps are used to convert variable rate
loans to a fixed rate basis. The amortizing feature of these swaps serves to
extend the maturity after a predetermined mandatory period if the three-month
LIBOR index rate is above a pre-established reference rate on a quarterly basis.
Additionally, the notional amount of the swaps is reduced on a quarterly basis
based upon pre-established rates beginning in 1995.
Interest rate swaps used to convert variable rate loans to fixed rate loans
have a total notional value of $55 million. Other swaps totalling $37 million
were used to convert fixed rate loans and securities to a variable rate basis.
Interest rate swaps with periodic caps involve the exchange of LIBOR based
variable interest payments with one party receiving a fixed basis point shim
over the LIBOR index, subject to a 25 basis point cap in quarterly increases in
rates receivable by Firstar. In 1995, $700 million of these swaps were
terminated involving minimal cash settlements. Also in 1995, $220 million of
these swaps were marked to market and reclassified as trading derivatives.
Interest rate floors provide for the receipt of payments when the three
month LIBOR rate is below a predetermined interest rate floor. Firstar has
entered into $270 million of floors to manage interest rate risk on certain
variable rate loans and has entered into $331 million of floors to manage the
interest rate risk on money market fund deposits which have guaranteed minimum
interest rates.
Interest rate caps provide for the receipt of payments when the three month
LIBOR rate exceeds predetermined interest rate caps. Firstar has entered into
$100 million in interest rate caps used to manage interest rate risk on variable
rate borrowed funds.
47
<PAGE> 49
The maturity of derivative financial instruments as of December 31, 1995 is
as follows:
<TABLE>
<CAPTION>
MATURITY RANGE OF DERIVATIVE FINANCIAL INSTRUMENTS
--------------------------------------------------------------------------------
MARKET
WEIGHTED VALUE
AVERAGE ASSET
1996 1997 1998 1999 2000 TOTAL MATURITIES (LIABILITY)
----- ----- ----- ----- ----- ------ ---------- -----------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate swaps
Receive variable......... $ 29 $ 8 $ 37 1.8 yrs $(1.8)
Average receive
rate................ 5.81% 5.68% 5.78%
Average pay rate...... 7.86% 8.59% 8.02%
Receive fixed............ $ 55 $ 55 .4 yrs
Average receive
rate................ 7.20% 7.20%
Average pay rate...... 7.71% 7.71%
Receive fixed --
amortizing............ $ 5 $ 88 $ 86 $ 90 $ 269 2.4 yrs (.9)
Average receive
rate................ 6.09% 4.90% 5.17% 6.00% 5.38%
Average pay rate...... 5.88% 5.94% 5.88% 5.85% 5.89%
Interest rate floors....... $ 10 $ 50 $ 25 $ 211 $ 305 $ 601 3.6 yrs 8.1
Average floor rate....... 4.50% 4.70% 5.00% 5.09% 4.76% 4.88%
Interest rate caps......... $ 100 $ 100 .8 yr
Average cap rate......... 6.25% 6.25%
----- ----- ----- ----- ----- ------ -----
Total............... $ 170 $ 167 $ 111 $ 309 $ 305 $1,062 2.8 yrs $ 5.4
===== ===== ===== ===== ===== ====== =====
</TABLE>
- ------------
All interest rates represent rates in effect on December 31, 1995.
Index rate for interest rate caps/floors is three month LIBOR.
The notional values of derivative financial instruments represent the
amounts on which interest payments are exchanged between the counterparties.
Those notional values do not represent direct credit exposures. Firstar is
exposed to credit-related losses in the event of nonperformance by
counterparties to these instruments but does not expect any counterparty to fail
to meet their obligations. Where appropriate, Firstar requires collateral based
upon the positive market value of the exposure taking into account bi-lateral
netting agreements with certain counterparties. Based on market values,
Firstar's credit exposure was $8.2 million at December 31, 1995.
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 had contracts
totaling $267 million and $44 million on December 31, 1995 and 1994
respectively. Gains or losses on these contracts are included in the
determination of the market value of mortgages held for sale.
Trading Activities
Firstar also acts as an intermediary for customers in their management of
interest rate and foreign currency rate risk. In this regard, Firstar will enter
into interest rate swaps, caps, floors and foreign exchange contracts with
customers to minimize their exposure to market risk. Firstar enters into
essentially offsetting transactions with other counterparties. Customer related
derivative activity, as well as derivative contracts not used to manage interest
rate risk on recorded assets and liabilities, is marked to market value. The
credit exposure at year-end of $13.1 million is represented by the fair value of
contracts with a positive value. Gross credit exposure amounts disregard the
value of any collateral. Revenue from this intermediary activity was $3.0
million and $3.2 million in 1995 and 1994, respectively.
48
<PAGE> 50
Information on these transactions is shown below.
<TABLE>
<CAPTION>
1995 1994
------------------------------- -------------------------------
ESTIMATED ESTIMATED
FAIR VALUE FAIR VALUE
NOTIONAL ------------------- NOTIONAL -------------------
AMOUNT YEAR-END AVERAGE AMOUNT YEAR-END AVERAGE
-------- -------- ------- -------- -------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Interest rate swaps
In a receivable position............... $719 $6.8 $ 4.2 $442 $ 18.1 $21.8
In a payable position.................. 421 4.9 3.9 442 18.5 21.3
Interest rate caps/floors
Held................................... 130 1.4 1.9 115 2.2 1.3
Written................................ 130 1.4 1.9 115 2.2 1.3
Foreign exchange contracts
In a receivable position............... 45 4.9 3.9 28 .7 1.0
In a payable position.................. 44 3.9 3.4 29 .7 1.1
</TABLE>
NOTE 18. 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 judgments
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 judgment 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.
Securities--Estimated fair value for 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.
49
<PAGE> 51
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.
Borrowed funds--The carrying value of short-term borrowed funds
approximates 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.
Derivative financial instruments--The fair value of interest rate swap
agreements is based on the present value of the swap primarily using counter
party or third party dealer quotes. Fair values for caps and floors were
obtained using an option pricing model. 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. Prices
obtained from counter parties or pricing models are tested by obtaining third
party valuations. 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 of Firstar's financial instruments is summarized
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------- --------------------------
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......... $ 1,426,158 $ 1,426,158 $ 1,476,950 $ 1,476,950
Trading securities...................... 10,029 10,029 29,050 29,050
Securities available for sale........... 2,047,848 2,047,848 342,653 342,653
Securities held to maturity............. 2,427,030 2,492,346 3,630,963 3,518,672
Loans, net of allowance for loan
losses............................... 12,437,230 12,451,430 11,715,276 11,501,567
Financial liabilities:
Deposits:
Without stated maturities............ 9,033,671 9,033,671 8,736,972 8,736,971
With stated maturities............... 5,277,975 5,306,647 4,672,243 4,661,409
Short-term borrowed funds............... 2,303,159 2,303,159 2,196,478 2,196,478
Long-term debt.......................... 734,021 745,825 573,545 573,464
Derivative financial instruments:
Asset and liability management:
Interest rate instruments
Asset.............................. 8,255 3,728
Liability.......................... 2,870 64,778
Credit commitments...................... 11,299 13,643
Trading activities:
Interest rate contracts
Asset.............................. 8,234 8,234 20,491 20,491
Liability.......................... 6,311 6,311 20,843 20,843
Foreign exchange contracts
Asset.............................. 4,949 4,949 740 740
Liability.......................... 3,899 3,899 659 659
</TABLE>
50
<PAGE> 52
NOTE 19. PARENT CORPORATION CONDENSED FINANCIAL STATEMENTS
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1994
---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Assets:
Cash and due from banks................................. $ 593 $ 670
Short-term investments.................................. 46,400 70,950
Securities available for sale........................... 5,092
Commercial loans........................................ 327 424
Loans to bank subsidiaries.............................. 36,925 35,000
Loans to other subsidiaries............................. 188 3,758
Investment in bank subsidiaries......................... 1,659,511 1,522,825
Investment in other subsidiaries........................ 16,547 15,668
Other assets............................................ 8,942 7,266
---------- ----------
Total assets......................................... $1,774,525 $1,656,561
========= =========
Liabilities and stockholders' equity:
Long-term debt.......................................... $ 224,956 $ 124,956
Other liabilities....................................... 24,749 18,920
Stockholders' equity.................................... 1,524,820 1,512,685
---------- ----------
Total liabilities and stockholders' equity........... $1,774,525 $1,656,561
========= =========
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
-------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Revenue:
Dividends from bank subsidiaries........................ $145,338 $ 119,920 $ 135,519
Dividends from other subsidiaries....................... 6,000 4,000 4,024
Fees from subsidiaries.................................. 26,083 22,859 21,566
Investment and loan income.............................. 5,423 4,897 3,784
Other revenue........................................... 121 1,201 1,673
-------- ---------- ----------
Total revenue........................................ 182,965 152,877 166,566
Expense:
Interest................................................ 15,501 12,748 13,045
Salaries and employee benefits.......................... 18,795 16,003 15,267
Other expense........................................... 17,251 12,396 10,508
-------- ---------- ----------
Total expense........................................ 51,547 41,147 38,820
Income before income taxes and equity in undistributed
income of subsidiaries.................................. 131,418 111,730 127,746
Provision for income tax expense (benefits)............... (6,465) (5,413) 8,151
-------- ---------- ----------
Income before equity in undistributed income of
subsidiaries............................................ 137,883 117,143 119,595
Equity in undistributed income of subsidiaries............ 91,030 109,530 108,343
-------- ---------- ----------
Net income........................................... $228,913 $ 226,673 $ 227,938
======== ========= =========
</TABLE>
51
<PAGE> 53
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
--------- --------- ---------
(thousands of dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 228,913 $ 226,673 $ 227,938
Adjustments:
Equity in undistributed income of subsidiaries....... (91,030) (109,530) (108,343)
Depreciation, amortization and accretion............. 447 813 733
(Increase) decrease in other assets.................. (2,361) (991) 10,527
Increase in other liabilities........................ 1,616 185 3,153
Other net............................................ 3,268 30 406
--------- --------- ---------
Net cash provided by operating activities.......... 140,853 117,180 134,414
Cash flows from investing activities:
Net decrease (increase) in short-term investments....... 24,550 (18,465) (18,335)
Net (increase) in long-term investments................. (5,011)
Net decrease in commercial loans........................ 98 270 174
Net decrease (increase) in loans to subsidiaries........ 1,645 (5,740) 5,978
Purchases of premises and equipment..................... (415) (1,031) (902)
Capital contributions to subsidiaries................... (400) (5,950) (710)
Purchase of minority shares of subsidiaries............. (9) (591)
Net decrease (increase) in intercompany receivables..... 6 622 (956)
Other net............................................... (159) 206 167
--------- --------- ---------
Net cash provided by (used in) investing
activities...................................... 20,314 (30,097) (15,175)
Cash flows from financing activities:
Repayment of long-term debt............................. (380) (366)
Net proceeds from long-term debt........................ 99,360
Cash dividends.......................................... (101,359) (75,081) (67,453)
Preferred stock redemption.............................. (8,350) (51,500)
Common stock transactions............................... (150,895) (11,076) 138
--------- --------- ---------
Net cash used in financing activities.............. (161,244) (86,537) (119,181)
--------- --------- ---------
Net (decrease) increase in cash and due from banks........ (77) 546 58
Cash and due from banks at beginning of year.............. 670 124 66
--------- --------- ---------
Cash and due from banks at end of year.................... $ 593 $ 670 $ 124
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.................. $ 13,036 $ 12,753 $ 12,829
</TABLE>
52
<PAGE> 54
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 3, the Corporation adopted the provisions of Statement
of Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights", as of January 1, 1995.
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
January 23, 1996
53
<PAGE> 55
FIRSTAR CORPORATION AND SUBSIDIARIES
SUMMARY OF QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
1995
--------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(thousands of dollars, except per share)
<S> <C> <C> <C> <C>
Interest revenue.................................... $322,277 $339,021 $339,477 $347,011
Interest expense.................................... 143,752 159,912 158,373 159,802
-------- -------- -------- --------
Net interest revenue................................ 178,525 179,109 181,104 187,209
Provision for loan losses........................... 13,136 9,987 5,778 7,855
Other operating revenue............................. 88,215 96,615 101,054 106,313
Other operating expense............................. 199,756 184,009 174,490 175,867
-------- -------- -------- --------
Income before income taxes.......................... 53,848 81,728 101,890 109,800
Provision for income taxes.......................... 17,563 27,946 34,813 38,031
-------- -------- -------- --------
Net income.......................................... $ 36,285 $ 53,782 $ 67,077 $ 71,769
======== ======== ======== ========
Per common share
Net income.......................................... $ .47 $ .70 $ .88 $ .95
Dividends........................................... .30 .34 .34 .34
Stock price ranges:
High.............................................. 30 1/4 34 1/4 38 3/8 41
Low............................................... 26 1/4 28 1/4 32 1/2 34 1/8
Close............................................. 29 1/2 33 5/8 37 1/8 39 5/8
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(thousands of dollars, except per share)
<S> <C> <C> <C> <C>
Interest revenue.................................... $255,115 $269,782 $284,822 $310,025
Interest expense.................................... 87,507 96,667 110,432 126,300
-------- -------- -------- --------
Net interest revenue................................ 167,608 173,115 174,390 183,725
Provision for loan losses........................... 3,675 2,877 3,789 13,550
Other operating revenue............................. 95,204 95,341 90,863 89,211
Other operating expense............................. 168,520 192,717 169,232 175,716
-------- -------- -------- --------
Income before income taxes.......................... 90,617 72,862 92,232 83,670
Provision for income taxes.......................... 30,479 23,306 31,759 27,164
-------- -------- -------- --------
Net income.......................................... $ 60,138 $ 49,556 $ 60,473 $ 56,506
======== ======== ======== ========
Per common share
Net income.......................................... $ .80 $ .65 $ .80 $ .73
Dividends........................................... .26 .30 .30 .30
Stock price ranges:
High.............................................. 34 3/4 35 3/8 35 1/8 30 7/8
Low............................................... 29 3/4 32 5/8 29 5/8 25 1/8
Close............................................. 33 35 3/8 31 26 7/8
</TABLE>
54
<PAGE> 56
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL RATIOS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
INTEREST REVENUE
Loans................................ $1,081,685 $ 914,311 $ 824,082 $ 830,227 $ 903,720
Securities........................... 253,794 193,280 195,391 216,674 237,692
Other................................ 12,307 12,153 8,581 17,341 24,550
---------- ---------- ---------- ---------- ----------
Total interest revenue............. 1,347,786 1,119,744 1,028,054 1,064,242 1,165,962
INTEREST EXPENSE
Deposits............................. 444,706 321,969 315,858 389,989 539,330
Short-term borrowed funds............ 133,151 67,622 25,189 25,452 48,817
Long-term debt....................... 43,982 31,315 27,068 22,430 22,606
---------- ---------- ---------- ---------- ----------
Total interest expense............. 621,839 420,906 368,115 437,871 610,753
---------- ---------- ---------- ---------- ----------
NET INTEREST REVENUE................. 725,947 698,838 659,939 626,371 555,209
Provision for loan losses............ 36,756 23,891 29,090 50,733 55,221
---------- ---------- ---------- ---------- ----------
NET INTEREST REVENUE AFTER LOAN LOSS
PROVISION.......................... 689,191 674,947 630,849 575,638 499,988
OTHER OPERATING REVENUE
Trust and investment management
fees............................... 132,377 120,349 112,521 98,296 83,032
Service charges on deposit
accounts........................... 80,891 81,980 83,060 75,273 67,727
Credit card service revenue.......... 62,990 56,265 53,728 51,867 54,994
Other................................ 115,939 112,025 143,609 122,500 105,888
---------- ---------- ---------- ---------- ----------
Total other operating revenue...... 392,197 370,619 392,918 347,936 311,641
OTHER OPERATING EXPENSE
Salaries and employee benefits....... 395,361 380,961 368,514 332,538 301,901
Equipment expense.................... 58,700 54,556 53,123 52,680 46,553
Net occupancy expense................ 57,992 52,984 58,328 53,514 50,578
Other................................ 222,069 217,684 209,309 216,712 196,473
---------- ---------- ---------- ---------- ----------
Total other operating expense...... 734,122 706,185 689,274 655,444 595,505
---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES........... 347,266 339,381 334,493 268,130 216,124
Provision for income taxes........... 118,353 112,708 106,555 82,131 61,709
---------- ---------- ---------- ---------- ----------
NET INCOME........................... $ 228,913 $ 226,673 $ 227,938 $ 185,999 $ 154,415
========== ========== ========== ========== ==========
Per common share:
Net income......................... $ 3.00 $ 2.98 $ 2.99 $ 2.50 $ 2.11
Dividends.......................... 1.32 1.16 1.00 0.80 0.705
Return on average total assets....... 1.26% 1.37% 1.49% 1.29% 1.12%
Return on average common equity...... 15.11 15.96 17.81 16.65 15.71
Dividend payout ratio................ 44.00 36.02 31.75 30.53 32.94
Equity as a percentage of assets:
At year-end........................ 7.95 8.41 8.28 7.94 7.35
Average for the year............... 8.37 8.67 8.67 8.02 7.31
Full-time equivalent staff (at
year-end).......................... 9,263 9,895 9,831 9,349 8,749
Average common shares outstanding
(000's)............................ 75,716 75,195 74,131 71,992 70,832
</TABLE>
55
<PAGE> 57
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST REVENUE AND RATE ANALYSIS
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------------- --------------------------------- -------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST
----------- ---------- ------- ----------- ---------- ------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits
with banks.............. $ 15,668 $ 967 6.17% $ 24,843 $ 1,297 5.22% $ 64,832 $ 2,667
Federal funds sold and
resale agreements....... 173,541 10,534 6.07 219,521 9,645 4.39 165,042 5,119
Trading securities....... 14,243 968 6.80 22,123 1,560 7.05 17,332 985
Securities:
Taxable................. 3,125,536 200,484 6.41 2,452,243 145,358 5.93 2,313,373 144,460
Nontaxable.............. 1,069,721 79,561 7.44 1,074,371 75,355 7.01 1,064,975 78,460
----------- -------- ----------- ---------- ----------- -----------
Total securities...... 4,195,257 280,045 6.68 3,526,614 220,713 6.26 3,378,348 222,920
Loans:
Commercial.............. 6,838,277 609,248 8.91 6,243,142 513,254 8.22 5,637,854 432,271
Consumer................ 5,453,397 479,492 8.79 4,972,720 408,239 8.21 4,472,934 396,560
----------- -------- ----------- ---------- ----------- -----------
Total loans........... 12,291,674 1,088,740 8.86 11,215,862 921,493 8.22 10,110,788 828,831
----------- -------- ----------- ---------- ----------- -----------
Interest earning
assets................ 16,690,383 1,381,254 8.28 15,008,963 1,154,708 7.69 13,736,342 1,060,522
Reserve for loan
losses.................. (197,181) (191,441) (188,358)
Cash and due from
banks................... 895,767 954,489 1,016,639
Other assets............. 826,431 773,024 744,283
----------- ----------- -----------
Total assets.......... $18,215,400 $16,545,035 $15,308,906
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
demand.................. $ 1,571,378 $ 23,831 1.52% $ 1,643,922 $ 21,065 1.28% $ 1,632,045 $ 29,366
Money market accounts.... 2,110,503 85,231 4.04 2,027,485 57,274 2.82 1,960,086 49,583
Savings passbook......... 1,731,344 44,509 2.57 1,854,944 43,887 2.37 1,755,129 45,330
Certificates of
deposit................. 5,261,589 291,135 5.53 4,410,873 199,743 4.53 4,290,651 191,579
Short-term borrowed
funds................... 2,275,739 133,151 5.85 1,591,305 67,622 4.25 865,298 25,189
Long-term debt........... 610,889 43,982 7.20 477,405 31,315 6.56 421,537 27,068
----------- -------- ----------- ---------- ----------- -----------
Interest-bearing
liabilities........... 13,561,442 621,839 4.59 12,005,934 420,906 3.51 10,924,746 368,115
Demand deposits.......... 2,827,623 2,837,257 2,793,567
Other liabilities........ 300,942 268,098 263,080
Stockholders' equity..... 1,525,393 1,433,746 1,327,513
----------- ----------- -----------
Total liabilities
and stockholders'
equity.............. $18,215,400 $16,545,035 $15,308,906
=========== =========== ===========
Net interest revenue/
margin.................. $ 759,415 4.55% $ 733,802 4.89% $ 692,407
========== ========== ===========
<CAPTION>
1992 1991
--------------------------------- ---------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
------- ----------- ---------- ------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits
with banks.............. 4.11% $ 137,383 $ 6,183 4.50% $ 131,333 $ 9,223 7.02%
Federal funds sold and
resale agreements....... 3.10 293,899 10,366 3.53 260,210 14,548 5.59
Trading securities....... 5.68 15,514 1,012 6.52 13,089 989 7.56
Securities:
Taxable................. 6.24 2,246,893 160,767 7.16 2,230,671 181,982 8.16
Nontaxable.............. 7.37 1,025,034 83,947 8.19 912,484 84,946 9.31
----------- -------- ----------- ----------
Total securities...... 6.60 3,271,927 244,714 7.48 3,143,155 266,928 8.49
Loans:
Commercial.............. 7.67 5,163,260 428,892 8.31 5,008,138 495,236 9.89
Consumer................ 8.87 4,044,256 407,639 10.08 3,759,869 419,970 11.17
----------- -------- ----------- ----------
Total loans........... 8.20 9,207,516 836,531 9.09 8,768,007 915,206 10.44
----------- -------- ----------- ----------
Interest earning
assets................ 7.72 12,926,239 1,098,806 8.50 12,315,794 1,206,894 9.80
Reserve for loan
losses.................. (174,007) (156,369)
Cash and due from
banks................... 931,413 874,266
Other assets............. 745,211 767,709
----------- -----------
Total assets.......... $14,428,856 $13,801,400
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
demand.................. 1.80% $ 1,479,688 $ 39,872 2.69% $ 1,250,775 $ 53,891 4.31%
Money market accounts.... 2.53 1,928,842 61,727 3.20 1,731,968 87,949 5.08
Savings passbook......... 2.58 1,487,437 48,314 3.25 1,237,560 59,259 4.79
Certificates of
deposit................. 4.47 4,520,152 240,076 5.31 4,957,142 338,231 6.82
Short-term borrowed
funds................... 2.91 742,263 25,452 3.43 892,702 48,817 5.47
Long-term debt........... 6.42 296,730 22,430 7.56 237,226 22,606 9.53
----------- -------- ----------- ----------
Interest-bearing
liabilities........... 3.37 10,455,112 437,871 4.19 10,307,373 610,753 5.93
Demand deposits.......... 2,564,854 2,218,641
Other liabilities........ 252,286 266,278
Stockholders' equity..... 1,156,604 1,009,108
----------- -----------
Total liabilities
and stockholders'
equity.............. $14,428,856 $13,801,400
=========== ===========
Net interest revenue/
margin.................. 5.04% $ 660,935 5.11% $ 596,141 4.84%
========== ==========
</TABLE>
Interest and rates are calculated on a taxable equivalent basis, using a tax
rate of 35% in 1995, 1994 and 1993 and 34% in 1992 and 1991 . 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.
56
<PAGE> 58
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 1996 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 1996 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 1996 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 1996 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 under Item 8. Financial Statements and Supplementary Data.
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Income for the Years Ended December 31,
1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended December 31,
1995, 1994 and 1993
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.
57
<PAGE> 59
(A)3. EXHIBITS
<TABLE>
<S> <C>
3.1 Articles of incorporation of Firstar Corporation (incorporated by reference to
Exhibit 3.1 of the Form 10-K for the year ended December 31, 1994)
3.2 By-Laws of Firstar Corporation
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)
4.5 Indenture dated as of August 23, 1995 between Firstar Corporation and Chemical
Bank, as Trustee, relating to 7.15% Subordinated Notes Due September 1, 2000
(incorporated by reference to Exhibit 4(a) to Amendment No. 1 to Registration
No. 33-61633 of Firstar)
4.6 Credit Agreement dated as of August 8, 1995 between Firstar Corporation and
First National Bank of Chicago, as agent, relating to revolving credit line.
4.7 Warrant Agreement, dated October 15, 1991 between Investors Bank Corp. and
Norwest Bank Minnesota, National Association (incorporated by reference to
Exhibit 4.7 to Registration No. 33-42684)
4.8 Form of Supplemental Warrant Agreement between Firstar Corporation and Norwest
Bank Minnesota, National Association (incorporated by reference to Exhibit 4(e)
to Amendment No. 1 to Registration No. 33-57245 of Firstar)
4.9 Form of Amended and Restated Depository Agreement among Firstar Corporation,
Firstar Trust Company as depository, and the holders from time-to-time of
Depository Receipts issued thereunder and the Form of Depository Receipt
(incorporated by reference to Exhibit 4(g) of Amendment No. 1 to Registration
No. 33-56545 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 First Colonial Bankshares Corporation 1988 Stock Option Plan, as amended,
assumed by Firstar (incorporated by reference to Exhibits 4.1 to 4.10 of
Registration No. 33-57521 of Firstar)
10.6 Investors Bank Corp. Stock Option Plan as amended assumed by Firstar
(incorporated by reference to Exhibits 4.1 and 4.2 of Registration No. 33-58915
of Firstar)
10.7 * 1988 Incentive Stock Plan, as amended (incorporated by reference to Exhibit A
of the Notice of the 1994 Annual Meeting and Proxy Statement of Firstar)
10.8 * Annual Executive Incentive Plan, as amended (incorporated by reference to
Exhibit B of the Notice of the 1994 Annual Meeting and Proxy Statement of
Firstar)
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)
</TABLE>
58
<PAGE> 60
<TABLE>
<S> <C>
21. Subsidiaries of Firstar Corporation
23. Consent of Independent Auditors
24. Powers of Attorney
27. Financial Data Schedule
</TABLE>
- ------------
* Executive Compensation Plans
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.
(B) No reports on Form 8-K were filed during the fourth quarter of 1995.
59
<PAGE> 61
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
--------------------------------------
Roger L. Fitzsimonds
March 15, 1996 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.
<TABLE>
<S> <C>
- ----------------------------------------------- March 15, 1996
Roger L. Fitzsimonds
Chairman and Chief Executive Officer and
director
March 15, 1996
- -----------------------------------------------
John A. Becker
President, Chief Operating Officer and director
WILLIAM H. RISCH* March 15, 1996
- -----------------------------------------------
William H. Risch
Senior Vice President-Finance and Treasurer
(principal finance and accounting officer)
</TABLE>
DIRECTORS
Michael E. Batten*
Robert C. Buchanan*
George M. Chester, Jr.*
Roger H. Derusha*
James L. Forbes*
Holmes Foster*
John H. Hendee, Jr.*
Jerry M. Hiegel*
Joe Hladky*
C. Paul Johnson*
James H. Keyes*
Sheldon B. Lubar*
Daniel F. McKeithan, Jr.*
George W. Mead II*
Guy A. Osborn*
Judith D. Pyle*
Clifford V. Smith, Jr.*
William W. Wirtz*
<TABLE>
<S> <C>
*By March 15, 1996
---------------------------------------------
William J. Schulz
Attorney-in-Fact
</TABLE>
60
<PAGE> 62
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
<S> <C>
3.2 By-Laws of Firstar Corporation
4.6 Credit Agreement dated as of August 8,
between Firstar Corporation and First National
Bank of Chicago, as agent, relating to
revolving credit line
21 Subsidiaries of Firstar Corporation
23 Consent of independent Auditors
24 Powers of attorney
27 Financial data schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.2
FIRSTAR CORPORATION
BY-LAWS
(As AMENDED to September 30, 1995)
<PAGE> 2
ARTICLE I
OFFICES
Section 1.01. Principal Office. The principal office of the Corporation in
the State of Wisconsin shall be located at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin. The Corporation may have such other offices, either
within or without the State of Wisconsin, as the board of directors may
designate or as the business of the Corporation may require from time to time.
Section 1.02. Registered Office. The registered office of the Corporation
required by the Wisconsin Business Corporation Law to be maintained in the
State of Wisconsin shall be the same as the principal office, except as the
board of directors may change the address of the registered office from time to
time.
ARTICLE II
SHAREHOLDERS
Section 2.01. Annual Meeting.
(a) The annual meeting of the shareholders of the Corporation (the "Annual
Meeting") shall be held on the third Thursday in the month of April in each
year (or on such other day as may be fixed by the board of directors) at such
time and place as may be designated by the board of directors or, in the
absence of designation by the board of directors, then by the chairman of the
board or the president, for the purpose of transacting only such business as is
properly brought before the Annual Meeting in accordance with this Section
2.01. If the day fixed for the Annual Meeting shall be a legal holiday in the
State of Wisconsin, then such meeting shall be held on the next succeeding
Business Day (as hereinafter defined), In fixing a meeting date for any Annual
Meeting, the board of directors may consider such factors as it deems relevant
within the good faith exercise of its business judgment,
(b) The proposal of business to be considered by the shareholders and, subject
to the terms of any series of the Preferred Stock as may be issued by the
Corporation from time to time (as such terms are stated and expressed in the
resolution or resolutions of the board of directors providing for the issuance
of such Preferred Stock), nominations of persons for election to the board of
directors of the Corporation may be made at an Annual Meeting only (i) pursuant
to the Corporation's notice of meeting, (ii) by or at the direction of the
board of directors (or, in the case of nominations, by the committee on
directors of the board of directors or, if such committee does not exist, any
other committee of the board of directors serving a similar function) or (iii)
by any shareholder of the Corporation who is a shareholder of record at the
time of the giving of the notice provided for in this
<PAGE> 3
Section 2.01, who is entitled to vote at the Annual Meeting and who complies
with the notice procedures set forth in this Section 2.01,
(c) For nominations or other business to be properly brought before an Annual
Meeting by a shareholder pursuant to clause (iii) of paragraph (b) of this
Section 2.01, the shareholder must have given timely notice thereof in writing
to the secretary of the Corporation. To be timely, a
1
<PAGE> 4
shareholder's notice must be received by the secretary of the Corporation at
the principal executive offices of the Corporation not later than 50 days in
advance of the third Thursday in the month of April next succeeding the last
Annual Meeting held; provided, however, that if the Annual Meeting is held
earlier than the third Thursday in the month of April, to be timely, a
shareholder's notice must be so received not later than the close of business
on the later of (x) the date 50 days prior to the earlier date of the Annual
Meeting and (y) the date 10 Business Days (as defined below) after the first
public announcement of the earlier date of such Annual Meeting. Such
shareholder's notice shall be signed by the shareholder of record who intends
to make the nomination or introduce the other business (or his or her duly
authorized proxy or other representative), shall bear the date of signature of
such shareholder (or proxy or other representative) and shall set forth:
(i) the name and address, as they appear on the Corporation's books, of
such shareholder and the beneficial owner or owners, if any, on whose behalf
the nomination or proposal is made; I
(ii) the class and number of shares of the Corporation which are
beneficially owned by such shareholder and any such beneficial owner or owners;
(iii) a representation that such shareholder is a holder of record of
shares of the Corporation entitled to vote at such Annual Meeting and intends
to appear in person or by proxy at such Annual Meeting to make the nomination
or introduce the other business specified in such shareholder's notice;
(iv) in the case of any proposed nomination for election or re-election as
a director, (A) the name and residence address of the person or persons to be
nominated, (B) a description of all arrangements or understandings between such
shareholder, any such beneficial owner or owners and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination is to be made by such shareholder, (C) such other information
regarding each nominee proposed by such shareholder as would be required to be
disclosed in solicitations of proxies for elections of directors, or would be
otherwise required to be disclosed, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including any information that would be required to be included in a proxy
statement filed pursuant to Regulation 14A had the nominee been nominated by
the board of directors and (D) the
<PAGE> 5
written consent of each nominee to be named in a proxy statement and to serve
as a director of the Corporation if so elected; and
(v) in the case of any other business that such shareholder proposes to
bring before the meeting, (A) a brief description of the business desired to be
brought before such Annual Meeting and, if such business includes a proposal to
amend these by-laws, the language of the proposed amendment, (B) such
shareholder's and any such beneficial owner's or owners' reasons for conducting
such business at such Annual Meeting and (C) and material interest in such
business of such shareholder and any such beneficial owner or owners.
(d) Only persons who are nominated in accordance with the procedures set forth
in this Section 2.01 shall be eligible to be elected as directors by
shareholder vote at an Annual Meeting. Only such business shall be conducted
at an Annual Meeting as shall have been brought before such Annual Meeting in
accordance with the procedures set forth in this Section 2.01. If the chairman
of the
2
<PAGE> 6
Annual Meeting shall determine that a nomination or any business proposed to be
brought before the meeting was not properly made or brought in accordance with
the procedures set forth in this Section 2.01, then the chairman shall so
declare to the meeting and such nomination or business shall not be considered,
(e) For purposes of Section 2.01 and Section 2.02 of these by-laws, "public
announcement" shall mean disclosure in a document publicly filed by the
Corporation with the Securities and Exchange Conunission pursuant to Section
13, 14 or 15 (d) of the Exchange Act or in a press release reported by the Dow
Jones News Service, Reuters Economic Services, Associated Press, United Press
International or comparable national news service. For purposes of these
by-laws, "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of Wisconsin are authorized or
obligated by law or executive order to close.
(f) Notwithstanding the foregoing provisions of this Section 2.01, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations promulgated thereunder with respect to the
matters set forth in this Section 2.01. Nothing in this Section 2.01 shall be
deemed to limit the Corporation's obligation to include shareholder proposals
in its proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
(g) In the event of failure, through oversight or otherwise, to hold the Annual
Meeting in any year on the date herein provided, a subsequent deferred Annual
Meeting upon due notice may be held in lieu thereof and any election had or
business done at such Annual Meeting shall be as valid and effectual as if had
or done at the Annual Meeting of the date herein provided.
Section 2.02. Special Meetings.
(a) A special meeting of the shareholders of the Corporation (a "Special
Meeting") may be called only by (i) the chairman of the board, (ii) the
president or (iii) a majority of the board of directors then in office, and
shall be called by the chairman of the board or the president upon the demand,
in accordance with this Section 2.02, of the holders of record of shares of the
Corporation representing at least 10% of all the votes entitled to be cast on
any issue proposed to be considered at the Special Meeting.
(b) In order that the Corporation may determine the shareholders entitled to
demand a Special Meeting, the board of directors may fix a record date to
determine the shareholders
<PAGE> 7
entitled to make such a demand (the "Demand Record Date"), The Demand Record
Date shall not precede the date upon which the resolution fixing the Demand
Record Date is adopted by the board of directors and shall not be more than 10
days after the date upon which the resolution fixing the Demand Record Date is
adopted by the board of directors. Any shareholder or record seeking to have
shareholders demand a Special Meeting shall, by sending written notice to the
secretary of the Corporation by hand or by certified or registered mail, return
receipt requested, request the board of directors to fix a Demand Record Date.
The board of directors shall promptly, but in all events within 10 days after
the date on which a valid request to fix a Demand Record Date is received by
the secretary of the Corporation, adopt a resolution fixing the Demand Record
Date and shall make a public announcement of such Demand Record Date. If no
Demand Record has been fixed by the board of directors within 10 days after the
date on which such valid request is received by the secretary, the Demand
Record Date shall be the 10th day after the first date on which a valid written
request to set a
3
<PAGE> 8
Demand Record Date is received by the secretary. To be valid, such written
request shall set forth the purpose or purposes for which the Special Meeting
is to be held, shall be signed by one or more shareholders of record (or their
duly authorized proxies or other representative), shall bear the date of
signature of each such shareholder (or proxy or other representative) and shall
set forth all information about each such shareholder and about the beneficial
owner or owners, if any, on whose behalf the request is made that would be
required to be set forth in a shareholder's notice described in paragraph (c)
of Section 2.01 of these by-laws.
(c) In order for a shareholder or shareholders to demand a Special Meeting, a
written demand or demands for a Special Meeting by the holders of record as of
the Demand Record Date of shares of the Corporation representing at least 10%
of all the votes entitled to be cast on each issue propose to be considered at
the Special Meeting must be delivered to the Corporation on or after the Demand
Record Date. To be valid, each written demand by a shareholder for a Special
Meeting shall set forth the specific purpose or purposes for which the Special
Meeting is to be held (which purpose or purposes shall be limited to the
purpose or purposes set forth in the written request to set a Demand Record
Date, received by the secretary pursuant to paragraph (b) of this Section
2.02), shall be signed by one or more persons who as of the Demand Record Date
are shareholders of record (or their duly authorized proxies or other
representatives), and shall set forth the name and address, as they appear in
the Corporation's books, of each shareholder signing such demand and the class
and number of shares of the Corporation which are owned of recorded and
beneficially by each such shareholder, shall be sent to the secretary by hand
or by certified or registered mail, return receipt requested, and must be
received by the secretary within 70 days after the Demand Record Date.
(d) The Corporation shall not be required to call a Special Meeting upon
shareholder demand unless, in addition to the documents required by paragraph
(c) of this Section 2.02, the secretary receives a written agreement signed by
each Soliciting Shareholder (as defined herein) pursuant to which each
Soliciting Shareholder, jointly and severally, agrees to pay the Corporation's
costs of holding the Special Meeting, including the costs of preparing and
mailing proxy materials for the Corporation's own solicitation, provided that
if each of the resolutions introduced by a Soliciting Shareholder at such
meeting is adopted, then the Soliciting Shareholders shall not be required to
pay such costs. For purposes of this paragraph (d), the following terms shall
have the meanings set forth below:
(i) "Affiliate" of any Person shall mean any Person controlling,
controlled by or under common control with such first Person.
<PAGE> 9
(ii) "Participant" shall have the meaning assigned to such term in Rule 14a-11
promulgated under the Exchange Act.
(iii) "Person" shall mean any individual, firm, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term in Rule 14a-1
promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such term in Rule 14a-I
promulgated under the Exchange Act.
4
<PAGE> 10
(vi) "Soliciting Shareholder" shall mean, with respect to any Special Meeting
demanded by a shareholder or shareholders, any of the following Persons:
(A) if the number of shareholders signing the demand or demands for a
meeting delivered to the Corporation pursuant to paragraph (c) of this Section
2.02 is ten or fewer, each shareholder signing any such demand;
(B) if the number of shareholders signing the demand or demands for a
meeting delivered to the Corporation pursuant to paragraph (c) of this Section
2.02 is more than ten, each Person who either (1) was a Participant in any
Solicitation of such demand or demands or (11) at the time of the delivery to
the Corporation of the documents described in paragraph (c) of this Section
2.02, had engaged or intended to engage in any Solicitation of Proxies for use
at such Special Meeting (other than a Solicitation of Proxies on behalf of the
Corporation); or
(C) any affiliate of a Soliciting Shareholder, if a majority of the
directors then in office determines, reasonably and in good faith, that such
Affiliate should be required to sign the written notice described in paragraph
(c) of this Section 2.02 and/or the written agreement described in this
paragraph (1) in order to prevent the purposes of this Section 2.02 from being
evaded,
(e) Except as provided in the following sentence, any Special Meeting shall
be held at such hour and day as may be designated by, or designated in the
manner provided by, whichever of the chairman of the board, the president or
the board of directors shall have called such meeting. In the case of any
Special Meeting called by the chairman of the board or the president upon the
demand of shareholders (a "Demand Special Meeting"), such meeting shall be at
such hour and day as may be designated by the board of directors; provided,
however, that the date of any Demand Special Meeting shall be not more than 70
days after the Meeting Record Date (as defined in Section 2.05 of these
by-laws); and provided further that if the directors then in office fail to
designate an hour and date for a Demand Special Meeting within 10 days after
the date that valid written demands for such Demand Special Meeting by the
holders of record as of the Demand Record Date of shares representing at least
10% of all the votes entitled to be cast on any issue proposed to be considered
at the Special Meeting are received by the Corporation (the "Delivery Date"),
then such meeting shall be held at 2:00 P.M. (local time) on the 100th day
after the Delivery Date or, if such 100th day is
<PAGE> 11
not a Business Day, on the first Business Day preceding such 100th day. In
fixing a meeting date for any Special Meeting, the chairman of the board, the
president or the board of directors may consider such factors as they deem
relevant within the good faith exercise of their business judgment,
including, without limitation, the nature of the action proposed to be taken,
the facts and circumstances surrounding any demand for such meeting, and any
plan of the board of directors to call an Annual Meeting or a Special Meeting
for the conduct of related business.
(f) The Corporation may engage nationally recognized independent inspectors of
elections to act as an agent of the Corporation for the purpose of promptly
performing a ministerial review of the validity of any purported written demand
or demands for a Special Meeting received by the secretary. For the purpose of
permitting the inspectors to perform such review, no purported demand shall be
deemed to have been received by the Corporation until the earlier of (i) five
Business Days following receipt by the secretary of such purported demand and
(ii) such date as the independent inspectors certify to the
5
<PAGE> 12
Corporation that the valid demands received by the secretary represent at least
10% of all the votes entitled to be cast on each issue proposed to be
considered at the Special Meeting. Nothing contained in this paragraph shall
in any way be construed to suggest or imply that the board of directors or any
shareholder shall not be entitled to contest the validity of any demand,
whether during or after such five Business Day period, or to take any other
action (including, without limitation, the commencement, prosecution or defense
of any litigation with respect thereto).
(g) Only such business shall be conducted at a Special Meeting as shall have
been described in the notice of meeting sent to shareholders pursuant to
Section 2.04 of these by-laws. Subject to the terms of any series of Preferred
Stock as may be issued by the Corporation from time to time (as such terms are
stated and expressed in the resolution or resolutions of the board of directors
providing for the issuance of such Preferred Stock), nominations of persons for
election to the board of directors to fill any vacancy on the board of
directors may be made at a Special Meeting called in accordance with this
Section 2.02 for the purpose of electing directors as provided in Section 3.03
of these by-laws (i) by or at the direction of the board of directors, (ii) by
the committee on directors of the board of directors (or, if such committee
does not exist, any other committee of the board of directors serving a similar
function) or (iii) by any shareholder of the Corporation who (A) is a
shareholder of record at the time of giving of such notice of meeting, (B) is
entitled to vote at such Special Meeting and (C) complies with the notice
procedures set forth in this Section 2.02. Any shareholder desiring to nominate
persons for election to the board of directors at such a Special Meeting shall
cause a written notice to be received by the secretary of the Corporation at
the principal executive offices of the Corporation not later than the close of
business on the later of (x) the date 50 days prior to such Special Meeting and
(y) the date 10 Business Days after the first public announcement of such
Special Meeting and of the nominees proposed by the board of directors to be
elected at such Special Meeting. Such written notice shall be signed by the
shareholder of record who intends to make the nomination (or his or her duly
authorized proxy or other representative), shall bear the date of signature of
such shareholder (or proxy or other representative) and shall set forth: (A)
the name and address, as they appear on the Corporation's books, of such
shareholder and the beneficial owner or owners, if any, on whose behalf the
nomination is made; (B) the class and number of shares of the Corporation which
are beneficially owned by such shareholder and any such beneficial owner or
owners; (C) a representation that such shareholder is a holder of record of
shares of the Corporation entitled to vote at such Special Meeting and intends
to appear in person or by proxy at such Special Meeting to make the nomination
specified in the notice; (D) the name and residence address of the person or
persons to be nominated; (E) a description of all arrangements or
understandings between such shareholder, any such beneficial owner or owners
and each nominee and any other person or persons (naming
<PAGE> 13
such person or persons) pursuant to which the nomination is to be made by such
shareholder; (F) such other information regarding each nominee proposed by such
shareholder as would be required to be disclosed in solicitations of proxies
for elections or directors, or would be otherwise required to be disclosed, in
each case pursuant to Regulation 14A under the Exchange Act, including any
information that would be required to be included in a proxy statement filed
pursuant to Regulation 14A had the nominee been nominated by the board of
directors; and (G) the written consent of each nominee to be named in a proxy
statement and to serve as a director of the Corporation if so elected.
(h) Only persons who are nominated in accordance with the procedures set forth
in this Section 2.02 shall be eligible to be elected as directors by
shareholder vote at a Special Meeting. Only such
6
<PAGE> 14
business shall be conducted at a Special Meeting as shall have been brought
before such meeting in accordance with the procedures set forth in this Section
2.02. If the chairman of the meeting shall determine that a nomination or any
business proposed to be brought before the Special Meeting was not properly
made or brought in accordance with the procedures set forth in this Section
2.02, then the chairman shall so declare to the meeting and such nomination or
business shall not be considered.
(i) Notwithstanding the foregoing provisions of this Section 2.02, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations promulgated thereunder with respect to the
matters set forth in this Section 2.02. Nothing in this Section 2,02 shall be
deemed to limit the Corporation's obligation to include shareholder proposals
in its proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
Section 2.03. Place of Meeting. The board of directors (or, in the absence of
designation by the board of directors, then the officer calling a meeting) may
designate any place within the State of Wisconsin as the place of meeting for
any Annual Meeting, and Special Meeting or any postponement thereof. If no
designation is made, the place of the meeting shall be at the address of the
registered office of the Corporation in the State of Wisconsin. The room
location for initially convening any meeting at the address of the registered
office, if not designated by the board of directors, may be fixed by the
secretary and shall be set forth in the notice of meeting. Any adjourned
meeting may be reconvened at any place designated by vote of the board of
directors or by the chairman of the board or the president.
Section 2.04. Notice of Meeting. The Corporation shall send written notice
stating the place, day and hour of any Annual Meeting or Special Meeting
not less than 10 days nor more than 70 days before the date of such meeting
either personally or by mail to each shareholder of record entitled to vote at
such meeting and to other shareholders of record as may be required by the
Wisconsin Business Corporation Law or the Restated Articles of Incorporation.
In the event of any Demand Special Meeting, such notice of meeting shall be
sent not more than 30 days after the Delivery Date (as defined in Section 2.02
(e) of these by-laws). If mailed, such notice of meeting shall be addressed to
each shareholder at his or her address as it appears on the stock record books
of the Corporation. Unless otherwise required by law or the Restated Articles
of Incorporation, a notice of an Annual Meeting need not include a description
of the purpose or purposes for which the meeting is called. In the case of any
Special Meeting, the notice of meeting shall describe any business that the
board of directors shall have theretofore determined to bring before the
meeting, and in the case of a Demand Special Meeting, the notice of meeting
shall also describe any business set forth in the statement of purpose of the
demands received by the
<PAGE> 15
Corporation in accordance with Section 2.02 of these by-laws. If an Annual
Meeting or Special Meeting is adjourned to a different date, time or place, the
Corporation shall not be required to give notice of the new date, time or place
if the new date, time or place is announced at the meeting before adjournment;
provided, however, that if a new Meeting Record Date for an adjourned meeting
is or must be fixed, the Corporation shall give notice of the adjourned meeting
to persons who are shareholders as of the new Meeting Record Date. A
shareholder's attendance at a meeting, in person or by proxy, waives objection
to the following: (A) lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting or promptly upon arrival
objects to holding the meeting or transacting business at the meeting; and (B)
consideration of a particular matter at the meeting that is not within the
purpose
7
<PAGE> 16
described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented.
Section 2.05. Fixing of Record Date. The board of directors may fix, or
provide the manner of fixing, a future date not less than 10 days nor more than
70 days prior to the date of any Annual Meeting or Special Meeting as the
record date for the determination of shareholders entitled to notice of, or to
vote at, such meeting (the "Meeting Record Date"). In the case of any Demand
Special Meeting, (i) the Meeting Record Date shall be not later than the 30th
day after the Delivery Date and (ii) if the board of directors fails to fix the
Meeting Record Date within 30 days after the Delivery Date, then the close of
business on such 30th day shall be the Meeting Record Date. The shareholders
of record on the Meeting Record Date shall be the shareholders entitled to
notice of and to vote at the meeting. Except as provided by the Wisconsin
Business Corporation Law for a court-ordered adjournment, a determination of
shareholders entitled to notice of or to vote at any Annual Meeting or Special
Meeting is effective for any postponement or adjournment of such meeting unless
the board of directors fixes a new Meeting Record Date, which it shall do if
the meeting is postponed or adjourned to a date more than 120 days after the
date fixed for the original meeting. The board of directors may also fix a
future date as the record date for the purpose of determining shareholders
entitled to take any other action or determining shareholders for any other
purpose.
Section 2.06. Voting Lists. After a Meeting Record Date has been fixed, the
Corporation shall prepare a list of names of all of the shareholders entitled
to notice of the meeting. The list shall be arranged by class or series of
shares, if any, and show the address of and number of shares held by each
shareholder. Such list shall be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the
list was prepared and continuing to the date of the meeting, at the
Corporation's principal office or at a place identified in the meeting notice
in the city where the meeting will be held. The Corporation shall make the
shareholders' list available at the meeting and any shareholder or his or her
agent or attorney may inspect the list at any time during the meeting or any
adjournment thereof. Refusal or failure to prepare or make available the
shareholders' list shall not affect the validity of any action taken at a
meeting of shareholders.
Section 2.07. Quorum and Voting Requirements; Postponements; Adjournments.
(a) Shares entitled to vote as a separate voting group may take action on a
matter at any Annual Meeting or Special Meeting only if a quorum of those
shares exists with respect to that matter. If the Corporation has only one
class of stock outstanding, such class shall constitute a separate voting group
for purposes of this Section 2.07. Except as otherwise provided in the Restated
Articles of Incorporation or the Wisconsin Business Corporation Law, a majority
of the votes entitled to be cast on a matter shall constitute a
quorum of
<PAGE> 17
the voting group for action on that matter. Once a share is represented for
any purpose at any Annual Meeting or Special Meeting, other than for the
purpose of objecting to holding the meeting or transacting business at the
meeting, it is considered present for purposes of determining whether a quorum
exists for the remainder of the meeting and for any adjournment of that
meeting unless a new Meeting Record Date is or must be set for the
adjourned meeting. If a quorum exists, except in the case of the election of
directors, action on a matter shall be approved if the votes cast within the
voting group favoring the action exceed the votes cast opposing the action,
unless the Restated Articles of Incorporation, these by-laws, or the Wisconsin
Business Corporation Law requires a greater number of affirmative votes.
Unless otherwise provided in the Restated Articles of Incorporation, directors
are elected by a plurality of the votes cast by the shares
8
<PAGE> 18
entitled to vote in the election of directors at any Annual Meeting, or Special
Meeting called for the purpose of electing directors, at which a quorum is
present.
(b) The board of directors acting by resolution may postpone and reschedule any
previously scheduled Annual Meeting or Special Meeting; provided, however, that
a Demand Special Meeting shall not be postponed beyond the 100th day following
the Delivery Date. Any Annual Meeting or Special Meeting may be adjourned from
time to time, whether or not there is a quorum, (i) at any time, upon a
resolution of shareholders if the votes cast in favor of such resolution by the
holders of shares of each voting group entitled to vote on any matter
theretofore properly brought before the meeting exceed the number of votes cast
against such resolution by the holders of shares of each such voting group or
(ii) at any time prior to the transaction of any business at such meeting, by
the chairman of the board of the president or pursuant to resolution of the
board of directors. No notice of the time and place of adjourned meetings need
be given except as required by the Wisconsin Business Corporation Law. At any
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2.08. Proxies. At all meetings of shareholders, a shareholder
entitled to vote may vote his or her shares in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the shareholder by
signing an appointment form, either personally or by his or her
attorney-in-fact. An appointment of a proxy is effective when received by the
secretary or other officer or agent of the Corporation authorized to tabulate
votes. An appointment is valid for eleven months from the date of its signing
unless a different period is expressly provided in the appointment form.
Section 2.09. Voting of Shares.
(a) Each outstanding share, regardless of class, shall be entitled to one vote
upon each matter submitted to a vote at a meeting of shareholders, except to
the extent that the voting rights of the shares of any class or classes are
enlarged, limited, or denied by the Restated Articles of Incorporation of the
Corporation or by the Wisconsin Business Corporation Law.
(b) Shares held by another corporation, if a sufficient number of shares
entitled to elect a majority of the directors of such other corporation is held
directly or indirectly by the Corporation, shall not be entitled to vote at the
meeting, but shares held in a fiduciary capacity may be voted.
Section 2.10. Acceptance of Instruments Showing Shareholder Action. If the
name
<PAGE> 19
signed on a vote, waiver or proxy appointment corresponds to the name of a
shareholder, the Corporation, if acting in good faith, may accept the vote,
waiver or proxy appointment and give it effect as the act of a shareholder.
If the name signed on a vote, waiver or proxy appointment does not correspond
to the name of a shareholder, the Corporation, if acting in good faith, may
accept the vote, waiver or proxy appointment and give it effect as the act of
the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports to be that of an
officer or agent of the entity.
9
<PAGE> 20
(b) The name purports to be that of a personal representative, administrator,
executor, guardian or conservator representing the shareholder and, if the
Corporation requests, evidence of fiduciary status acceptable to the
Corporation is presented with respect to the vote, waiver or proxy appointment.
(c) The name signed purports to be that of a receiver or trustee in bankruptcy
of the shareholder and, if the Corporation requests, evidence of this status
acceptable to the Corporation is presented with respect to the vote, waiver or
proxy appointment.
(d) The name signed purports to be that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if the Corporation requests, evidence
acceptable to the Corporation of the signatory's authority to sign for the
shareholder is presented with respect to the vote, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants or fiduciaries and
the name signed purports to be the name of at least one of the co-owners and
the person signing appears to be acting on behalf of all co-owners.
The Corporation may reject a vote, waiver or proxy appointment if the secretary
or other officer or agent of the Corporation who is authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
Section 2. 1 1. Conduct of Meeting. The chairman of the board, and in his or
her absence, the president, and in his or her absence, any officer or director
designated by the chairman of the board, and in his or her absence or in the
absence of any such designation, a vice president in the order provided under
Section 4.07 of these by-laws, and in their absence, any person chosen by the
shareholders present shall call any Annual Meeting or Special Meeting to order
and shall act as chairman of the meeting, and secretary of the Corporation
shall act as secretary of all meetings of the shareholders, but in the absence
of the secretary, the chairman of the meeting may appoint any other person to
act as secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. General Powers, Number and Oualifications.
<PAGE> 21
(a) All corporate powers of the Corporation shall be exercised by or under the
authority of, and the business affairs of the Corporation shall be managed
under the direction of, its board of directors. The number of directors of the
Corporation shall be twenty. No person shall be eligible to be elected or
re-elected as a member of the board of directors if he or she shall have
attained seventy (70) years of age and any director who attains the age of
seventy (70) years shall resign from the board of directors
10
<PAGE> 22
as of the last day of the calendar quarter in which such director's seventieth
birthday falls. The board of directors shall be divided into three (3) classes
consisting of seven (7) directors in Class 11 six (6) directors in Class II and
seven (7) directors in Class III. At each Annual Meeting, the successors to the
class of directors whose term expires at the time of such meeting shall be
elected to hold office until the third succeeding Annual Meeting and until
their successors have been elected and, if necessary, qualified, or until there
is a decrease in the number of directors which takes effect after the
expiration of his or her term.
(b) Subject to the terms of any series of Preferred Stock as may be issued by
the Corporation from time to time, as such terms are stated and expressed in
the resolution or resolutions of the board of directors providing for the
issuance of such Preferred Stock, the number of directors is subject to
increase or decrease at any time or from time to time by amending subsection
(a) of this by-law in the manner provided in Section 3.12 of these by-laws, but
no decrease shall have the effect of shortening the term of any incumbent
director. Any increase or decrease in the number of directors shall be
distributed over the three classes of directors in such manner after giving
effect to such increase or decrease the number of directors in each class is as
nearly equal as possible.
Section 3.02. Removal, Resignation. Subject to the terms of any series of
Preferred Stock as may be issued by the Corporation from time to time, as such
terms are stated and expressed in the resolution or resolutions of the board of
directors providing for the issuance of such Preferred Stock, a director may be
removed from office by the affirmative vote of not less than 75% of the shares
entitled to vote for the election of such director, voting together as a single
class, taken at a Special Meeting called for that purpose. A director may
resign at any time by delivering his or her written resignation to the board of
directors, to the chairman of the board, to the president or to the secretary
of the Corporation. A director's resignation is effective when the notice is
delivered unless the notice specifies a later effective date.
Section 3.03. Vacancies. Subject to the terms of any series of Preferred
Stock as may be issued by the Corporation from time to time, as such terms are
stated and expressed in the resolution or resolutions of the board of directors
providing for the issuance of such Preferred Stock, (a) any vacancy occurring
in the board of directors, including a vacancy created by an increase in the
number of directors may be filled only by the affirmative vote of a majority of
the directors then in office, although less than a quorum; (b) if there shall
be no directors then in office, the shareholders shall be entitled to fill the
vacancies on the board of directors; and (c) directors appointed to newly
created directorships resulting from any increase in the authorized number of
directors or to fill any vacancies
<PAGE> 23
in the board of directors resulting from death, resignation, removal,
disqualification or any other cause shall hold office for a term expiring at
the next annual meeting of shareholders at which the term of the class to which
they have been appointed expires. If the vacant office was held by a director
elected by a voting group of shareholders, then only the holders of shares of
that voting group may vote to fill the vacancy if it is filled by the
shareholders, and only the remaining directors elected by that voting group may
vote to fill the vacancy if it is filled by the directors. A vacancy that will
occur at a specific later date, because of a resignation effective at a later
date or otherwise, may be filled before the vacancy occurs, but the new
director may not take office until the vacancy occurs.
11
<PAGE> 24
Section 3.04. Regular Meetings. The board of directors may provide, by
resolution, the time and place within the State of Wisconsin for the holding of
regular meetings without other notice than such resolution.
Section 3.05. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the president,
secretary, or any ten (10) of the directors. The person or persons authorized
to call special meetings may fix any place, either within or without the State
of Wisconsin, as the place for holding any special meeting called by them.
Section 3.06. Notice. Notice of any special meeting and of any regular meeting
(except as provided in Section 3.04) shall be given either (a) not later than
three (3) days prior thereto by mailing written notice to such director at his
or her business address or (b) not later than two (2) days prior thereto by
sending written notice by private carrier that guarantees delivery on the next
day to such director at his or her business address, and (c) not later than the
day prior thereto by written or oral notice given by other means to each
director either personally or to his or her business address. Whenever any
notice whatever is required to be given to any director under the Restated
Articles of Incorporation or by-laws, or any provision of law, a waiver thereof
in writing signed at any time, whether before or after the time of meeting, by
the director entitled to such notice, and retained by the Corporation shall be
deemed equivalent to the giving of such notice. The attendance of a director
at or participation in a meeting shall constitute a waiver of notice of such
meeting unless the director at the beginning of the meeting or promptly upon
his or her arrival objects to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Section 3.07. Quorum. One-third of the number of directors fixed by Section
3.01 shall constitute a quorum for the transaction of business at any meeting.
If a quorum is present when a vote is taken, the affirmative vote of a majority
of directors present shall be the act of the board of directors, unless the act
of a greater number is required by law, by THE Restated Articles of
Incorporation or these by-laws.
Section 3.08. Compensation. The board of directors, irrespective of any
personal interest of any of its members, may establish compensation of all
directors for services to the Corporation as directors, officers or otherwise,
or may delegate such authority to an
<PAGE> 25
appropriate committee. The board of directors also shall have authority
to provide for or to delegate authority to an appropriate committee to provide
for reasonable pensions, disability or death benefits, and other benefits or
payments to directors, officers and employees and to their estates, families,
dependents, or beneficiaries, on account of prior services rendered by such
directors, officers and employees to the Corporation.
12
<PAGE> 26
Section 3.09. Informal Action. Any action required or permitted by the
Restated Articles of Incorporation or by-laws or any provision of the Wisconsin
Business Corporation Law to be taken by the board of directors or a committee
thereof at a meeting or by resolution may be taken without a meeting if the
action is taken by all members of the board of directors or of the committee.
The action shall be evidenced by one or more written consents describing the
action taken, signed by each director or committee member and retained by the
Corporation. Such action shall be effective when the last director or
committee member signs the consent, unless the consent specifies a different
effective date.
Section 3. 10. Committees. The board of directors by resolution approved by a
majority of all directors then in office may designate one or more committees,
including an executive committee, each committee to consist of two (2) or more
directors elected by the board of directors, which to the extent provided in
said resolution as initially adopted, and as thereafter amended by further
resolution adopted by a like vote, shall have and may exercise when the board
of directors is not in session, the authority of the board of directors in the
management of the business and affairs of the Corporation, except that a
committee may not do any of the following: (a) authorize distributions; (b)
approve or propose to shareholders action that the Wisconsin Business
Corporation Law requires to be approved by shareholders; (c) fill vacancies on
the board of directors or, unless the board of directors provides by resolution
that vacancies on a committee shall be filled by the affirmative vote of the
remaining committee members, on any board committee; (d) amend the
Corporation's Restated Articles of Incorporation; (e) adopt, amend or repeal
these by-laws; (f) approve a plan of merger not requiring shareholder approval;
(g) authorize or approve reacquisition of shares, except according to a formula
or method prescribed by the board of directors; and (h) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences and limitations of a class or
series of shares, except that the board of directors may authorize a committee
to do so within limits prescribed by the board of directors. Unless otherwise
provided by the board of directors in creating the committee, a committee may
employ counsel, accountants and other consultants to assist it in the exercise
of its authority. The board of directors may elect one or more of its members
as alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request of the
chairman of such meeting. Subject to any provision of law and these by-laws,
each such committee shall fix its own rules governing the conduct of its
activities and shall make such reports to the board of directors of its
activities as the board of directors may request. Notice of any meeting of
conimittee.shall be given either (i) as provided Section 3.06 or (ii) as
provided by rules fixed by such committee. Except as otherwise provided by the
Wisconsin Business Corporation Law or by the Restated Articles of Incorporation
or by these
<PAGE> 27
by-laws, (1) a quorum of any committee of the board of directors having
at least four members shall consist of one-third of the number of directors
appointed to serve on the committee and (2) a quorum of any committee of the
board of directors having three or two members shall consist of a majority of
the number of members appointed to serve on the committee.
Section 3.11. Nominations. Nominations for the election of directors at any
Annual Meeting or any Special Meeting may be made only in accordance with
Sections 2.01 and 2.02 of these by-laws.
13
<PAGE> 28
Section 3.12. Amendments, Notwithstanding the provisions of Article IX of
these by-laws, Section 3.01, 3.02, 3.03 and 3.12 of these by-laws have been
adopted by the shareholders of the Corporation and may be amended only by (a)
the affirmative vote of not less than a majority of the board of directors or
(b) the affirmative vote of not less than 75% of the outstanding shares
entitled to vote generally for the election of directors, voting together as a
single class.
Section 3.13. Telephonic and Electronic.
(a) Notwithstanding any place specified in any notice of a regular or special
meeting of the board of directors as provided in Sections 3.04 and 3.05 of
these by-laws, or in any notice of any meeting of a committee of the board of
directors in accordance with Section 3.10 of the by-laws, any or all directors
may participate in a regular or special meeting or in a committee meeting of
the board of directors by, or may conduct the meeting through the use of, any
means of communication by which (i) all participating directors may
simultaneously hear each other during the meeting or (ii) all communication
during the meeting is inunediately transmitted to each participating director,
and each participating director is able to immediately send messages to all
other participating directors.
(b) If any meeting is conducted through the use of any means described in
paragraph (a) above, all participating directors shall be informed that a
meeting is taking place at which official business may be transacted. A
director participating in a meeting by any means described in paragraph (a)
above is deemed to be present in person at the meeting. If requested by a
director, minutes of the meeting shall be prepared and distributed to each
director.
Section 3.14. Presumption of Assent. A director who is present and is
announced as present at a meeting of the board of directors or any committee
thereof when corporate action is taken assents to the action taken unless any
of the following occurs: (a) the director objects at the beginning of the
meeting or promptly upon his or her arrival to holding the meeting or
transacting business at the meeting; (b) the director dissents or abstains from
an action taken and minutes of the meeting are prepared that show the
director's dissent or abstention from the action taken; (c) the director
delivers written notice of his or her dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Corporation immediately
after adjournment of the meeting; or (d) the director dissents or abstains from
an action taken, minutes of the meeting are prepared that fail to show the
director's dissent or abstention from the action taken, and the director
delivers to the Corporation a written notice of that failure promptly after
receiving the
<PAGE> 29
minutes. Such right of dissent or abstention shall not apply to a director who
votes in favor of the action taken.
14
<PAGE> 30
ARTICLE IV
Section 4.01. Number. The principal officers of the Corporation shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by the board of directors. Such other officers,
including a chairman of the board of directors, and assistant officers as may
be deemed necessary may be elected or appointed by the board of directors. The
chairman of the board of directors, if one is elected, shall be chosen by the
board of directors from among its membership, but the remaining officers may or
may not be directors. Any two or more offices may be held by the same person.
Except to the extent such power is limited by the board of directors, any
officer authorized by these by-laws or the board of directors to appoint
officers may appoint one or more other officers or assistant officers, and any
officer making such an appointment shall report the appointment to the board of
directors at its next regular meeting.
Section 4.02. Election and Term of Office. The officers of the Corporation to
be elected by the board of directors shall be elected annually at the first
meeting of the board of directors held after each Annual Meeting. The board of
directors may elect additional officers at any time during the year. Each
officer shall hold office until his or her successor shall have been duly
elected or until his or her prior death, resignation, or removal. The board of
directors may remove any officer and, unless restricted by the board of
directors or these by-laws, an officer may remove any officer or assistant
officer appointed by that officer, at any time, with or without cause and
notwithstanding the contract rights, if any, of the officer removed. The
appointment of an officer does not of itself create contract rights. An
officer may resign at any time by delivering notice to the Corporation. The
resignation shall be effective when the notice is delivered, unless the notice
specifies a later effective date and the Corporation accepts the later
effective date.
Section 4.03. Vacancy. A vacancy in any principal office because of death,
resignation, removal or otherwise may be filled by the board of directors for
the unexpired portion of the term. If a resignation of an officer is effective
at a later date as contemplated by Section 4.02 hereof, the board of directors
may fill the pending vacancy before the effective date if the board of
directors provides that the successor may not take office until the effective
date.
Section 4.04. Chief Executive Officer. The president shall be the chief
executive officer of the Corporation unless the board of directors shall have
chosen a chairman of the board of directors and designated such chairman of the
board of directors as chief executive officer. Subject to the control of the
board of directors, the chief executive officer shall in general supervise and
control all of the business and affairs of the Corporation. The chief
executive officer shall preside at all meetings of the shareholders and of the
board of directors. The chief executive officer shall have authority, subject
to such rules as may be prescribed by the board of directors, to appoint such
agents, employees and, in accordance with Section 4.01 of these by-laws, other
officers of the
<PAGE> 31
Corporation as he or she shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to
15
<PAGE> 32
them. Such agents, employees and officers shall hold office at the discretion
of the chief executive officer. The chief executive officer shall have
authority to sign, execute and acknowledge, on behalf of the Corporation, all
deeds, mortgages, bonds, stock certificates, contracts, leases, reports, and
all other documents or instruments necessary or proper to be executed in the
course of the Corporation's regular business, or which shall be authorized by
resolution of the board of directors; and except as otherwise provided by law
or the board of directors, he or she may authorize the president, any vice
president or other officer or agent of the Corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead. In
general, he or she shall perform all duties incident to the chief executive
officer of the Corporation and such other duties as may be prescribed by the
board of directors from time to time.
Section 4.05. Chairman of the Board of Directors. The chairman of the board
of directors, if one be chosen by the board of directors, shall perform all
duties incident to the office of the chairman of the board and such other
duties as may be prescribed by the board of directors.
Section 4.06. President. The president shall perform all duties incident to
the office of the president and such other duties as may be prescribed by the
board of directors from time to time; provided, however, that should the board
of directors elect a chairman of the board of directors any or all of the
powers customarily incidental to the office of president may be assigned by the
board of directors to such chairman of the board of directors. If the chairman
of the board of directors is designated as the chief executive officer, the
president shall be the chief administrative officer of the Corporation.
Unless the board of directors otherwise provides, in the absence of the
chairman of the board of directors or in the event of his or her inability or
refusal to act, or in the event of a vacancy in the office of the chairman of
the board of directors, the president shall perform the duties of the chairman
of the board, and when so acting shall have all the powers of and be subject to
all the restrictions upon the chairman of the board of directors. The
president may sign with the secretary or any other proper officer of the
Corporation thereunto authorized by the board of directors certificates for
shares of the Corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the board of directors has authorized to be executed, except
in case where the signing and execution thereof shall be expressly delegated by
the board of directors or by these by-laws to some other officer or agent of
the Corporation, or shall be required by law to be otherwise signed or
executed.
Section 4.07. Vice Presidents. In the absence of the president, or in the
event of his or her death, inability, or refusal to act, or in the event for
any reason it shall be impracticable for the president to act personally, the
vice presidents (in descending order of classes of vice presidents and, within
any class, by the order of election to such class,
<PAGE> 33
unless otherwise provided by the board of directors) shall
perform the duties of the president, and when so acting, shall have all the
power of and be subject to all the restrictions upon the president. Each vice
president shall perform such other duties and have such authority as from time
to time may be assigned to him or her by the chairman of the board of
directors, the president or by the board of directors. The execution of any
instrument of the Corporation by any vice president shall be conclusive
evidence, as to third-parties, of his or her authority to act in the stead of
the chairman of the board of directors or the president.
16
<PAGE> 34
Section 4.08. Secretary. The secretary shall: (a) keep as permanent records of
the Corporation any of the following that has been prepared: the minutes of the
shareholders' and of the board of directors' meetings; records of actions taken
by the board of directors without a meeting; and records of actions taken by a
committee of the board of directors in place of the board of directors and on
behalf of the Corporation; (b) see that all notices are duly given in
accordance with these by-laws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents the execution of which on behalf of
the Corporation under its seal is duly authorized; (d) maintain or cause an
authorized agent to maintain a record of the shareholders of the Corporation,
in a form that permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and the class
or series of shares held by each shareholder; (e) have general charge of the
stock transfer books of the Corporation; (f) tabulate, or cause an authorized
agent to tabulate, votes cast at meetings of shareholders; and (g) in general
perform all duties incident to the office of secretary and have such other
duties and exercise such authority as from time to time may be delegated or
assigned to him or her by the chairman of the board of directors, the president
or by the board of directors.
Section 4.09. Treasurer. The treasurer shall: (a) have charge and custody of
all funds and securities of the Corporation; (b) pay such dividends as may be
declared from time to time by the board of directors; (c) keep or arrange for
the keeping of correct books of account and exhibit said books and accounts at
the offices of the Corporation at any reasonable time when called upon to do so
by the board of directors, and furnish statements when required by the chairman
of the board of directors, the president or by the board of directors; and (d)
in general perform all of the duties incident to the office of treasurer, and
have such other duties and exercise such other authority as from time to time
may be designated or assigned to him by the chairman of the board of directors,
the president or by the board of directors.
Section 4.10. Assistants and Acting Officers. The board of directors and any
officer authorized by the board of directors or these by-laws shall have the
power to appoint any person to act as assistant to any officer or as agent for
the Corporation in his or her stead, and such assistant or acting officer or
other agent so appointed by the board of directors or any such officer shall
have the power to perform all the duties of the office to which he or she is so
appointed to be assistant or as to which he or she is so appointed to act,
subject to such limitations as the board of directors or the appointing officer
shall prescribe.
ARTICLE V
<PAGE> 35
CONTRACTS, LOANS, CHECKS, DEPOSITS
AND ASSIGNMENTS OF SECURITIES
Section 5.01. Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter any contract or execute or deliver any
instrument in the name of and on behalf of the Corporation, and such
authorization may be general or confined to specific instances.
17
<PAGE> 36
Section 5.02. No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness shall be issued in its name unless authorized by or
under the authority of a resolution of the board of directors. Such
authorization may be general or confined to specific instances.
Section 5.03. Checks, Drafts, etc. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents, and in such manner as shall from time to time be determined by or under
the authority of a resolution of the board of directors.
Section 5.04. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies, or other depositories as may be selected by or under
the authority of a resolution of the board of directors,
Section 5.05. Assignment of Securities. The chairman of the board of
directors, the president or a vice president together with the treasurer or
secretary, are authorized and empowered to sell, assign, pledge or hypothecate
any and all shares of stock and all securities or interest in stock or
securities owned or held by the Corporation at any time, including deposit
certificates for stock or securities and warrants or rights which entitle the
holder thereof to subscribe for shares of stock, and to make and execute to the
purchaser or purchasers, pledgee or pledgees, on behalf and in the name of the
Corporation, any assignment of stock certificates or securities owned or held
by the Corporation, including any deposit certificates for stock or securities
and any certificates representing any right to subscribe for shares of stock.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.01. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the chairman of the board, the
president or a vice president and by the secretary or an assistant secretary.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until
<PAGE> 37
the former certificate for a like number of shares shall have been
surrendered and cancelled, except that in case of a lost, destroyed or
mutilated certificate, a new one may be issued therefor upon such terms and
indemnity" to the Corporation as may be satisfactory to the secretary.
Section 6.02. Facsimile Signatures and Seal. The seal of the Corporation on
any certificates for shares may be a facsimile. The signatures of the chairman
of the board, president or vice president and the secretary or assistant
secretary upon a certificate may be facsimiles if the certificate is
countersigned
18
<PAGE> 38
by a transfer agent, or registered by a registrar, other than the Corporation
itself or an employee of the Corporation. In case any officer who has signed
or whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer at the date
of its issue.
Section 6.03. Transfer of Shares. Transfer of shares of the Corporation shall
be made by the holder of record thereof or by his or her legal representative,
who shall, if so required, furnish proper evidence of incumbency or appointment
and of authority to transfer, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the secretary or transfer agent
of the Corporation, and on surrender for cancellation of the certification for
such shares. The person in whose name shares stand shall be deemed by the
Corporation to be the owner thereof for all purposes.
Section 6.04. Stock Regulations. The board of directors shall have the power
and authority to make all such further rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
Corporation.
Section 6.05. Uncertificated Shares. The board of directors may authorize the
issuance of any shares of any of the Corporation's classes or series without
certificates. The authorization does not affect shares already represented by
certificates until the certificates are surrendered to the Corporation.
Section 6.06. No Nominee Procedures. The Corporation has not established, and
nothing in these by-laws shall be deemed to establish, any procedure by which a
beneficial owner of the Corporation's shares that are registered in the name of
a nominee is recognized by the Corporation as the shareholder under Section
180.0723 of the Wisconsin Business Corporation Law.
ARTICLE VII
CORPORATE SEAL, NOTICES
Section 7.01. Seal. The board of directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of
the Corporation and the words "Corporate Seal."
<PAGE> 39
Section 7.02. Notices. Except as otherwise required by law or these by-laws,
any notice required to be given by these by-laws may be given orally or in
writing and notice may be communicated in person, by telephone, telegraph,
teletype, facsimile or other form of wire or wireless communication, or by mail
or private carrier. Except where these by-laws require a notice to be
delivered to or received by a recipient, written notice to be given by these
by-laws is effective at the earliest of the following: (a) when received, (b)
if communicated by mail, when deposited in the United States mail, if mailed
postpaid and correctly addressed, (c) if communicated by private carrier, when
delivered to
19
<PAGE> 40
the carrier and (d) if communicated by telegraph, when the telegram is
delivered to the telegraph company. Oral notice is effective when
communicated.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Certain Definitions. All capitalized terms used in this Article
VIII and not otherwise hereinafter defined in this Section 8.01 shall have the
meaning set forth in Section 180.0850 of the Statute. The following
capitalized terms (including any plural forms thereof) used in this Article
VIII shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the Director or Officer to
determine his or her right to indemnification pursuant to Section 8.04.
(c) "Board" shall mean the entire then elected and serving board of directors
of the Corporation, including all members thereof who are Parties to the
subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer breached or failed to
perform his or her duties to the Corporation and his or her breach of or
failure to perform those duties is determined, in accordance with Section 8.04,
to constitute misconduct under Section 180.0851 (2) (a) 1, 2, 3 or 4 of
the Statute.
(e) "Controlled Banking Subsidiary" shall mean any subsidiary of the
Corporation, at least 80% of the outstanding voting stock of which is owned
directly or indirectly by the Corporation, chartered as bank or trust company
under federal or state law.
(f) "Corporation" as used herein and as defined in the Statute and incorporated
by reference into the definitions of certain other capitalized terms used
herein, shall mean this
<PAGE> 41
Corporation, including, without limitation, any successor corporation or entity
to this Corporation by way of merger, consolidation or acquisition of all or
substantially all of the capital stock or assets of this Corporation.
(g) "Director or Officer" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article VIII, it shall be conclusively
presumed that any Director or Officer serving as a director, officer, partner,
trustee, member of any governing or decision-making committee, employee or
agent of an Affiliate shall be so serving at the request of the Corporation.
(h) "Disinterested Quorum" shall mean a quorum of the Board who are not Parties
to the subject Proceeding or any related Proceeding.
20
<PAGE> 42
(i) "Party" shall have the meaning set forth in the Statute; provided, that,
for purposes of this Article VIII, the term "Party" shall also include any
Director or Officer who is or was a witness in a Proceeding at a time
when he or she has not otherwise been formally named a Party thereto.
(j) "Proceeding" shall have the meaning set forth in the Statute; provided,
that, in accordance with Section 180.0859 of the Statute and for purposes of
this Article VIII, the term "Proceeding" shall also include all Proceedings (i)
brought under (in whole or in part) the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, their respective state
counterparts, and/or any rule or regulation promulgated under any of the
foregoing; (ii) brought before an Authority or otherwise to enforce rights
hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which
the Director or Officer is a plaintiff or petitioner because he or she is a
Director or Officer; provided, however, that any such Proceeding under this
subsection (iv) must be authorized by a majority vote of a Disinterested
Quorum.
(k) "Statute" shall mean Sections 180.0850 through 180.0859, inclusive, of the
Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, as
the same shall then be in effect, including any amendments thereto, but, in the
case of any such amendment, only to the extent such amendment permits or
requires the Corporation to provide broader indemnification rights than the
Statute permitted or required the Corporation to provide prior to such
amendment.
Section 8.02. Mandatory Indemnification. To the fullest extent permitted or
required by the Statute, the Corporation shall indemnify a Director or Officer
against all Liabilities incurred by or on behalf of such Director or Officer
in connection with a Proceeding in which the Director or Officer is a Party
because he or she is or was a Director or Officer.
Section 8.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under Section 8.02 shall
make a written request therefor to the Corporation. Subject to Section
8.03(b), within sixty days of the Corporation's receipt of such request, the
Corporation shall pay or reimburse the Director or Officer for the entire
amount of Liabilities incurred by the Director or Officer in connection with
the subject Proceeding (net of any Expenses previously advanced pursuant to
Section 8.05).
<PAGE> 43
(b) No indemnification shall be required to be paid by the Corporation
pursuant to Section 8.02 if, within such sixty-day period, (i) a Disinterested
Quorum, by a majority vote thereof, determines that the Director or Officer
requesting indemnification engaged in misconduct constituting a Breach of Duty
or (ii) a Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Section 8.03(b), the Board shall
immediately authorize by resolution that an Authority, as provided in Section
8.04, determine whether the Director's or Officer's conduct constituted a
Breach of Duty and, therefore, whether indemnification should be denied
hereunder.
(d) (i) If the Board does not authorize an Authority to determine the
Director's or Officer's right to indemnification hereunder within such
sixty-day period and/or (ii) if indemnification of the requested amount of
Liabilities is paid by the Corporation, then it shall be conclusively presumed
for all purposes that a Disinterested Quorum has affirmatively determined that
the Director or Officer did not engage in misconduct constituting a Breach of
Duty and, in the case of subsection (i) above (but not subsection (ii)),
indemnification by the Corporation of the requested amount of Liabilities shall
be paid to the Director or Officer immediately.
Section 8.04. Determination of Indemnification. (a) If the Board authorizes an
Authority to determine a Director's or Officer's right to indemnification
pursuant to Section 8.03, then the Director or Officer requesting
indemnification shall have the absolute discretionary authority to select one
of the following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall be
mutually selected by such Director or Officer and by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by
a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels of arbitrators
of the American Arbitration Association in Milwaukee, Wisconsin; provided, that
(A) one arbitrator shall be selected by such Director or Officer, the second
arbitrator shall be selected by a majority vote of a Disinterested Quorum or,
if a Disinterested Quorum cannot be obtained, then by a majority vote of the
Board, and the third arbitrator shall be selected by the two previously
selected arbitrators, and (B) in all other respects, such panel shall be
governed by the American Arbitration Association's then existing Commercial
Arbitration Rules; or
<PAGE> 44
(iii) A court pursuant to and in accordance with Section 180.0854 of the
Statute.
(b) In any such determination by the selected Authority there shall exist a
rebuttable presumption that the Director's or Officer's conduct did not
constitute a Breach of Duty and that indemnification against the requested
amount of Liabilities is required. The burden of rebutting such a presumption
by clear and convincing evidence shall be on the Corporation or such other
party asserting that such indemnification should not be allowed.
(c) The Authority shall make its determination within sixty days of being
selected and shall submit a written opinion of its conclusion simultaneously
to both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is required hereunder,
the Corporation shall pay the entire requested amount of Liabilities (net of
any Expenses previously advanced pursuant to Section 8.05), including interest
thereon at a reasonable rate, as determined by the Authority, within ten days
of receipt of the Authority's opinion; provided, that, if it is determined by
the Authority that a Director or Officer is entitled to indemnification against
Liabilities incurred in connection with some claims, issues or matters, but not
as to other claims, issues or matters, involved in the subject Proceeding, the
Corporation shall be required to pay (as set forth above) only the amount of
such requested Liabilities as the Authority shall deem appropriate in light of
all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is required
hereunder shall be binding upon the Corporation regardless of any prior
determination that the Director or Officer engaged in a Breach of Duty,
22
<PAGE> 45
(f) All expenses incurred in the determination process under this Section 8.04
by either the Corporation or the Director or Officer, including, without
limitation, all Expenses of the selected Authority, shall be paid by the
Corporation.
Section 8.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or at any time,
within ten days after the receipt of the Director's or Officer's written
request therefor, the reasonable Expenses of the Director or Officer as such
Expenses are incurred; provided, the following conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation an executed
written certificate affirming his or her good faith belief that he or
she has not engaged in misconduct which constitutes a Breach of Duty;
and
(ii) The Director or Officer furnishes to the Corporation an unsecured
executed written agreement to repay any advances made under this
Section 8.05 if it is ultimately determined by an Authority that he
or she is not entitled to be indemnified by the Corporation for such
Expenses pursuant to Section 8.04.
(b) If the Director or Officer must repay any previously advanced Expenses
pursuant to this Section 8.05, such Director or Officer shall not be
required to pay interest on such amounts.
Section 8.06. Indemnification and Allowance of Expenses of Certain Others.
(a) The Corporation shall indemnify a director or officer of any Controlled
Banking Subsidiary (who is not otherwise serving as a Director or Officer)
against all Liabilities, and shall advance the reasonable Expenses, incurred by
such director or officer in a Proceeding, but only to the extent such
Proceeding is based on acts or omissions alleged to have occurred after the
Controlled Banking Subsidiary has become a subsidiary of the Corporation to the
same extent hereunder as if such director or officer incurred such Liabilities
because he or she was a Director or Officer, if such director or officer is a
Party thereto because he or she is or was a director or officer of the Banking
Subsidiary.
(b) The Board may, in its sole and absolute discretion as it deems appropriate,
pursuant to a
<PAGE> 46
majority vote thereof, indemnify a director or officer of an Affiliate (who is
not otherwise serving as a Director or Officer or a director or officer of a
Controlled Banking Subsidiary) against all Liabilities, and shall advance the
reasonable Expenses, incurred by such director or officer in a Proceeding to
the same extent hereunder as if such director or officer incurred such
Liabilities because he or she was a Director or Officer, if such director or
officer is a Party thereto because he or she is or was a director or officer
of the Affiliate.
(c) The Board may, in its sole and absolute discretion it deems appropriate,
pursuant to a majority vote thereof, indemnify against Liabilities incurred by,
and/or provide for the advance of reasonable Expenses of, an employee or
authorized agent of the Corporation acting within the scope of his or her
duties as such and who is not otherwise a Director or Officer. Notwithstanding
the foregoing, the Corporation shall indemnify an employee who is not a
Director or Officer of the Corporation, to the
23
<PAGE> 47
extent that he or she has been successful on the merits or otherwise in defense
of a proceeding, for all reasonable expenses incurred in the proceeding if the
employee was a party because he or she was an employee of the Corporation.
Section 8.07. Insurance. The Corporation may purchase and maintain insurance
on behalf of a Director or Officer or any individual who is or was an employee
or authorized agent of the Corporation against any Liability asserted against
or incurred by such individual in his or her capacity as such or arising from
his or her status as such, regardless of whether the Corporation is required or
permitted to indemnify against any such Liability under this Article VIII.
Section 8.08. Notice to the Corporation. A Director or Officer shall promptly
notify the Corporation in writing when he or she has actual knowledge of a
Proceeding which may result in a claim of indemnification against Liabilities
or allowance of Expenses hereunder, but the failure to do so shall not relieve
the Corporation of any Liability to THE Director or Officer hereunder unless
the Corporation shall have been irreparably prejudiced by such failure (as
determined by an Authority selected pursuant to Section 8.04 (a)).
Section 8.09. Severability, If any provision of this Article VIII shall be
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article VIII contravene public
policy, this Article VIII shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further action or deed by or on behalf of the
Corporation, to be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable; it being understood that it
is the Corporation's intention to provide the Directors and Officers with the
broadest possible protection against personal liability allowable under the
Statute.
Section 8.10. Nonexclusivity of Article VIII. The rights of a Director or
Officer (or any other person) granted hereunder shall not be deemed exclusive
of any other rights to indemnification against Liabilities or allowance of
Expenses which the Director or Officer (or such other person) may be entitled
to under any written agreement, Board resolution, vote of stockholders of the
Corporation or otherwise, including, without limitation, under the Statute.
Nothing contained in this Article VIII shall be deemed to limit the
Corporation's obligations to indemnify against Liabilities or allow Expenses to
a Director or Officer under the Statute.
Section 8.11. Amendment.
(a) This Article VIII may only be altered, amended or repealed by the
affirmative vote of a
<PAGE> 48
majority of the shareholders of the Corporation represented at a meeting at
which a quorum is present and entitled to vote; provided, however, that the
Board may alter or amend this Article VIII without such shareholder approval if
any such alteration or amendment is (i) made in order to conform to any
amendment or revision of the Wisconsin Business Corporation Law, including,
without limitation, the Statute, which (x) expands or permits the expansion of
a Director's or Officer's right to indemnification thereunder; (y) limits or
eliminates, or permits the limitation or elimination, of the liability of a
Director or Officer; or (z) is otherwise beneficial to the Directors and
Officers or (ii) an alteration or amendment which is otherwise deemed by the
Board to be an immaterial modification.
24
<PAGE> 49
(b) This Article VIII shall be deemed to be a contract between the Corporation
and each Director and Officer and any repeal or other limitation of this
Article VIII or any repeal or limitation of the Statute or any other
applicable law shall not limit any rights of indemnification against
Liabilities or allowance of Expenses then existing or arising out of
events, acts or omissions occurring prior to such repeal or limitation,
including, without limitation, the right to indemnification against
Liabilities or allowance of Expenses for Proceedings commenced after such
repeal or limitation to enforce this Article VIII with regard to acts,
omissions or events arising prior to such repeal or limitation.
AMENDMENTS
Section 9.01. By Shareholders. These by-laws may be altered, amended or
repealed and new by-laws may be adopted by the shareholders by affirmative vote
of not less than a majority of the shares present or represents at any annual
Meeting or special Meeting at which a quorum is in attendance.
Section 9.02. By Directors. These by-laws may be altered, amended or
repealed, and new by-laws may be adopted by the board of directors by
affirmative vote of a majority of the number of directors present at any
meeting at which a quorum is in attendance, but any by-law so adopted may be
subsequently altered, amended or repealed by the shareholders. Any by-law
adopted, altered or amended by shareholders may be subsequently altered,
amended or repealed by the board of directors unless such by-law as adopted,
altered or amended by shareholders expressly denies such authority to the board
of directors.
25
<PAGE> 1
EXHIBIT 4.6
[EXECUTION COPY]
================================================================================
CREDIT AGREEMENT
dated as of
August 8, 1995
among
FIRSTAR CORPORATION
THE LENDERS NAMED HEREIN
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
CHEMICAL BANK
and
NBD BANK,
as Co-Agents
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 1
ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 13
2.1. Description of Facility. . . . . . . . . . . . . . . . . . . . . . .. . . . . 13
2.2. Availability of Facility. . . . . . . . . . . . . . . . . . . . . . . .. . . . . 13
2.3. Committed Advances. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 13
2.3.1. Commitment. . . . . . . . . . . . . . . . . . . . . . . .. . . . . 13
2.3.2. Ratable Loans; Types of Advances . . . . . . . . . . . .. . . . . 13
2.3.3. Minimum Amount of Each Committed Advance. . . . . . . .. . . . . 13
2.3.4. Applicable Margin . . . . . . . . . . . . . . . . . . . .. . . . . 14
2.3.5. Method of Selecting Types and Interest
Periods for New Committed Advances. . . . . . . . . . . .. . . . . 15
2.3.6. Conversion and Continuation of
Outstanding Committed Advances . . . . . . . . . . . . .. . . . . 15
2.4. Competitive Bid Advances. . . . . . . . . . . . . . . . .. . . . . 16
2.4.1. Competitive Bid Option; Repayment of
Competitive Bid Advances. . . . . . . . . . . . . . . . .. . . . . 16
2.4.2. Competitive Bid Quote Request. . . . . . . . . . . . . .. . . . . 16
2.4.3. Invitation for Competitive Bid Quotes. . . . . . . . . .. . . . . 17
2.4.4. Submission and Contents of Competitive
Bid Quotes . . . . . . . . . . . . . . . . . . . . . . .. . . . . 17
2.4.5. Notice to Borrower. . . . . . . . . . . . . . . . . . .. . . . . 19
2.4.6. Acceptance and Notice by Borrower. . . . . . . . . . .. . . . . 19
2.4.7. Allocation by the Agent . . . . . . . . . . . . . . . . .. . . . . 20
2.4.8. Administration Fee. . . . . . . . . . . . . . . . . . .. . . . . 20
2.5. Method of Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 20
2.6. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 21
2.6.1. Facility Fee . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 21
2.6.2. Usage Fee . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 21
2.6.3. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 21
2.7. Reductions in Aggregate Commitment;
Principal Payments. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 21
2.7.1. Reductions in Aggregate Commitment. . . . . . . . . . . .. . . . . 21
2.7.2. Principal Payments . . . . . . . . . . . . . . . . . . .. . . . . 21
2.8. Changes in Interest Rate, etc. . . . . . . . . . . . . . . . . . . . .. . . . . 22
2.9. Rates Applicable After Default . . . . . . . . . . . . . . . . . . . .. . . . . 22
2.10. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 22
2.11. Notes; Telephonic Notices . . . . . . . . . . . . . . . . . . . . . . .. . . . . 23
2.12. Interest Payment Dates; Interest and Fee Basis . . . . . . . . . . . .. . . . . 23
2.13. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions . . . . . . . . . . . . . . . . .. . . . . 24
2.14. Lending Installations . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 24
2.15. Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . .. . . . . 24
2.16. Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . .. . . . . 24
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
2.17. Extension of Termination Date . . . . . . . . . . . . . . . . . . . . .. . . . . 25
2.17.1 Extension Procedures. . . . . . . . . . . . . . . . . . . .. . . . . 25
2.17.2. Termination of Lenders. . . . . . . . . . . . . . . . . . .. . . . . 25
2.17.3. Successor Lenders. . . . . . . . . . . . . . . . . . . . .. . . . . 26
ARTICLE III CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 27
3.1. Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 27
3.2. Changes in Capital Adequacy Regulations . . . . . . . . . . . . . . . .. . . . . 28
3.3. Availability of Types of Advances . . . . . . . . . . . . . . . . . . .. . . . . 28
3.4. Funding Indemnification . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 28
3.5. Lender Statements; Survival of Indemnity . . . . . . . . . . . . . . .. . . . . 29
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 29
4.1. Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 29
4.2. Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 30
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 31
5.1. Corporate Existence and Standing . . . . . . . . . . . . . . . . . . .. . . . . 31
5.2. Authorization and Validity . . . . . . . . . . . . . . . . . . . . . .. . . . . 31
5.3. No Conflict; Government Consent . . . . . . . . . . . . . . . . . . . .. . . . . 32
5.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 32
5.5. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 32
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 32
5.7. Litigation and Contingent Obligations . . . . . . . . . . . . . . . . .. . . . . 32
5.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 33
5.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 33
5.10. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 33
5.11. Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 33
5.12. Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 33
5.13. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 33
5.14. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
5.15. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
5.16. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . .. . . . . 34
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
6.1. Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 37
6.3. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
6.4. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
6.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
6.7. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
6.8. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
6.9. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
</TABLE>
ii
<PAGE> 4
6.10. Merger . . . . . . . . . . . . . . . . . . . . . . . . 39
6.11. Sale of Assets . . . . . . . . . . . . . . . . . . . . 39
6.12. Acquisitions . . . . . . . . . . . . . . . . . . . . . 39
6.13. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.14. Capitalization . . . . . . . . . . . . . . . . . . . . 42
6.15. Consolidated Non-Performing Assets
to Total Equity Capital . . . . . . . . . . . . . . . . 42
6.16. Debt to Total Equity Capital . . . . . . . . . . . . . 42
ARTICLE VII DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES . . . . . . . 45
8.1. Acceleration . . . . . . . . . . . . . . . . . . . . . 45
8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . 45
8.3. Preservation of Rights . . . . . . . . . . . . . . . . 46
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 46
9.1. Survival of Representations . . . . . . . . . . . . . . 46
9.2. Governmental Regulation . . . . . . . . . . . . . . . . 46
9.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.4. Headings . . . . . . . . . . . . . . . . . . . . . . . 47
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . . 47
9.6. Several Obligations; Benefits of this Agreement . . . . 47
9.7. Expenses; Indemnification . . . . . . . . . . . . . . . 47
9.8. Numbers of Documents . . . . . . . . . . . . . . . . . 48
9.9. Accounting . . . . . . . . . . . . . . . . . . . . . . 48
9.10. Severability of Provisions . . . . . . . . . . . . . . 48
9.11. Nonliability of Lenders . . . . . . . . . . . . . . . . 48
9.12. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . 48
9.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . 48
9.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 49
9.15. Confidentiality . . . . . . . . . . . . . . . . . . . . 49
ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.1. Appointment . . . . . . . . . . . . . . . . . . . . . . 49
10.2. Powers . . . . . . . . . . . . . . . . . . . . . . . . 49
10.3. General Immunity . . . . . . . . . . . . . . . . . . . 50
10.4. No Responsibility for Loans, Recitals, etc. . . . . . . 50
10.5. Action on Instructions of Lenders . . . . . . . . . . . 50
10.6. Employment of Agents and Counsel . . . . . . . . . . . 50
10.7. Reliance on Documents; Counsel . . . . . . . . . . . . 51
10.8. Agent's Reimbursement and Indemnification . . . . . . . 51
10.9. Rights as a Lender . . . . . . . . . . . . . . . . . . 51
10.l0. Lender Credit Decision . . . . . . . . . . . . . . . . 51
10.11. Successor Agent . . . . . . . . . . . . . . . . . . . . 52
iii
<PAGE> 5
10.12. Co-Agents . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XI SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . . . . . . . . 53
11.1. Setoff . . . . . . . . . . . . . . . . . . . . . . . . 53
11.2. Ratable Payments . . . . . . . . . . . . . . . . . . . 53
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . . . . . . 53
12.1. Successors and Assigns . . . . . . . . . . . . . . . . 53
12.2. Participations . . . . . . . . . . . . . . . . . . . . 54
12.2.1 Permitted Participants; Effect . . . . . . . . 54
12.2.2. Voting Rights . . . . . . . . . . . . . . . . 54
12.2.3. Benefit of Setoff . . . . . . . . . . . . . . 54
12.3. Assignments . . . . . . . . . . . . . . . . . . . . . . 55
12.3.1. Permitted Assignments . . . . . . . . . . . . 55
12.3.2. Effect; Effective Date . . . . . . . . . . . . 55
12.4. Dissemination of Information . . . . . . . . . . . . . 56
12.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XIII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.1. Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . 56
13.2. Change of Address . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XIV COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 56
iv
<PAGE> 6
EXHIBIT "A-1" COMMITTED NOTE . . . . . . . . . . . . . . . . . 60
EXHIBIT "A-2" COMPETITIVE BID NOTE . . . . . . . . . . . . . . . 62
EXHIBIT "B" COMPETITIVE BID QUOTE REQUEST . . . . . . . . . . 64
EXHIBIT "C" INVITATION FOR COMPETITIVE BID QUOTES . . . . . . 66
EXHIBIT "D" COMPETITIVE BID QUOTE . . . . . . . . . . . . . . 67
EXHIBIT "E" FORM OF OPINION . . . . . . . . . . . . . . . . . 69
EXHIBIT "F" COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . 71
EXHIBIT "G" LOAN/CREDIT RELATED MONEY
TRANSFER INSTRUCTION . . . . . . . . . . 75
EXHIBIT "H" ASSIGNMENT AGREEMENT . . . . . . . . . . . . . . . 76
SCHEDULE "1" LITIGATION . . . . . . . . . . . . . . . . . . . . 86
SCHEDULE "2" SUBSIDIARIES . . . . . . . . . . . . . . . . . . . 87
v
<PAGE> 7
CREDIT AGREEMENT
This Agreement, dated as of August 8, 1995, is among Firstar Corporation,
the Lenders, Bank of America National Trust and Savings Association, Chemical
Bank and NBD Bank, as Co-Agents and The First National Bank of Chicago, as
Agent. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to a Loan made by a given Lender for
the relevant Absolute Rate Interest Period, the rate of interest per annum
(rounded to the nearest 1/100 of 1%) offered by such Lender and accepted by the
Borrower pursuant to Section 2.4.6.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate
Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.4.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than 7 and not more than
180 days commencing on a Business Day selected by the Borrower pursuant to this
Agreement, but in no event extending beyond the Termination Date. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.
"Absolute Rate Loan" means a Loan which bears interest at an Absolute
Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election
of directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of
the outstanding ownership interests of a partnership, association, joint
venture or similar business organization.
<PAGE> 8
"Adequately Capitalized" means "adequately capitalized" for purposes of
12 U.S.C. 1831(o) and any rules and regulations issued thereunder (including,
without limitation, 12 C.F.R. 565.4), as amended, supplemented or otherwise
modified from time to time.
"Advance" means a borrowing hereunder consisting of the aggregate amount
of the several Loans made by some or all of the Lenders to the Borrower of the
same Type (or on the same interest basis in the case of Competitive Bid
Advances) and, in the case of Fixed Rate Advances, for the same Interest Period
and includes both a Committed Advance and a Competitive Bid Advance.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as agent
for the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the
sum of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Margin" means, at any date of determination thereof with
respect to any Eurodollar Committed Advance and the facility fees payable
pursuant to Section 2.6.1, the respective rates per annum for such Eurodollar
Committed Advance and facility fees calculated in accordance with the terms of
Section 2.3.4.
"Article" means an article of this Agreement unless another document is
specifically referenced.
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<PAGE> 9
"Authorized Officer" means any of the Chairman of the Board, President,
or Senior Vice President - Finance and Treasurer of the Borrower, acting
singly.
"Banking Subsidiary" means any insured depository institution (within the
meaning of 12 U.S.C. 1813(c), as amended, supplemented or otherwise modified
from time to time), which is controlled (within the meaning of 12 U.S.C. 1841,
as amended, supplemented or otherwise modified from time to time) by the
Borrower.
"Borrower" means Firstar Corporation, a Wisconsin corporation, and its
successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Closing Date" means the date upon which all of the conditions set forth
in Section 4.1 have been satisfied or waived.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below or
as set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to Section 12.3.2, as such amount may be modified
from time to time pursuant to the terms hereof.
"Committed Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Committed Loans made by the Lenders to the
Borrower at the same time, of the same Type and, in the case of Eurodollar
Committed Advances, for the same Interest Period.
"Committed Borrowing Notice" is defined in Section 2.3.5.
"Committed Loan" means a Loan made by a Lender pursuant to Section 2.3.
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"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of
the Lenders to the Borrower at the same time, at the same interest basis, and
for the same Interest Period.
"Competitive Bid Acceptance Notice" is defined in Section 2.4.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form
of Exhibit "A-2" hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in
the form of Exhibit "D" hereto completed and delivered by a Lender to the Agent
in accordance with Section 2.4.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "B" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.4.2.
"Consolidated Financial Statements" means the Consolidated Financial
Statements for Bank Holding Companies With Total Consolidated Assets of $150
Million or More, or With More Than One Subsidiary Bank--FR Y-9 C, as such
report may be amended or modified from time to time, and any similar report
required to be filed by the Borrower.
"Consolidated Reports of Condition and Income" means the Consolidated
Reports of Condition and Income for A Bank With Domestic and Foreign
Offices--FFIEC 031, Consolidated Reports of Condition and Income for A Bank
With Domestic Offices Only and
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Total Assets of $300 Million or More--FFIEC 032, Consolidated Reports of
Condition and Income for A Bank With Domestic Offices Only and Total Assets of
$100 Million or More But Less Than $300 Million--FFIEC 033, and Consolidated
Reports of Condition and Income for A Bank With Domestic Offices Only and Total
Assets of Less Than $100 Million--FFIEC 034, as such reports may be amended or
modified from time to time, and any similar report required to be filed by any
Banking Subsidiary.
"Conversion/Continuation Notice" is defined in Section 2.3.6.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries,
are treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when
and as said corporate base rate changes.
"Default" means an event described in Article VII.
"ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means a Eurodollar Committed Advance or a Eurodollar
Bid Rate Advance, as applicable.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to Section 2.4.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, (i) in the case of a Eurodollar Committed Advance, in the
approximate amount of First Chicago's relevant Eurodollar Committed Loan, or
(ii) in the case of a Eurodollar Bid Rate Advance, in the approximate amount of
such Eurodollar Bid Rate Advance requested by the Borrower, and in each case
having a maturity approximately equal to such Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(i) the quotient of (a) the Eurodollar Base Rate applicable to such Eurodollar
Interest Period, divided by
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(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Competitive Bid Margin offered
by such Lender and accepted by the Borrower pursuant to Section 2.4.6.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.3.
"Eurodollar Committed Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.3.
"Eurodollar Interest Period" means, with respect to a Eurodollar Advance
or a Eurodollar Loan, a period of one, two, three or six months commencing on a
Business Day selected by the Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter, provided,
however, that if there is no such numerically corresponding day in such next,
second, third or sixth succeeding month, such Eurodollar Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month. If a Eurodollar Interest Period would otherwise end on a day which is
not a Business Day, such Eurodollar Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Eurodollar Interest Period
shall end on the immediately preceding Business Day. In no event shall any
Eurodollar Interest Period extend beyond the Termination Date.
"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar Bid
Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar Committed Advance
or a Eurodollar Committed Loan for the relevant Eurodollar Interest Period, the
sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such
Eurodollar Interest Period, divided by (b) one minus the Reserve Requirement
(expressed as a decimal) applicable to such Eurodollar Interest Period, plus
(ii) the Applicable Margin. The Eurodollar Rate shall be rounded to the next
higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on
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overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such day (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations at
approximately 10 a.m. (Chicago time) on such day on such transactions received
by the Agent from three Federal funds brokers of recognized standing selected
by the Agent in its sole discretion.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day, changing when and as the Alternate Base Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Indebtedness" means (i) total deposits, (ii) securities sold under
agreements to repurchase, (iii) borrowings with an original maturity of one
year or less, (iv) other borrowed funds with an original maturity of greater
than one year, (v) mandatory convertible securities, (vi) subordinated notes
and debentures, and (vii) other liabilities, in each case determined for the
Borrower only in a manner consistent with that used in preparing the Borrower's
March 31, 1995 Parent Company Only Financial Statements.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit "C" hereto,
completed and delivered by the Agent to the Lenders in accordance with Section
2.4.3.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
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"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance.
"Loan Documents" means this Agreement and the Notes.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Material Banking Subsidiary" means, at any time, any one or more Banking
Subsidiaries having aggregate consolidated assets equal to or greater than 5%
of the consolidated assets of the Borrower and its Subsidiaries at such time.
"Moody's" means Moody's Investors Service Inc. or any successor
corporation thereto.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Non-Performing Assets" means the total of (i) Non-Performing Loans, (ii)
Other Real Estate Owned and (iii) without duplication for amounts included as
Other Real Estate Owned, property acquired pursuant to in substance
foreclosures.
"Non-Performing Loans" means (i) the total of loans which are placed on a
nonaccural status, (ii) the total of loans which are past due 90 days or more
and are still accruing, and (iii) the total of loans and leases restructured
and in compliance with
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modified terms, in each case determined for the Borrower and its Subsidiaries
on a consolidated basis in a manner consistent with that used in preparing the
Borrower's March 31, 1995 Consolidated Financial Statements.
"Notes" means, collectively, the Committed Notes and the Competitive Bid
Notes; and "Note" means any one of such Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party hereunder arising
under the Loan Documents.
"Other Real Estate Owned" means Other Real Estate Owned as defined in 12
C.F.R. Section 7.3025 (1989), as such regulation may be amended or supplemented
from time to time, determined for the Borrower and its Subsidiaries on a
consolidated basis in a manner consistent with that used in preparing the
Borrower's Consolidated Financial Statements.
"Parent Company Only Financial Statements" means the Parent Company Only
Financial Statements for Bank Holding Companies With Total Consolidated Assets
of $150 Million or More, or With More Than One Subsidiary Bank--FR Y-9 LP, as
such report may be amended or modified from time to time, and any similar
report required to be filed by the Borrower.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Banking Subsidiary Indebtedness" means obligations incurred by
any Banking Subsidiary in the ordinary course of business in such circumstances
as may be incidental or usual in carrying on the banking or trust business of a
bank or trust company, including, without limitation, obligations incurred in
connection with (i) any deposits with or funds collected by such Subsidiary,
(ii) any banker's acceptance credit of such Subsidiary, (iii) any check, note,
certificate of deposit, instrument, money or Letter of Credit issued by such
Subsidiary, (iv) any check, note, certificate of deposit, money order,
traveler's check, draft or bill of exchange issued, accepted or endorsed by
such Subsidiary, (v) any discount with, borrowing from, or other obligation to,
any Federal Reserve Bank or any Federal Home Loan Bank, (vi) any agreement made
by such Subsidiary to purchase or repurchase
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securities, loans or Federal funds or any interest or participation in any
thereof, (vii) any guarantee or similar obligation incurred by such Subsidiary
in the ordinary course of its banking or trust business, (viii) any transaction
in the nature of an extension of credit, whether in the form of a commitment or
otherwise, undertaken by such Subsidiary for the account of a third party with
the application of the same banking considerations and legal lending limits
that would be applicable if the transaction were a loan to such party, (ix) any
transaction in which such Subsidiary acts solely in the fiduciary or agency
capacity, (x) Rate Hedging Obligations incurred in the ordinary course of
business, and (xi) other short-term liabilities similar to those enumerated in
clauses (i) and (vi) above, including United States Treasury tax and loan
borrowings.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
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"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, and excluding any event described in Section
4043(b)(3) of ERISA.
"Required Lenders" means Lenders in the aggregate having at least 66 2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66 2/3% of the aggregate
unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation D
on Eurocurrency liabilities.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Standard & Poor's" means Standard & Poor's Ratings Group or any
successor corporation thereto.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Notwithstanding
the foregoing, "Subsidiary" of the Borrower shall also mean any Banking
Subsidiary. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Borrower and its
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Subsidiaries as would be shown in the consolidated financial statements of the
Borrower and its Subsidiaries as at the beginning of the twelve-month period
ending with the month in which such determination is made, or (ii) is
responsible for more than 10% of the consolidated net sales or of the
consolidated net income of the Borrower and its Subsidiaries as reflected in
the financial statements referred to in clause (i) above.
"Termination Date" means the earlier of (i) August 7, 1999 or such later
date as shall have been agreed to by the Lenders pursuant to Section 2.17, and
(ii) the date on which the Commitments shall have been reduced to zero or
terminated pursuant to Section 2.7.1 or 8.1.
"Thrift Financial Report" means the Thrift Financial Report, as such
report may be amended or modified from time to time, and any similar report
required to be filed by any Banking Subsidiary.
"Total Equity Capital" means total equity capital determined for the
Borrower and its Subsidiaries on a consolidated basis in a manner consistent
with that used in preparing the Borrower's March 31, 1995 Consolidated
Financial Statements.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance or Loan, its nature as an
Alternate Base Rate Advance or Loan, Eurodollar Committed Advance or Loan,
Eurodollar Bid Rate Advance or Loan or Absolute Rate Advance or Loan.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Well-Capitalized" means "well-capitalized" for purposes of 12 U.S.C.
1831(o) and any rules and regulations issued thereunder (including, without
limitation, 12 C.F.R. 565.4), as amended, supplemented or otherwise modified
from time to time.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, association, joint
venture or similar ordinary voting power of which shall at the time be so
owned or controlled.
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The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Description of Facility. Upon the terms and subject to the
conditions set forth in this Agreement, the Lenders hereby grant to the
Borrower a revolving credit facility pursuant to which: (i) each Lender
severally agrees to make Committed Loans to the Borrower in accordance with
Section 2.3; and (ii) each Lender may, in its sole discretion, make bids to
make Competitive Bid Loans to the Borrower in accordance with Section 2.4;
provided, however, that in no event may the aggregate principal amount of all
outstanding Advances (including both Committed Advances and Competitive Bid
Advances) exceed the Aggregate Commitment.
2.2. Availability of Facility. Subject to all of the terms and
conditions of this Agreement, the facility is available from the Closing Date
to the Termination Date, and the Borrower may borrow, repay and reborrow at any
time prior to the Termination Date.
2.3. Committed Advances.
2.3.1. Commitment. From and including the Closing
Date and prior to the Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make Committed Loans to
the Borrower from time to time in amounts not to exceed in the aggregate at any
one time outstanding the amount of its Commitment. The Commitments to lend
hereunder shall expire on the Termination Date.
2.3.2. Ratable Loans; Types of Advances. Each
Committed Advance hereunder shall consist of Loans made from the several
Lenders ratably in proportion to the ratio that their respective Commitments
bear to the Aggregate Commitment. The Committed Advances may be Floating Rate
Advances or Eurodollar Committed Advances, or a combination thereof, selected
by the Borrower in accordance with Sections 2.3.5 and 2.3.6. The Committed
Advances shall be evidenced by the Committed Notes.
2.3.3. Minimum Amount of Each Committed Advance.
Each Committed Advance shall be in the minimum amount of $5,000,000 (and in
multiples of $500,000 in excess thereof); provided, however,
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that any Floating Rate Advance may be in the aggregate amount of the unused
Aggregate Commitment.
2.3.4. Applicable Margin.
(i) The Applicable Margin for Eurodollar Committed Advances
and for facility fees payable pursuant to Section 2.6.1 hereunder, shall
be subject to adjustment (upwards or downwards, as appropriate) based on
the Borrower's Rating and shall be determined in accordance with the
table set forth below. The Applicable Margin shall be adjusted on the
earlier of the date of announcement or the date of publication by the
respective rating agencies of a change in the Rating or, in the absence
of such announcement or publication, on the effective date of such
changed Rating (the "Adjustment Date"), and shall apply to all
outstanding Eurodollar Committed Advances and the facility fees from and
after such Adjustment Date to the next Adjustment Date. In the event
that the Borrower shall at any time cease to be rated by Standard &
Poor's and Moody's, the maximum Applicable Margin shall apply.
<TABLE>
<CAPTION>
Applicable Margin
(basis points per annum)
------------------------
Eurodollar Committed
Rating Advances Facility Fees
------ -------------------- -------------
<S> <C> <C>
Level I 20.00 b.p. 10.00 b.p.
Level II 25.00 b.p. 12.50 b.p.
Level III 30.00 b.p. 15.00 b.p.
Level IV 41.25 b.p. 18.75 b.p.
Level V 45.00 b.p. 25.00 b.p.
</TABLE>
(ii) For purposes of this Agreement, the Borrower's Rating
shall be determined in accordance with the following definitions:
"Level I" means the level applicable at any time when the
Borrower's Rating from Standard & Poor's is at least A or better or at
least A2 or better from Moody's.
"Level II" means the level applicable at any time when the
Borrower's Rating from Standard & Poor's is A- or A3 from Moody's.
"Level III" means the level applicable at any time when the
Borrower's Rating from Standard & Poor's is BBB+ or Baa1 from Moody's.
"Level IV" means the level applicable at any time when the
Borrower's Rating from Standard & Poor's is BBB or Baa2 from Moody's.
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"Level V" means the level applicable at any time when the
Borrower's Rating from Standard & Poor's is BBB- or less or Baa3 or less
from Moody's.
"Rating" means the rating assigned by Standard & Poor's or
Moody's to the Borrower's senior unsecured debt or if the Borrower ceases
to have such a rating, then the Rating shall be the Borrower's implied
long-term senior debt rating (i.e., the rating that is one rating level
higher than the rating assigned by Standard & Poor's or Moody's to the
Borrower's publicly issued subordinated debt). The Rating shall be based
on the applicable Level I, Level II, Level III, Level IV or Level V;
provided, however, that if (i) such rating is received from one such
rating agency, then that rating will be the Rating, (ii) such rating is
received from both rating agencies, then the higher rating will be the
Rating, and (iii) if there is a difference of two or more levels between
such Ratings, then the Rating which is one below the higher Rating will
be the Rating.
2.3.5. Method of Selecting Types and Interest Periods for
New Committed Advances. The Borrower shall select the Type of Committed
Advance, and in the case of each Eurodollar Committed Advance the Eurodollar
Interest Period applicable thereto, for each such Committed Advance. The
Borrower shall give the Agent irrevocable notice (a "Committed Borrowing
Notice") not later than 10:00 a.m. (Chicago time) on the Borrowing Date for
each Floating Rate Advance and three Business Days before the Borrowing Date
for each Eurodollar Committed Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Committed Advance,
(ii) the aggregate amount of such Committed Advance,
(iii) the Type of Committed Advance selected, and
(iv) in the case of each Eurodollar Committed Advance, the
Eurodollar Interest Period applicable thereto.
2.3.6. Conversion and Continuation of Outstanding Committed
Advances. Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into Eurodollar
Committed Advances. Each Eurodollar Committed Advance shall continue as a
Eurodollar Committed Advance until the end of the then applicable Eurodollar
Interest Period therefor, at which time such Eurodollar Committed Advance shall
be automatically converted into a Floating Rate Advance unless such Eurodollar
Committed Advance is paid by the Borrower or the Borrower shall have given the
Agent a Conversion/Continuation Notice requesting that, at the end of such
Eurodollar Interest Period, such Eurodollar Committed Advance continue as a
Eurodollar
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Committed Advance for the same or another Eurodollar Interest Period. Subject
to the terms of Section 2.3.3, the Borrower may elect from time to time to
convert all or any part of a Floating Rate Advance into a Eurodollar Committed
Advance. The Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of Floating Rate Advance
or continuation of a Eurodollar Committed Advance not later than 10:00 a.m.
(Chicago time) at least three Business Days prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Committed Advance
which is to be converted or continued; and
(iii) the amount and Type(s) of Committed Advance(s) into which
such Committed Advance is to be converted or continued
and, in the case of a conversion into or continuation of a
Eurodollar Committed Advance, the duration of the
Eurodollar Interest Period applicable thereto.
2.4. Competitive Bid Advances.
2.4.1. Competitive Bid Option; Repayment of Competitive Bid
Advances. In addition to Committed Advances pursuant to Section 2.3, but
subject to all of the terms and conditions of this Agreement (including,
without limitation, the limitation set forth in Section 2.1 as to the maximum
aggregate principal amount of all outstanding Advances hereunder), the Borrower
may, as set forth in this Section 2.4, request the Lenders, prior to the
Termination Date, to make offers to make Competitive Bid Advances to the
Borrower. Each Lender may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers
in the manner set forth in this Section 2.4. The Competitive Bid Advances
shall be evidenced by the Competitive Bid Notes. Each Competitive Bid Advance
shall be repaid in full by the Borrower on the last day of the Interest Period
applicable thereto.
2.4.2. Competitive Bid Quote Request. When the Borrower
wishes to request offers to make Competitive Bid Loans under this Section 2.4,
the Borrower shall transmit to the Agent by telecopy a Competitive Bid Quote
Request so as to be received no later than (x) 10:00 a.m. (Chicago time) at
least five Business Days prior to the Borrowing Date proposed therein, in the
case of a Eurodollar Auction, or (y) 9:00 a.m. (Chicago time) at least one
Business Day prior to the Borrowing Date proposed therein, in the case of an
Absolute Rate Auction, specifying in accordance with all of the terms of this
Agreement:
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(i) the proposed Borrowing Date, which shall be a Business Day, for
the proposed Competitive Bid Advance;
(ii) the aggregate principal amount of such Competitive Bid Advance;
(iii) whether the Competitive Bid Quotes requested are to set forth a
Competitive Bid Margin or an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto.
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall
be given within five Business Days (or upon reasonable prior notice to the
Lenders, such other number of days as the Borrower and the Agent may agree) of
any other Competitive Bid Quote Request. Each Competitive Bid Quote Request
shall be in a minimum amount of $5,000,000 (and in multiples of $500,000 in
excess thereof). A Competitive Bid Quote Request that does not conform
substantially to the format of Exhibit "B" hereto shall be rejected, and the
Agent shall promptly notify the Borrower of such rejection by telecopy.
2.4.3. Invitation for Competitive Bid Quotes. Promptly upon
receipt of a Competitive Bid Quote Request that is not rejected pursuant to
Section 2.4.2, the Agent shall send to each of the Lenders by telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
the Borrower to each Lender to submit Competitive Bid Quotes offering to make
the Competitive Bid Loans to which such Competitive Bid Quote Request relates
in accordance with this Section 2.4.
2.4.4. Submission and Contents of Competitive Bid Quotes.
(a) Each Lender may, in its sole discretion, submit a Competitive
Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid
Quotes. Each Competitive Bid Quote must comply with the
requirements of this Section 2.4.4 and must be submitted to
the Agent by telecopy at its offices specified in or pursuant
to Article XIII not later than (i) (A) 12:45 p.m. (Chicago
time) in the case of First Chicago and (B) 1:00 p.m. (Chicago
time) in the case of each other Lender, at least four Business
Days prior to the proposed Borrowing Date in the case of a
Eurodollar Auction, or (ii) (A) 8:45 a.m. (Chicago time) in
the case of First Chicago and (B) 9:00 a.m. (Chicago time) in
the case of each other Lender, on the proposed Borrowing Date
in the case of an Absolute Rate Auction
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(or, in either such case upon reasonable prior notice to the Lenders,
such other time and date as the Borrower and the Agent may agree;
provided that First Chicago shall always be required to submit its
Competitive Bid Quotes not less than fifteen minutes prior to the
other Lenders). Subject to Articles IV and VIII, any Competitive Bid
Quote so made shall be irrevocable except with the written consent of
the Agent given on the instructions of the Borrower.
(b) Each Competitive Bid Quote shall in any case specify:
(i) the proposed Borrowing Date, which shall be the same
as that set forth in the applicable Invitation for
Competitive Bid Quotes;
(ii) the principal amount of the Competitive Bid Loan for
which each such offer is being made, (1) which
principal amount may be greater than, less than or
equal to the Commitment of the quoting Lender, but
in no case greater than the unutilized Aggregate
Commitment, (2) which principal amount must be at
least $5,000,000 (and in multiples of $500,000 in
excess thereof) and (3) which principal amount may
not exceed the principal amount of Competitive Bid
Loans for which offers were requested;
(iii) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each such
Competitive Bid Loan;
(iv) the minimum or maximum amount, if any, of the
Competitive Bid Loan which may be accepted by the
Borrower and/or the limit, if any, as to the
aggregate principal amount of the Competitive Bid
Loans from such Lender which may be accepted by the
Borrower;
(v) in the case of an Absolute Rate Auction, the
Absolute Rate offered for each such Competitive Bid
Loan;
(vi) the applicable Interest Period; and
(vii) the identity of the quoting Lender.
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(c) The Agent shall reject any Competitive Bid Quote that:
(i) is not substantially in the form of Exhibit
"D" hereto or does not specify all of the
information required by Section 2.4.4(b);
(ii) contains qualifying, conditional or similar
language, other than any such language
contained in Exhibit "D" hereto;
(iii) proposes terms other than or in addition to
those set forth in the applicable Invitation
for Competitive Bid Quotes; or
(iv) arrives after the time set forth in Section
2.4.4(a).
(d) If any Competitive Bid Quote shall be rejected pursuant to
Section 2.4.4(c), then the Agent shall notify the relevant
Lender of such rejection as soon as practicable.
2.4.5. Notice to Borrower. The Agent shall promptly notify
the Borrower of the terms (i) of any Competitive Bid Quote submitted by a
Lender that is in accordance with Section 2.4.4 and (ii) of any Competitive Bid
Quote that is in accordance with Section 2.4.4 and amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote submitted by such
Lender with respect to the same Competitive Bid Quote Request. Any such
subsequent Competitive Bid Quote shall be disregarded by the Agent unless such
subsequent Competitive Bid Quote specifically states that it is submitted
solely to correct a manifest error in such former Competitive Bid Quote. The
Agent's notice to the Borrower shall specify the aggregate principal amount of
Competitive Bid Loans for which offers have been received for each Interest
Period specified in the related Competitive Bid Quote Request and the
respective principal amounts and Competitive Bid Margins or Absolute Rates, as
the case may be, so offered.
2.4.6. Acceptance and Notice by Borrower. Subject to the
receipt of the notice from the Agent referred to in Section 2.4.5, not later
than (i) 10:00 a.m. (Chicago time) at least three Business Days prior to the
proposed Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m.
(Chicago time) on the proposed Borrowing Date, in the case of an Absolute Rate
Auction, the Borrower shall notify the Agent of the Borrower's acceptance or
rejection of the offers so notified to it pursuant to Section 2.4.5; provided,
however, that the failure by the Borrower to give such notice to the Agent
shall be deemed to be a rejection by the Borrower of all such offers. In the
case of acceptance, such notice (a "Competitive Bid Acceptance Notice") shall
specify the aggregate principal amount of offers for each Interest Period that
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are accepted. The Borrower may accept or reject any Competitive Bid Quote in
whole or in part (subject to the terms of Section 2.4.4(b)(iv)); provided that:
(i) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in
the related Competitive Bid Quote Request;
(ii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Absolute Rates, as
the case may be; and
(iii) the Borrower may not accept any offer of the type
described in Section 2.4.4(c) or that otherwise fails to
comply with the requirements of this Agreement for the
purpose of obtaining a Competitive Bid Loan under this
Agreement.
2.4.7. Allocation by the Agent. Subject to Section 2.4.6,
if offers are made by two or more Lenders with the same Competitive Bid Margins
or Absolute Rates, as the case may be, for a greater aggregate principal amount
than the amount in respect of which offers are permitted to be accepted for the
related Interest Period, the principal amount of Competitive Bid Loans in
respect of which such offers are accepted shall be allocated by the Agent among
such Lenders as nearly as possible (in such multiples as the Agent may deem
appropriate) in proportion to the aggregate principal amount of such offers;
provided, however, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Agent of the
amounts of Competitive Bid Loans shall be conclusive in the absence of manifest
error. The Agent shall promptly, but in any event on the same Business Day in
the case of Eurodollar Bid Rate Advances, and by 11:00 a.m. (Chicago time) on
the same Business Day in the case of Absolute Rate Advances, notify each Lender
of its receipt of a Competitive Bid Acceptance Notice and the aggregate
principal amount of each Competitive Bid Advance allocated to each
participating Lender.
2.4.8. Administration Fee. The Borrower hereby agrees to
pay to the Agent, for its sole account, an administration fee of $1,000 per
Competitive Bid Quote Request transmitted by the Borrower to the Agent pursuant
to Section 2.4.2. Such administration fee shall be payable in arrears on each
Payment Date and on the Termination Date for any period then ending for which
such fee, if any, shall not have been theretofore paid.
2.5. Method of Borrowing. Not later than 12:00 noon (Chicago time)
on each Borrowing Date, each Lender shall make available its Loan or Loans, if
any, in funds immediately available to the Agent, in Chicago, Illinois at its
address specified
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pursuant to Article XIII. The Agent will make the funds so received from the
Lenders available to the Borrower at the Agent's aforesaid address.
Notwithstanding the foregoing provisions of this Section 2.5, to the extent
that a Loan made by a Lender matures on the Borrowing Date of a requested Loan,
such Lender shall apply the proceeds of the Loan it is then making to the
repayment of principal of the maturing Loan.
2.6. Fees. The Borrower agrees to pay the following fees:
2.6.1. Facility Fee. The Borrower agrees to pay to the Agent
for the account of each Lender, for the period from the Closing Date to and
including the Termination Date, a facility fee equal to the product of (i) such
Lender's Commitment (whether used or unused), and (ii) the amount (expressed in
basis points per annum) specified as the Applicable Margin for facility fees
pursuant to Section 2.3.4(i), payable on each Payment Date and on the
Termination Date.
2.6.2. Usage Fee. In the event that during any
calendar quarter, the average daily principal amount of the Loans outstanding
is greater than $62,500,000, the Borrower agrees to pay to the Agent for the
account of each Lender a usage fee equal to 5 basis points per annum on the
average daily principal amount of the Loans outstanding during such quarter,
payable on each Payment Date and on the Termination Date.
2.6.3. Agent's Fees. The Borrower agrees to pay to the
Agent, for its own account, the fees agreed to by the Borrower and the Agent
pursuant to that certain Letter Agreement dated June 28, 1995.
2.7. Reductions in Aggregate Commitment; Principal Payments.
2.7.1. Reductions in Aggregate Commitment. The Borrower may
permanently reduce the Aggregate Commitment in whole, or in part ratably among
the Lenders in a minimum aggregate amount of $5,000,000 (and multiples of
$500,000 in excess thereof), upon at least three Business Days' written notice
to the Agent, which notice shall specify the amount of any such reduction;
provided, however, that the amount of the Aggregate Commitment may not be
reduced below the aggregate principal amount of the outstanding Advances.
2.7.2. Principal Payments.
(i) Optional Payments. The Borrower may from time to time
pay, without penalty or premium, all outstanding Floating Rate
Advances, or, in a minimum aggregate amount of $5,000,000 (and
multiples of $500,000 in excess thereof), any portion of the
outstanding Floating Rate Advances upon one Business Days'
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prior notice to the Agent. A Fixed Rate Advance may not be paid prior
to the last day of the applicable Interest Period.
(ii) Termination. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Termination
Date.
2.8. Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is converted from a
Eurodollar Committed Advance into a Floating Rate Advance pursuant to Section
2.3.6 to but excluding the date it becomes due or is converted into a
Eurodollar Committed Advance pursuant to Section 2.3.6 hereof, at a rate per
annum equal to the Floating Rate for such day. Changes in the rate of interest
on that portion of any Advance maintained as a Floating Rate Advance will take
effect simultaneously with each change in the Alternate Base Rate. Each Fixed
Rate Advance shall bear interest from and including the first day of the
Interest Period applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such Fixed
Rate Advance. No Interest Period may end after the Termination Date.
2.9. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.3.5 or 2.3.6, during the continuance of a
Default or Unmatured Default, the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Advance may be made as, converted into or continued as a Eurodollar Committed
Advance. During the continuance of a Default, the Required Lenders may, at
their option, by notice to the Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that (i) each Fixed Rate Advance shall bear interest for the remainder
of the applicable Interest Period at the rate otherwise applicable to such
Interest Period plus 2% per annum and (ii) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate plus 2% per annum.
2.10. Method of Payment. Subject to the last sentence of Section
2.5, all payments of the Obligations hereunder shall be made, without setoff,
deduction, or counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article XIII, or at any other Lending
Installation of the Agent specified in writing by the Agent to the Borrower, by
noon (local time) on the date when due and shall be applied ratably by the
Agent among all Lenders in the case of fees and payments in respect of
Committed Advances and ratably among the applicable Lenders in respect of
Competitive Bid Advances. Each payment
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delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds that the Agent
received at its address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Agent from such Lender. The
Agent is hereby authorized to charge the account of the Borrower maintained
with First Chicago for each payment of principal, interest and fees as it
becomes due hereunder.
2.11. Notes; Telephonic Notices. Each Lender is hereby authorized
to record the principal amount of each of its Loans and each repayment on the
schedule attached to its Notes; provided, however, that the failure to so
record shall not affect the Borrower's obligations under any Loan Document.
The Borrower hereby authorizes the Lenders and the Agent to extend, convert or
continue Advances, effect selections of Types of Advances, transfer funds and
submit Competitive Bid Quotes, in each case based on telephonic notices made by
any person or persons the Agent or any Lender in good faith believes to be
acting on behalf of the Borrower. The Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the
Agent or any Lender, of each telephonic notice signed by an Authorized Officer.
If the written confirmation differs in any material respect from the action
taken by the Agent and the Lenders, the records of the Agent and the Lenders
shall govern absent manifest error.
2.12. Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which the Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on each Fixed Rate Advance shall
be payable on the last day of its applicable Interest Period, on any date on
which the Fixed Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on each Fixed Rate Advance having
an Interest Period longer than three months shall also be payable on the last
day of each three-month interval (in the case of Eurodollar Committed Advances
or Eurodollar Bid Rate Advances) or 90-day interval (in the case of Absolute
Rate Advances) during such Interest Period. Interest and fees shall be
calculated for actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local time) at
the place of payment. If any payment of principal of or interest on an Advance
shall become due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.
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2.13. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Committed Borrowing Notice, Competitive Bid Acceptance Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each Fixed
Rate Advance promptly upon determination of such interest rate and will give
each Lender prompt notice of each change in the Alternate Base Rate.
2.14. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.15. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption.
If such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (i) in the case of payment by a
Lender, the Federal Funds Effective Rate for such day or (ii) in the case of
payment by the Borrower, the interest rate applicable to the relevant Loan.
2.16. Withholding Tax Exemption. At least five Business Days prior
to the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver
to each of the Borrower and the Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224 (or a successor form),
certifying in either case that such Lender is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes. Each Lender which so delivers a Form 1001
or 4224 further undertakes to deliver to each
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of the Borrower and the Agent two additional copies of such form (or a
successor form) on or before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrower or the
Agent, in each case certifying that such Lender is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
2.17. Extension of Termination Date.
2.17.1. Extension Procedures. The Commitment of each Lender,
and this Agreement as between such Lender and the Borrower, may be extended for
one period of one year upon mutual agreement of such Lender and the Borrower in
the manner provided in this Section 2.17, to the effect that the Termination
Date with respect to such Lender for all purposes under this Agreement and the
Notes shall be extended by one year to August 7, 2000. The request for such an
extension shall be made by the Borrower in writing and delivered to the Agent
no later than 60 days but not sooner than 90 days prior to the second
anniversary of this Agreement. Promptly following the Agent's receipt of any
such request, the Agent shall notify each Lender thereof. Each Lender may, in
its sole discretion, agree to such extension by giving written notice of such
agreement to the Agent and the Borrower within 30 days following the Borrower's
request for such extension (each Lender which so consents to a requested
extension is herein called a "Consenting Lender" and each Lender which does not
so consent to a requested extension is herein called a "Non-consenting
Lender"). If any Lender fails to respond to any such request, such Lender
shall be deemed to be a Non-consenting Lender. If Consenting Lenders hold 66
2/3% or more of the Aggregate Commitment, then the Termination Date of each
Consenting Lender shall be so extended and the Termination Date of each
Non-consenting Lender, if any, shall remain unchanged. If Consenting Lenders
hold less than 66 2/3% of the Aggregate Commitment, then the Termination Date
shall not be extended for any of the Lenders.
2.17.2. Termination of Lenders. If there are any
Non-consenting Lenders pursuant to Section 2.17.1 and an extension has occurred
for Consenting Lenders, the Borrower may, at its option, terminate the
Commitment of a Non-consenting Lender and pay or
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prepay all outstanding Loans of such Non-consenting Lender (each a "Terminated
Lender"). The Borrower shall, by giving written notice thereof to the
Terminated Lender and to the Agent, specify the proposed effective date of
termination of the Terminated Lender's Commitment (the "Lender Termination
Date"), which date shall not in any event be less than five nor more than
thirty days following the date of such notice of termination. The Borrower may
not elect to terminate and prepay any Lender under this Section 2.17.2 if a
Default or Unmatured Default exists. On the Lender Termination Date (i) the
Borrower shall pay or prepay all outstanding Loans of such Terminated Lender,
together with accrued interest thereon and all fees due such Terminated Lender
under this Agreement, in each case accrued through the Lender Termination Date,
together with all amounts, if any, payable under Section 3.4 in connection with
prepayment of such Loans, and (ii) the Terminated Lender shall have no further
Commitment under this Agreement and shall no longer be a "Lender" under this
Agreement for any purpose except insofar as it shall be entitled to any payment
or indemnification, or be obligated to make any indemnification, on account of
any event which shall have occurred, or any right or liability which shall have
arisen, on or prior to the date of repayment in full of such Loans. The
termination of any Terminated Lender's Commitment and the prepayment of a
Terminated Lender's Loans pursuant to this Section 2.17.2 shall not relieve or
satisfy the obligations of the Borrower to make any such prepayments free and
clear of all taxes, to reimburse such Terminated Lender for all increased costs
pursuant to Section 3.4, or to comply with all other terms and conditions of
this Agreement (including, without limitation, Section 9.7).
2.17.3. Successor Lenders. If, from time to time, any
Non-consenting Lender's Commitment is terminated pursuant to Section 2.17.2,
the Borrower may, at its option, specify one or more commercial banks
(including any Lender) (each a "Successor Lender"), each of which Successor
Lenders (i) shall be acceptable to the Agent, (ii) have a combined capital,
surplus (or its equivalent) and undivided profits in an amount not less than
U.S. $250,000,000 (or its equivalent in another currency), and (iii) shall
have agreed, in the aggregate, to succeed to the entire Commitment of such
Terminated Lender on the applicable Lender Termination Date. Effective as of
such Lender Termination Date, the Borrower, the Agent and such Successor Lender
shall enter into an appropriate Assignment Agreement to so assign the entire
Commitment of the applicable Terminated Lender to the Successor Lender.
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ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from
payments due from the Borrower (excluding federal taxation
of the overall net income of any Lender or applicable
Lending Installation, income taxes imposed on any Lender
in the jurisdiction in which such Lender's home office is
located, and the Illinois personal property replacement
tax), or changes the basis of taxation of payments to any
Lender in respect of its Loans or other amounts due it
hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or
reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with loans,
or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference
to the amount of loans held or interest received by it, by
an amount deemed material by such Lender,
then, within 15 days of demand by such Lender pursuant to the written statement
required under Section 3.5, the Borrower shall pay such Lender that portion of
such increased expense incurred or reduction in an amount received which such
Lender determines is attributable to making, funding and maintaining its Loans
and its Commitment. Each Lender will notify the Borrower of any event occurring
after the date of this Agreement which will entitle such Lender to compensation
pursuant to this Section 3.1, as promptly as practicable after such Lender
obtains knowledge thereof and determines to request such compensation.
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3.2. Changes in Capital Adequacy Regulations. If a Lender
reasonably determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or any
corporation controlling such Lender is increased as a result of a Change, then,
within 15 days of demand by such Lender pursuant to the written statement
required under Section 3.5, the Borrower shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender reasonably determines is
attributable to this Agreement, its Loans or its obligation to make Loans
hereunder (after taking into account such Lender's policies as to capital
adequacy). "Change" means (i) any change after the date of this Agreement in
the Risk-Based Capital Guidelines, or (ii) any adoption of or change in any
other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of
law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. "Risk-Based Capital Guidelines"
means (i) the risk-based capital guidelines in effect in the United States on
the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International
Convergence of Capital Measurements and Capital Standards," including
transition rules, and any amendments to such regulations adopted prior to the
date of this Agreement. Each Lender will notify the Borrower of any event
occurring after the date of this Agreement which will entitle such Lender to
compensation pursuant to this Section 3.2, as promptly as practicable after
such Lender obtains knowledge thereof and determines to request such
compensation.
3.3. Availability of Types of Advances. If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or
not having the force of law, or if the Required Lenders (or in the case of any
Competitive Bid Loan, the Lender making such Loan) determine that (i) deposits
of a type and maturity appropriate to match fund Fixed Rate Advances are not
available or (ii) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Agent shall suspend the availability of the affected Type of Advance and
require any Fixed Rate Advances of the affected Type to be repaid.
3.4. Funding Indemnification. If any payment of a Fixed Rate
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a Fixed
Rate Advance is not made, continued or converted on the date specified by the
Borrower for
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any reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed Rate Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Fixed Rate Loans to reduce any liability of
the Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender as to the amount due, if any, under Sections
3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable detail
the calculations upon which such Lender determined such amount and shall be
final, conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a Fixed
Rate Loan shall be calculated as though each Lender funded its Fixed Rate Loan
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Fixed Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be payable on
demand after receipt by the Borrower of the written statement. The obligations
of the Borrower under Sections 3.1, 3.2 and 3.4 shall survive payment of the
Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance.
4.1.1. The Lenders shall not be required to make the initial
Advance hereunder and this Agreement shall not become effective unless the
Borrower has furnished to the Agent with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower,
together with all amendments, and a certificate of status,
both certified by the appropriate governmental officer in
its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary
of the Borrower, of its by-laws and of its Board of
Directors' resolutions (and resolutions of
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other bodies, if any are deemed necessary by counsel for
any Lender) authorizing the execution of the Loan
Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify
by name and title and bear the signature of the officers
of the Borrower authorized to sign the Loan Documents and
to make borrowings hereunder, upon which certificate the
Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(iv) A certificate, signed by the chief financial officer of
the Borrower, stating that on the initial Borrowing Date
no Default or Unmatured Default has occurred and is
continuing.
(v) A written opinion of the Borrower's counsel, addressed to
the Lenders in substantially the form of Exhibit "E"
hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the
form of Exhibit "G" hereto, addressed to the Agent and
signed by an Authorized Officer, together with such other
related money transfer authorizations as the Agent may
have reasonably requested.
(viii) Such other documents as any Lender or its counsel may have
reasonably requested.
4.1.2. The Lenders shall not be required to make the initial
Advance hereunder, unless prior to or concurrently with the making of the
initial Advance hereunder, the Loan Agreement, dated as of July 27, 1995,
between the Borrower and First Chicago shall have been terminated and the
Borrower shall have paid to First Chicago any and all unpaid principal of and
accrued and unpaid interest on the notes evidencing the obligations thereunder,
and any and all other obligations of the Borrower to First Chicago thereunder
arising under or in connection with such Loan Agreement.
4.2. Each Advance. No Lender shall be required to make any Advance
(other than a Committed Advance that, after giving effect thereto and to the
application of the proceeds thereof, does not increase the aggregate amount of
outstanding Committed Advances), unless on the applicable Borrowing Date:
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(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V
are true and correct as of such Borrowing Date except to
the extent any such representation or warranty is stated
to relate solely to an earlier date, in which case such
representation or warranty shall be true and correct on
and as of such earlier date.
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Committed Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in Sections 4.2(i) and (ii) have
been satisfied. Any Lender may require a duly completed compliance certificate
in substantially the form of Exhibit "F" hereto as a condition to making an
Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower and
its Subsidiaries is a corporation or a national or state banking association
duly incorporated or organized, as applicable, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where such failure to obtain all requisite
authority would not, with respect to any individual failure or any failures in
the aggregate, have a Material Adverse Effect.
5.2. Authorization and Validity. The Borrower has the corporate
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
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5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Subsidiaries or the
Borrower's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
the Borrower or a Subsidiary pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents.
5.4. Financial Statements. The December 31, 1994 consolidated
financial statements of the Borrower and its Subsidiaries heretofore delivered
to the Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.
5.5. Material Adverse Change. Since December 31, 1994 through and
including the Closing Date, there has been no change in the business, Property,
prospects, condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries which could have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all
United States federal tax returns and all other tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended December 31, 1991. No tax liens have been filed
and no claims are being asserted with respect to any such taxes. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of any taxes or other governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Except as set forth on
Schedule "1" hereto, there is no litigation,
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arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could have a Material Adverse Effect.
Other than any liability incident to such litigation, arbitration or
proceedings, the Borrower has no material contingent obligations not provided
for or disclosed in the financial statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule "2" hereto contains an accurate list
of all of the existing Subsidiaries of the Borrower as of the date hereof,
setting forth their respective jurisdictions of incorporation and the
percentage of their respective capital stock owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock of
such Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable, except as provided in Wisconsin Business Corporation Law
Section 180.0622(2)(b).
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans
do not in the aggregate exceed $50,000,000. Each Plan complies in all material
respects with all applicable requirements of law and regulations and no
Reportable Event has occurred with respect to any Plan. Neither the Borrower
nor any other member of the Controlled Group has incurred or reasonably expects
to incur any liability under Title IV of ERISA with respect to any Plan (other
than premiums due under Section 4007 of ERISA).
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein
not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary
is a party to any agreement or instrument or subject to any charter or other
corporate restriction which could have a Material Adverse Effect. Neither the
Borrower nor any Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in (i)
any agreement to which it is a party, which default could have a Material
Adverse Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules,
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regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
their respective businesses or the ownership of their respective Property,
except where any individual noncompliance or any noncompliance in the aggregate
would not have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary has received any notice to the effect that its operations are not in
material compliance with any of the requirements of applicable federal, state
and local environmental, health and safety statutes and regulations or the
subject of any federal or state investigation evaluating whether any remedial
action is needed to respond to a release of any toxic or hazardous waste or
substance into the environment, which non-compliance or remedial action could
have a Material Adverse Effect.
5.14. Ownership of Properties. On the date of this Agreement, the
Borrower and its Subsidiaries will have good title, free of all Liens other
than those permitted by Section 6.13, to all of the Property and assets
reflected in the financial statements as owned by it.
5.15. Investment Company Act. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
5.16. Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal
years, an unqualified audit report certified by
independent certified public accountants, acceptable to the
Lenders, prepared in accordance with Agreement Accounting
Principles on a consolidated and
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consolidating basis (consolidating statements need not be certified by
such accountants) for itself and the Subsidiaries, including balance
sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows,
accompanied by (a) any management letter prepared by said accountants,
and (b) a certificate of said accountants that, in the course of their
examination necessary for their certification of the foregoing, they
have obtained no knowledge of any Default or Unmatured Default, or if,
in the opinion of such accountants, any Default or Unmatured Default
shall exist, stating the nature and status thereof (for purposes of
this Section 6.1(i), Form 10-K filed with the Securities and Exchange
Commission and delivered by the Borrower to the Lenders hereunder in
respect of each such fiscal year shall be deemed to satisfy the
financial statements required hereby).
(ii) Within 45 days after the close of the first three
quarterly periods of each of its fiscal years, for itself and the
Subsidiaries, consolidated and consolidating unaudited balance sheets
as at the close of each such period and consolidated and consolidating
profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its chief
financial officer (for purposes of this Section 6.1(ii), Form 10-Q
filed with the Securities and Exchange Commission and delivered to the
Lenders hereunder in respect of each such quarterly period shall be
deemed to satisfy the financial statements required hereby).
(iii) Together with the financial statements required hereunder,
a compliance certificate in substantially the form of Exhibit "F"
hereto signed by its chief financial officer showing the calculations
necessary to determine compliance with this Agreement and stating that
no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
(iv) Simultaneously with the preparation thereof, and not more
than 45 days after the close of each of the first three fiscal quarters
of the Borrower and not more than 90 days after the close of the
last fiscal quarter of the Borrower in each fiscal year (a) call
reports for Firstar Bank Milwaukee N.A. in the form delivered to the
Federal Reserve District Bank, the Comptroller of the Currency or The
Federal Deposit
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Insurance Corporation, as the case may be, such reports to include the
Consolidated Reports of Condition and Income and all schedules
thereto, and (b) the Consolidated Financial Statements and the Parent
Company Only Financial Statements of the Borrower as at the end of
such quarter, each in the form delivered to the appropriate Federal
Reserve District Bank and each to include all schedules thereto.
(v) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer
Plan, certified by an actuary enrolled under ERISA.
(vi) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer of the
Borrower, describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto.
(vii) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect that
the Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries,
which, in either case, could have a Material Adverse Effect.
(viii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(ix) Promptly upon the filing thereof (and in the case of any registration
statement, upon the effectiveness thereof), copies of all registration
statements (excluding S-8 registration statements) and annual,
quarterly, monthly or other regular reports which the Borrower files
with the Securities and Exchange Commission (including, without
limitation, reports on Forms 10-K, 10-Q and 8-K or their equivalents).
(x) Promptly after the Borrower's or any Subsidiary's receipt thereof,
unless disclosure is prohibited by the terms thereof and after the
Borrower or such Subsidiary has in good faith attempted to obtain the
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consent of the relevant regulatory authority and such authority will
not consent to the disclosure thereof, copies of any (i) notice of
charges, (ii) notice of intent to revoke deposit insurance, (iii)
cease and desist order, (iv) suspension or removal order, (v)
memorandum of understanding, (vi) assessment of civil money penalties,
(vii) directive relating to holding company activities constituting a
risk to any Bank Subsidiary, (viii) directive, order or disapproval of
any exception or exemption request, plan or proposal related to
capital requirements, (ix) request that the Borrower guarantee any
capital restoration plan of any Banking Subsidiary, (x) notification
that any Bank Subsidiary is, or is to be treated as if it were, not
Well-Capitalized or Adequately Capitalized; or (xi) request or
directive from any regulatory authority requiring any Banking
Subsidiary to submit a capital restoration plan or restricting the
payment of dividends by any Subsidiary to the Borrower or any other
Subsidiary.
(xi) Promptly after the later to occur of the creation of any new
Subsidiary and the consummation of any Acquisition (if applicable), the
Borrower shall furnish an updated schedule of Subsidiaries to the
Agent and the Lenders in the form of Schedule "2" hereto, which
schedule shall set forth the respective jurisdictions of incorporation
of the Subsidiaries and the percentage of their respective capital
stock owned by the Borrower or other Subsidiaries.
(xii) Such other information (including non-financial information) as the
Agent or any Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances for general corporate purposes,
including, without limitation, working capital needs; the funding of
investments in, or extensions of credit to, Subsidiaries, Acquisitions (subject
to clause (y) of the next sentence) of other financial institutions or other
businesses or their assets; the reduction or repayment of outstanding
Indebtedness; the repurchase of outstanding equity securities of the Borrower;
and pending such uses, temporary investments in investment grade securities.
The Borrower will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Advances (x) to purchase or carry any "margin stock" (as
defined in Regulation U) in violation of Regulation U, or (y) to make any
Acquisition which has not been approved by the board of directors of the entity
being acquired.
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6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise, which could have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted or as permitted by its regulators and to do all things necessary to
remain duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where such failure to obtain all requisite authority would
not, with respect to any individual failure or any failures in the aggregate,
have a Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
pay when due all taxes, assessments and governmental charges and levies upon it
or its income, profits or Property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside.
6.6. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance companies insurance
on all their Property in such amounts and covering such risks as is consistent
with sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where any individual noncompliance or any noncompliance in the aggregate would
not have a Material Adverse Effect.
6.8. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each Subsidiary
to, permit the Lenders, by their respective representatives and agents, and
upon five Business Days' written notice to the Agent, to inspect any of the
Property, corporate books and financial records of the Borrower and each
Subsidiary, to
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examine and make copies of the books of accounts and other financial records of
the Borrower and each Subsidiary, and to discuss the affairs, finances and
accounts of the Borrower and each Subsidiary with, and to be advised as to the
same by, their respective officers at such reasonable times and intervals as
the Lenders may designate; provided, however, that, unless a Default or
Unmatured Default has occurred and is continuing, the Borrower shall not be
required to discuss any matter if the Borrower determines, in its reasonable
judgment, that such discussion would adversely affect the competitive position
of the Borrower or any Subsidiary.
6.10. Merger. The Borrower will not, nor will it permit
any Subsidiary to, merge or consolidate with or into any other Person, except
that:
(i) any Subsidiary may merge with the Borrower or a Wholly-Owned
Subsidiary provided that the Borrower or such Wholly-Owned
Subsidiary is the continuing or surviving corporation; or
(ii) the Borrower may merge with another Person; provided that (x)
the Borrower is the continuing or surviving corporation; and
(y) immediately after the consummation of the transaction, and
after giving effect thereto, no Default or Unmatured Default
exists.
6.11. Sale of Assets. The Borrower will not, nor will it
permit any Subsidiary to, lease, sell or otherwise dispose of its Property, to
any other Person except for (i) sales of inventory in the ordinary course of
business and (ii) leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than inventory in the ordinary
course of business) as permitted by this Section during the twelve-month period
ending with the month in which any such lease, sale or other disposition
occurs, do not constitute a Substantial Portion of the Property of the Borrower
and its Subsidiaries.
6.12. Acquisitions. If, at any time, any Material Banking
Subsidiary of the Borrower ceases to be Well-Capitalized, then the Borrower
will not, nor will it permit any Subsidiary to, make any Acquisition of any
Person, except:
(i) if such Acquisition is of a (w) bank holding company and one
or more banks, such bank holding company shall have a
composite BOPEC rating of 3 or better, (x) bank only, such
bank shall have a composite CAMEL rating of 3 or better, (y)
savings and loan association or a branch thereof, either (1)
such savings and loan association or branch thereof has a
composite MACRO rating of 3 or better, or (2) such Acquisition
is being made from the
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Federal Deposit Insurance Corporation, the Resolution Trust
Corporation or any successor thereof and is being assisted by
any such regulatory agency; or
(ii) Acquisitions which do not satisfy the foregoing rating
requirements in an aggregate amount not to exceed 10% of the
consolidated assets of the Borrower and its Subsidiaries,
calculated during the twelve-month period ending with the
month in which any such Acquisition is consummated.
Notwithstanding the foregoing, immediately after the consummation of any
Acquisition by the Borrower or any Subsidiary, and after giving effect thereto,
no Default or Unmatured Default shall exist.
6.13. Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time
be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been
set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its
books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits,
or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way affect
the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries.
(v) Liens on Property of the Borrower and its Subsidiaries
(other than the capital stock of any Subsidiary)
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existing on the date hereof and securing Indebtedness in
an aggregate principal amount not to exceed $10,000,000.
(vi) Liens granted by a Banking Subsidiary in the ordinary
course of its banking and trust business in connection
with any Permitted Banking Subsidiary Indebtedness.
(vii) Liens to secure public funds or other pledges of funds
required by law to secure deposits.
(viii) Repurchase agreements, reverse repurchase agreements and
other similar transactions entered into by any Banking
Subsidiary in the ordinary course of its banking or trust
business.
(ix) Liens granted by (1) any Subsidiary to the Borrower or any
other Subsidiary, or (2) the Borrower to any Subsidiary,
in each case as required pursuant to 12 U.S.C. 371c, as
amended, supplemented or otherwise modified from time to
time.
(x) Liens securing Indebtedness incurred after the date of
this Agreement to finance the cost of Acquisition,
construction or improvement of any Property useful and
intended to be used in carrying out the business of the
Borrower or any Subsidiary; provided, however, that (1)
any such Lien shall attach solely to the Property
acquired, constructed or improved or to substantially
unimproved real property on which real property so
acquired, constructed or improved is located, and (2) any
such Lien attaches within 90 days of the date such
Property was acquired, constructed or improved.
(xi) Liens on Property useful and intended to be used in
carrying out the business of the Borrower or any
Subsidiary which were existing at the time of Acquisition
of such property, or at the time of Acquisition by the
Borrower or any Subsidiary of any business entity then
owning such Property; provided, however, that (1) any such
Lien was not incurred, extended or renewed in the
contemplation of or in connection with such Acquisition by
the Borrower or any Subsidiary, and (2) any such Lien
shall attach solely to the Property acquired.
(xii) Extensions or renewals of Liens permitted by clauses (x)
and (xi) above; provided, however, that at the time of
such transaction and after giving effect thereto and to
the application of the proceeds thereof, (1) the aggregate
unpaid principal amount of
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Indebtedness of the Borrower and its Subsidiaries which is
secured pursuant to this clause (xii) and clauses (x) and
(xi) above shall be no greater than the aggregate unpaid
principal amount of such Indebtedness secured pursuant to
such clauses immediately preceding such transaction, and
(2) any such Lien shall attach solely to the Property
which was subject thereto immediately preceding such
transaction.
(xiii) Liens securing Rate Hedging Obligations incurred by the
Borrower and any Subsidiary in the ordinary course of
business solely for asset/liability management purposes
and not for speculative purposes.
6.14. Capitalization. The Borrower will ensure that each Banking
Subsidiary will at all times be, and will at all times be treated by the
relevant regulatory authorities as if they were, Well-Capitalized or
Adequately Capitalized. The Borrower and its Banking Subsidiaries shall comply
at all times with any and all minimum risk-based capital guidelines, leverage
measure capital guidelines and any other capital guidelines now or hereafter
published by any federal or state regulatory authorities having jurisdiction
over them.
6.15. Consolidated Non-Performing Assets to Total Equity Capital.
The Borrower will maintain as at the last day of each fiscal quarter a ratio of
(i) Non-Performing Assets to (ii) Total Equity Capital of not greater than 0.65
to 1.00.
6.16. Debt to Total Equity Capital. The Borrower will maintain as
at the last day of each fiscal quarter a ratio of (i) Indebtedness to (ii)
total equity capital (determined for the Borrower only in a manner consistent
with that used in preparing the Borrower's March 31, 1995 Parent Company Only
Financial Statements) which is less than 0.45 to 1.00.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement, any Loan, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made or deemed made.
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7.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any fee or other obligations under any of the Loan
Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions
of Section 6.2 and Sections 6.10 through and including 6.16.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within thirty days after
written notice from the Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay any
Indebtedness in excess of $10,000,000 when due; or the default by the Borrower
or any of its Subsidiaries in the performance of any term, provision or
condition contained in any agreement under which any Indebtedness in excess of
$10,000,000 was created or is governed, or any other event shall occur or
condition exist, the effect of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become due prior to
its stated maturity; or any Indebtedness of the Borrower or any of its
Subsidiaries in excess of $10,000,000 shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled payment) prior
to the stated maturity thereof; or the Borrower or any of its Subsidiaries
shall not pay, or admit in writing its inability to pay, its debts generally as
they become due.
7.6. The Borrower or any of its Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws
as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section
7.7.
7.7. Without the application, approval or consent of the Borrower
or any of its Subsidiaries, a receiver, trustee, examiner,
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liquidator or similar official shall be appointed for the Borrower or any of
its Subsidiaries or any Substantial Portion of its Property, or a proceeding
described in Section 7.6(iv) shall be instituted against the Borrower or any of
its Subsidiaries and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive days.
7.8. The Borrower or any of its Subsidiaries shall fail within 30
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $25,000,000, which is not stayed on appeal or otherwise
being appropriately contested in good faith.
7.9. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $50,000,000 or any Reportable Event shall occur in
connection with any Plan.
7.10. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower or any other member of the Controlled Group as withdrawal
liability (determined as of the date of such notification), exceeds $10,000,000
or requires payments exceeding $1,000,000 per annum.
7.11. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an amount
exceeding $1,000,000.
7.12. Any Banking Subsidiary shall cease to be insured under the
Federal Deposit Insurance Act and any rules and regulations issued thereunder,
as amended, supplemented or otherwise modified from time to time; or a cease
and desist order shall be issued against the Borrower or any Subsidiary
pursuant to 12 U.S.C. 1818(b) or (c) or any similar applicable provision of
state law and any rules and regulations issued thereunder, as amended,
supplemented or otherwise modified from time to time; or there shall occur,
with respect to any Banking Subsidiary, any event which is grounds for the
required submission of a capital restoration plan under 12 U.S.C. Section
1831(o)(e)(2) and any rules and regulations issued thereunder, as amended,
supplemented or
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otherwise modified from time to time, or for seeking the appointment of a
receiver or conservator under 12 U.S.C. 1821(c) and any rules and regulations
issued thereunder, as amended, supplemented or otherwise modified from time to
time; or any conservator or receiver shall be appointed for any Banking
Subsidiary under any such provisions or any other state or federal law.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part
of the Agent or any Lender. If any other Default occurs, the Required Lenders
may terminate or suspend the obligations of the Lenders to make Loans
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.
If, within fourteen (14) days after acceleration of the maturity of
the Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving
any Default hereunder; provided, however, that no such supplemental agreement
shall, without the consent of each Lender affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon.
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(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower to
assign its rights or obligations under this Agreement.
(iv) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.2 without obtaining the consent
of any other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders
or the Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence therein,
and the making of a Loan notwithstanding the existence of a Default or the
inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required pursuant to Section
8.2, and then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Agent and the Lenders until the Obligations
have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery
of the Notes and the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal income taxes on the
overall net income of any Lender, income taxes imposed on any
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Lender in the jurisdiction in which such Lender's home office is located, and
the Illinois personal property replacement tax) or other similar assessments or
charges made by any governmental or revenue authority in respect of the Loan
Documents shall be paid by the Borrower, together with interest and penalties,
if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agent
and the Lenders relating to the subject matter thereof.
9.6. Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint and
no Lender shall be the partner or agent of any other (except to the extent to
which the Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.7. Expenses; Indemnification. Subject to the Letter Agreement,
dated June 28, 1995, between the Borrower and the Agent, the Borrower shall
reimburse the Agent for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents. The
Borrower also agrees to reimburse the Agent and the Lenders for any costs,
internal charges and out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Agent and the Lenders, which attorneys may be
employees of the Agent or the Lenders) paid or incurred by the Agent or any
Lender in connection with the collection and enforcement of the Loan Documents.
The Borrower further agrees to indemnify the Agent and each Lender, its
directors, officers and employees (each an "Indemnified Party") against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not the Agent or any Lender is a party thereto) which any
Indemnified Party may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or
the direct or indirect application or proposed application of the proceeds of
any Loan hereunder, except that any such Indemnified Party shall not be
indemnified for any such losses, claims,
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damages, penalties, judgments, liabilities and expenses to the extent that they
arise from the gross negligence or willful misconduct of such Indemnified
Party. The obligations of the Borrower under this Section shall survive the
termination of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles; provided, however, that compliance with Sections 6.15 and 6.16
shall be interpreted and all determinations thereunder shall be made in
accordance with regulatory accounting principles as in effect from time to
time, applied in a manner consistent with that used in preparing the financial
statements and reports referred to in Section 6.1(iv) for the fiscal quarter
ended March 31, 1995.
9.10. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.11. Nonliability of Lenders. The relationship between the
Borrower and the Lenders and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
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IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement
in confidence, except for disclosure (i) to other Lenders and their respective
Affiliates, (ii) to legal counsel, accountants, and other professional advisors
to that Lender or to a Transferee, (iii) to regulatory officials, (iv) to any
Person as requested pursuant to or as required by law, regulation, or legal
process, (v) to any Person in connection with any legal proceeding to which
that Lender is a party, and (vi) permitted by Section 12.4.
ARTICLE X
THE AGENT
10.1. Appointment. The First National Bank of Chicago is hereby
appointed Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the agent of such Lender.
The Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
10.2. Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
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10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; (iv) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security.
The Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its capacity as
Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders and on all holders
of Notes. The Agent shall be fully justified in failing or refusing to take
any action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
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10.7. Reliance on Documents; Counsel. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by the Agent,
which counsel may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith
or the transactions contemplated thereby, or the enforcement of any of the
terms thereof or of any such other documents, provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.
10.9. Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is
a Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender.
10.l0. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time,
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continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of
its intention to resign. Upon any such resignation, the Required Lenders shall
have the right to appoint, on behalf of the Borrower and the Lenders, a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders within thirty days after the resigning Agent's giving notice
of its intention to resign, then the resigning Agent may appoint, on behalf of
the Borrower and the Lenders, a successor Agent. If the Agent has resigned and
no successor Agent has been appointed, the Lenders may perform all the duties
of the Agent hereunder and the Borrower shall make all payments in respect of
the Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the effectiveness of the resignation of the Agent, the
resigning Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation of an
Agent, the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents.
10.12. Co-Agents. None of the Lenders identified in this Agreement
or any other Loan Document as a "Co-Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement or any other
Loan Document other than those applicable to all Lenders as such. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or any other Loan
Document or in taking or refraining from taking any action hereunder or
thereunder or pursuant hereto or thereto.
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<PAGE> 59
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights
of the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by any Lender to or for the credit or account of the Borrower may be
offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments received
pursuant to Sections 3.1, 3.2 or 3.4) in a greater proportion than that
received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Loans held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff
or otherwise, receives collateral or other protection for its Obligations or
such amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (ii) of this Section, any Lender may
at any time, without the consent of the Borrower or the Agent, assign all or
any portion of its rights under this Agreement and its Notes to a Federal
Reserve Bank; provided, however, that no such assignment shall release the
transferor Lender from its obligations hereunder. The Agent may treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
such
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<PAGE> 60
payee complies with Section 12.3 in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed with
the Agent. Any assignee or transferee of a Note agrees by acceptance thereof
to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in
the ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Note for all purposes under
the Loan Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Loan or Commitment in which such Participant has an
interest which forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan or releases any
substantial portion of collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 11.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents, provided that each Lender shall retain the right of
setoff
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<PAGE> 61
provided in Section 11.1 with respect to the amount of participating
interests sold to each Participant. The Lenders agree to share with
each Participant, and each Participant, by exercising the right of
setoff provided in Section 11.1, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such
amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations under the
Loan Documents. Such assignment shall be substantially in the form of
Exhibit "H" hereto or in such other form as may be agreed to by the
parties thereto. The consent of the Borrower and the Agent, which
consent in each case shall not be unreasonably withheld, shall be
required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof; provided,
however, that if a Default has occurred and is continuing, the consent
of the Borrower shall not be required.
12.3.2. Effect; Effective Date. Upon (i) delivery to the
Agent of a notice of assignment, substantially in the form attached as
Exhibit "I" to Exhibit "H" hereto (a "Notice of Assignment"), together
with any consents required by Section 12.3.1, and (ii) payment of a
$2,500 fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in
such Notice of Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans
under the applicable assignment agreement are "plan assets" as defined
under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA. On
and after the effective date of such assignment, such Purchaser shall
for all purposes be a Lender party to this Agreement and any other
Loan Document executed by the Lenders and shall have all the rights
and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent
or action by the Borrower, the Lenders or the Agent shall be required
to release the transferor Lender with respect to the percentage of the
Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section
12.3.2, the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued
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<PAGE> 62
to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Commitment, as adjusted pursuant to
such assignment.
12.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser, which, if required pursuant
to Section 12.3.1, the Borrower has consented to in accordance with the terms
thereof, or any other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective Transferee any and
all information in such Lender's possession concerning the creditworthiness of
the Borrower and its Subsidiaries; provided that each Transferee and
prospective Transferee agrees to be bound by Section 9.15 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.16.
ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by Section 2.11
with respect to borrowing notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by telex or by facsimile and addressed or delivered to
such party at its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other parties.
Any notice, if mailed and properly addressed with postage prepaid, shall be
deemed given when received; any notice, if transmitted by telex or facsimile,
shall be deemed given when transmitted (answerback confirmed in the case of
telexes).
13.2. Change of Address. The Borrower, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by telex or
telephone, that it has taken such action.
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<PAGE> 63
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
FIRSTAR CORPORATION
By: /s/ William H. Risch
-----------------------------------------------
Print Name: William H. Risch
----------------------------------------
Title: Senior Vice President-Finance and Treasurer
--------------------------------------------
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Mr. William H. Risch
Senior Vice President -
Finance and Treasurer
Commitment
$20,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ R.C. English
-----------------------------------------------
Print Name: Robert C. English
----------------------------------------
Title: Vice President
--------------------------------------------
One First National Plaza
Suite 0162
Chicago, Illinois 60670
Attention: Mr. Robert C. English
Vice President
$20,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
Individually and as Co-Agent
By: /s/ Jennings F. Werner
-----------------------------------------------
Print Name: Jennings F. Werner
----------------------------------------
Title: Vice President
--------------------------------------------
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Mr. Jennings F. Werner
Vice President
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<PAGE> 64
$20,000,000 CHEMICAL BANK,
Individually and as Co-Agent
By: /s/ George Johnson
------------------------------------------
Print Name: George Johnson
-----------------------------------
Title: Vice President
---------------------------------------
270 Park Avenue
New York, New York 10017
Attention: Mr. George C. Johnson
Vice President
$20,000,000 NBD BANK,
Individually and as Co-Agent
By: /s/ Donald J. Buse'
------------------------------------------
Print Name: Donald J. Buse'
-----------------------------------
Title: Vice President
---------------------------------------
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Mr. Donald J. Buse
Vice President
$15,000,000 THE BANK OF NEW YORK
By: /s/ Christine M. Herrick
------------------------------------------
Print Name: Christine M. Herrick
-----------------------------------
Title: Vice President
---------------------------------------
One Wall Street, 17th Floor
New York, New York 10286
Attention: Mr. David G. Dobbins
Vice President
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<PAGE> 65
$15,000,000 DEUTSCHE BANK AG - NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ Gayma Z. Shivnarain
------------------------------------------
Print Name: Gayma Z. Shivnarain
-----------------------------------
Title: Vice President
---------------------------------------
By: /s/ Christopher de Chabert
------------------------------------------
Print Name: Christopher de Chabert
-----------------------------------
Title: Vice President
---------------------------------------
31 West 52nd Street
New York, New York 10019
Attention: Mr. Christopher de Chabert
Assistant Vice President
$15,000,000 MELLON BANK, N.A.
By: /s/ Michael Shuster
------------------------------------------
Print Name: Michael Shuster
-----------------------------------
Title: Vice President
---------------------------------------
One Mellon Bank Center
Room 400
Pittsburgh, Pennsylvania
15258
Attention: Mr. Michael Shuster
Vice President
$125,000,000
============
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<PAGE> 66
EXHIBIT "A-1"
COMMITTED NOTE
$___________
August 8, 1995
Firstar Corporation, a Wisconsin corporation (the "Borrower"), promises to
pay to the order of ___________ (the "Lender") the lesser of the principal sum
of __________ Dollars or the aggregate unpaid principal amount of all Committed
Loans made by the Lender to the Borrower pursuant to Section 2.3 of the Credit
Agreement (as the same may be amended, supplemented or otherwise modified from
time to time, the "Agreement") hereinafter referred to, in immediately
available funds at the main office of The First National Bank of Chicago in
Chicago, Illinois, as Agent, or as otherwise directed by the Agent pursuant to
the terms of the Agreement, together with interest on the unpaid principal
amount hereof at the rates and on the dates set forth in the Agreement. The
Borrower shall pay the principal of and accrued and unpaid interest on all
Committed Loans in full on the Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Committed Loan and the date and amount of each
principal payment hereunder, provided, however, that any failure to so record
shall not affect the Borrower's obligations under any Loan Document.
This Committed Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Credit Agreement, dated as of August 8, 1995, among the
Borrower, Bank of America National Trust and Savings Association, Chemical Bank
and NBD Bank, as Co-Agents, The First National Bank of Chicago, individually
and as Agent, and the lenders named therein, including the Lender, to which
Agreement, as it may be amended from time to time, reference is hereby made for
a statement of the terms and conditions governing this Committed Note,
including the terms and conditions under which this Committed Note may be
prepaid or its maturity date accelerated. Capitalized terms used and not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
FIRSTAR CORPORATION
By: _______________________________
Print Name: _______________________
Title: ____________________________
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<PAGE> 67
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMMITTED NOTE OF FIRSTAR CORPORATION
DATED AUGUST 8, 1995
<TABLE>
<CAPTION>
Principal Maturity Principal
Amount of Interest Amount Unpaid
Date of Loan Period Paid Balance
- ---- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
</TABLE>
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EXHIBIT "A-2"
COMPETITIVE BID NOTE
August 8, 1995
Firstar Corporation, a Wisconsin corporation (the "Borrower"),
promises to pay to the order of ___________ (the "Lender") the aggregate unpaid
principal amount of all Competitive Bid Loans made by the Lender to the
Borrower pursuant to Section 2.4 of the Credit Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the "Agreement")
hereinafter referred to, in immediately available funds at the main office of
The First National Bank of Chicago in Chicago, Illinois, as Agent, or as
otherwise directed by the Agent pursuant to the terms of the Agreement,
together with interest on the unpaid principal amount hereof at the rates and
on the dates set forth in the Agreement. The Borrower shall pay each
Competitive Bid Loan in full on the last day of the Interest Period applicable
to such Competitive Bid Loan.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Competitive Bid Loan and the date and amount of
each principal payment hereunder, provided, however, that any failure to so
record shall not affect the Borrower's obligations under any Loan Document.
This Competitive Bid Note is one of the Notes issued pursuant to, and
is entitled to the benefits of, the Credit Agreement, dated as of August 8,
1995, among the Borrower, Bank of America National Trust and Savings
Association, Chemical Bank and NBD Bank, as Co-Agents, The First National Bank
of Chicago, individually and as Agent, and the lenders named therein, including
the Lender, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions governing
this Competitive Bid Note, including the terms and conditions under which this
Competitive Bid Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with
the meanings attributed to them in the Agreement.
FIRSTAR CORPORATION
By: ____________________________
Print Name: ____________________
Title: _________________________
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SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMPETITIVE BID NOTE OF FIRSTAR CORPORATION
DATED AUGUST 8, 1995
<TABLE>
<CAPTION>
Principal Maturity Principal
Amount of Interest Amount Unpaid
Date of Loan Period Paid Balance
- ---- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
</TABLE>
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EXHIBIT "B"
COMPETITIVE BID QUOTE REQUEST
(Section 2.4.2)
__________, 19__
To: The First National Bank of Chicago, as agent (the "Agent")
From: Firstar Corporation (the "Borrower")
Re: Credit Agreement dated as of August 8, 1995 among the
Borrower, the lenders from time to time party thereto, Bank
of America National Trust and Savings Association, Chemical
Bank and NBD Bank, as Co-Agents and The First National Bank of
Chicago, as Agent for such lenders (as amended, supplemented
or otherwise modified from time to time through the date
hereof, the "Agreement")
1. Capitalized terms used herein have the meanings assigned to them
in the Agreement.
2. We hereby give notice pursuant to Section 2.4.2 of the Agreement
that we request Competitive Bid Quotes for the following proposed Competitive
Bid Advance(s):
Borrowing Date: __________, 19__
Principal Amount(1) Interest Period(2)
------------------- ------------------
3. Such Competitive Bid Quotes should offer [a Competitive Bid
Margin] [an Absolute Rate].
- ----------------------------------
(1)Amount must be at least $5,000,000 (and multiples of $500,000 in excess
thereof).
(2)One, two, three, or six months (Eurodollar Auction) or at least 7 and
not more than 180 days (Absolute Rate Auction), subject to the provisions of the
definitions of Eurodollar Interest Period and Absolute Rate Interest Period.
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4. Upon acceptance by the undersigned of any or all of the
Competitive Bid Advances offered by Lenders in response to this request, the
undersigned shall be deemed to affirm as of the Borrowing Date thereof the
representations and warranties made in Article IV of the Agreement.
FIRSTAR CORPORATION
By: __________________________________
Title: _______________________________
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EXHIBIT "C"
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.4.3)
__________, 19__
To: Each of the Lenders party to the Agreement referred to below
Re: Invitation for Competitive Bid Quotes to Firstar Corporation (the
"Borrower")
Pursuant to Section 2.4.3 of the Credit Agreement dated as of August
8, 1995 among the Borrower, the lenders from time to time party thereto, Bank
of America National Trust and Savings Association, Chemical Bank and NBD Bank,
as Co-Agents and The First National Bank of Chicago, as Agent for such lenders
(as amended, supplemented or otherwise modified from time to time through the
date hereof, the "Agreement"), we are pleased on behalf of the Borrower to
invite you to submit Competitive Bid Quotes to the Borrower for the following
proposed Competitive Bid Advance(s):
Borrowing Date: __________, 19__
Principal Amount Interest Period
---------------- ---------------
Such Competitive Bid Quotes should offer [a Competitive Bid Margin]
[an Absolute Rate]. Your Competitive Bid Quote must comply with Section 2.4.4
of the Agreement and the foregoing. Capitalized terms used herein have the
meanings assigned to them in the Agreement.
Please respond to this invitation by no later than [1:00 p.m.] [9:00
a.m.] (Chicago time) on _________, 19__.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By: _____________________________
Title: __________________________
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<PAGE> 73
EXHIBIT "D"
COMPETITIVE BID QUOTE
(Section 2.4.4)
_________, 19__
To: The First National Bank of Chicago, as Agent
Re: Competitive Bid Quote to Firstar Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_________, 19__, we hereby make the following Competitive Bid Quote pursuant to
Section 2.4.4 of the Agreement hereinafter referred to and on the following
terms:
1. Quoting Lender: _______________
2. Person to contact at Quoting Lender: _______________
3. Borrowing Date: _______________(1)
4. We hereby offer to make Competitive Bid Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
<TABLE>
<CAPTION>
Principal Interest [Competitive [Absolute Minimum
Amount(2) Period(3) Bid Margin(4)] Rate (5)] Amount(6)
------ ------ ---------- -------- ------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------
(1)As specified in the related Invitation For Competitive Bid Quotes.
(2)Principal amount bid for each Interest Period may not exceed the
principal amount requested. Bids must be made for at least $5,000,000 (and
multiples of $500,000 in excess thereof).
(3)One, two, three or six months or at least 7 and not more than 180 days,
as specified in the related Invitation For Competitive Bid Quotes.
(4)Competitive Bid Margin over or under the Eurodollar Base Rate
determined for the applicable Interest Period. Specify percentage (rounded to
the nearest 1/100 of 1%) and specify whether "PLUS" or "MINUS".
(5)Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
(6)Specify minimum or maximum amount, if any, which the Borrower may
accept (see Section 2.4.4(b)(iv)).
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We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of August 8, 1995 among the Borrower, the lenders from time to time
party thereto, Bank of America National Trust and Savings Association, Chemical
Bank and NBD Bank, as Co-Agents and The First National Bank of Chicago, as
Agent for such lenders (as amended, supplemented or otherwise modified from
time to time through the date hereof, the "Agreement"), irrevocably obligates
us to make the Competitive Bid Loan(s) for which any offer(s) are accepted, in
whole or in part. Capitalized terms used herein and not otherwise defined
herein shall have their meanings as defined in the Agreement.
Very truly yours,
[NAME OF LENDER]
By: __________________________________
Title: _______________________________
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<PAGE> 75
EXHIBIT "E"
FORM OF OPINION
August 8, 1995
To: The Agent and the Lenders who are parties to the Credit Agreement
described below.
Gentlemen/Ladies:
I am counsel for Firstar Corporation (the Borrower"), and have
represented the Borrower in connection with its execution and delivery of a
Credit Agreement among the Borrower, The First National Bank of Chicago,
individually and as Agent, Bank of America National Trust and Savings
Association, Chemical Bank and NBD Bank, as Co-Agents and the Lenders named
therein, providing for Advances in an aggregate principal amount not exceeding
$125,000,000 at any one time outstanding and dated as of August 8, 1995 (the
"Agreement"). All capitalized terms used in this opinion and not otherwise
defined shall have the meanings attributed to them in the Agreement.
We have examined the Borrower's articles of incorporation, by-laws,
resolutions, the Loan Documents and such other matters of fact and law which we
deem necessary in order to render this opinion. Based upon the foregoing, it
is our opinion that:
l. Each of the Borrower and its Subsidiaries is a corporation or
a national or state banking association duly incorporated or organized, as
applicable, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, except where
such failure to obtain all requisite authority would not, with respect to any
individual failure or any failures in the aggregate, have a Material Adverse
Effect.
2. The execution and delivery of the Loan Documents by the
Borrower and the performance by the Borrower of the Obligations have been duly
authorized by all necessary corporate action and proceedings on the part of the
Borrower and will not:
(a) require any consent of the Borrower's shareholders;
(b) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or the Borrower's or any Subsidiary's articles of
incorporation or by-laws or any indenture, instrument or agreement
binding upon the Borrower or any of its Subsidiaries; or
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<PAGE> 76
(c) result in, or require, the creation or imposition of any
Lien pursuant to the provisions of any indenture, instrument or
agreement binding upon the Borrower or any of its Subsidiaries.
3. The Loan Documents have been duly executed and delivered by
the Borrower and constitute legal, valid and binding obligations of the
Borrower enforceable in accordance with their terms except to the extent the
enforcement thereof may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and subject also to
the availability of equitable remedies if equitable remedies are sought.
4. There is no litigation or proceeding against the Borrower or
any of its Subsidiaries which, if adversely determined, could have a Material
Adverse Effect.
5. No approval, authorization, consent, adjudication or order of
any governmental authority, which has not been obtained by the Borrower or any
of its Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement or in connection with the payment
by the Borrower of the Obligations.
This opinion may be relied upon by the Agent, the Lenders and their
participants, assignees and other transferees.
Very truly yours,
____________________________
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EXHIBIT "F"
COMPLIANCE CERTIFICATE
To: The Lenders who are parties to the Credit Agreement described below.
This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of August 8, 1995 (as amended, modified, renewed or
extended from time to time, the "Agreement") among Firstar Corporation (the
"Borrower"), the lenders party thereto, Bank of America National Trust and
Savings Association, Chemical Bank and NBD Bank, as Co-Agents and The First
National Bank of Chicago, as Agent for the Lenders. Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate have the meanings
ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
Page 71
<PAGE> 78
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ____ day of
______________, 19__.
________________________________
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<PAGE> 79
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of with
-------------------
Sections 6.15 and 6.16 of the Agreement
Section 6.15. Consolidated Non-Performing Assets to Total Equity Capital:
<TABLE>
<S> <C> <C>
A. Consolidated Non-Performing Assets
1. Loans on nonaccrual status $
-------------
2. Loans 90 days or more past
due and still accruing $
-------------
3. Loans and leases restructured and
in compliance with modified terms $
-------------
4. Other Real Estate Owned $
-------------
5. Property acquired pursuant to
in substance foreclosures $
-------------
6. Total Consolidated Non-Performing
Assets (1 + 2 + 3 + 4 + 5) $
-------------
B. Total Equity Capital $
-------------
C. Ratio (A6/B) :1.00
-------------
D. Maximum Permitted 0.65:1.00
-------------
Section 6.16. Debt to Total Equity Capital:
----------------------------
A. Total Indebtedness (Borrower-only)
1. Total deposits $
-------------
2. Securities sold under agreements
to repurchase $
-------------
3. Borrowings with an original
maturity of one year or less $
-------------
4. Other borrowed funds with an
original maturity of greater
than one year $
-------------
5. Mandatory convertible securities $
-------------
6. Subordinated notes and debentures $
-------------
</TABLE>
Page 73
<PAGE> 80
<TABLE>
<S> <C> <C>
7. Other liabilities $
----------------
8. Total debt (1 + 2 + 3 + 4 + 5 + 6 + 7) $
----------------
B. Total equity capital (Borrower-only) $
----------------
C. Ratio A/B :1.00
----------------
D. Maximum Permitted 0.45:1.00
----------------
</TABLE>
Page 74
<PAGE> 81
EXHIBIT "G"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: The First National Bank of Chicago, as Agent (the "Agent") under the
Credit Agreement Described Below.
Re: Credit Agreement, dated as of August 8, 1995 (as the same may be
amended or modified, the "Credit Agreement"), among Firstar
Corporation (the "Borrower"), the Agent, Bank of America National
Trust and Savings Association, Chemical Bank and NBD Bank, as Co-
Agents and the Lenders named therein. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned thereto in
the Credit Agreement.
The Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds of
Advances or other extensions of credit from time to time until receipt by the
Agent of a specific written revocation of such instructions by the Borrower;
provided, however, that the Agent may otherwise transfer funds as hereafter
directed in writing by the Borrower in accordance with Section 13.1 of the
Credit Agreement or based on any telephonic notice made in accordance with
Section 2.11 of the Credit Agreement.
Facility Identification Number(s) __________________________________________
Customer/Account Name ______________________________________________________
Transfer Funds To __________________________________________________________
__________________________________________________________
__________________________________________________________
For Account No. ____________________________________________________________
Reference/Attention To _____________________________________________________
Authorized Officer (Customer Representative) Date ____________________
<TABLE>
<S> <C>
_____________________________________ _________________________________
(Please Print) Signature
Bank Officer Name Date ____________________________
_____________________________________ _________________________________
(Please Print) Signature
</TABLE>
(Deliver Completed Form to Credit
Support Staff For Immediate Processing)
Page 75
<PAGE> 82
EXHIBIT "H"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
__________________________ (the "Assignor") and __________________ (the
"Assignee") is dated as of _________________, 19__. The parties hereto agree
as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from time
to time is herein called the "Credit Agreement") described in Item 1 of Schedule
1 attached hereto ("Schedule 1"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under the
Credit Agreement such that after giving effect to such assignment the Assignee
shall have purchased pursuant to this Assignment Agreement the percentage
interest specified in Item 3 of Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the facilities listed in Item
3 of Schedule 1 and the other Loan Documents. The aggregate Commitment (or
Loans, if the applicable Commitment has been terminated) purchased by the
Assignee hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date specified in
Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by
the Agent) after a Notice of Assignment substantially in the form of Exhibit "I"
attached hereto has been delivered to the Agent. Such Notice of Assignment must
include any consents required to be delivered to the Agent by Section [12.3.1]
of the Credit Agreement. In no event will the Effective Date occur if the
payments required to be made by the Assignee to the Assignor on the Effective
Date under Sections 4 and 5 hereof are not made on the proposed Effective Date.
The Assignor will notify the Assignee of the proposed Effective Date no later
than the Business Day prior to the proposed Effective Date. As of the Effective
Date, (i) the Assignee shall have the rights and obligations of a Lender under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder and (ii) the Assignor shall relinquish its rights and be
released from its corresponding obligations under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all
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<PAGE> 83
payments of principal, interest and fees with respect to the interest assigned
hereby. The Assignee shall advance funds directly to the Agent with respect to
all Loans and reimbursement payments made on or after the Effective Date with
respect to the interest assigned hereby. [In consideration for the sale and
assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on the
Effective Date, an amount equal to the principal amount of the portion of all
Floating Rate Loans assigned to the Assignee hereunder and (ii) with respect to
each Fixed Rate Loan made by the Assignor and assigned to the Assignee hereunder
which is outstanding on the Effective Date, (a) on the last day of the Interest
Period therefor or (b) on such earlier date agreed to by the Assignor and the
Assignee or (c) on the date on which any such Fixed Rate Loan either becomes due
(by acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment
Date"), the Assignee shall pay the Assignor an amount equal to the principal
amount of the portion of such Fixed Rate Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that
the Payment Date for such Fixed Rate Loan shall be the Effective Date, they
shall agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the existing
Interest Period applicable to such Fixed Rate Loan (the "Agreed Interest Rate")
and any interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor. In the event interest for the period from
the Effective Date to but not including the Payment Date is not paid by the
Borrower with respect to any Fixed Rate Loan sold by the Assignor to the
Assignee hereunder, the Assignee shall pay to the Assignor interest for such
period on the portion of such Fixed Rate Loan sold by the Assignor to the
Assignee hereunder at the applicable rate provided by the Credit Agreement. In
the event a prepayment of any Fixed Rate Loan which is existing on the Payment
Date and assigned by the Assignor to the Assignee hereunder occurs after the
Payment Date but before the end of the Interest Period applicable to such Fixed
Rate Loan, the Assignee shall remit to the Assignor the excess of the prepayment
penalty paid with respect to the portion of such Fixed Rate Loan assigned to the
Assignee hereunder over the amount which would have been paid if such prepayment
penalty was calculated based on the Agreed Interest Rate. The Assignee will
also promptly remit to the Assignor (i) any principal payments received from the
Agent with respect to Fixed Rate Loans prior to the Payment Date and (ii) any
amounts of interest on Loans and fees received from the Agent which relate to
the portion of the Loans assigned to the Assignee hereunder for periods prior to
the Effective Date, in the case of Floating Rate Loans or fees, or the Payment
Date, in the case of Fixed Rate Loans, and not previously paid by the Assignee
to the Assignor.]******* In the event that either party hereto receives any
payment to which the other party
- ----------------------------------
*******Each Assignor may insert its standard payment provisions in lieu of
the payment terms included in this Exhibit.
Page 77
<PAGE> 84
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or [commitment] fees
is made under the Credit Agreement with respect to the amounts assigned to the
Assignee hereunder (other than a payment of interest or facility fees for the
period prior to the Effective Date or, in the case of Fixed Rate Loans, the
Payment Date, which the Assignee is obligated to deliver to the Assignor
pursuant to Section 4 hereof). The amount of such fee shall be the difference
between (i) the interest or fee, as applicable, paid with respect to the amounts
assigned to the Assignee hereunder and (ii) the interest or fee, as applicable,
which would have been paid with respect to the amounts assigned to the Assignee
hereunder if each interest rate was ___ of 1% less than the interest rate paid
by the Borrower or if the facility fee was ___ of 1% less than the facility fee
paid by the Borrower, as applicable. In addition, the Assignee agrees to pay
___% of the recordation fee required to be paid to the Agent in connection
with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
Property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms
that it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter
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<PAGE> 85
into this Assignment Agreement, (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, (iii) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Loan Documents as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender, (v) agrees that
its payment instructions and notice instructions are as set forth in the
attachment to Schedule 1, (vi) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are "plan assets" as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be "plan assets" under
ERISA, [and (vii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is entitled to receive
payments under the Loan Documents without deduction or withholding of any
United States federal income taxes].*
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section [12.3.1] of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any of
the terms and conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Loan Documents has been obtained and (ii) unless the prior
written consent of the Assignor is obtained, the Assignee is not thereby
released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under [Sections 4, 5
and 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar
- ----------------
*to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
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<PAGE> 86
amount purchased shall be recalculated based on the reduced Aggregate
Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By: _______________________________
Title: ____________________________
________________________________
________________________________
[NAME OF ASSIGNEE]
By: _______________________________
Title: ____________________________
________________________________
________________________________
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<PAGE> 87
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement: Credit Agreement, dated as
of August 8, 1995, among Firstar Corporation, the Lenders, Bank of
America National Trust and Savings Association, Chemical Bank
and NBD Bank, as Co-Agents and The First National Bank of Chicago, as
Agent
2. Date of Assignment Agreement: _____________, 19__
3. Amounts (As of Date of Item 2 above):
<TABLE>
<CAPTION>
Facility Facility Facility Facility
1* 2* *3 *4
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
a. Total of Commitments
(Loans)** under
Credit Agreement $ $ $ $
-------- -------- -------- --------
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement*** % % % %
-------- -------- -------- --------
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ $ $ $
-------- -------- -------- --------
4. Assignee's aggregate (Loan
Amount)** Commitment amount
purchased hereunder: $
-------
5. Proposed Effective Date:
-------
</TABLE>
Accepted and Agreed:
<TABLE>
<S> <C>
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: ___________________________ By: _________________________
Title: ___________________________ Title: _________________________
</TABLE>
* Insert specific facility names per Credit Agreement
** If a Commitment has been terminated, insert outstanding Loans in place
of Commitment
*** Percentage taken to 10 decimal places
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<PAGE> 88
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which
must include notice address for the Assignor and the Assignee
Page 82
<PAGE> 89
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
____________________, 19__
<TABLE>
<S> <C>
To: [NAME OF BORROWER]*
__________________________
__________________________
[NAME OF AGENT]
__________________________
__________________________
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
</TABLE>
1. We refer to that Credit Agreement (the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given
and delivered to ****[the Borrower and]**** the Agent pursuant to Section
[12.3.2] of the Credit Agreement.
3. The Assignor and the Assignee have entered into an
Assignment Agreement, dated as of ___________, 19__ (the "Assignment"),
pursuant to which, among other things, the Assignor has sold, assigned,
delegated and transferred to the Assignee, and the Assignee has purchased,
accepted and assumed from the Assignor the percentage interest specified in
Item 3 of Schedule 1 of all outstandings, rights and obligations under the
Credit Agreement relating to the facilities listed in Item 3 of Schedule 1.
The Effective Date of the Assignment shall be the later of the date specified
in Item 5 of Schedule 1 or two Business Days (or such shorter period as agreed
to by the Agent) after this Notice of Assignment and any consents and fees
required by Sections [12.3.1 and 12.3.2] of the Credit Agreement have been
delivered to the Agent, provided that the Effective Date shall not occur if any
condition precedent agreed to by the Assignor and the Assignee has not been
satisfied.
- ------------------------------------
*To be included only if consent must be obtained from the Borrower pursuant to
Section 12.3.1 of the Credit Agreement.
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<PAGE> 90
4. The Assignor and the Assignee hereby give to the Borrower and
the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective on
such date pursuant to Section 3 hereof, and will confer with the Agent to
determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment Agreement
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Agent, the Assignor will give the Agent
written confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent
on or before the Effective Date the processing fee of $2,500 required by
Section 12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the
Assignor and the Assignee request and direct that the Agent prepare and cause
the Borrower to execute and deliver new Notes or, as appropriate, replacements
notes, to the Assignor and the Assignee. The Assignor and, if applicable, the
Assignee each agree to deliver to the Agent the original Note received by it
from the Borrower upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and
payment instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none
of the funds, monies, assets or other consideration being used to make the
purchase pursuant to the Assignment are "plan assets" as defined under ERISA
and that its rights, benefits, and interests in and under the Loan Documents
will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent
under the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect to
the Borrower or the Loan Documents to the Assignee until the Assignee becomes a
party to the Credit Agreement.*
- -----------------------------------
*May be eliminated if Assignee is a party to the Credit Agreement prior to the
Effective Date.
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<PAGE> 91
<TABLE>
<S> <C>
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: ___________________________ By: _________________________
Title: ___________________________ Title: _________________________
ACKNOWLEDGED [AND CONSENTED TO] ACKNOWLEDGED [AND CONSENTED TO]
BY [NAME OF AGENT] BY [NAME OF BORROWER]
By: ___________________________ By: _________________________
Title: ___________________________ Title: _________________________
</TABLE>
[Attach photocopy of Schedule 1 to Assignment]
Page 85
<PAGE> 92
SCHEDULE "1"
LITIGATION
(See Section 5.7)
None.
Page 86
<PAGE> 93
Schedule 2 to Credit Agreement among Firstar Corporation, The First National
Bank of Chicago as Agent and Lenders named therein
Jurisdiction
Parent in which Incorporated
Company Name of Subsidiary or Organized
- ------- ---------------------------------------- ---------------------
6 Firstar Insurance Services, Inc. Wisconsin
5 Elan Investment Services, Inc. Wisconsin
6 Elan Life Insurance Company, Inc. Arizona
6 Elan Title Services, Inc. Wisconsin
5 Firstar Community Investment Corporation Wisconsin
6 Firstar Development Corporation Delaware
5 Firstar Leasing Services Corporation Wisconsin
5 Firstar Mortgage Corporation Wisconsin
5 FM Properties of Wisconsin, Inc. Wisconsin
5 CSFM Corporation Wisconsin
5 Firstar Home Mortgage Corporation Wisconsin
5 Firstar Information Services Corporation Wisconsin
4 Banks of Iowa Capital Corporation Iowa
4 Banks of Iowa Credit Corporation Iowa
4 Firstar CSC Corporation Iowa
5 DPC of Milwaukee, Inc. Wisconsin
5 Mid States Financial Corp Illinois
1 First Colonial Trust Company Illinois
1 First Colonial Mortgage Corporation Illinois
1 BankersTech, Inc. Illinois
* Appleton Capital Corporation Nevada
* Eau Claire Capital Corporation Nevada
* Fond du Lac Capital Corporation Nevada
* Grantsburg Capital Corporation Nevada
* Green Bay Capital Corporation Nevada
* Madison Capital Corporation Nevada
* Manitowoc Capital Corporation Nevada
* Milwaukee Capital Corporation Nevada
* Minocqua Capital Corporation Nevada
* Oshkosh Capital Corporation Nevada
* Rice Lake Capital Corporation Nevada
* Sheboygan Capital Corporation Nevada
* Wausau Capital Corporation Nevada
* Wisconsin Rapids Capital Corporation Nevada
Notes
1 Subsidiary of Firstar Corporation of Wisconsin
2 Subsidiary of Firstar Corporation of Minnesota
3 Subsidiary of Firstar Corporation of Arizona
4 Subsidiary of Firstar Corporation of Iowa
5 Subsidiary of Firstar Bank Milwaukee, N.A.
6 Subidiary of Firstar Corporation
* All Capital Corporations are subsidiaries of their respective banks
Page 87
<PAGE> 94
Jurisdiction
Parent in which Incorporated
Company Name of Subsidiary or Organized
- ------- ----------------------------------------- ---------------------
1 Firstar Bank Milwaukee, N.A. United States
1 Firstar Credit Card Bank, 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 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 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
4 Firstar Bank Ames Iowa
4 Firstar Bank Burlington, N.A. United States
4 Firstar Bank Cedar Falls Iowa
4 Firstar Bank Cedar Rapids, N.A. United States
4 Firstar Bank Council Bluffs Iowa
4 Firstar Bank Des Moines, N.A. United States
4 Firstar Bank Mount Pleasant Iowa
4 Firstar Bank Ottumwa Iowa
4 Firstar Bank Quad Cities, N.A. United States
4 Firstar Bank Red Oak, N.A. United States
4 Firstar Bank Sioux City, N.A. United States
2 Firstar Bank of Minnesota, N.A. United States
1 Firstar Bank Illinois Illinois
1 Colonial Bank Illinois
1 Community Bank of Edgewater Illinois
1 York State Bank Illinois
1 Fox Lake State Bank Illinois
1 All American Bank Illinois
1 First Colonial Bank of Lake County Illinois
3 Firstar Metropolitan Bank & Trust Arizona
6 Firstar Corporation of Wisconsin Wisconsin
6 Firstar Corporation of Minnesota Minnesota
6 Firstar Corporation of Arizona Arizona
6 Firstar Corporation of Iowa Iowa
1 Firstar Trust Company Wisconsin
1 Firstar Trust Company of Florida, N.A. United States
1 Firstar Trust Company of Illinois Illinois
2 Firstar Trust Company of Minnesota Minnesota
6 Firstar Investment Research & Management Company Wisconsin
Page 88
<PAGE> 95
Each subsidiary shown on this Schedule 2 is 100% owned by its indicated
Firstar parent company, with the following exceptions. The percentage ownership
by the subsidiary's Firstar parent company is indicated next to the name of each
subsidiary:
Firstar Bank Eau Claire, N.A. 97.8%
Firstar Bank Green Bay 99.7%
Firstar Bank Madison, N.A. 99.4%
Firstar Bank Oshkosh, N.A. 99.7%
Firstar Trust Company 99.9%
Elan Life Insurance Company 79.0%
The remaining shares of the four Firstar Banks listed above and of Firstar
Trust Company are owned by the public. All of the remaining shares of Elan Life
Insurance Company are owned by ERCO Services, Inc.
Page 89
<PAGE> 1
Exhibit 21
Subsidiaries of the Registrant
Firstar Corporation has no parents. The following list shows the name and the
state or jurisdiction of the incorporation.
United States, State or
Other Jurisdiction
in which Incorporated
Name of Subsidiary or Organized
------------------------------- -----------------------
1 Firstar Bank Milwaukee, N.A. United States
1 Firstar Credit Card Bank, 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 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 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
4 Firstar Bank Iowa, N.A. United States
4 Firstar Bank Burlington, N.A. United States
2 Firstar Bank of Minnesota, N.A. United States
1 Firstar Bank Illinois Illinois
1 FCSB Bank Illinois
3 Firstar Metropolitan Bank & Trust Arizona
Firstar Corporation of Wisconsin Wisconsin
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 Minnesota Minnesota
Firstar Investment Research & Management Company Wisconsin
<PAGE> 2
Unites States, State or
Other Jurisdiction
in which Incorporated
Name of Subsidiary or Organized
----------------------------------- --------------------------
Firstar Insurance Services, Inc. Wisconsin
5 Elan Investment Services, Inc. Wisconsin
Elan Life Insurance Company, Inc. Arizona
Elan Title Services, Inc. Wisconsin
5 Firstar Community Investment Corporation Wisconsin
Firstar Development Corporation Delaware
5 Firstar Leasing Services Corporation Wisconsin
5 FM Properties of Wisconsin, Inc. Wisconsin
5 CSFM Corporation Wisconsin
5 Firstar Home Mortgage Corporation Wisconsin
5 Firstar Information Services Corporation Wisconsin
4 Banks of Iowa Capital Corporation Iowa
5 DPC of Milwaukee, Inc. Wisconsin
5 Mid States Financial Corp Illinois
1 First Colonial Mortgage Corporation Illinois
Appleton Capital Corporation Nevada
Eau Claire Capital Corporation Nevada
Fond du Lac Capital Corporation Nevada
Grantsburg Capital Corporation Nevada
Green Bay Capital Corporation Nevada
Madison Capital Corporation Nevada
Manitowoc Capital Corporation Nevada
Milwaukee Capital Corporation Nevada
Minocqua Capital Corporation Nevada
Oshkosh Capital Corporation Nevada
Rice Lake Capital Corporation Nevada
Sheboygan Capital Corporation Nevada
Wausau Capital Corporation Nevada
Wisconsin Rapids Capital Corporation Nevada
Notes
-----------------
1 Subsidiary of Firstar Corporation of Wisconsin
2 Subsidiary of Firstar Corporation of Minnesota
3 Subsidiary of Firstar Corporation of Arizona
4 Subsidiary of Firstar Corporation of Iowa
5 Subsidiary of Firstar Bank Milwaukee, N.A.
All Capital Corporations are subsidiaries of their respective banks
<PAGE> 1
Exhibit 23
The Board of Directors
Firstar Corporation:
We consent to incorporation by reference in the Registration Statements Nos
33-38830, 33-41030, 33-19830, 33-57521, 33-57523, 33-58559, 33-58913, 33-58915
and 33-59207 on Form S-8 of Firstar Corporation of our report dated January 23,
1996, relating to the consolidated balance sheets of Firstar Corporation and
subsidiaries as of December 31, 1995 and 1994, 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, 1995, which report appears in
the December 31, 1995 annual report on Form 10-K of Firstar Corporation.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
March 15, 1996
<PAGE> 1
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Michael E. Batten SEAL
-------------------------
<PAGE> 2
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
16th day of January, 1996.
/s/ Robert C. Buchanan SEAL
------------------------
<PAGE> 3
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ George M. Chester SEAL
------------------------
<PAGE> 4
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Roger H. Derusha SEAL
-----------------------
<PAGE> 5
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
16th day of January, 1996.
/s/ James L. Forbes SEAL
----------------------
<PAGE> 6
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ John H. Hendee, Jr. SEAL
---------------------------
<PAGE> 7
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Holmes Foster SEAL
--------------------
<PAGE> 8
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
23rd day of January, 1996.
/s/ Jerry M. Hiegel SEAL
----------------------
<PAGE> 9
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
16th day of January, 1996.
/s/ Joe Hladky SEAL
-------------------
<PAGE> 10
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
23rd day of January, 1996.
/s/ C. Paul Johnson SEAL
----------------------
<PAGE> 11
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
22nd day of January, 1996.
/s/ James H. Keyes SEAL
---------------------
<PAGE> 12
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Sheldon B. Lubar SEAL
----------------------
<PAGE> 13
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
16th day of January, 1996.
/s/ Daniel F. McKeithan, Jr. SEAL
------------------------------
<PAGE> 14
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
16th day of January, 1996.
/s/ George W. Mead II SEAL
------------------------
<PAGE> 15
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Guy A. Osborn SEAL
--------------------
<PAGE> 16
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Judith D. Pyle SEAL
---------------------
<PAGE> 17
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
29th day of January, 1996.
/s/ William H. Risch SEAL
-----------------------
<PAGE> 18
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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, 1996.
/s/ Dr. Clifford V. Smith, Jr. SEAL
--------------------------------
<PAGE> 19
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
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 Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; 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
2nd day of February, 1996.
/s/ William W. Wirtz SEAL
-----------------------
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,310,746
<INT-BEARING-DEPOSITS> 5,467
<FED-FUNDS-SOLD> 109,945
<TRADING-ASSETS> 10,029
<INVESTMENTS-HELD-FOR-SALE> 2,047,848
<INVESTMENTS-CARRYING> 2,427,030
<INVESTMENTS-MARKET> 2,492,346
<LOANS> 12,632,513
<ALLOWANCE> 195,283
<TOTAL-ASSETS> 19,168,300
<DEPOSITS> 14,311,646
<SHORT-TERM> 2,303,159
<LIABILITIES-OTHER> 294,654
<LONG-TERM> 734,021
0
15,344
<COMMON> 94,266
<OTHER-SE> 1,415,210
<TOTAL-LIABILITIES-AND-EQUITY> 19,168,300
<INTEREST-LOAN> 1,081,685
<INTEREST-INVEST> 253,794
<INTEREST-OTHER> 12,307
<INTEREST-TOTAL> 1,347,786
<INTEREST-DEPOSIT> 444,706
<INTEREST-EXPENSE> 621,839
<INTEREST-INCOME-NET> 725,947
<LOAN-LOSSES> 36,756
<SECURITIES-GAINS> (5,730)
<EXPENSE-OTHER> 734,122
<INCOME-PRETAX> 347,266
<INCOME-PRE-EXTRAORDINARY> 228,913
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 228,913
<EPS-PRIMARY> 3.00
<EPS-DILUTED> 3.00
<YIELD-ACTUAL> 8.28
<LOANS-NON> 89,385
<LOANS-PAST> 49,410
<LOANS-TROUBLED> 1,376
<LOANS-PROBLEM> 19,515
<ALLOWANCE-OPEN> 190,552
<CHARGE-OFFS> 52,863
<RECOVERIES> 19,973
<ALLOWANCE-CLOSE> 195,283
<ALLOWANCE-DOMESTIC> 194,518
<ALLOWANCE-FOREIGN> 765
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
