FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED JUNE 30, 1997 COMMISSION FILE NUMBER 1-2981
FIRSTAR CORPORATION
(Exact Name of Registrant as Specified in its Charter)
WISCONSIN 39-0711710
(State of Incorporation) (I.R.S. EMPLOYER
Identification No.)
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Telephone Number (414) 765-4321
The registrant (1) has filed all reports required to be filed by Section 13 or
15 (d) of the Securities Exchange Act of 1934 during the precedeing 12 months
and (2) has been subject to such filing requirements for the past 90 days.
As of July 31, 1997, 144,596,811 shares of common stock were outstanding.
FIRSTAR CORPORATION
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flows 3
Supplemental Footnotes 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Additional Financial Data 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 17
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------
June 30 December 31 June 30
(thousands of dollars) 1997 1996 1996
- ------------------------------------------------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,317,063 $ 1,449,094 $ 1,066,838
Interest-bearing deposits with banks 26,496 6,349 10,402
Federal funds sold and resale agreements 224,006 192,965 89,879
Trading securities 1,763 13,489 9,347
Securities held to maturity (market value $2,382,206,
$2,287,448 and $2,313,276 on June 30, 1997,
December 31, 1996 and June 30, 1996) 2,346,013 2,250,776 2,303,223
Securities available for sale 1,782,225 1,966,590 2,013,629
Loans:
Commercial and industrial 3,539,141 3,366,016 3,245,776
Real estate 2,956,591 2,992,416 2,854,273
Other 1,157,169 953,145 873,139
------------ ------------ ------------
Commercial loans 7,652,901 7,311,577 6,973,188
Credit card 652,010 684,619 611,950
Real estate - mortgage 2,562,158 2,660,290 2,695,426
Home equity 1,169,210 1,121,580 988,537
Other 1,444,178 1,417,468 1,386,623
------------ ------------ ------------
Consumer loans 5,827,556 5,883,957 5,682,536
------------ ------------ ------------
Total loans 13,480,457 13,195,534 12,655,724
Reserve for loan losses (213,763) (213,138) (205,041)
------------ ------------ ------------
Loans - net 13,266,694 12,982,396 12,450,683
Bank premises and equipment 363,817 368,699 350,548
Customer acceptance liability 10,487 14,281 19,583
Other assets 567,121 522,781 498,248
------------ ------------ ------------
Total assets $ 19,905,685 $ 19,767,420 $ 18,812,380
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 3,730,430 $ 3,880,610 $ 3,120,027
Interest-bearing demand 1,590,408 1,687,885 1,513,355
Money market accounts 2,713,187 2,744,751 2,470,748
Savings passbook 1,449,381 1,518,033 1,598,782
Certificates of deposit 5,140,330 5,382,918 5,333,198
------------ ------------ ------------
Total deposits 14,623,736 15,214,197 14,036,110
Short-term borrowed funds 2,794,858 1,868,606 2,503,259
Long-term debt 627,935 697,194 589,074
Bank acceptances outstanding 10,487 14,281 19,583
Other liabilities 258,237 269,095 248,577
------------ ------------ ------------
Total liabilities 18,315,253 18,063,373 17,396,603
Stockholders' equity:
Preferred stock 7,454 11,344 12,359
Common stock 181,027 188,532 188,532
Issued: June 30, 1997, 144,881,896 shares
Issued: December 31, 1996, 150,826,196 shares
Issued: June 30, 1996, 150,826,196 shares
Capital surplus (280,296) 51,145 47,741
Retained earnings 1,675,642 1,437,891 1,352,501
Treasury stock (6,059) (4,056) (187,890)
Held: June 30, 1997, 275,606 shares
Held: December 31, 1996, 490,396 shares
Held: June 30, 1996, 8,502,214 shares
Restricted stock 0 0 (17)
Unrealized gains on securities available for sale 12,664 19,191 2,551
------------ ------------ ------------
Total stockholders' equity 1,590,432 1,704,047 1,415,777
------------ ------------ ------------
Total liabilities and stockholders' equity $ 19,905,685 $ 19,767,420 $ 18,812,380
============ ============ ============
-1-
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- ----------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
(thousands of dollars, except per share data) 1997 1996 1997 1996
- --------------------------------------------- ----------------------- -----------------------
(unaudited)
<S> <C> <C> <C> <C>
INTEREST REVENUE
Loans $ 283,831 $ 272,842 $ 560,061 $ 548,255
Securities 64,195 66,722 127,849 132,955
Interest-bearing deposits with banks 329 109 415 257
Federal funds sold and resale agreements 2,149 1,049 3,690 1,698
Trading securities 28 110 97 241
---------- ---------- ---------- ----------
Total interest revenue 350,532 340,832 692,112 683,406
INTEREST EXPENSE
Deposits 117,190 113,741 231,305 228,507
Short-term borrowed funds 34,664 31,914 62,958 62,458
Other debt 12,067 10,981 24,214 23,914
---------- ---------- ---------- ----------
Total interest expense 163,921 156,636 318,477 314,879
---------- ---------- ---------- ----------
NET INTEREST REVENUE 186,611 184,196 373,635 368,527
Provision for loan losses 9,532 10,846 19,250 20,055
---------- ---------- ---------- ----------
NET INTEREST REVENUE AFTER
LOAN LOSS PROVISION 177,079 173,350 354,385 348,472
OTHER OPERATING REVENUE
Trust and investment management fees 42,009 36,131 81,095 71,578
Service charges on deposit accounts 21,102 21,863 43,191 43,417
Credit card service revenue 18,202 17,441 35,262 32,714
Mortgage Banking Revenue 10,204 10,279 19,053 24,064
Data processing fees 4,791 4,548 9,935 9,164
Securities gains 0 1 1,126 42
Other revenue 17,070 15,960 34,165 30,299
---------- ---------- ---------- ----------
Total other operating revenue 113,378 106,223 223,827 211,278
OTHER OPERATING EXPENSE
Salaries 84,306 76,534 162,242 158,674
Employee benefits 16,370 19,372 34,897 38,749
Equipment expense 15,940 14,930 32,757 31,605
Net occupancy expense 15,829 14,661 31,506 30,574
Restructuring expense 0 0 0 50,237
Other expense 47,657 44,033 97,322 87,613
---------- ---------- ---------- ----------
Total other operating expense 180,102 169,530 358,724 397,452
INCOME BEFORE INCOME TAXES 110,355 110,043 219,488 162,298
Applicable income taxes 37,647 39,880 74,985 55,017
---------- ---------- ---------- ----------
NET INCOME $ 72,708 $ 70,163 $ 144,503 $ 107,281
========== ========== ========== ==========
Net income applicable to common stock $ 72,577 $ 69,947 $ 144,231 $ 106,813
========== ========== ========== ==========
PER COMMON SHARE
Net income $ 0.50 $ 0.48 $ 0.99 $ 0.73
Dividends 0.21 0.19 0.40 0.36
-2-
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------
Six Months Ended
June 30
(thousands of dollars) 1997 1996
- -------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 144,503 $ 107,281
Adjustments:
Provision for loan losses 19,250 20,055
Depreciation, amortization, and accretion 29,780 35,988
Net decrease in trading securities 11,726 682
Net(increase) decrease in loans held for resale (14,612) 183,230
Gains on sale of assets (1,764) (148)
Net increase in other assets/liabilities (84,419) (46,527)
------------- --------------
Net cash provided by operating activities 104,464 300,561
Cash Flows from Investing Activities:
Net (increase) decrease in federal funds sold and resale agreements (31,041) 20,066
Net increase in interest-bearing deposits with banks (20,147) (4,935)
Purchase of securities available for sale (161,439) (231,240)
Sale of securities available for sale 1,126 38,430
Maturities of securities available for sale 333,763 208,521
Maturities of securities held to maturity 192,699 224,579
Purchase of securities held to maturity (295,482) (95,548)
Net (increase) decrease in loans (242,111) 76,730
Cash acquired in acquisitions 0 4,901
Proceeds from sale of foreclosed assets 7,879 4,409
Purchase of bank premises and equipment (31,998) (23,402)
Proceeds from sale of bank premises and equipment 670 2,774
------------- --------------
Net cash (used in) provided by investing activities (246,081) 225,285
Cash Flows from Financing Activities:
Net decrease in deposits (590,461) (519,620)
Net increase in short-term borrowed funds 926,252 140,100
Issuance of long-term debt 598 0
Repayment of long-term debt (69,857) (161,947)
Common/treasury stock repurchases/retires (206,339) (189,893)
Common/treasury stock issued 8,387 15,329
Cash dividends (58,994) (53,723)
------------- --------------
Net cash provided by (used in) financing activities 9,586 (769,754)
Net decrease in cash and due from banks (132,031) (243,908)
Cash and due from banks at beginning of period 1,449,094 1,310,746
------------- --------------
Cash and due from banks at end of period $ 1,317,063 $ 1,066,838
============= ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 323,523 $ 325,759
Income taxes 69,481 73,793
Transfer to foreclosed assets from loans $ 3,006 $ 5,815
-3-
</TABLE>
FIRSTAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FOOTNOTES (unaudited)
- -----------------------------------------------------
(thousands of dollars except as otherwise indicated)
1. The financial data presented herein are unaudited, however, in the opinion
of management, reflect all adjustments which are necessary for a fair
presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Certain
amounts have been reclassified in prior periods to conform to classifi-
cations used in the June 30, 1997 financial statements. Reference
should be made to the financial statements contained in the
registrant's annual report on Form 10-K for the year ended December
31, 1996.
All shares and per share amounts have been adjusted to reflect the two-
for-one common stock split completed in February, 1997.
2. Securities
The amortized cost and approximate market values of securities
are as follows:
<TABLE>
<CAPTION>
June 30, 1997
--------------------------------------------------
Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury and federal agencies $ 394 $ 0 $ 0 $ 394
Mortgage backed obligations of federal agencies 1,120,009 25,130 (4,194) 1,140,945
State and political subdivisions 1,218,249 17,637 (2,380) 1,233,506
Corporate debt 7,361 20 (20) 7,361
----------- ----------- ----------- -----------
Total $ 2,346,013 $ 42,787 $ (6,594)$ 2,382,206
=========== =========== =========== ===========
Securities available for sale:
U.S. Treasury and federal agencies $ 1,611,940 $ 23,826 $ (3,433)$ 1,632,333
Mortgage backed obligations of federal agencies 8,026 84 (192) 7,918
State and political subdivisions 6,809 29 (19) 6,819
Equity securities 96,186 0 0 96,186
Money market mutual funds 38,969 0 0 38,969
----------- ----------- ----------- -----------
Total $ 1,761,930 $ 23,939 $ (3,644)$ 1,782,225
=========== =========== =========== ===========
</TABLE>
-4-
3. Nonperforming Assets and Past Due Loans
<TABLE>
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Nonaccrual loans:
Commercial $ 46,688 $ 35,757 $ 32,828
Commercial - real estate 22,555 30,128 36,363
Consumer 16,150 19,193 16,933
----------- ----------- -----------
85,393 85,078 86,124
Renegotiated loans:
Commercial 0 0 38
Commercial - real estate 273 1,028 1,331
----------- ----------- -----------
273 1,028 1,369
Foreclosed assets 6,196 8,926 9,905
----------- ----------- -----------
Total $ 91,862 $ 95,032 $ 97,398
=========== =========== ===========
Nonperforming assets as a percent of:
Loans and foreclosed assets .68 % .72 % .77 %
Total assets .46 .48 .52
Loans past due 90 days and still accruing
Commercial $ 25,375 $ 24,368 $ 18,446
Commercial - eeal estate 25,710 27,352 11,393
Consumer 21,867 22,938 21,125
----------- ----------- -----------
Total $ 72,952 $ 74,658 $ 50,964
=========== =========== ===========
</TABLE>
4. Reserve for Loan Losses
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - beginning of period $ 213,136 $ 202,857 $ 213,138 $ 195,283
Provision for loan losses 9,532 10,846 19,250 20,055
Loan recoveries 5,129 7,682 9,927 13,369
Loan charge-offs (14,034) (16,344) (28,552) (28,123)
Reserves of acquired banks 0 0 0 4,457
----------- ----------- ----------- -----------
Balance - end of period $ 213,763 $ 205,041 $ 213,763 $ 205,041
=========== =========== =========== ===========
Net charge-offs to average loans .27 % .27 % .28 % .23 %
Reserve to period-end loans 0.00 0.00 1.59 1.62
-5-
</TABLE>
5. Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Preferred Common Capital Retained
Stock Stock Surplus Earnings
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ 15,344 $ 188,532 $ 53,236 $ 1,298,857
Net income 0 0 0 107,281
Cash dividends: 0 0 0 0
Preferred stock, series D ($17.50 per share) 0 0 0 (472)
Common stock ($.36 per share) 0 0 0 (53,168)
Converted 5,970 shares of preferred stock
into 256,228 shares of common stock (2,985) 0 52 0
Issued 1,774,408 shares of common stock for
bank acquisitions 0 0 4,920 0
Issued 1,639,732 shares of common stock for
employee benefit plans 0 0 (10,456) 3
Purchased 7,783,200 shares of treasury stock 0 0 0 0
Unrealized gains on securities available for sale 0 0 0 0
Amortization/adjustment of restricted stock 0 0 (11) 0
----------- ----------- ----------- -----------
Balance at June 30, 1996 $ 12,359 $ 188,532 $ 47,741 $ 1,352,501
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gain/ Restricted Treasury
Loss Stock Stock Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ 34,127 $ (442)$ (64,834)$ 1,524,820
Net income 0 0 0 107,281
Cash dividends: 0 0 0 0
Preferred stock, series D ($17.50 per share) 0 0 0 (472)
Common stock ($.36 per share) 0 0 0 (53,168)
Converted 5,970 shares of preferred stock
into 256,228 shares of common stock 0 0 2,933 0
Issued 1,774,408 shares of common stock for
bank acquisitions 0 0 31,106 36,026
Issued 1,639,732 shares of common stock for
employee benefit plans 0 0 25,783 15,330
Purchased 7,783,200 shares of treasury stock 0 0 (182,566) (182,566)
Unrealized gains on securities available for sale (31,576) 0 0 (31,576)
Amortization/adjustment of restricted stock 0 425 (312) 102
----------- ----------- ----------- -----------
Balance at June 30, 1996 $ 2,551 $ (17)$ (187,890)$ 1,415,777
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Preferred Common Capital Retained
Stock Stock Surplus Earnings
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 11,344 $ 188,532 $ 51,145 $ 1,437,891
Net income 0 0 0 144,503
Cash dividends: 0 0 0 0
Preferred stock, series D ($17.50 per share) 0 0 0 (272)
Common stock ($.40 per share) 0 0 0 (58,722)
Converted 7,780 shares of preferred stock 0 0 0 0
into 333,871 shares of common stock (3,890) 0 (518) (1,568)
Issued 806,678 shares of common stock for 0 0 0 0
employee benefit plans 0 0 (5,184) (3,951)
Retired 5,944,300 shares of common stock 0 (7,430) (45,443) (122,610)
Purchased 1.071,900 shares of treasury stock 0 0 0 0
Unrealized gains on securities available for sale 0 0 0 0
----------- ----------- ----------- -----------
Balance at June 30, 1997 $ 7,454 $ 181,102 $ 0 $ 1,395,271
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gain/ Restricted Treasury
Loss Stock Stock Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 19,191 $ 0 $ (4,056)$ 1,704,047
Net income 0 0 0 144,503
Cash dividends: 0 0 0 0
Preferred stock, series D ($17.50 per share) 0 0 0 (272)
Common stock ($.40 per share) 0 0 0 (58,722)
Converted 7,780 shares of preferred stock 0 0 0 0
into 333,871 shares of common stock 0 0 5,976 0
Issued 806,678 shares of common stock for 0 0 0 0
employee benefit plans 0 0 22,877 13,742
Retired 5,944,300 shares of common stock 0 0 (12,941) (188,424)
Purchased 1.071,900 shares of treasury stock 0 0 (17,915) (17,915)
Unrealized gains on securities available for sale (6,527) 0 0 (6,527)
----------- ----------- ----------- -----------
Balance at June 30, 1997 $ 12,664 $ 0 $ (6,059)$ 1,590,432
=========== =========== =========== ===========
</TABLE>
-6-
FIRSTAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FOOTNOTES (unaudited)
- -----------------------------------------------------
6.
Derivative Financial Instruments
The following table summarizes the various types of interest rate
contracts that Firstar uses for the purpose of managing interest
rate risk.
<TABLE>
<CAPTION>
June 30, 1997
--------------------------------------------------------------
Market
12-31-96 Average Average Weighted Value
Notional Notional Receive Pay Average Asset
Amount Amount Rate Rate Maturity (Liability)
--------- --------- ----------- ----------- ----------- -----------
<C> <C> <C> <C> <C> <C>
<S>
(millions)
Interest rate swaps $ 107 $ 35 5.26 % 5.81 % 1.4 yr $ (0.30)
Receive fixed rate 27 ---- ---- ---- ----
Index amortizing 62 13 5.79 7.42 1.9 (0.30)
Other
Receive variable 591 591 4.89 2.2 0.20
--------- --------- -----------
Interest rate floors* $ 787 $ 639 $ (0.40)
========= ========= ===========
*Interest rate floors provide for the receipt of payments when the
index interest rate is below the predetermined interest rate.
<\TABLE.
7.
New Accounting Rules
The Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share". The statement will be effective with the
preparation of the year-end 1997 financial statements. The statement
will require the presentation of basic and diluted earnings per
share. Firstar's current calculation of its earnings per share will
be equivalent to the basic EPS of SFAS No. 128. The calculation of
diluted EPS will not be materially different from the basic EPS.
-7-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Information
The following discussion includes forward looking statements concerning
Firstar's business results that are based on estimates. Actual results could
differ materially due to factors such as changes in economic conditions,
compression of net interest revenue due to unanticipated declines in net
interest margins and outstanding loan balances, unanticipated delays in cost
reduction and revenue enhancements, and the ability to attract and retain
qualified personnel. Therefore, there can be no assurances that actual
results will correspond to these forward looking statements.
Financial Discussion - Income Statement
Firstar Corporation's net income for the second quarter of 1997 was $72.7
million, or $.50 per common share, up
from the $70.2 million, or $.48 per common share, for the same period last
year. This represented a 4.2% increase in earnings per share. Return on
common equity was 18.86% for the second quarter of the year, com- pared with
19.35% for the same period last year, while return on average assets was 1.51%
compared to1.50% during the second quarter of last year.
Net income for the first six months of 1997 was $144.5 million, or $.99 per
common share, up from the $107.3 million, or $.73 per common share, for the
same period last year. This represented a 35.6% increase in earnings per
share. Return on common equity was 18.61% for the first half of the year,
compared with 14.32% for the same period last year, while return on average
assets was 1.51% compared to 1.14% during the first half of last year.
In the first quarter of 1996, Firstar recorded a $50.2 million pre-tax
charge in connection with Firstar Forward, the corporate wide restructuring
program. Excluding this charge from last year's results, operating earnings
rose by 5.3% over the first half of 1996 from $.94 per share to $.99.
Table 1 shows the components of net income and net interest margin.
</TABLE>
<TABLE>
<CAPTION>
Table 1. Condensed income statements - taxable equivalent basis
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------- -------------------------------------------
1997 1996 Change 1997 1996 Change
------------ ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <> <C> <C>
(millions of dollars) (millions of dollars)
Interest revenue $ 350.5 $ 340.9 $ 9.6 $ 692.1 $ 683.5 $ 8.6
Taxable-equivalent adjustment 9.0 8.4 0.6 17.5 17.0 0.5
------------ ------------ ----------- ------------- ------------- -------------
Interest revenue - taxable-e 359.5 349.3 10.2 709.6 700.5 9.1
Interest expense 163.9 156.6 7.3 318.5 314.9 3.6
------------ ------------ ----------- ------------- ------------- -------------
Net interest revenue - tea 195.6 192.7 2.9 391.1 385.6 5.5
Provision for loan losses 9.5 10.9 (1.4) 19.2 20.1 (0.9)
Other operating revenue 113.3 106.2 7.1 223.8 211.3 12.5
Other operating expense 180.1 169.5 10.6 358.7 397.4 (38.7)
------------ ------------ ----------- ------------- ------------- -------------
Income before income taxes 119.3 118.5 0.8 237.0 179.4 57.6
Provision for income taxes 37.6 39.9 (2.3) 75.0 55.1 19.9
Taxable-equivalent adjustment 9.0 8.4 0.6 17.5 17.0 0.5
------------ ------------ ----------- ------------- ------------- -------------
Net income $ 72.7 $ 70.2 $ 2.5 $ 144.5 $ 107.3 $ 37.2
============ ============ =========== ============= ============= =============
Yield on earning assets 8.16 % 8.16 % 0.00 % 8.13 % 8.17 % (0.04)%
Cost of interest-bearing liab 4.58 4.45 0.13 4.52 4.48 0.04
------------ ------------ ----------- ------------- ------------- -------------
Interest spread 3.58 3.71 (0.13) 3.61 3.69 (0.08)
Impact of interest-free funds 0.86 0.79 0.07 0.86 0.80 0.06
------------ ------------ ----------- ------------- ------------- -------------
Net interest margin 4.44 % 4.50 % (0.06)% 4.47 % 4.49 % (0.02)%
============ ============ =========== ============= ============= =============
</TABLE>
-8-
Net interest revenue during the first half of 1997, on a taxable equivalent
basis, was $391.1 million, a $5.5 million, or 1.4%, increase from the level
experienced in the same period last year. The net interest margin was 4.47%
during the first half compared to 4.49% a year earlier. The increase in net
interest revenue was primarily attributable to the 2.0% increase in average
earning asset balances. During the second quarter of 1997 the net interest
margin further declined to 4.44%, reflecting continued competitive pressures
on loan and deposit rates and a shift in the funding mix to higher cost
deposits and borrowed funds.
Table 2 shows the components of interest revenue and expense along with
changes related to volumes and rates. Total interest revenue on a
taxable-equivalent basis increased by $9.1million to $709.6 million during the
first half of 1997 compared to the same period last year. This resulted from
the increase in average earning assets through a bank acquisition which was
partially offset by the decline in asset yields. Loan income rose by $12.0
million due to increased balances acquired through an acquisition while the
rate earned on total loans declined by .12% to 8.59%. Securities revenue
declined by $4.9 million as average balance levels were reduced.
Total interest expense was $318.5 million during the first half of 1997, an
increase of $3.6 million from the same period last year. Interest rates on
liabilities increased from 4.48% in 1996 to 4.52% in 1997. Interest expense on
total deposits increased $2.8 million in the first half of 1997 compared to
the same period last year due to higher higher deposit levels and a change in
mix of deposits from lower cost passbook and short term certificates of
deposit to money market savings accounts and longer term certificates of
deposit. Interest expense on borrowed funds increased by $800 thousand due to
both higher average balances and interes rates.
Net cash flows of off-balance sheet derivative instruments used to manage
interest rate risk reduced net interest revenue by $762 thousand and net
interest margin by .01% during the first half of 1997. This compares to a
decrease in net interest revenue of $900 thousand and a decrease in net
interest margin of .01% during the same period in 1996.
Table 2. Analysis of interest revenue and expense
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------------------------------------------------------
Interest Total Due to
------------------------- ----------------------------
1997 1996 Change Volume Rate
------------ ----------- ------------- ------------- -------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits
with banks $ 415 $ 257 $ 158 $ 139 $ 19
Federal funds sold and
resale agreements 3,690 1,698 1,992 2,048 (56)
Trading securities 99 268 (169) (179) 10
Securities 141,812 146,728 (4,916) (7,677) 2,761
Commercial loans 310,751 302,153 8,598 18,037 (9,439)
Consumer loans 252,820 249,410 3,410 2,953 457
------------ ----------- -------------
Total loans 563,571 551,563 12,008 21,202 (9,194)
------------ ----------- -------------
Total interest revenue 709,587 700,514 9,073 13,926 (4,853)
Interest-bearing demand 11,768 10,609 1,159 327 832
Money market accounts 56,497 48,566 7,931 5,553 2,378
Savings passbook 17,284 20,511 (3,227) (1,582) (1,645)
Certificates of deposit 145,756 148,821 (3,065) (2,204) (861)
------------ ----------- -------------
Total deposits 231,305 228,507 2,798 1,833 965
Short-term borrowed funds 62,958 62,458 500 352 148
Long-term debt 24,214 23,914 300 1,263 (963)
------------ ----------- -------------
Total interest expense 318,477 314,879 3,598 2,089 1,509
------------ ----------- -------------
Net interest revenue $ 391,110 $ 385,635 $ 5,475 7,671 (2,196)
============ =========== =============
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.
</TABLE>
-9-
The objective of Firstar's asset/liability management policy is to maintain
adequate capital and liquidity and to manage interest rate risk to produce an
acceptable level of net interest revenue. The policy is to employ an asset
liability management strategy which limits the potential impact of projected
interest rate changes to 5% of net income over the subsequent four quarters.
Using the most recent simulation modeling, Firstar was within these
guidelines. The recently completed asset-liability forecast shows that
consolidated net interest revenue is expected to remain stable or decline
somewhat under the low and most likely scenarios as compared to current rates.
Under a high rate scenario a reduction of $13 million in net interest revenue
is possible. The rate scenarios assume an average prime rate over the next
four quarters of 8.71% under the most likely, 7.73% under the low, and 9.60%
under the high scenarios.
The provision for loan losses of $19.2 million was $805 thousand lower than
last year. Net charge-offs for the first half of 1997 were at a level of
.28% of average outstanding loans compared to .23% a year earlier. The
reserve for loan losses represented 1.59% of total loans at June 30, 1997,
down from 1.62% a year earlier.
Consumer loan losses have declined somewhat in the second quarter of 1997
from the higher levels of the two prior quarters. Net charge offs on consumer
loans were .59% in the current quarter compared to the high of .72% in the
fourth quarter of 1996 and are essentially level with the second quarter of
1996. Credit card charge offs for the second quarter of 1997 were 3.52%, up
slightly from the 3.44% of the first quarter, but down from the 1996 levels.
Firstar expects credit card charge offs to be in the range of 3.25% to 4.25%
for the remainder of the year. Commercial loan charge offs were negligible
during the first half of 1997, reflecting net recoveries realized in the first
quarter of this year.
Nonperforming assets were $91.9 million at June 30, 1997 which represented
.68% of total loans and foreclosed assets. This was a reduction of $9.6
million and $5.5 million from the prior quarter and one year ago,
respectively.
<TABLE>
<CAPTION>
Table 3. Net loan charge-offs
Quarter ended
-----------------------------------------------------------------------------------------
6-30-97 3-31-97 12-31-96 9-30-96 6-30-96 3-31-96
------------ ----------- ------------- ------------- ------------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Credit card $ 5,673 $ 5,556 $ 8,304 $ 6,162 $ 5,674 $ 4,746
Other consumer 2,869 4,497 2,314 1,800 2,722 1,072
------------ ----------- ------------- ------------- ------------- ------------
Total consumer 8,542 10,053 10,618 7,962 8,396 5,818
Commercial 363 (333) 4,438 986 266 274
------------ ----------- ------------- ------------- ------------- ------------
Total net charge-off $ 8,905 $ 9,720 $ 15,056 $ 8,948 $ 8,662 $ 6,092
============ =========== ============= ============= ============= ============
Net charge-offs as a % of:
Credit card 3.52 % 3.44 % 5.11 % 3.94 % 3.81 % 3.20 %
Other consumer 0.22 0.36 0.17 0.14 0.22 0.08
Total consumer 0.59 0.71 0.72 0.55 0.60 0.41
Commercial 0.02 (0.02) 0.24 0.05 0.02 0.02
Total loans 0.27 0.30 0.46 0.27 0.27 0.19
</TABLE>
-10-
Other operating revenue, excluding securities gain and losses, was $222.7
million in the first half of 1997, an increase of 5.4% from the same period
last year. Table 4 shows the composition of other operating revenue.
<TABLE>
<CAPTION>
Table 4. Other operating revenue
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------- -----------------------------------------
1997 1996 Change 1997 1996 Change
------------ ------------ ----------- ------------- ------------- -----------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Trust and investment management $ 42,009 $ 36,131 16.3 % $ 81,095 $ 71,578 13.3 %
Service charges on deposit accts 21,102 21,863 (3.5) 43,191 43,417 (0.5)
Credit card service revenue 18,202 17,441 4.4 35,262 32,714 7.8
Mortgage loan servicing 3,090 4,164 (25.8) 6,458 10,850 (40.5)
Mortgage loan origination 7,114 6,115 16.3 12,595 13,214 (4.7)
Data processing fees 4,791 4,548 5.3 9,935 9,164 8.4
Insurance revenue 3,561 2,109 68.8 5,845 4,508 29.7
Brokerage revenue 3,473 3,600 (3.5) 6,817 7,063 (3.5)
International fees 1,637 1,422 15.1 3,086 2,777 11.1
Foreign exchange gains 742 583 27.3 1,408 1,258 11.9
ATM fees 1,325 1,381 (4.1) 2,481 2,571 (3.5)
Safe deposit fees 1,085 1,013 7.1 2,476 2,109 17.4
Trading securities gains 209 423 (50.6) 726 914 (20.6)
Other 5,038 5,429 (7.2) 11,326 9,099 24.5
------------ ------------ ------------- -------------
Subotal 113,378 106,222 6.7 222,701 211,236 5.4
Securities (losses) gains 0 1 1,126 42
Total ------------ ------------ ------------- -------------
$ 113,378 $ 106,223 6.7 % $ 223,827 $ 211,278 5.9 %
============ ============ ============= =============
</TABLE>
Other operating revenue represents 36.3% of total taxable equivalent revenue
for the first half of 1997 compared to 35.4% for the same period one year ago.
Trust and investment management fees are the single largest source of fee
revenue, contributing $81.1 million, or 36%, of other operating revenue. This
level represents a 13.3% growth in revenue during the first half of 1997
compared to the same period last year. Trust and investment assets under
management were $24.5 billion on June 30, 1997, a 27.6% increase from the
year earlier level due to both the result of general market appreciation and
additional net new business. Additionally, assets held in custody accounts
rose by 31.0% to a level of $82.8 billion due in part to increased mutual fund
services business. The increased volatility of equity markets and interest
rates may have a significant effect on trust and investment management fees in
the coming months.
Revenue from service charges on deposit accounts at $43.2 million for the
first half of 1997 was slightly below last year.
Credit card service revenues are the third largest source of fee revenue,
totaling $35.3 million during the first half of 1997. This level represented
an 7.8% increase over the same period last year. The introduction of new
credit card products and the repricing of service charges have contributed to
this revenue growth.
Mortgage loan servicing revenues declined by 40.5% from the year earlier
level due to the gain on the sale of servicing rights last year and the
resulting lower level of serviced loans. Revenue from mortgage loan
originations activity for the first half of this year has declined due to
lower production volumes. Loan origination volumes were high during the
first quarter of 1996 when favorable interest rates produced an increased
demand for refinancings. Origination volumes have, however, shown
improvement in the second quarter of 1997.
Insurance revenue is showing a 29.7% increase over the first half of 1996
and benefits from the timing of certain annual experience related credits from
insurance underwriters.
The remaining sources of other operating revenue derive from a wide range of
services and aggregated $38.3 million, an increase of 9.4% over the first
half of 1996. This year's revenue included $1.6 million of nonrecurring items.
-11-
Other operating expense declined to a level of $358.7 million for the first
half of 1997. Excluding the restructuring charges , expenses increased by
3.3%. Personnel costs were level with last year. Nonpersonnel expense ,
excluding the one-time charges, increased by 7.9%. The detail of other
operating expense is shown in Table 5.
Full-time equivalent personnel headcount was 7,989 on June 30, 1997, down
from 8,367 one year earilier. Staff reductions have occurred under the
corporate wide restructuring program. The impact of the staff reductions was
offset by increases in temporary staffing costs, employees added through the
bank acquisition, and normal salary increases for all employees. Increased
temporary staffing has occurred as these resources are dedicated to implement
technology related enhancements and to staff operation areas of the company.
Net occupancy expense increased by 3.0% from the first half of last year
reflecting in part additional banking offices from a 1996 acquisition.
Business development expense rose by 24.3% from a somewhat unrepresentative
lower level last year and as a result of increased focus on customer
development activities this year. Professional fees increased 33.8% due to
some one-time costs and increased use of outside consultants in various areas
of the company. Amortization of intangibles increased by 16.7% due to the
addition of new intangibles from the bank acquisition completed in 1996.
During the first quarter of 1996, Firstar recorded a $50.2 million charge in
connection with Firstar Forward, the corporate wide restructuring program
which was announced in January 1996. This program was completed in June
1997. The 1996 charge included severance accruals of $24.0 million associated
with staff reductions of approximately 1,500 people, fixed asset writedowns of
$3.9 million and other project costs of $22.3 million. There are approxmately
$3 million of remaining cash payments to be made as of June 30, 1997.
The efficiency ratio, which is the ratio of expense to revenue, was 58.4% in
the first half of 1997 compared to 58.2% a year earlier.
<TABLE>
<CAPTION>
Table 5. Other operating expense
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------- -------------------------------------------
1997 1996 Change 1997 1996 Change
------------ ------------ ----------- ------------- ------------- -------------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 84,306 $ 76,534 10.2 % $ 162,242 $ 158,674 2.2 %
Employee benefits 16,370 19,372 (15.5) 34,897 38,749 (9.9)
------------ ------------ ------------- -------------
Total personnel expense 100,676 95,906 5.0 197,139 197,423 (0.1)
Net occupancy expense 15,829 14,661 8.0 31,506 30,574 3.0
Equipment expense 15,940 14,930 6.8 32,757 31,605 3.6
Business development 7,442 6,424 15.8 14,677 11,808 24.3
F.D.I.C. insurance 654 635 3.0 1,303 1,732 (24.8)
Stationery and supplies 5,086 6,080 (16.3) 10,859 12,045 (9.8)
Delivery 4,601 4,315 6.6 9,642 9,515 1.3
Professional fees 6,081 4,877 24.7 12,619 9,432 33.8
Information processing expense 5,866 5,274 11.2 10,769 9,821 9.7
Amortization of intangibles 3,968 3,767 5.3 8,626 7,389 16.7
Employee education/recruiting 2,071 1,287 60.9 4,028 2,840 41.8
Federal Reserve processing 1,502 1,278 17.5 3,181 2,533 25.6
Commissions and service fee 1,352 1,606 (15.8) 2,503 2,930 (14.6)
Wire communication 2,479 1,710 45.0 5,029 3,693 36.2
Processing and other losses 2,075 1,853 12.0 3,477 3,657 (4.9)
Credit card assessment fees 995 1,272 (21.8) 2,811 2,794 0.6
Net foreclosed assets exp(inc) 17 428 (58) 536
Published information 531 598 (11.2) 1,362 1,241 9.8
Insurance 214 215 (0.5) 367 622 (41.0)
Other 2,723 2,414 12.8 6,127 5,025 21.9
------------ ------------ ------------- -------------
Total nonpersonnel expense 79,426 73,624 7.9 161,585 149,792 7.9
Restructuring charges 0 0 0 50,237
SAIF assessment 0 0 0 0
------------ ------------ ------------- -------------
Total other operating exp $ 180,102 $ 169,530 6.2 % $ 358,724 $ 397,452 (9.7)%
============ ============ ============= =============
</TABLE>
-12-
Income tax expense was $75.0 million in the first half of 1997 compared to
$55.0 million in the same period of last year. The effective tax rate was
34.2% in 1997 compared to 33.9% in 1996.
Based upon the foregoing discussion of revenue and expense trends, and the
resulting earnings, Firstar expects that the level of earnings for the next
several quarters will be at substantially the same level as experienced in
recent quarters.
Financial Discussion - Balance Sheet
Total assets on June 30, 1997 were $19.9 billion, up $138 million from
December 31, 1996 and up $1.1 billion from a year earlier. Earning assets
totaled $17.9 billion, up $235 million from year end. Earning assets have
increased $779 million, or 4.6% from a year earlier.
Average loans totaled $13.2 billion during the first half of 1997, an
increase of $494 million , or 3.9% from a year earlier. A bank acquisition
which occurred in the third quarter of last year added approximately $625
million of loans. Exclusive of this acquisition related impact, average loans
declined by 1.0% from a year ago.
Commercial loans averaged $7.4 billion during the first half of 1997, an
increase of $427 million, or 6.1% from a year earlier. Excluding loans
acquired through the bank acquisition, commercial loans declined by 1.1% from
last year. This trend has, however, reversed during the last two quarters
where, when compared to the immediate prior quarter, average balances grew at
an annualized rate of 8.4% in the second quarter and 3.9% in the first
quarter. While this loan growth is encouraging, competitve pressures are
leading to narrower interest spreads in 1997 for commercial lending.
Consumer loans, excluding residential mortgages, averaged $3.2 billion, an
increase of $268 million, or 9.1% over the first half of 1996. Excluding
loans from the bank acquisition, consumer lending increased by 6.0%. Good
growth has occurred in home equity loans and credit card loans, which are up
14.4% and 8.7% respectively, excluding acquisition impacts from the same
period one year ago.
Residential mortgage loans, exclusive of loans acquired through bank
acquisition and loans held for sale, declined by 3.5% on average from the
first half of 1996. The reduction was attributable to the normal loan
amortization and prepayments partially offset by the placement in the
portfolio of some shorter term variable rate mortgages. Firstar's strategy
is to originate and sell mortgages into the secondary market thereby reducing
the amount of mortgages held on the balance sheet.
Total securities, including both those designated as available for sale and
those held to maturity averaged $4.2 billion during the first half of 1997
compared with $4.4 billion a year earlier. Similar to portfolio mortgages,
Firstar intends to reduce the size of its investment portfolio through normal
run-off and redeploying the proceeds to loans or reduce short-term borrowed
funds.
Funding sources, consisting of deposits and borrowed funds, averaged $17.4
billion during the first half of 1997. Total deposits averaged $14.3
billion, a decrease of 2.2% from a year ago excluding the bank acquisition
impact. Increased competition for consumer deposits and continued consumer
sensitivity to interest rates and other uses of funds, such as investments in
equity markets, have limited Firstar's deposit growth.
Borrowed funds averaged $3.1 billion during the first half of 1997,
unchanged from a year earlier. In December 1996 Firstar issued through Firstar
Capital Trust I, $150 million of Trust Capital Securities. These securities
qualify as Tier 1 capital and are mandatorily redeemable in 30 years. These
securities are included in long term debt at June 30, 1997. This is a change
from the presentation in Firstar's 1996 Form 10- K wherein these securities
were classified as a minority interest .
-13-
Stockholders' equity totaled $1,590 billion at June 30, 1997, a decrease of
$114 million from year end 1996. Firstar has repurchased and retired 5,944,300
shares of its common stock during the first half of this year under its
previously announced stock buyback plan which authorized up to 12 million
shares for repurchase. Additionally, 1,071,900 shares of common stock wre
purchased and placed in treasury stock for reissuance under stock options
plans and convertible securities during the first half of 1997. Shares reissued
under option plans and conversions totaled 1,140,549 during the first half of
1997.
Firstar's capital management plan strives to match longer term capital needs
with maintaining sound capital levels. It is Firstar's policy to manage
tier 1 leverage to the top quartile level of its peer group which was 8.68% at
the end of the first quarter of 1997. Firstar's tier 1 leverage ratio was
8.03% at June 30, 1997. Future purchases by Firstar of its common stock for
retirement will take into consideration the goal of returning to the top
quartile range of its peers for the tier I leverage ratio.
The board of directors declared a quarterly dividend to common stockholders
of $.21 per share. The dividend is payable August 15 to shareholders of
record on July 28. The board also declared a quarterly dividend of $8.75 per
Series D preferred share payable September 30 to stockholders of record on
September 15.
<TABLE>
<CAPTION>
Table 6. Capital components and ratios
June 30 December 31 June 30
1997 1996 1996
------------- ------------- -------------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity $ 1,590,432 $ 1,704,047 $ 1,415,777
Trust capital securities 150,000 150,000 0
Unrealized (gains) losses on securities available for sale (12,664) (19,191) (2,551)
Minority interest in subsidiaries 2,623 2,384 2,112
Less disallowed intangibles (194,415) (200,540) (115,758)
------------- ------------- -------------
Total Tier I capital 1,535,976 1,636,700 1,299,580
Allowable reserve for loan losses 182,806 175,725 166,730
Allowable long-term debt 60,000 75,668 95,668
------------- ------------- -------------
Total Tier II capital 242,806 251,393 262,398
------------- ------------- -------------
Total capital $ 1,778,782 $ 1,888,093 $ 1,561,978
============= ============= =============
Risk-adjusted assets $ 14,593,563 $ 14,020,587 $ 13,300,110
Tier I capital to risk-adjusted assets 10.53 % 11.67 % 9.77 %
Total capital to risk-adjusted assets 12.19 13.47 11.74
Tier I leverage ratio 8.03 8.55 6.94
</TABLE>
-14-
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (unaudited)
- ----------------------------------------------------------------------------------------------------
Selected Financial Data
(thousands of dollars, except per share)
Quarter ended Six Months ended
June 30 June 30
---------------------- ------------------------------
1997 1996 1997 1996
---------------------- ------------------------------
<S> <C> <C> <C> <C>
Earnings and Dividends
Net income $ 72,708 $ 70,163 $ 144,503 $ 107,281
Per common share:
Net income 0.50 0.48 0.99 0.73
Dividends 0.21 0.19 0.40 0.36
Stockholders' equity 0.00 0.00 10.96 9.86
Performance Ratios
Return on average assets 1.51 % 1.50 % 1.51 % 1.14 %
Return on average common equity 18.86 19.35 18.61 14.32
Dividend payout ratio 42.00 39.58 40.40 49.32
Equity to assets 0.00 0.00 7.99 7.53
Net loan charge-offs as a percentage
of average loans 0.27 0.27 0.28 0.23
Nonperforming assets as a
percentage of loans and foreclosed
assets 0.00 0.00 0.68 0.77
Net interest margin 4.44 4.50 4.47 4.49
Efficiency ratio* 58.30 56.72 58.44 58.17 *
Fee revenue as a percentage
of average assets 2.35 2.27 2.33 2.25
Statistical Data
Full-time equivalent staff (at quarter end) 0 0 7,989 8,367
Average common shares
outstanding (000's) 144,506 144,819 145,597 146,207
Actual common shares
outstanding (000's at quarter end) 0 0 144,460 142,324
Stock Price Information
High $ 33.125 $ 24.875 $ 33.125 $ 24.875
Low 27.250 21.063 25.563 18.313
Close 30.500 23.063 30.500 23.063
*Excludes nonrecurring items.
-15-
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (Unaudited)
- --------------------------------------------------------------------------------------------------------
Consolidated Average Balance Sheets, Net Interest Revenue and Rate Analysis
(Thousands of Dollars)
Quarter ended June 30
------------------------------------------------------------------------
1997 1996
------------------------------------- ----------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-bearing deposits
with banks $ 24,346 $ 329 5.42 % $ 9,616 $ 109 4.56 %
Federal funds sold and
resale agreements 163,863 2,149 5.26 76,472 1,049 5.52
Trading securities 2,178 28 5.16 7,904 123 6.26
Securities:
Taxable 2,987,539 49,846 6.68 3,293,197 53,099 6.47
Nontaxable 1,196,425 21,488 7.18 1,118,227 20,414 7.30
----------- ---------- ----------- ----------
Total securities 4,183,964 71,334 6.83 4,411,424 73,513 6.68
Loans:
Commercial 7,509,454 159,044 8.49 7,023,930 151,263 8.66
Consumer 5,765,249 126,605 8.80 5,652,587 123,223 8.75
----------- ---------- ----------- ----------
Total loans 13,274,703 285,649 8.63 12,676,517 274,486 8.70
----------- ---------- ----------- ----------
Interest earning assets 17,649,054 359,489 8.16 17,181,933 349,280 8.16
Reserve for loan losses (212,970) (202,725)
Cash and due from banks 958,394 1,010,777
Other assets 922,181 857,966
----------- -----------
Total assets $ 19,316,659 $ 18,847,951
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,575,476 $ 6,034 1.54 % $ 1,515,589 $ 5,191 1.38 %
Money market accounts 2,741,187 28,901 4.23 2,500,262 24,457 3.93
Savings passbook 1,480,249 8,335 2.26 1,610,509 10,024 2.50
Certificates of deposit 5,321,915 73,920 5.57 5,415,221 74,069 5.50
Short-term borrowed funds 2,578,069 34,664 5.39 2,456,253 31,914 5.23
Other debt 668,510 12,067 7.22 644,513 10,981 6.82
----------- ---------- ----------- ----------
Interest-bearing liabilities 14,365,406 163,921 4.58 14,142,347 156,636 4.45
Demand deposits 3,133,612 2,938,756
Other liabilities 266,427 299,840
Stockholders' equity 1,551,214 1,467,008
----------- -----------
Total liabilities and
stockholders' equity $ 19,316,659 $ 18,847,951
=========== ===========
Net interest
revenue/margin $ 195,568 4.44 % $ 192,644 4.50 %
========== ==========
</TABLE>
:
<TABLE>
<CAPTION>
Six months ended June 30
------------------------------------- ----------------------------------
1997 1996
----------------------------------- ----------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-bearing deposits
with banks $ 15,869 $ 415 5.27 % $ 10,503 $ 257 4.92 %
Federal funds sold and
resale agreements 140,629 3,690 5.29 62,029 1,698 5.50
Trading securities 3,199 99 6.24 8,987 268 6.00
Securities:
Taxable 3,027,900 99,855 6.63 3,299,538 105,532 6.41
Nontaxable 1,171,231 41,957 7.16 1,128,055 41,196 7.30
----------- ---------- ----------- ----------
Total securities 4,199,131 141,812 6.78 4,427,593 146,728 6.64
Loans:
Commercial 7,433,372 310,751 8.43 7,006,417 302,153 8.67
Consumer 5,773,972 252,820 8.80 5,706,522 249,410 8.77
----------- ---------- ----------- ----------
Total loans 13,207,344 563,571 8.59 12,712,939 551,563 8.71
----------- ---------- ----------- ----------
Interest earning assets 17,566,172 709,587 8.13 17,222,051 700,514 8.17
Reserve for loan losses (212,721) (201,049)
Cash and due from banks 993,782 1,023,669
Other assets 913,341 838,022
----------- -----------
Total assets $ 19,260,574 $ 18,882,693
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,582,678 $ 11,768 1.50 % $ 1,535,973 $ 10,609 1.39 %
Money market accounts 2,742,929 56,497 4.15 2,471,781 48,566 3.95
Savings passbook 1,494,309 17,284 2.33 1,624,992 20,511 2.54
Certificates of deposit 5,296,884 145,756 5.55 5,395,849 148,821 5.55
Short-term borrowed funds 2,411,410 62,958 5.26 2,397,930 62,458 5.24
Other debt 682,739 24,214 7.10 691,023 23,914 6.92
----------- ---------- ----------- ----------
Interest-bearing liabilities 14,210,949 318,477 4.52 14,117,548 314,879 4.48
Demand deposits 3,198,224 2,968,768
Other liabilities 280,028 282,812
Stockholders' equity 1,571,373 1,513,565
----------- -----------
Total liabilities and
stockholders' equity $ 19,260,574 $ 18,882,693
=========== ===========
Net interest
revenue/margin $ 391,110 4.47 % $ 385,635 4.49 %
========== ==========
-16-
</TABLE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits to Part 1 of Form 10-Q
3.2 By-laws of Firstar Corporation
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FIRSTAR CORPORATION
/s/ Jeffrey B. Weeden
------------------
Jeffrey B. Weeden
Senior Vice President-Finance and
Treasurer (Chief Financial Officer)
August 14, 1997
-17-
F I R S T A R C O R P O R A T I O N
B Y - L A W S
(As amended to July 17, 1997)
ARTICLE I
OFFICES
Amended: 4/18/74
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
Restated: 1/23/92
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 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 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;
(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 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 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 Commission 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
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 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 proposed 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.
(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-1 promulgated under the Exchange Act.
(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 (I) was a Participant in any Solicitation of such
demand or demands or (II) 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 (d) 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 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
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 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 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 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
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 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 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 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.
(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 2.11. 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
Restated: 7/21/66; 4/20/67
Section 3.01. General Powers, Number and Qualifications.
Amended: 1/18/66; 1/22/76; 4/19/90; 7/19/90; 1/17/91; 7/18/91;
1/23/92; 4/22/93; 10/20/94; 1/19/95; 9/30/95; 4/1/96, 4/1/97
(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 seventeen (17). 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 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
six (6) directors in Class I, six (6) directors in Class II and
five (5) 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.
Amended: 4/19/90; 1/23/92
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.
Amended: 4/19/90; 1/23/92
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 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.
Amended: 10/19/72
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.
Amended: 1/20/77; 1/23/92
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.
Amended: 7/17/86; 1/23/92
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.
Amended: 1/23/92
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.
Amended: 1/23/92
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 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.<PAGE>
Amended: 1/23/92
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.
Amended: 7/17/86; 1/23/92
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 committee 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 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.
Adopted: 1/18/90
Restated: 1/23/92
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.
Adopted: 4/19/90
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.
Adopted: 7/19/90
Amended: 1/23/92
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 immediately 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.
Adopted: 1/23/92
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 minutes. Such right of
dissent or abstention shall not apply to a director who votes in
favor of the action taken.
ARTICLE IV
Restated: 1/20/77
OFFICERS
Amended: 4/17/86; 1/23/92; 7/17/97
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. Wherever in these By-laws it is provided
that the board of directors may elect, appoint, or remove any
officer, the chief executive officer of the Corporation shall
have the same authority as the board of directors except with
respect to any officer who is or, pursuant to such action, would
become a member of the Corporation's Strategic Planning
Committee.
Amended: 1/23/92
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.
Amended: 1/23/92
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.
Amended: 1/23/92
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 Corporation as he or she
shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to 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.
Amended: 1/23/92
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, 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.
Amended: 1/23/92
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.
Amended: 1/23/92
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
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.
Section 5.02. Loans. 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.
Amended: 1/20/77
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
Amended: 1/23/92
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 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.
Amended: 1/23/92
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 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.
Amended: 10/21/71
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.
Adopted: 1/23/92
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.
Adopted: 1/23/92
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."
Adopted: 1/23/92
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 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
Amended: (stat. ref.) 1/23/92
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 a 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
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.
(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).
(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.
Amended: (stat. ref.) 1/23/92
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
(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.
(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.
Amended: 1/23/92
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 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 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 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.
(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.
ARTICLE IX
Restated: 4/20/72
AMENDMENTS
Amended: 1/23/92
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 represented at any Annual Meeting or
Special Meeting at which a quorum is in attendance.
Amended: 1/23/92
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.
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