<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 October 31, 1997, 144,775,871 shares of common stock were outstanding.
<PAGE>
FIRSTAR CORPORATION
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flows 3
Supplemental Footnotes 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Additional Financial Data 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 16
<PAGE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- - ------------------------------------------------------------------------------------------------
September 30 December 31 September 30
(thousands of dollars) 1997 1996 1996
- - ------------------------------------------------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,222,014 $ 1,449,094 $ 1,402,393
Interest-bearing deposits with banks 24,074 6,349 6,206
Federal funds sold and resale agreements 93,489 192,965 199,399
Trading securities 3,277 13,489 6,757
Securities held to maturity (market value $2,452,347,
$2,287,448 and $2,282,608 on September 30, 1997,
December 31, 1996 and September 30, 1996) 2,396,802 2,250,776 2,262,745
Securities available for sale 1,776,912 1,966,590 2,018,230
Loans:
Commercial and industrial 3,647,079 3,366,016 3,373,991
Real estate 2,990,175 2,992,416 3,006,468
Other 1,049,124 953,145 1,003,490
------------ ------------ ------------
Commercial loans 7,686,378 7,311,577 7,383,949
Credit card 688,219 684,619 627,888
Real estate - mortgage 2,499,793 2,660,290 2,709,693
Home equity 1,213,265 1,121,580 1,080,396
Other 1,446,162 1,417,468 1,413,737
------------ ------------ ------------
Consumer loans 5,847,439 5,883,957 5,831,714
------------ ------------ ------------
Total loans 13,533,817 13,195,534 13,215,663
Reserve for loan losses (213,362) (213,138) (214,510)
------------ ------------ ------------
Loans - net 13,320,455 12,982,396 13,001,153
Bank premises and equipment 365,268 368,699 356,263
Customer acceptance liability 11,451 14,281 18,400
Other assets 556,108 522,781 643,058
------------ ------------ ------------
Total assets $ 19,769,850 $ 19,767,420 $ 19,914,604
============ ============ ============
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 3,545,857 $ 3,880,610 $ 3,497,517
Interest-bearing demand 1,562,486 1,687,885 1,539,302
Money market accounts 2,766,660 2,744,751 2,670,292
Savings passbook 1,374,390 1,518,033 1,566,107
Certificates of deposit 5,364,626 5,382,918 5,551,666
------------ ------------ ------------
Total deposits 14,614,019 15,214,197 14,824,884
Short-term borrowed funds 2,509,864 1,868,606 2,549,526
Long-term debt 758,579 697,194 601,720
Bank acceptances outstanding 11,451 14,281 18,400
Other liabilities 236,808 269,095 275,258
------------ ------------ ------------
Total liabilities 18,130,721 18,063,373 18,269,788
Stockholders' equity:
Preferred stock 6,738 11,344 11,424
Common stock 181,102 188,532 188,532
Issued: September 30, 1997, 144,881,896 shares
Issued: December 31, 1996, 150,826,196 shares
Issued: September 30, 1996, 150,826,196 shares
Capital surplus 0 51,145 45,430
Retained earnings 1,436,873 1,437,891 1,393,020
Treasury stock (2,844) (4,056) (2,320)
Held: September 30, 1997, 226,745 shares
Held: December 31, 1996, 490,396 shares
Held: September 30, 1996, 437,436 shares
Restricted stock 0 0 (8)
Unrealized gains on securities available for sale 17,260 19,191 8,738
------------ ------------ ------------
Total stockholders' equity 1,639,129 1,704,047 1,644,816
------------ ------------ ------------
Total liabilities and stockholders' equity $ 19,769,850 $ 19,767,420 $ 19,914,604
============ ============ ============
-1-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- - ----------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
(thousands of dollars, except per share data) 1997 1996 1997 1996
- - --------------------------------------------- ----------------------- -----------------------
(unaudited)
<S> <C> <C> <C> <C>
INTEREST REVENUE
Loans $ 288,735 $ 283,309 $ 848,925 $ 831,564
Securities 64,109 65,753 191,958 198,708
Interest-bearing deposits with banks 313 108 599 365
Federal funds sold and resale agreements 1,083 1,829 4,773 3,527
Trading securities 16 19 113 260
---------- ---------- ---------- ----------
Total interest revenue 354,256 351,018 1,046,368 1,034,424
INTEREST EXPENSE
Deposits 119,680 118,222 350,985 346,729
Short-term borrowed funds 33,507 32,876 96,465 95,334
Other debt 13,211 10,054 37,425 33,968
---------- ---------- ---------- ----------
Total interest expense 166,398 161,152 484,875 476,031
---------- ---------- ---------- ----------
NET INTEREST REVENUE 187,858 189,866 561,493 558,393
Provision for loan losses 11,290 8,908 30,540 28,963
---------- ---------- ---------- ----------
NET INTEREST REVENUE AFTER
LOAN LOSS PROVISION 176,568 180,958 530,953 529,430
OTHER OPERATING REVENUE
Trust and investment management fees 44,829 37,414 127,298 110,104
Service charges on deposit accounts 21,963 23,060 65,154 66,477
Credit card service revenue 18,989 18,100 54,251 50,814
Mortgage Banking Revenue 13,445 13,044 32,498 37,108
Data processing fees 5,224 4,687 15,159 13,851
Securities gains 31 22 1,157 64
Other revenue 16,425 17,024 49,216 46,211
---------- ---------- ---------- ----------
Total other operating revenue 120,906 113,351 344,733 324,629
<PAGE>
OTHER OPERATING EXPENSE
Salaries 82,942 78,234 245,184 236,908
Employee benefits 15,605 17,338 50,502 56,087
Equipment expense 16,476 15,644 49,233 46,041
Net occupancy expense 16,061 16,782 47,567 47,356
Restructuring expense 0 0 0 50,237
SAIF assessments 0 7,969 0 7,969
Other expense 52,680 51,045 150,002 139,866
---------- ---------- ---------- ----------
Total other operating expense 183,764 187,012 542,488 584,464
INCOME BEFORE INCOME TAXES 113,710 107,297 333,198 269,595
Applicable income taxes 38,423 38,025 113,408 93,042
---------- ---------- ---------- ----------
NET INCOME $ 75,287 $ 69,272 $ 219,790 $ 176,553
========== ========== ========== ==========
Net income applicable to common stock $ 75,169 $ 69,072 $ 219,400 $ 175,885
========== ========== ========== ==========
PER COMMON SHARE
Net income $ 0.52 $ 0.46 $ 1.51 $ 1.19
Dividends 0.21 0.19 0.61 0.55
-2-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- - -------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30
(thousands of dollars) 1997 1996
- - -------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 219,790 $ 176,553
Adjustments:
Provision for loan losses 30,540 28,963
Depreciation, amortization, and accretion 45,021 53,118
Net decrease in trading securities 10,212 5,879
Net(increase) decrease in loans held for resale (80,551) 194,694
Gains on sale of assets (1,827) (1,161)
Net increase in other assets/liabilities (58,659) (50,777)
------------- --------------
Net cash provided by operating activities 164,526 407,269
Cash Flows from Investing Activities:
Net decrease (increase) in federal funds sold and resale agreements 99,476 (67,549)
Net increase in interest-bearing deposits with banks (17,725) (739)
Sale of securities available for sale 1,157 253,438
Maturities of securities available for sale 437,319 283,934
Maturities of securities held to maturity 267,671 301,791
Purchase of securities available for sale (253,352) (289,284)
Purchase of securities held to maturity (418,056) (129,601)
Net (increase) decrease in loans (284,116) 153,333
Cash acquired in acquisitions 0 99,456
Proceeds from sale of foreclosed assets 9,500 6,048
Purchase of bank premises and equipment (51,593) (36,783)
Proceeds from sale of bank premises and equipment 3,781 2,999
------------- --------------
Net cash (used in) provided by investing activities (205,938) 577,043
Cash Flows from Financing Activities:
Net decrease in deposits (600,178) (611,380)
Net increase in short-term borrowed funds 641,258 139,112
Issuance of long-term debt 140,598 0
Repayment of long-term debt (79,213) (161,965)
Common/treasury stock repurchases/retires (209,649) (191,920)
Common/treasury stock issued 10,936 15,879
Cash dividends (89,420) (82,391)
------------- --------------
Net cash used in financing activities (185,668) (892,665)
Net (decrease) increase in cash and due from banks (227,080) 91,647
Cash and due from banks at beginning of period 1,449,094 1,310,746
------------- --------------
Cash and due from banks at end of period $ 1,222,014 $ 1,402,393
============= ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 492,012 $ 481,485
Income taxes 88,993 96,547
Transfer to foreclosed assets from loans $ 7,017 $ 6,333
-3-
</TABLE>
<PAGE>
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 September 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.
The Financial Accounting Standard 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.
2. Securities
The amortized cost and approximate market values of securities
are as follows:
<TABLE>
<CAPTION>
September 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 $ 1,130,766 $ 33,822 $ (1,366)$ 1,163,222
State and political subdivisions 1,259,336 24,382 (1,301) 1,282,417
Corporate debt 6,700 20 (12) 6,708
----------- ----------- ----------- -----------
Total $ 2,396,802 $ 58,224 $ (2,679)$ 2,452,347
=========== =========== =========== ===========
Securities available for sale:
U.S. Treasury and federal agencies $ 1,509,852 $ 30,186 $ (2,755)$ 1,537,283
Mortgage backed obligations of federal agencies 98,323 251 (294) 98,280
State and political subdivisions 6,779 27 (11) 6,795
Equity securities 96,340 0 0 96,340
Money market mutual funds 38,214 0 0 38,214
----------- ----------- ----------- -----------
Total $ 1,749,508 $ 30,464 $ (3,060)$ 1,776,912
=========== =========== =========== ===========
</TABLE>
-4-
<PAGE>
3. Nonperforming Assets and Past Due Loans
<TABLE>
<CAPTION>
September 30 December 31 September 30
1997 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Nonaccrual loans:
Commercial $ 34,744 $ 35,757 $ 29,732
Commercial - real estate 21,674 30,128 35,193
Consumer 17,653 19,193 17,271
----------- ----------- -----------
74,071 85,078 82,196
Renegotiated loans:
Commercial 0 0 0
Commercial - real estate 272 1,028 1,362
----------- ----------- -----------
272 1,028 1,362
Foreclosed assets 8,644 8,926 8,887
----------- ----------- -----------
Total $ 82,987 $ 95,032 $ 92,445
=========== =========== ===========
Nonperforming assets as a percent of:
Loans and foreclosed assets .61 % .72 % .70 %
Total assets .42 .48 .46
Loans past due 90 days and still accruing
Commercial $ 46,646 $ 24,368 $ 40,055
Commercial - eeal estate 28,130 27,352 19,438
Consumer 21,073 22,938 23,233
----------- ----------- -----------
Total $ 95,849 $ 74,658 $ 82,726
=========== =========== ===========
</TABLE>
4. Reserve for Loan Losses
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - beginning of period $ 213,763 $ 205,041 $ 213,138 $ 195,283
Provision for loan losses 11,290 8,908 30,540 28,963
Loan recoveries 6,316 6,158 16,243 19,527
Loan charge-offs (18,007) (15,106) (46,559) (43,229)
Reserves of acquired banks 0 9,509 0 13,966
----------- ----------- ----------- -----------
Balance - end of period $ 213,362 $ 214,510 $ 213,362 $ 214,510
=========== =========== =========== ===========
Net charge-offs to average loans .35 % .27 % .31 % .25 %
Reserve to period-end loans 0.00 0.00 1.58 1.62
</TABLE>
-5-
<PAGE>
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 0 176,553
Cash dividends: 0 0 0 0
Preferred stock, series D ($26.25 per share) 0 0 0 (669)
Common stock ($.55 per share) 0 0 0 (81,722)
Converted 7,840 shares of preferred stock
into 336,500 shares of common stock (3,920) 0 (998) 0
Issued 9,774,408 shares of common stock for
bank acquisitions 0 0 4,826 0
Issued 1,711,238 shares of common stock for
employee benefit plans 0 0 (11,623) 1
Purchased 7,870,200 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 September 30, 1996 $ 11,424 $ 188,532 $ 45,430 $ 1,393,020
=========== =========== =========== ===========
</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 0 176,553
Cash dividends: 0 0 0 0
Preferred stock, series D ($26.25 per share) 0 0 0 (669)
Common stock ($.55 per share) 0 0 0 (81,722)
Converted 7,840 shares of preferred stock
into 336,500 shares of common stock 0 0 4,916 (2)
Issued 9,774,408 shares of common stock for
bank acquisitions 0 0 215,002 219,828
Issued 1,711,238 shares of common stock for
employee benefit plans 0 0 27,502 15,880
Purchased 7,870,200 shares of treasury stock 0 0 (184,593) (184,593)
Unrealized gains on securities available for sale (25,389) 0 0 (25,389)
Amortization/adjustment of restricted stock 0 434 (313) 110
----------- ----------- ----------- -----------
Balance at September 30, 1996 $ 8,738 $ (8)$ (2,320)$ 1,644,816
=========== =========== =========== ===========
</TABLE>
<PAGE>
<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 0 219,790
Cash dividends: 0 0 0 0
Preferred stock, series D ($26.25 per share) 0 0 0 (390)
Common stock ($.61 per share) 0 0 0 (89,030)
Converted 9,212 shares of preferred stock 0 0 0 0
into 395,352 shares of common stock (4,606) 0 (518) (2,649)
Issued 1,040,199 shares of common stock for 0 0 0 0
employee benefit plans 0 0 (5,184) (6,129)
Retired 5,944,300 shares of common stock 0 (7,430) (45,443) (122,610)
Purchased 1,171,900 shares of treasury stock 0 0 0 0
Unrealized gains on securities available for sale 0 0 0 0
----------- ----------- ----------- -----------
Balance at September 30, 1997 $ 6,738 $ 181,102 $ 0 $ 1,436,873
=========== =========== =========== ===========
</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 0 219,790
Cash dividends: 0 0 0 0
Preferred stock, series D ($26.25 per share) 0 0 0 (390)
Common stock ($.61 per share) 0 0 0 (89,030)
Converted 9,212 shares of preferred stock 0 0 0 0
into 395,352 shares of common stock 0 0 7,772 (1)
Issued 1,040,199 shares of common stock for 0 0 0 0
employee benefit plans 0 0 27,606 16,293
Retired 5,944,300 shares of common stock 0 0 0 (175,483)
Purchased 1,171,900 shares of treasury stock 0 0 (34,166) (34,166)
Unrealized gains on securities available for sale (1,931) 0 0 (1,931)
----------- ----------- ----------- -----------
Balance at September 30, 1997 $ 17,260 $ 0 $ (2,844)$ 1,639,129
=========== =========== =========== ===========
</TABLE>
<PAGE>
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>
September 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 $ 29 5.26 % 5.75 % 1.1 yr $ (0.20)
Receive fixed rate 27 ---- ---- ---- ----
Index amortizing 62 13 5.79 7.43 1.6 (0.30)
Other
Receive variable 591 581 4.89 2.0 0.20
--------- --------- -----------
Interest rate floors* $ 787 $ 623 $ (0.30)
========= ========= ===========
*Interest rate floors provide for the receipt of payments when the
index interest rate is below the predetermined interest rate.
<\TABLE.
7.
Subsequent Event
On October 8, 1997, Firstar announced the formation of Elan Merchant
Services, LLC, a joint venture with NOVA Information Systems, Inc.
The new company will provide credit card processing services to
merchants. Firstar will contribute its existing payment processing
contracts to the company and NOVA will provide the technological
support. Firstar, who will be the 49% partner in the company, will
record a $23 million gain on the transaction in the fourth quarter
of 1997.
-6-
<PAGE>
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 assurance that actual results will correspond to
these forward looking statements.
Financial Discussion - Income Statement
Firstar Corporation's net income for the third quarter of 1997
was $75.3 million, or $.52 per common share, up from the $69.3
million, or $.46 per common share, for the same period last
year. This represented a 13.0% increase in earnings per share.
Return on common equity was 18.51% for the third quarter of the
year, compared with 17.27% for the same period last year, while
return on average assets was 1.55% compared to 1.41% during the
third quarter of last year.
Net income for the first nine months of 1997 was $219.8
million, or $1.51 per common share, up from the $176.6 million,
or $1.19 per common share, for the same period last year. This
represented a 26.9% increase in earnings per share. Return on
common equity was 18.57% for the first nine months of the year,
compared with 15.35% for the same period last year, while return
on average assets was 1.52% compared to 1.24% during the first
nine months 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. This change reduced net income by
$.21 per share. The third quarter of 1996 included the Savings
Association Insurance Fund (SAIF) charge of three cents per
share. This banking industry wide SAIF assessment recapitalized
the savings and loan deposit insurance fund and was based upon
deposits that Firstar acquired through several savings and loan
acquisitions. Excluding the restructuring charge and SAIF
charge from last year's results, operating earnings rose by
5.6% over the first nine months of 1996 from $1.43 per share to
$1.51. Similarly adjusted, operating earnings for the current
quarter rose by 6.1% over the third quarter of 1996 from $.49
per share to $.52.
<PAGE>
Table 1 shows the components of net income and the net interest
margin.
</TABLE>
<TABLE>
<CAPTION>
Table 1. Condensed income statements - taxable equivalent basis
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------- ----------------------------------
1997 1996 Change 1997 1996 Change
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
(millions of dollars) (millions of dollars)
Interest revenue $ 354.3 $ 351.1 $ 3.2 $ 1,046.4 $ 1,034.6 $ 11.8
Taxable-equivalent adjustment 9.1 8.4 0.7 26.6 25.4 1.2
---------- ---------- ---------- ---------- ---------- ----------
Interest revenue - taxable-equivalent 363.4 359.5 3.9 1,073.0 1,060.0 13.0
Interest expense 166.4 161.1 5.3 484.9 476.0 8.9
---------- ---------- ---------- ---------- ---------- ----------
Net interest revenue - taxable-equivalent 197.0 198.4 (1.4) 588.1 584.0 4.1
Provision for loan losses 11.3 8.9 2.4 30.5 29.0 1.5
Other operating revenue 120.9 113.3 7.6 344.7 324.6 20.1
Other operating expense 183.8 187.0 (3.2) 542.5 584.4 (41.9)
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 122.8 115.8 7.0 359.8 295.2 64.6
Provision for income taxes 38.4 38.1 0.3 113.4 93.2 20.2
Taxable-equivalent adjustment 9.1 8.4 0.7 26.6 25.4 1.2
---------- ---------- ---------- ---------- ---------- ----------
Net income $ 75.3 $ 69.3 $ 6.0 $ 219.8 $ 176.6 $ 43.2
========== ========== ========== ========== ========== ==========
Yield on earning assets 8.20 % 8.13 % 0.07 % 8.15 % 8.15 % 0.00 %
Cost of interest-bearing liabilities 4.61 4.51 0.10 4.55 4.49 0.06
---------- ---------- ---------- ---------- ---------- ----------
Interest spread 3.59 3.62 (0.03) 3.60 3.66 (0.06)
Impact of interest-free funds 0.86 0.87 (0.01) 0.87 0.83 0.04
---------- ---------- ---------- ---------- ---------- ----------
Net interest margin 4.45 % 4.49 % (0.04)% 4.47 % 4.49 % (0.02)%
========== ========== ========== ========== ========== ==========
</TABLE>
-7-
Net interest revenue during the first nine months of 1997, on
a taxable equivalent basis, was $588.1 million, a $4.1 million,
or .7%, increase from the level experienced in the same period
last year. The net interest margin was 4.47% during the first
nine months compared to 4.49% a year earlier. The increase in
net interest revenue was attributable to the 1.3% increase in
average earning asset balances. During the third quarter of
1997, as compared to the second quarter of this year, the net
interest margin remained relatively stable at 4.45%.
Competitive pricing pressures on loan and deposit rates and a
shift in the funding mix to higher cost deposits and borrowed
funds will continue to impact the net interest margin.
<PAGE>
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 $12.9 million
to $1,072.9 million during the first nine months 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 $17.7 million due to increased balances acquired
through an acquisition while the rate earned on total loans
declined by .08% to 8.61%. Securities revenue declined by $6.0
million as average balance levels were reduced.
Total interest expense was $484.9 million during the first
nine months of 1997, an increase of $8.8 million from the same
period last year. Interest rates on liabilities increased from
4.49% in 1996 to 4.55% in 1997. Interest expense on total
deposits increased $4.3 million in the first nine months 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 higher priced certificates of deposit.
Interest expense on borrowed funds increased by $4.6 million due
to higher average balances. In December 1996, the company
issued $150 million of securities through Firstar Capital Trust
I. These securities are being accounted for as long term debt.
Net cash flows of off-balance sheet derivative instruments
used to manage interest rate risk reduced net interest revenue
by $942 thousand. This compares to a decrease in net interest
revenue of $1.3 million during the same period in 1996.
<PAGE>
<TABLE>
<CAPTION>
Table 2. Analysis of interest revenue and expense
Nine Months Ended September 30
---------------------------------------------------------------
Interest Total Due to
------------------------ ------------------------
1997 1996 Change Volume Rate
----------- ----------- ----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits
with banks $ 599 $ 365 $ 234 $ 224 $ 10
Federal funds sold and
resale agreements 4,773 3,527 1,246 1,606 (360)
Trading securities 115 303 (188) (269) 81
Securities 213,247 219,289 (6,042) (10,686) 4,644
Commercial loans 472,026 460,518 11,508 22,230 (10,722)
Consumer loans 382,180 376,016 6,164 3,527 2,637
----------- ----------- -----------
Total loans 854,206 836,534 17,672 26,015 (8,343)
----------- ----------- -----------
Total interest revenue 1,072,940 1,060,018 12,922 13,926 (1,004)
Interest-bearing demand 18,257 16,118 2,139 479 1,660
Money market accounts 86,814 75,160 11,654 6,898 4,756
Savings passbook 25,360 30,515 (5,155) (2,675) (2,480)
Certificates of deposit 220,554 224,936 (4,382) (3,392) (990)
----------- ----------- -----------
Total deposits 350,985 346,729 4,256 1,177 3,079
Short-term borrowed funds 96,465 95,334 1,131 680 451
Long-term debt 37,425 33,968 3,457 4,517 (1,060)
----------- ----------- -----------
Total interest expense 484,875 476,031 8,844 3,433 5,411
----------- ----------- -----------
Net interest revenue $ 588,065 $ 583,987 $ 4,078 7,647 (3,569)
=========== =========== ===========
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>
-8-
<PAGE>
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 to 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 decline by up
to $8 million under the low and most likely scenarios as
compared to current rates. Under a high rate scenario a
reduction of $20 million in net interest revenue is possible.
Under all four rate scenarios the forecast shows higher net
interest income than experienced during the prior four quarters.
The rate scenarios used assume an average prime rate over the
next four quarters of 8.65% under the most likely, 7.41% under
the low, and 9.75% under the high scenarios, as compared to the
current prime rate of 8.5%.
The provision for loan losses of $30.5 million was $1.6
million higher than last year. Net charge-offs for the first
nine months of 1997 were at .31% of average outstanding loans
compared to .25% a year earlier. The reserve for loan losses
represented 1.58% of total loans at September 30, 1997, down
from 1.62% a year earlier.
Consumer loan losses for the third quarter of 1997 have
remained level with the prior quarter. 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 slightly
higher than the third quarter of 1996. Credit card charge-offs
for the third quarter of 1997 were 3.66%, up slightly from the
3.52% of the second quarter, but down from the 1996 levels.
Firstar expects credit card charge- offs to be in the range of
3.25% to 4.25% over the next twelve months. Commercial loan
charge-offs increased during the quarter from the unusually low
levels in the prior two quarters.
Nonperforming assets were $83.0 million at September 30, 1997
which represented .61% of total loans and foreclosed assets.
This was a reduction of $8.9 million and $9.5 million from the
prior quarter and one year ago, respectively. Loans past due 90
days or more rose by $22.9 million from the prior quarter level
to $95.8 million. This was attributable to a few loans which
were in the process of renewal and were subsequently removed
from past due status.
<PAGE>
<TABLE>
<CAPTION>
Table 3. Net loan charge-offs
Quarter ended
----------------------------------------------------------------------------------
9-30-97 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> <C>
Credit card $ 6,172 $ 5,673 $ 5,556 $ 8,304 $ 6,162 $ 5,674 $ 4,746
Other consumer 2,485 2,869 4,497 2,314 1,800 2,722 1,072
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total consumer 8,657 8,542 10,053 10,618 7,962 8,396 5,818
Commercial 3,034 363 (333) 4,438 986 266 274
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total net charge-offs $ 11,691 $ 8,905 $ 9,720 $ 15,056 $ 8,948 $ 8,662 $ 6,092
========== ========== ========== ========== ========== ========== ==========
Net charge-offs as a % of:
Credit card 3.66 % 3.52 % 3.44 % 5.11 % 3.94 % 3.81 % 3.20 %
Other consumer 0.19 0.22 0.36 0.17 0.14 0.22 0.08
Total consumer 0.59 0.59 0.71 0.72 0.55 0.60 0.41
Commercial 0.16 0.02 (0.02) 0.24 0.05 0.02 0.02
Total loans 0.35 0.27 0.30 0.46 0.27 0.27 0.19
</TABLE>
Other operating revenue, excluding securities gains and
losses, was $343.6 million in the first nine months of 1997, an
increase of 5.9% from the same period last year. Table 4 shows
the composition of other operating revenue.
-9-
<PAGE>
<TABLE>
<CAPTION>
Table 4. Other operating revenue
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------- ----------------------------------
1997 1996 Change 1997 1996 Change
---------- ---------- ---------- ---------- ---------- ----------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Trust and investment management fees $ 44,829 $ 37,414 19.8 % $ 127,298 $ 110,104 15.6 %
Service charges on deposit accounts 21,963 23,060 (4.8) 65,154 66,477 (2.0)
Credit card service revenue 18,989 18,100 4.9 54,251 50,814 6.8
Mortgage loan servicing 2,988 6,874 (56.5) 9,446 17,724 (46.7)
Mortgage loan origination 10,457 6,170 69.5 23,052 19,384 18.9
Data processing fees 5,224 4,687 11.5 15,159 13,851 9.4
Insurance revenue 2,487 3,881 (35.9) 8,332 8,389 (0.7)
Brokerage revenue 2,818 2,301 22.5 8,261 8,252 0.1
International fees 1,741 1,565 11.2 4,827 4,342 11.2
Foreign exchange gains 641 586 9.4 2,049 1,844 11.1
ATM fees 1,868 1,412 32.3 4,349 3,983 9.2
Safe deposit fees 1,106 901 22.8 3,582 3,010 19.0
Trading securities gains 196 635 (69.1) 922 1,549 (40.5)
Other 5,568 5,743 (3.0) 16,894 14,842 13.8
---------- ---------- ---------- ----------
Subotal 120,875 113,329 6.7 343,576 324,565 5.9
Securities (losses) gains 31 22 1,157 64
Total ---------- ---------- ---------- ----------
$ 120,906 $ 113,351 6.7 % $ 344,733 $ 324,629 6.2 %
========== ========== ========== ==========
</TABLE>
Other operating revenue represents 37.0% of total taxable
equivalent revenue for the first nine months of 1997 compared to
35.7% for the same period one year ago.
Trust and investment management fees are the single largest
source of fee revenue, contributing $127.3 million, or 37%, of
other operating revenue. This level represents a 15.6% growth
in revenue during the first nine months of 1997 compared to the
same period last year. Trust and investment assets under
management were $25.1 billion on September 30, 1997, a 20.9%
increase from the year earlier level due to both the result of
general market appr- eciation and additional net new business.
Additionally, assets held in custody accounts rose by 37.1% to a
level of $91.2 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.
<PAGE>
Revenue from service charges on deposit accounts at $65.2
million for the first nine months of 1997 was 2.0% below last
year.
Credit card service revenues are the third largest source of
fee revenue, totaling $54.3 million during the first nine months
of 1997. This level represented a 6.8% increase over the same
period last year. Increased cardholder fees and interbank fees
have contributed to this revenue growth.
Mortgage loan servicing revenues declined by 46.7% from the
year earlier level due to gains 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
nine months of this year increased 18.9% due to a gain on sale
of portfolio mortgages in the third quarter of $1.4 million and
continued improvement in origination volumes during the past two
quarters.
The remaining sources of other operating revenue derive from a
wide range of services and aggregated $64.4 million, an increase
of 7.2% over the first nine months of 1996. This year's revenue
included $1.6 million of nonrecurring items.
Other operating expense declined to a level of $542.5 million
for the first nine months of 1997. Excluding the restructuring
charges and SAIF assessment, expenses increased by 3.1%.
Personnel costs increased less than 1%. Nonpersonnel expense,
excluding the one-time charges, increased by 5.8%. The detail
of other operating expense is shown in Table 5.
-10-
Full-time equivalent personnel headcount was 7,755 on
September 30, 1997, down from 8,420 one year earlier. Staff
reductions have occurred under the corporate wide restructuring
program. The impact of the staff reductions was offset by
increases in temporary staffing costs, higher variable pay,
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, including year 2000 compliance
changes, and to staff operation areas of the company. Employee
benefit expense has declined due to lower pension and other
postretirement benefit costs.
Business development expense rose by 15.7% from a somewhat
unrepresentative lower level last year and as a result of
increased focus on customer development activities this year.
Professional fees increased 17.6% due to some one-time costs and
increased use of outside consultants in various areas of the
company to implement process improvement changes. Processing
losses increased 37.2% due to higher fraud losses and other
one-time losses incurred through the centralization of various
operational functions. All other operating expenses totaled
$199.7 million, an increase of 3.1% over the first nine months
of 1996.
<PAGE>
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 approx- imately 1,500 people, fixed asset
writedowns of $3.9 million and other project costs of $22.3
million. There are approximately $2.4 million of remaining cash
payments to be made as of September 30, 1997.
The efficiency ratio, which is the ratio of expense to
revenue, was 58.2% in the first nine months of 1997 compared to
57.9% a year earlier.
<TABLE>
<CAPTION>
Table 5. Other operating expense
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------- ----------------------------------
1997 1996 Change 1997 1996 Change
---------- ---------- ---------- ---------- ---------- ----------
(thousands of dollars) (thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 82,942 $ 78,234 6.0 % $ 245,184 $ 236,908 3.5 %
Employee benefits 15,605 17,338 (10.0) 50,502 56,087 (10.0)
---------- ---------- ---------- ----------
Total personnel expense 98,547 95,572 3.1 295,686 292,995 0.9
Net occupancy expense 16,061 16,782 (4.3) 47,567 47,356 0.4
Equipment expense 16,476 15,644 5.3 49,233 46,041 6.9
Business development 6,945 6,875 1.0 21,622 18,683 15.7
F.D.I.C. insurance 599 398 50.5 1,902 2,130 (10.7)
Stationery and supplies 5,423 5,769 (6.0) 16,282 17,814 (8.6)
Delivery 5,191 4,956 4.7 14,833 14,471 2.5
Professional fees 5,716 6,159 (7.2) 18,335 15,591 17.6
Information processing expense 6,392 5,550 15.2 17,161 15,371 11.6
Amortization of intangibles 4,375 5,102 (14.2) 13,001 12,491 4.1
Employee education/recruiting 2,495 2,136 16.8 6,523 4,976 31.1
Federal Reserve processing fees 1,990 1,552 28.2 5,171 4,085 26.6
Commissions and service fees 1,512 1,451 4.2 4,015 4,381 (8.4)
Wire communication 2,510 2,361 6.3 7,539 7,262 3.8
Processing and other losses 3,654 1,541 137.1 7,131 5,198 37.2
Credit card assessment fees 1,474 1,561 (5.6) 4,285 4,355 (1.6)
Net foreclosed assets expense(income) (87) 126 (145) 662
Published information 828 691 19.8 2,190 1,932 13.4
Insurance 529 803 (34.1) 896 1,425 (37.1)
Other 3,134 4,014 (21.9) 9,261 9,039 2.5
---------- ---------- ---------- ----------
Total nonpersonnel expense 85,217 83,471 2.1 246,802 233,263 5.8
Restructuring charges 0 0 0 50,237
SAIF assessment 0 7,969 0 7,969
---------- ---------- ---------- ----------
Total other operating expense $ 183,764 $ 187,012 (1.7)% $ 542,488 $ 584,464 (7.2)%
========== ========== ========== ==========
</TABLE>
-11-
<PAGE>
Income tax expense was $113.4 million in the first nine
months of 1997 compared to $93.0 million in the same period last
year. The effective tax rate was 34.0% in 1997 compared to
34.5% in 1996.
Financial Discussion - Balance Sheet
Total assets on September 30, 1997 were $19.8 billion, up $2.4
million from December 31, 1996 and down $145 million from a year
earlier. Earning assets totaled $17.8 billion, up $203 million
from year end. Earning assets have increased $119 million, or
.7% from a year earlier.
Average loans totaled $13.3 billion during the first nine
months of 1997, an increase of $403 million, or 3.1% 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 .3% from a year ago.
Commercial loans averaged $7.5 billion during the first nine
months of 1997, an increase of $349 million, or 4.9% from a year
earlier. Excluding loans acquired through the bank acquisition,
commercial loans declined by .1% from last year. Average loans
have increased during the past three quarters when compared with
the immediate prior quarter at an annualized rate of 1.6% in the
third quarter, 8.4% in the second quarter and 3.9% in the first
quarter. While this loan growth is encouraging, competitive
pressures are leading to narrower interest spreads for commercial
lending.
Consumer loans, excluding residential mortgages, averaged $3.2
billion, an increase of $253 million, or 8.5% over the first
nine months of 1996. Excluding loans from the bank acquisition,
consumer lending increased by 6.3%. Good growth has occurred in
home equity loans and credit card loans, which are up 17.2% and
8.4% 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
5.9% on average from the first nine months 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.
<PAGE>
Total securities, including both those designated as available
for sale and those held to maturity averaged $4.2 billion during
the first nine months of 1997 compared with $4.4 billion a year
earlier. Similar to portfolio mortgages, Firstar has reduced
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 nine months of 1997.
Total deposits averaged $14.3 billion, a decrease of 2.4% 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 nine
months of 1997, up 2.1% 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 September 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.
Stockholders' equity totaled $1,639 million at September 30,
1997, a decrease of $65 million from year end 1996. Firstar
repurchased and retired 5,944,300 shares of its common stock
during the first five months of this year under its previously
announced stock buyback plan which authorized up to 12 million
shares for repurchase. Additionally, 1,171,900 shares of common
stock were purchased and placed in treasury stock for reissuance
under stock option plans and convertible securities during the
first nine months of 1997. Shares reissued under option plans
and conversions totaled 1,435,551 during the first nine months
of 1997.
-12-
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 8.97% at the end of the second
quarter of 1997. Firstar's tier 1 leverage ratio was 8.28% at
September 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 1
leverage ratio.
<PAGE>
On October 16, 1997, the board of directors declared a
quarterly dividend to common stockholders of $.21 per share.
The dividend is payable November 15 to shareholders of record on
October 27. The board also declared a quarterly dividend of
$8.75 per Series D preferred share payable December 31 to
stockholders of record on December 15.
<TABLE>
<CAPTION>
Table 6. Capital components and ratios
September 30 December 31 September 30
1997 1996 1996
------------ ------------ ------------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity $ 1,639,129 $ 1,704,047 $ 1,644,816
Trust capital securities 150,000 150,000 0
Unrealized (gains) losses on securities available for sale (17,260) (19,191) (8,738)
Minority interest in subsidiaries 2,798 2,384 2,278
Less disallowed intangibles (191,507) (200,540) (189,814)
------------ ------------ ------------
Total Tier I capital 1,583,160 1,636,700 1,448,542
Allowable reserve for loan losses 185,789 175,725 177,724
Allowable long-term debt 40,000 75,668 75,668
------------ ------------ ------------
Total Tier II capital 225,789 251,393 253,392
------------ ------------ ------------
Total capital $ 1,808,949 $ 1,888,093 $ 1,701,934
============ ============ ============
Risk-adjusted assets $ 14,835,573 $ 14,020,587 $ 14,181,132
Tier I capital to risk-adjusted assets 10.67 % 11.67 % 10.21 %
Total capital to risk-adjusted assets 12.19 13.47 12.00
Tier I leverage ratio 8.28 8.55 7.49
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (unaudited)
- - ----------------------------------------------------------------------------------------------------
Selected Financial Data
(thousands of dollars, except per share)
Quarter ended Nine Months ended
September 30 September 30
---------------------- ------------------------------
1997 1996 1997 1996
---------------------- ------------------------------
<S> <C> <C> <C> <C>
Earnings and Dividends
Net income $ 75,287 $ 69,272 $ 219,790 $ 176,553
Per common share:
Net income 0.52 0.46 1.51 1.19
Dividends 0.21 0.19 0.61 0.55
Stockholders' equity 0.00 0.00 11.28 10.86
Performance Ratios
Return on average assets 1.55 % 1.41 % 1.52 % 1.24 %
Return on average common equity 18.51 17.27 18.57 15.35
Dividend payout ratio 40.38 41.30 40.40 46.22
Equity to assets 0.00 0.00 8.29 8.26
Net loan charge-offs as a percentage
of average loans 0.35 0.27 0.31 0.25
Nonperforming assets as a
percentage of loans and foreclosed
assets 0.00 0.00 0.61 0.70
Net interest margin 4.45 4.49 4.47 4.49
Efficiency ratio* 57.82 57.44 * 58.23 57.92 *
Fee revenue as a percentage
of average assets 2.48 2.31 2.38 2.27
Statistical Data
Full-time equivalent staff (at quarter end) 0 0 7,755 8,420
Average common shares
outstanding (000's) 144,611 149,416 145,265 147,285
Actual common shares
outstanding (000's at quarter end) 0 0 144,655 150,389
Stock Price Information
High $ 38.000 $ 24.563 $ 38.000 $ 24.875
Low 30.625 21.438 25.563 18.313
Close 36.250 24.438 36.250 24.438
*Excludes nonrecurring items.
-14-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (Unaudited)
- - --------------------------------------------------------------------------------------------------------
Consolidated Average Balance Sheets, Net Interest Revenue and Rate Analysis
(Thousands of Dollars)
Quarter ended September 30
------------------------------------------------------------------------
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 $ 22,039 $ 313 5.63 % $ 8,820 $ 108 4.87 %
Federal funds sold and
resale agreements 76,183 1,083 5.64 121,716 1,829 5.98
Trading securities 1,166 16 5.44 8,799 35 1.58
Securities:
Taxable 2,913,495 49,162 6.72 3,215,682 52,411 6.50
Nontaxable 1,242,398 22,273 7.17 1,116,720 20,150 7.22
----------- ---------- ----------- ----------
Total securities 4,155,893 71,435 6.86 4,332,402 72,561 6.69
Loans:
Commercial 7,542,064 161,146 8.48 7,352,926 158,365 8.57
Consumer 5,815,916 129,360 8.85 5,789,922 126,606 8.72
----------- ---------- ----------- ----------
Total loans 13,357,980 290,506 8.64 13,142,848 284,971 8.64
----------- ---------- ----------- ----------
Interest earning assets 17,613,261 363,353 8.20 17,614,585 359,504 8.13
Reserve for loan losses (212,240) (213,171)
Cash and due from banks 987,957 1,069,877
Other assets 929,540 1,039,556
----------- -----------
Total assets $ 19,318,518 $ 19,510,847
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,599,625 $ 6,489 1.61 % $ 1,562,501 $ 5,509 1.40 %
Money market accounts 2,767,882 30,317 4.35 2,644,523 26,594 4.00
Savings passbook 1,416,480 8,076 2.26 1,599,096 10,004 2.49
Certificates of deposit 5,306,137 74,798 5.59 5,346,708 76,115 5.66
Short-term borrowed funds 2,495,752 33,507 5.33 2,471,395 32,876 5.29
Other debt 755,803 13,211 6.99 600,082 10,054 6.70
----------- ---------- ----------- ----------
Interest-bearing liabilities 14,341,679 166,398 4.61 14,224,305 161,152 4.51
Demand deposits 3,127,312 3,393,956
Other liabilities 231,278 290,191
Stockholders' equity 1,618,249 1,602,395
----------- -----------
Total liabilities and
stockholders' equity $ 19,318,518 $ 19,510,847
=========== ===========
Net interest
revenue/margin $ 196,955 4.45 % $ 198,352 4.49 %
========== ==========
</TABLE>
<PAGE>
:
<TABLE>
<CAPTION>
Nine months ended September 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 $ 15,895 $ 599 5.04 % $ 9,938 $ 365 4.91 %
Federal funds sold and
resale agreements 118,911 4,773 5.37 82,070 3,527 5.74
Trading securities 2,514 115 6.12 8,924 303 4.54
Securities:
Taxable 2,989,346 149,017 6.66 3,271,382 157,943 6.44
Nontaxable 1,195,214 64,230 7.17 1,124,249 61,346 7.28
----------- ---------- ----------- ----------
Total securities 4,184,560 213,247 6.80 4,395,631 219,289 6.66
Loans:
Commercial 7,472,054 472,026 8.45 7,122,763 460,518 8.64
Consumer 5,788,107 382,180 8.82 5,734,525 376,016 8.75
----------- ---------- ----------- ----------
Total loans 13,260,161 854,206 8.61 12,857,288 836,534 8.69
----------- ---------- ----------- ----------
Interest earning assets 17,582,041 1,072,940 8.15 17,353,851 1,060,018 8.15
Reserve for loan losses (212,559) (205,119)
Cash and due from banks 991,819 1,039,184
Other assets 918,800 905,690
----------- -----------
Total assets $ 19,280,101 $ 19,093,606
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,588,389 $ 18,257 1.54 % $ 1,544,880 $ 16,118 1.39 %
Money market accounts 2,751,338 86,814 4.22 2,529,782 75,160 3.97
Savings passbook 1,468,081 25,360 2.31 1,616,297 30,515 2.52
Certificates of deposit 5,300,002 220,554 5.56 5,379,349 224,936 5.59
Short-term borrowed funds 2,439,833 96,465 5.29 2,422,597 95,334 5.26
Other debt 707,361 37,425 7.06 660,488 33,968 6.86
----------- ---------- ----------- ----------
Interest-bearing liabilities 14,255,004 484,875 4.55 14,153,393 476,031 4.49
Demand deposits 3,174,327 3,111,532
Other liabilities 263,600 285,290
Stockholders' equity 1,587,170 1,543,391
----------- -----------
Total liabilities and
stockholders' equity $ 19,280,101 $ 19,093,606
=========== ===========
Net interest
revenue/margin $ 588,065 4.47 % $ 583,987 4.49 %
========== ==========
-15-
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits to Part 1 of Form 10-Q
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FIRSTAR CORPORATION
/s/ Jeffrey B. Weeden
------------------
Jeffrey B. Weeden
Senior Vice President-Finance and
Treasurer (Chief Financial Officer)
November 14, 1997
-16-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
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0
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