<PAGE> 1
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ____________________
Commission file number 1-3750
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BOATMEN'S BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-0672260
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE BOATMEN'S PLAZA, 800 MARKET STREET, ST. LOUIS, MISSOURI 63101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 466-6000
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<TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<CAPTION>
NAME OF EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- -------------------
<S> <C>
None None
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS)
CONVERTIBLE SUBORDINATED DEBENTURES, 6.25%, DUE 2011
(TITLE OF CLASS)
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes. X No.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /
<TABLE>
Indicate the number of shares outstanding of each of the registrant's
classes of common stock:
<CAPTION>
NUMBER OF SHARES OUTSTANDING
CLASS OF COMMON STOCK AS OF MARCH 8, 1994
--------------------- ----------------------------
<S> <C>
$1 Par Value 104,197,976
</TABLE>
The aggregate market value of registrant's common stock (based upon
the closing trade price on March 8, 1994) held by non-affiliates was
approximately $2,889,800,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1993 (Part I, Part II, and Part IV).
(2) Portions of registrant's Proxy Statement filed for its Annual
Meeting of Shareholders scheduled for April 26, 1994 (Part III).
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<PAGE> 2
PART I
ITEM 1. BUSINESS
BOATMEN'S BANCSHARES, INC. ("CORPORATION")
The Corporation was incorporated under the laws of the State of
Missouri in June, 1946 and was known as General Bancshares Corporation
until the time of its merger with Boatmen's Bancshares, Inc. on March
29, 1986. The Corporation's principal office is located in St. Louis,
Missouri where its largest subsidiary, The Boatmen's National Bank of
St. Louis ("Boatmen's Bank"), is located. The Corporation directly owns
substantially all of the capital stock of 49 subsidiary banks, a trust
company, a mortgage banking company, a credit life insurance company,
an insurance agency and a credit card bank. The subsidiary banks
operate from approximately 425 banking offices and 350 off-site
automated teller machine locations in Missouri, New Mexico, Oklahoma,
Iowa, Texas, Illinois, Arkansas, Tennessee and Kansas.
The business of the Corporation consists primarily of the ownership,
supervision and control of its subsidiaries. The Corporation provides
its subsidiaries with advice, counsel and specialized services in
various fields of financial and banking policy and operations. The
Corporation also engages in negotiations designed to lead to the
acquisition of other banks and closely related businesses.
Based on total assets as of December 31, 1993, the Corporation was
the largest bank holding company headquartered in the State of Missouri
and among the 30 largest bank holding companies in the United States.
There are numerous bank holding companies and groupings of banks
located throughout the Corporation's markets which offer substantial
competition in the acquisition and operation of banks and non-bank
financial institutions. The Corporation's subsidiaries encounter
substantial competition in all of their banking and related activities,
and its banking subsidiaries face increasing competition from various
non-banking financial institutions that are not subject to the same
geographic and other regulatory restraints applicable to banks.
On November 6, 1993, the Corporation entered into a definitive
agreement to acquire Woodland Bancorp, Inc., a one bank holding company
based in Tulsa, Oklahoma, which had consolidated assets of
approximately $64 million at December 31, 1993. Woodland Bank, which
operates from one office in Tulsa and has plans to open two additional
branches, will be merged into Boatmen's First National Bank of Oklahoma
upon completion of the acquisition on March 31, 1994.
The information under the caption Acquisition Overview on pages 18,
19 and the top of page 20 and Table 2 on page 18 of the Corporation's
Annual Report to Shareholders for the year ended December 31, 1993, is
incorporated herein by reference.
Banking Operations
<TABLE>
The following table summarizes the banking operations for each state
in which the Corporation has banking locations.
<CAPTION>
12/31/93 12/31/93 12/31/93
ASSETS LOANS DEPOSITS
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Missouri........................................................ $15,764 $8,833 $12,009
New Mexico...................................................... 3,262 1,458 2,784
Oklahoma........................................................ 1,780 945 1,534
Texas........................................................... 1,556 773 1,152
Iowa............................................................ 1,215 640 1,026
Illinois........................................................ 977 614 856
Arkansas........................................................ 907 396 753
Tennessee....................................................... 689 612 579
Kansas.......................................................... 181 76 150
</TABLE>
<PAGE> 3
Trust Operations
The Corporation provides a wide range of trust services to both
individuals and institutions through Boatmen's Trust Company and the
trust departments of certain of its subsidiary banks. Its trust
operations rank among the 15 largest providers of trust services in the
United States, with total trust assets of $71.1 billion at December 31,
1993, including $34.1 billion under management.
Other Non-Bank Subsidiaries
The Corporation's other non-bank subsidiaries include: (1) a mortgage
banking company, whose business is the origination and servicing of
real estate mortgage loans for the account of long-term investors and
the servicing of real estate loans originated by its affiliate banks;
(2) a credit life insurance company which insures or reinsures credit
life and accident and health insurance written by the Corporation's
subsidiary banks; (3) an insurance agency; and (4) a credit card bank.
Regulation and Supervision
As a bank holding company, the Corporation is subject to regulation
pursuant to the Bank Holding Company Act of 1956 (the "Act"), which is
administered by the Board of Governors of the Federal Reserve System
(the "Board").
A bank holding company must obtain Board approval before acquiring,
directly or indirectly, ownership or control of any voting shares of a
bank or bank holding company if, after such acquisition, it would own
or control more than 5% of such shares. Board approval must also be
obtained before any bank holding company acquires all or substantially
all of the assets of another bank or bank holding company or merges or
consolidates with another bank holding company. Furthermore, any
acquisition by a bank holding company of more than 5% of the voting
shares, or of all or substantially all of the assets, of a bank located
in another state may not be approved by the Board unless the laws of
the second state specifically authorize such an acquisition.
Legislation was enacted in Missouri during 1986 which authorized bank
holding companies domiciled in contiguous states to acquire Missouri
banks and bank holding companies provided their home states have
similar laws. All of the eight contiguous states have passed similar
legislation.
The Act also prohibits a bank holding company, with certain limited
exceptions, from acquiring or retaining direct or indirect ownership or
control of more than 5% of the voting shares of any company which is
not a bank or a bank holding company, or from engaging in any
activities other than those of banking, managing or controlling banks,
or providing services for its subsidiaries. The principal exceptions to
these prohibitions involve certain activities which the Board has
determined to be closely related to the business of banking or managing
or controlling banks.
A bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with the
extension of credit, with limited exemptions. Subsidiary banks of a
bank holding company are also subject to certain restrictions imposed
by the Federal Reserve Act on any extensions of credit to the bank
holding company or any of its subsidiaries, or investment in the stock
or other securities thereof, and on the taking of such stocks or
securities as collateral for loans. The Board possesses cease and
desist powers over bank holding companies if their actions represent
unsafe or unsound practices or violations of law.
In August, 1989, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") was enacted. FIRREA allows bank
holding companies to acquire healthy savings institutions, removing
certain restrictions on operations of such institutions. Acquired
savings institutions may now be operated as separate savings
subsidiaries, converted to bank charters or merged into existing bank
subsidiaries, subject to certain requirements. FIRREA also contains a
"cross-guarantee" provision which could result in depository
institutions being assessed for losses incurred by the FDIC in the
assistance provided to, or the failure of, an affiliated depository
institution.
On December 16, 1988, the Board adopted final risk-based capital
guidelines for use in its examination and supervision of bank holding
companies and banks. The guidelines have three main goals: (1) to make
regulatory capital requirements more sensitive to differences in risk
profiles among banking organizations; (2)
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to take off-balance sheet risk exposures into explicit account in
assessing capital adequacy; and (3) to minimize disincentives to
holding liquid, low-risk assets. A bank holding company's ability to
pay dividends and expand its business through the acquisition of new
banking or non-banking subsidiaries could be restricted if its capital
falls below levels established by these guidelines. The risk-based
capital ratios were fully implemented by the end of 1992. In 1991, the
Board required bank holding companies and banks to adhere to another
capital guideline referred as the Tier 1 leverage ratio. This guideline
places a constraint on the degree to which a banking institution can
leverage its equity capital base. The Corporation substantially exceeds
the requirements of these capital guidelines.
In December, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") was enacted. FDICIA, among other
things, identifies the following capital standards for depository
institutions: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. A depository institution is well capitalized if it
significantly exceeds the minimum level required by regulation for each
relevant capital measure, adequately capitalized if it meets each such
measure, undercapitalized if it fails to meet any such measure,
significantly undercapitalized if it is significantly below any such
measure, and critically undercapitalized if it fails to meet any
critical capital level set forth in the regulations. FDICIA requires a
bank that is determined to be undercapitalized to submit a capital
restoration plan, and the bank's holding company must guarantee that
the bank will meet its capital plan, subject to certain limitations.
FDICIA also prohibits banks from making any capital distribution or
paying any management fee if the bank would thereafter be
undercapitalized. The Corporation's bank subsidiaries currently meet
the well capitalized standards.
FDICIA grants the FDIC authority to impose special assessments on
insured depository institutions to repay FDIC borrowings from the
United States Treasury or other sources and to establish semiannual
assessment rates on Bank Insurance Fund ("BIF") member banks so as to
maintain the BIF at the designated reserve ratio defined in FDICIA.
FDICIA also required the FDIC to implement a risk-based insurance
assessment system pursuant to which the premiums paid by a depository
institution will be based on the probability that the BIF will incur a
loss in respect of such institution. The FDIC has adopted a deposit
insurance assessment system that places each insured institution in one
of nine risk categories based on the level of its capital, evaluation
of its risk by its primary state or federal supervisor, statistical
analysis and other information. In 1994, deposit insurance premiums
will range between 23 cents and 31 cents per $100 of domestic deposits.
The Corporation's national bank subsidiaries are subject to
supervision by the Comptroller of the Currency. The Arkansas federal
savings bank is subject to supervision by the Office of Thrift
Supervision. The FDIC has primary federal supervisory responsibility
for the Corporation's state banks, with the exception of three state
banks that are members of the Federal Reserve System. The Corporation's
state banks and trust company are also subject to supervision by the
bank supervisory authorities in their respective states. Various
federal and state laws and regulations apply to many aspects of the
operations of the Corporation's subsidiary banks, including interest
rates paid on deposits and loans, investments, mergers and acquisitions
and the establishment of branch offices and facilities. The payment of
dividends by the Corporation's subsidiary banks, which is the
Corporation's principal source of income, is also subject to certain
statutory restrictions and to regulation by governmental agencies.
Statistical Disclosure
Pages 17 through 47 and footnote number 11 on page 57 of the
Corporation's Annual Report to Shareholders for the year ended December
31, 1993, are incorporated herein by reference. The statistical data
contained therein reflect the restatement of prior period data for the
acquisition of First Amarillo Bancorporation, Inc. on November 30, 1993
using the pooling of interests accounting method.
ITEM 2. PROPERTIES
The Corporation's headquarters building, Boatmen's Plaza, is located
in downtown St. Louis, Missouri. Through a joint venture, Boatmen's
Bank owns a one-half undivided interest in two-thirds of the building.
On December 31, 1981, Boatmen's Bank entered into a lease agreement for
approximately 60 percent of the
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building for a term of 30 years. This long-term lease obligation was
capitalized in accordance with Statement of Financial Accounting
Standards No. 13. The principal office of Boatmen's Trust Company was
purchased on January 4, 1994.
The Corporation's principal banking offices in Oklahoma, Iowa and
Tennessee are leased under long-term leases. The principal banking
offices in New Mexico, Illinois, Arkansas and Texas are owned. The
majority of the other banking offices are owned by the respective
subsidiary banks. In the opinion of management, the physical properties
of the Corporation and its subsidiaries are suitable and adequate and
are being fully utilized.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE CORPORATION
<TABLE>
The following sets forth certain information regarding the executive
officers of the Corporation:
<CAPTION>
POSITIONS WITH OFFICER
NAME AGE CORPORATION SINCE
---- --- -------------- -------
<C> <C> <S> <C>
Andrew B. Craig, III............................ 62 Chairman of the Board, President 1985
and Chief Executive Officer
Samuel B. Hayes, III............................ 57 Vice Chairman and Director 1988
John Peters MacCarthy........................... 60 Vice Chairman and Director 1988
John M. Brennan................................. 58 Executive Vice President 1977
J. Robert Brubaker.............................. 58 Executive Vice President and Senior 1987
Operations Officer
Gregory L. Curl................................. 45 Executive Vice President 1982
Alfred S. Dominick, Jr. ........................ 48 Executive Vice President 1992
Retail Banking
James W. Kienker................................ 47 Executive Vice President and 1979
Chief Financial Officer
Phillip E. Peters............................... 54 Executive Vice President and 1988
Chief Investment Officer
Philip N. McCarty............................... 55 Senior Vice President and Secretary 1970
</TABLE>
There are no family relationships between any of the named persons.
Each executive officer is elected by the Board of Directors to serve
until the close of the next annual meeting of the shareholders
following his election and until the election of his successor. No
executive officer of the Corporation was selected to his position
pursuant to any arrangement or understanding with any other person.
Each executive officer has held the same position or another
executive position with the Corporation or Boatmen's Bank during the
past five years, except as follows:
Mr. Dominick was Executive Vice President of Bank One, Dallas, Texas
from March 1990 until joining the Corporation on August 4, 1992. Prior
to Bank One, Mr. Dominick was a partner in Dominick/Frerichs Associates
Ltd. (a bank consulting firm) from February, 1989 to March 1990. Mr.
Dominick was Senior Vice President of Shawmut Bank, Boston,
Massachusetts from 1974 until February, 1989.
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PART II
ITEM 5. MARKET FOR THE CORPORATION'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Footnote number 21 on page 62 and page 65 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1993, are
incorporated herein by reference. The last trade price for the
Corporation's common stock on March 8, 1994, was $28.00.
ITEM 6. SELECTED FINANCIAL DATA
Page 17 of the Corporation's Annual Report to Shareholders for the
year ended December 31, 1993, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pages 17 through 39 of the Corporation's Annual Report to
Shareholders for the year ended December 31, 1993, are incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements together with the report thereon of Ernst &
Young on pages 48 through 63 and the supplementary quarterly
information on page 39 and pages 40 through 43 of the Corporation's
Annual Report to Shareholders for the year ended December 31, 1993, are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION
The information under the item captioned Election of Directors and
Information With Respect to Directors and Executive Officers in the
Corporation's Proxy Statement filed for its Annual Meeting of
Shareholders scheduled for April 26, 1994, is incorporated herein by
reference. The required information regarding the Corporation's
executive officers is contained in PART I in the item captioned
Executive Officers of the Corporation.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption Executive Compensation on pages 10
through the graph on page 17 in the Corporation's Proxy Statement filed
for its Annual Meeting of Shareholders scheduled for April 26, 1994, is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the table captioned Amount and Nature of
Beneficial Ownership and the caption Security Ownership of Management
in the Corporation's Proxy Statement filed for its Annual Meeting of
Shareholders scheduled for April 26, 1994, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption Certain Transactions in the
Corporation's Proxy Statement filed for its Annual Meeting of
Shareholders scheduled for April 26, 1994, is incorporated herein by
reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
The following financial statements of the Corporation and its
consolidated subsidiaries, and the accountants' report thereon, are
incorporated herein by reference.
Consolidated Financial Statements
Balance Sheets-December 31, 1993 and 1992.
Statements of Income-Years ended December 31, 1993, 1992 and 1991.
Statements of Changes in Stockholders' Equity-Years ended December
31, 1993, 1992 and 1991.
Statements of Cash Flows-Years Ended December 31, 1993, 1992 and
1991.
Notes to Consolidated Financial Statements.
Financial Statement Schedules
All required schedules for the Corporation and its subsidiaries
have been included in the consolidated financial statements or
related notes thereto.
The following exhibits are incorporated herein by reference (a):
Exhibit 3(a) - Restated Articles of Incorporation of the
Corporation.
Exhibit 3(b) - Amended By-laws of the Corporation.
Exhibit 4 - Rights Agreement dated as of August 14, 1990.
Exhibit 4(a) - Amendment dated as of January 26, 1993 to Rights
Agreement dated as of August 14, 1990.
Note: No long-term debt instrument issued by the
Corporation exceeds 10% of the consolidated total
assets of the Corporation and its subsidiaries. In
accordance with paragraph 4(iii) of Item 601 of
Regulation S-K, the Corporation will furnish to
the Commission upon request copies of long-term
debt instruments and related agreements.
Exhibit 10(c) - Boatmen's Bancshares, Inc. Amended 1981 Incentive
Stock Option Plan, Exhibit 10(h) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1986.
Exhibit 10(d) - Boatmen's Bancshares, Inc. Amended 1982 Long-Term
Incentive Plan, Exhibit 10(d) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1992.
Exhibit 10(e) - Boatmen's Bancshares, Inc. 1987 Non-Qualified
Stock Option Plan, Exhibit 10(e) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1992.
Exhibit 10(f) - Employment Agreement dated February 1, 1992,
between Boatmen's Sunwest, Inc., a subsidiary of
the Corporation, and Ike Kalangis, Exhibit 10(f)
to Boatmen's Bancshares, Inc.'s Annual Report to
the Securities and Exchange Commission on Form
10-K (File No. 1-3750) for the fiscal year ended
December 31, 1992.
Exhibit 10(g) - Centerre Executive Retirement Program, Exhibit
10(c)(6) to Centerre Bancorporation's Annual
Report to the Securities and Exchange Commission
on Form 10-K (File No. 0-3909) for the fiscal year
ended December 31, 1983.
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Exhibit 10(h) - Amendment dated as of January 1, 1988, to Centerre
Executive Retirement Program, Exhibit 10(m) to
Boatmen's Bancshares, Inc.'s Annual Report to the
Securities and Exchange Commission on Form 10-K
(File No. 1-3750) for the fiscal year ended
December 31, 1988.
Exhibit 10(i) - Second Amendment dated as of January 1, 1988, to
Centerre Executive Retirement Program, Exhibit
10(n) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission
on Form 10-K (File No. 1-3750) for the fiscal year
ended December 31, 1988.
Exhibit 10(j) - Third Amendment dated March 31, 1989, effective as
of December 9, 1988, to Centerre Executive
Retirement Program, Exhibit 10(m) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1989.
Exhibit 10(k) - Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(c)(9) to Centerre
Bancorporation's Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
0-3909) for the fiscal year ended December 31,
1985.
Exhibit 10(l) - Amendment dated as of January 1, 1987, to Centerre
Bancorporation Executive Deferred Compensation
Plan, Exhibit 10(p) to Boatmen's Bancshares,
Inc.'s Annual Report to the Securities and
Exchange Commission on Form 10-K (File No. 1-3750)
for the fiscal year ended December 31, 1988.
Exhibit 10(m) - Second Amendment dated as of January 1, 1988, to
Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(q) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1988.
Exhibit 10(n) - Third Amendment dated as of January 1, 1986, to
Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(r) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1988.
Exhibit 10(o) - Fourth Amendment dated December 13, 1988, to
Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(r) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1989.
Exhibit 10(p) - Centerre Bancorporation Deferred Compensation Plan
for Directors, Exhibit 10(c)(10) to Centerre
Bancorporation's Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
0-3909) for the fiscal year ended December 31,
1986.
Exhibit 10(q) - Amendment dated as of January 1, 1988, to Centerre
Bancorporation Deferred Compensation Plan for
Directors, Exhibit 10(t) to Boatmen's Bancshares,
Inc.'s Annual Report to the Securities and
Exchange Commission on Form 10-K (File No. 1-3750)
for the fiscal year ended December 31, 1988.
Exhibit 10(r) - Amendment No. 2 dated February 14, 1989, to
Centerre Bancorporation Deferred Compensation Plan
for Directors, Exhibit 10(x) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1989.
Exhibit 10(s) - Amendment No. 3 dated August 8, 1989, to Centerre
Bancorporation Deferred Compensation Plan for
Directors and adoption by Boatmen's Bancshares,
Inc. of Centerre Bancorporation Deferred
Compensation Plan for Directors, Exhibit 10(y) to
Boatmen's Bancshares, Inc.'s Annual Report to the
Securities and Exchange
7
<PAGE> 9
Commission on Form 10-K (File No. 1-3750) for the
fiscal year ended December 31, 1989.
Exhibit 10(t) - Amendment No. 4 dated November 14, 1989, as of
August 8, 1989, to Boatmen's Deferred Compensation
Plan for Directors, Exhibit 10(z) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1989.
Exhibit 10(u) - Boatmen's Executive Deferred Compensation Plan
dated August 8, 1989, effective January 1, 1990,
Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s
Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the
fiscal year ended December 31, 1989.
Exhibit 10(x) - Boatmen's Supplemental Retirement Participation
Agreement dated August 8, 1989, between the
Corporation and Samuel B. Hayes, III, Exhibit
10(dd) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission
on Form 10-K (File No. 1-3750) for the fiscal year
ended December 31, 1989.
Exhibit 10(y) - Boatmen's Supplemental Retirement Participation
Agreement dated August 8, 1989, between the
Corporation and John Peters MacCarthy, Exhibit
10(ee) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission
on Form 10-K (File No. 1-3750) for the fiscal year
ended December 31, 1989.
Exhibit 10(bb) - Boatmen's Bancshares, Inc. 1991 Incentive Stock
Option Plan, Exhibit 10(dd) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1991.
Exhibit 10(cc) - Boatmen's Bancshares, Inc. 1992 Annual Incentive
Bonus Plan, Exhibit 10(ee) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1991.
Exhibit 10(dd) - Sunwest Financial Services, Inc. 1983 Incentive
Stock Option Plan, Exhibit A to Boatmen's
Bancshares, Inc.'s S-8 Registration Statement (No.
33-55186).
Exhibit 10(ee) - Sunwest Financial Services, Inc. 1987 Incentive
Stock Option Plan, Exhibit A to Boatmen's
Bancshares, Inc.'s S-8 Registration Statement (No.
33-55110).
Exhibit 10(ff) - Fifth Amendment dated November 10, 1992 to
Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(ii) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1992.
Exhibit 10(gg) - Supplemental Executive Retirement Plan of
Boatmen's Sunwest, Inc., a subsidiary of the
Corporation, Exhibit (jj) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1992.
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The following exhibits are submitted herewith:
Exhibit 10(a) - Amended Employment Agreement dated November 9,
1993, between the Corporation and Andrew B. Craig,
III.
Exhibit 10(b) - Amended Employment Agreement dated November 9,
1993, between the Corporation and Samuel B. Hayes,
III.
Exhibit 10(v) - Boatmen's Supplemental Retirement Plan dated
November 9, 1993.
Exhibit 10(w) - Boatmen's Supplemental Retirement Participation
Agreement dated August 4, 1993, between the
Corporation and Andrew B. Craig, III.
Exhibit 10(z) - Boatmen's Supplemental Retirement Participation
Agreement dated November 9, 1993, between the
Corporation and Ike Kalangis.
Exhibit 10(aa) - Letter agreement dated November 9, 1993, between
the Corporation and John Peters MacCarthy.
Exhibit 13 - Portions of the Annual Report to Shareholders for
the year ended December 31, 1993.
Exhibit 21 - Subsidiaries of the Corporation.
Exhibit 23 - Independent Auditors' Consent of Ernst & Young.
Exhibit 23(a) - Independent Auditors' Consent of KPMG Peat
Marwick.
Exhibit 23(b) - Independent Auditors' Consent of KPMG Peat
Marwick.
Exhibit 23(c) - Independent Auditors' Consent of KPMG Peat
Marwick.
Exhibit 99 - Independent Auditors' Report of KPMG Peat Marwick.
Exhibit 99(a) - Independent Auditors' Report of KPMG Peat Marwick.
Exhibit 99(b) - Independent Auditors' Report of KPMG Peat Marwick.
[FN]
- -----
(a) The exhibits included under Exhibit 10 constitute all management
contracts, compensatory plans and arrangements required to be filed
as an exhibit to this form pursuant to Item 14(c) of this report.
On December 7, 1993, the Corporation filed a Current Report on Form
8-K reporting on the November 30, 1993, acquisition of First Amarillo
Bancorporation, Inc.
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act
of 1933, the Corporation hereby undertakes as follows, which
undertaking shall be incorporated by reference into the Corporation's
Registration Statements on Form S-8 Nos. 33-15714 (filed July 10,
1987), 33-15715 (filed July 10, 1987), 33-25945 (filed December 23,
1988), 33-25946 (filed December 23, 1988), 33-37862 (filed November 16,
1990), 33-44546 (filed December 17, 1991), 33-46730 (filed April 1,
1992), 33-55186 (filed November 27, 1992), 33-55110 (filed November 27,
1992), 33-50451 (filed September 30, 1993), 33-51635 (filed December
21, 1993) and 33-51637 (filed December 21, 1993).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Corporation pursuant to the foregoing
provisions, or otherwise, the Corporation has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Corporation of expenses incurred or paid by a director, officer or
controlling person of the Corporation in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Corporation will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Corporation has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BOATMEN'S BANCSHARES, INC.
........................................
(Registrant)
By ANDREW B. CRAIG, III
..........................................
Andrew B. Craig, III, Chairman of the
Board, President and Chief Executive Officer
(principal executive officer)
By JAMES W. KIENKER
------------------------------------------
James W. Kienker, Executive Vice President
and Chief Financial Officer
(principal financial and accounting officer)
Date: March 8, 1994
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Corporation and in the capacities and on the date indicated.
<CAPTION>
SIGNATURES TITLES DATE
---------- ------ ----
<S> <C> <C>
ANDREW B. CRAIG, III Chairman of the Board, President and March 8, 1994
------------------------------------------ Chief Executive Officer
Andrew B. Craig, III
SAMUEL B. HAYES, III Vice Chairman and Director March 8, 1994
------------------------------------------
Samuel B. Hayes, III
JOHN PETERS MACCARTHY Vice Chairman and Director March 8, 1994
------------------------------------------
John Peters MacCarthy
RICHARD L. BATTRAM Director March 8, 1994
------------------------------------------
Richard L. Battram
B. A. BRIDGEWATER, JR. Director March 8, 1994
------------------------------------------
B. A. Bridgewater, Jr.
WILLIAM E. CORNELIUS Director March 8, 1994
------------------------------------------
William E. Cornelius
ILUS W. DAVIS Director March 8, 1994
------------------------------------------
Ilus W. Davis
MICHAEL G. FITT Director March 8, 1994
------------------------------------------
Michael G. Fitt
JOHN E. HAYES, JR. Director March 8, 1994
------------------------------------------
John E. Hayes, Jr.
10
<PAGE> 12
<CAPTION>
SIGNATURES TITLES DATE
---------- ------ ----
IKE KALANGIS
------------------------------------------
Ike Kalangis Director March 8, 1994
LEE M. LIBERMAN Director March 8, 1994
------------------------------------------
Lee M. Liberman
WILLIAM E. MARITZ Director March 8, 1994
------------------------------------------
William E. Maritz
ANDREW E. NEWMAN Director March 8, 1994
------------------------------------------
Andrew E. Newman
Director March , 1994
------------------------------------------
Jerry E. Ritter
WILLIAM P. STIRITZ Director March 8, 1994
------------------------------------------
William P. Stiritz
Director March , 1994
------------------------------------------
Albert E. Suter
DWIGHT D. SUTHERLAND Director March 8, 1994
------------------------------------------
Dwight D. Sutherland
THEODORE C. WETTERAU Director March 8, 1994
------------------------------------------
Theodore C. Wetterau
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
NUMBER EXHIBIT PAGE
------ ------- ----
<C> <S> <C>
3(a) The Corporation's Restated Articles of Incorporation as adopted by its Board of Directors on May
12, 1992, Exhibit 3(a) to Boatmen's Bancshares, Inc.'s S-3 Registration Statement (File
No. 33-48528) is incorporated herein by reference................................................ *
3(b) The Corporation's Amended By-laws as adopted by its Board of Directors on April 27, 1993, Exhibit
3(b) to Boatmen's Bancshares, Inc.'s S-4 Registration Statement (File No. 33-50159) is
incorporated herein by reference................................................................. *
4 Conformed copy of Rights Agreement dated as of August 14, 1990,
Exhibits 1 and 2 to Registration Statement on Form 8-A is incorporated herein
by reference..................................................................................... *
4(a) Amendment dated as of January 26, 1993 to Rights Agreement dated August 14, 1990, is incorporated
herein by reference.............................................................................. *
10(a) Amended Employment Agreement dated November 9, 1993, between the Corporation and Andrew B. Craig,
III..............................................................................................
10(b) Amended Employment Agreement dated November 9, 1993, between the Corporation and Samuel B.
Hayes, III.......................................................................................
10(c) Boatmen's Bancshares, Inc. Amended 1981 Incentive Stock Option Plan, Exhibit 10(h) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1986, is incorporated herein by reference......... *
10(d) Boatmen's Bancshares, Inc. Amended 1982 Long Term Incentive Plan, Exhibit 10(d) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference......... *
10(e) Boatmen's Bancshares, Inc. 1987 Non-Qualified Stock Option Plan, Exhibit 10(e) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference......... *
10(f) Employment Agreement dated February 1, 1992, between Boatmen's Sunwest, Inc., a subsidiary of the
Corporation, and Ike Kalangis, Exhibit 10(f) to Boatmen's Bancshares, Inc.'s Annual Report to
the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended
December 31, 1992, is incorporated herein by reference........................................... *
10(g) Centerre Executive Retirement Program, Exhibit 10(c)(6) to Centerre Bancorporation's Annual
Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal
year ended December 31, 1983, is incorporated herein by reference................................ *
10(h) Amendment dated as of January 1, 1988, to Centerre Executive Retirement Program, Exhibit 10(m) to
Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K
(File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by
reference........................................................................................ *
<PAGE> 14
<CAPTION>
INDEX TO EXHIBITS (CONTINUED)
NUMBER EXHIBIT PAGE
------ ------- ----
10(i) Second Amendment dated as of January 1, 1988, to Centerre Executive Retirement Program, Exhibit
10(n) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on
Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein
by reference..................................................................................... *
10(j) Third Amendment dated March 31, 1989, effective as of December 9, 1988, to Centerre
Bancorporation Executive Retirement Program, Exhibit 10(m) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal
year ended December 31, 1989, is incorporated herein by reference................................ *
10(k) Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(c)(9) to Centerre
Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
0-3909) for the fiscal year ended December 31, 1985, is incorporated herein by reference......... *
10(l) Amendment dated as of January 1, 1987, to Centerre Bancorporation Executive Deferred Compensation
Plan, Exhibit 10(p) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is
incorporated herein by reference................................................................. *
10(m) Second Amendment dated as of January 1, 1988, to Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(q) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31,
1988, is incorporated herein by reference........................................................ *
10(n) Third Amendment dated as of January 1, 1986, to Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(r) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31,
1988, is incorporated herein by reference........................................................ *
10(o) Fourth Amendment dated December 13, 1988, to Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(r) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31,
1989, is incorporated herein by reference........................................................ *
10(p) Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(c)(10) to Centerre
Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
0-3909) for the fiscal year ended December 31, 1986, is incorporated herein by reference......... *
10(q) Amendment dated as of January 1, 1988, to Centerre Bancorporation Deferred Compensation Plan for
Directors, Exhibit 10(t) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and
Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988,
is incorporated herein by reference.............................................................. *
10(r) Amendment No. 2 dated February 14, 1989, to Centerre Bancorporation Deferred Compensation Plan
for Directors, Exhibit 10(x) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and
Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989,
is incorporated herein by reference.............................................................. *
<PAGE> 15
<CAPTION>
INDEX TO EXHIBITS (CONTINUED)
NUMBER EXHIBIT PAGE
------ ------- ----
10(s) Amendment No. 3 dated August 8, 1989, to Centerre Bancorporation Deferred Compensation Plan for
Directors and adoption by Boatmen's Bancshares, Inc. of Centerre Bancorporation Deferred
Compensation Plan for Directors, Exhibit 10(y) to Boatmen's Bancshares, Inc.'s Annual Report to
the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended
December 31, 1989, is incorporated herein by reference........................................... *
10(t) Amendment No. 4 dated November 14, 1989, as of August 8, 1989, to Boatmen's Deferred Compensation
Plan for Directors, Exhibit 10(z) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31,
1989, is incorporated herein by reference........................................................ *
10(u) Boatmen's Executive Deferred Compensation Plan dated August 8, 1989, effective January 1, 1990,
Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is
incorporated herein by reference................................................................. *
10(v) Boatmen's Supplemental Retirement Plan dated November 9, 1993....................................
10(w) Boatmen's Supplemental Retirement Participation Agreement dated August 4, 1993, between the
Corporation and Andrew B. Craig, III.............................................................
10(x) Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the
Corporation and Samuel B. Hayes, III, Exhibit 10(dd) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal
year ended December 31, 1989, is incorporated herein by reference................................ *
10(y) Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the
Corporation and John Peters MacCarthy, Exhibit 10(ee) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal
year ended December 31, 1989, is incorporated herein by reference................................ *
10(z) Boatmen's Supplemental Retirement Participation Agreement dated November 9, 1993, between the
Corporation and Ike Kalangis.....................................................................
10(aa) Letter agreement dated November 9, 1993, between the Corporation and John Peters MacCarthy.......
10(bb) Boatmen's Bancshares, Inc. 1991 Incentive Stock Option Plan, Exhibit 10(dd) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1991, is incorporated herein by reference......... *
10(cc) Boatmen's Bancshares, Inc. 1992 Annual Incentive Bonus Plan, Exhibit 10(ee) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1991, is incorporated herein by reference......... *
10(dd) Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan, Exhibit A to Boatmen's
Bancshares, Inc.'s S-8 Registration Statement (No. 33-55186), is incorporated herein by reference. *
<PAGE> 16
<CAPTION>
INDEX TO EXHIBITS (CONTINUED)
NUMBER EXHIBIT PAGE
------ ------- ----
10(ee) Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan, Exhibit A to Boatmen's
Bancshares, Inc.'s S-8 Registration Statement (No. 33-55110) is incorporated herein by reference. *
10(ff) Fifth Amendment dated November 10, 1992 to Centerre Bancorporation Executive Deferred
Compensation Plan, Exhibit 10(ii) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31,
1992, is incorporated herein by reference........................................................ *
10(gg) Supplemental Executive Retirement Plan of Boatmen's Sunwest, Inc., a subsidiary of the
Corporation, Exhibit (jj) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and
Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992,
is incorporated herein by reference.............................................................. *
13 Portions of the Annual Report to Shareholders for the year ended December 31, 1993...............
</TABLE>
<TABLE>
<CAPTION>
GRAPHICS APPENDIX
CROSS REFERENCE
TO PAGE OF
OMITTED CHARTS ANNUAL REPORT
-------------- ---------------
<S> <C>
1. Return on Equity............................................................. Page 17
2. Return on Assets............................................................. Page 17
3. Earnings per Share........................................................... Page 17
4. Asset Growth................................................................. Page 18
5. Equity Growth................................................................ Page 18
6. Net Interest Margin.......................................................... Page 22
7. Quarterly Net Interest Margin................................................ Page 22
8. Average Earning Asset Mix.................................................... Page 25
9. Funding Mix.................................................................. Page 25
10. Noninterest Income........................................................... Page 29
11. Noninterest Expense.......................................................... Page 30
12. Loan Portfolio............................................................... Page 31
13. Loan Loss Experience......................................................... Page 33
14. Loan Reserve Coverage........................................................ Page 35
15. Nonperforming Assets......................................................... Page 35
16. Risk-Based Capital........................................................... Page 38
</TABLE>
The above listed charts were omitted from the EDGAR version
of Exhibit 13; however, the information depicted in the
charts was adequately discussed and/or displayed in tabular
format within the Management's Discussion and Analysis
section of the Annual Report.
<TABLE>
<C> <S> <C>
21 Subsidiaries of the Corporation..................................................................
23 Independent Auditors' Consent of Ernst & Young...................................................
23(a) Independent Auditors' Consent of KPMG Peat Marwick...............................................
23(b) Independent Auditors' Consent of KPMG Peat Marwick...............................................
23(c) Independent Auditors' Consent of KPMG Peat Marwick...............................................
99 Independent Auditors' Report of KPMG Peat Marwick................................................
99(a) Independent Auditors' Report of KPMG Peat Marwick................................................
99(b) Independent Auditors' Report of KPMG Peat Marwick................................................
<FN>
- -----
*Incorporated by reference.
</TABLE>
<PAGE> 1
Exhibit 10(a)
AMENDED EMPLOYMENT AGREEMENT
This is an Amended Employment Agreement made as of November 9, 1993, by and
between Boatmen's Bancshares, Inc. (the "Company") and Andrew B. Craig, III
("Employee").
WHEREAS, the Company and Employee entered into an Employment Agreement
as of January 28, 1985, amended it as of December 13, 1988, and August 8,
1989, and now desire to amend that Employment Agreement, as so amended, in
its entirety;
NOW THEREFORE, in consideration of the mutual promises contained herein,
and intending on being legally bound, the parties hereto agree that their
Amended Employment Agreement ("Agreement") shall be in its entirety as
follows:
1. Term. Subject to the provisions for termination as hereinafter provided,
----
the term of this Agreement commenced on January 28, 1985, and shall terminate
on March 31, 1996.
2. Duties. Employee shall serve as Chief Executive Officer of the Company
------
or a senior officer as the Board of Directors of the Company shall determine
from time to time. Employee shall devote his full time and attention and
best efforts to the performance of such duties.
3. Compensation. For all services rendered by Employee under this agreement,
------------
the Company shall pay or cause Employee to be paid a base compensation of at
least Six Hundred Thousand Dollars ($600,000) per year and such increased
base compensation as the Board of Directors may authorize at their discretion
from time to time. Employee's base compensation for purposes of this
Agreement shall include such increased base compensation and in no event
shall such base compensation be reduced during the term of this Agreement.
The Company may also pay Employee incentive compensation in such amounts as
the Compensation Committee or the Board of Directors shall determine.
4. Payment on Death. In the event of the Employee's death during the term
----------------
of this Agreement, a renewal thereof, or when payments are being made
pursuant to Paragraph 10 hereof, the Company shall pay to the designated
beneficiaries of Employee the compensation which would otherwise be payable
to Employee up to the end of the month in which his death occurs.
5. Retirement Benefits. Employee's retirement benefits shall not be less
-------------------
than those that would be provided him under the terms of the Boatmen's
Bancshares, Inc. Retirement Plan for Employees and the Boatmen's Supplemental
Retirement Plan in effect as of November 9, 1993, or as such benefits shall
be increased, whether or not such benefits shall be decreased or eliminated.
The obligations of the Company pursuant to this paragraph shall survive the
termination of this Agreement.
<PAGE> 2
6. Rights Under Other Plans. The Company and Employee agree that nothing
------------------------
contained herein is intended to or shall be deemed to affect any of Employee's
rights as a participant under any retirement, stock option or purchase,
insurance, bonus or similar plan of the Company now or hereafter in effect.
7. Assignment. The rights and obligations of the Company under this
----------
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. Employee's rights and obligations
under this Agreement shall be non-assignable.
8. Termination of this Agreement.
-----------------------------
(a) The Company may terminate the employment of the Employee with or
without cause prior to the expiration of this Agreement. In such event, this
Agreement shall be terminated, except that the Company shall (i) continue to
pay Employee the base compensation for the full term of this Agreement
pursuant to Paragraph 3 of this Agreement, (ii) provide retirement benefits
pursuant to Paragraph 5 of this Agreement accrued through the effective date
of the termination and (iii) continue to have the obligations set forth in
Paragraph 10 of this Agreement.
(b) Voluntary termination of employment by the Employee shall terminate
this Agreement in its entirety except as provided in Paragraphs 5 and 10
hereof.
9. Termination in the Event of an Act of Dishonesty. The obligation of the
------------------------------------------------
Company to pay compensation and supplemental retirement and death benefits to
Employee as specified in Paragraphs 3, 4, 5, 8, and 10 of this agreement shall
not exist if Employee has been terminated as a result of an act of dishonesty on
his part involving a shortage, loss or theft of funds or property of the
Company or its affiliates.
10. Termination after Change of Control. If the employment of Employee by
-----------------------------------
the Company is terminated by the Company, except under paragraph 9 of this
Agreement, prior to his sixty-fifth birthday and either during the six months
before or the three years after a "Change of Control", as such term is defined
in the Boatmen's Supplemental Retirement Plan in effect as of November 9,
1993, or by Employee prior to his sixty-fifth birthday and either during the
six months before or the year after a "Change of Control," Employee shall
receive at a minimum the base compensation set forth in Paragraph 3 of this
Agreement for a period of three (3) years from the date of such termination or
until his sixty-fifth birthday, whichever period is shorter. Any amounts
payable pursuant to Paragraph 8(a)(i) of this Agreement or similar provisions
of later employment agreements between the Company and Employee shall be
applied against this obligation, so that termination payments of base
compensation under this Paragraph 10 shall be made only to the extent they
may exceed those paid under Paragraph 8(a)(i).
2
<PAGE> 3
The obligations of the Company as set forth in this Paragraph 10 shall (i)
survive the termination of this Agreement, (ii) survive the termination of any
later employment agreements between Employee and the Company and (iii) remain
in full force and effect even if the employment of Employee by the Company
becomes an employment at will as opposed to an employment for a fixed term.
11. Entire Agreement. This instrument contains the entire agreement of the
----------------
parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
BOATMEN'S BANCSHARES, INC.
By /s/ PHILIP N. MCCARTY
----------------------------------
/s/ ANDREW B. CRAIG, III
----------------------------------
ANDREW B. CRAIG, III
3
<PAGE> 1
Exhibit 10(b)
AMENDED EMPLOYMENT AGREEMENT
This is an Amended Employment Agreement made as of November 9, 1993, by and
between Boatmen's Bancshares, Inc. (the "Company") and Samuel B. Hayes, III
("Employee").
WHEREAS, the Company and Employee entered into an Employment Agreement
as of November 1, 1986, amended it as of August 8, 1989, and November 14,
1989, and now desire to amend that Employment Agreement, as so amended, in
its entirety;
NOW THEREFORE, in consideration of the mutual promises contained herein,
and intending on being legally bound, the parties hereto agree that their
Amended Employment Agreement ("Agreement") shall be in its entirety as
follows:
1. Term. Subject to the provisions for termination as hereinafter provided,
----
the term of this Agreement commenced on November 1, 1986, and shall terminate
on December 31, 1996.
2. Duties. Employee shall serve as Vice Chairman of the Company and
------
President and Chief Executive Officer of the Company's subsidiary, The
Boatmen's National Bank of St. Louis, or a senior officer as the Board of
Directors of the Company shall determine from time to time. Employee shall
devote his full time and attention and best efforts to the performance of
such duties.
3. Compensation. For all services rendered by Employee under this agreement,
------------
the Company shall pay or cause Employee to be paid a base compensation of at
least Four Hundred Fifty Thousand Six Hundred Forty Dollars ($450,640) per
year and such increased base compensation as the Board of Directors may
authorize at their discretion from time to time. Employee's base compensation
for purposes of this Agreement shall include such increased base compensation
and in no event shall such base compensation be reduced during the term of
this Agreement. The Company may also pay Employee incentive compensation in
such amounts as the Compensation Committee or the Board of Directors shall
determine.
4. Payment on Death. In the event of the Employee's death during the term
----------------
of this Agreement, a renewal thereof, or when payments are being made
pursuant to Paragraph 10 hereof, the Company shall pay to the designated
beneficiaries of Employee the compensation which would otherwise be payable
to Employee up to the end of the month in which his death occurs.
5. Retirement Benefits. Employee's retirement benefits shall not be less
-------------------
than those that would be provided him under the terms of the Boatmen's
Bancshares, Inc. Retirement Plan for Employees and the Boatmen's Supplemental
Retirement Plan in effect as of November 9, 1993, or as such benefits shall
be increased, whether or not such benefits shall be decreased or eliminated.
The obligations of
<PAGE> 2
the Company pursuant to this paragraph shall survive the termination of this
Agreement.
6. Rights Under Other Plans. The Company and Employee agree that nothing
------------------------
contained herein is intended to or shall be deemed to affect any of Employee's
rights as a participant under any retirement, stock option or purchase,
insurance, bonus or similar plan of the Company now or hereafter in effect.
7. Assignment. The rights and obligations of the Company under this
----------
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. Employee's rights and obligations
under this Agreement shall be non-assignable.
8. Termination of this Agreement.
-----------------------------
(a) The Company may terminate the employment of the Employee with or
without cause prior to the expiration of this Agreement. In such event, this
Agreement shall be terminated, except that the Company shall (i) continue to
pay Employee the base compensation for the full term of this Agreement
pursuant to Paragraph 3 of this Agreement, (ii) provide retirement benefits
pursuant to Paragraph 5 of this Agreement accrued through the effective date
of the termination and (iii) continue to have the obligations set forth in
Paragraph 10 of this Agreement.
(b) Voluntary termination of employment by the Employee shall terminate
this Agreement in its entirety except as provided in Paragraphs 5 and 10
hereof.
9. Termination in the Event of an Act of Dishonesty. The obligation of the
------------------------------------------------
Company to pay compensation and supplemental retirement and death benefits to
Employee as specified in Paragraphs 3, 4, 5, 8, and 10 of this agreement shall
not exist if Employee has been terminated as a result of an act of dishonesty
on his part involving a shortage, loss or theft of funds or property of the
Company or its affiliates.
10. Termination after Change of Control. If the employment of Employee by
-----------------------------------
the Company is terminated by the Company, except under paragraph 9 of this
Agreement, prior to his sixty-fifth birthday and either during the six months
before or the three years after a "Change of Control", as such term is defined
in the Boatmen's Supplemental Retirement Plan in effect as of November 9,
1993, or by Employee prior to his sixty-fifth birthday and either during the
six months before or the year after a "Change of Control," Employee shall
receive at a minimum the base compensation set forth in Paragraph 3 of this
Agreement for a period of three (3) years from the date of such termination or
until his sixty-fifth birthday, whichever period is shorter. Any amounts
payable pursuant to Paragraph 8(a)(i) of this Agreement or similar provisions
of later employment agreements between the Company and Employee shall be
2
<PAGE> 3
applied against this obligation, so that termination payments of base
compensation under this Paragraph 10 shall be made only to the extent they
may exceed those paid under Paragraph 8(a)(i).
The obligations of the Company as set forth in this Paragraph 10 shall (i)
survive the termination of this Agreement, (ii) survive the termination of any
later employment agreements between Employee and the Company and (iii) remain
in full force and effect even if the employment of Employee by the Company
becomes an employment at will as opposed to an employment for a fixed term.
11. Entire Agreement. This instrument contains the entire agreement of the
----------------
parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
BOATMEN'S BANCSHARES, INC.
By /s/ A. B. CRAIG, III
----------------------------------
/s/ SAMUEL B. HAYES, III
----------------------------------
SAMUEL B. HAYES, III
3
<PAGE> 1
Exhibit 10(v)
PLAN DOCUMENT
- -----------------------------------------------------------------------------
WHEREAS, Boatmen's Bancshares, Inc., a Missouri corporation, (the
"Corporation") desires to provide certain key executive employees of the
Corporation and its subsidiaries with supplemental benefits in addition to
those benefits provided under the Boatmen's Bancshares, Inc. Retirement Plan
for Employees.
Therefore, the Boatmen's Supplemental Retirement Plan, adopted effective as
of August 8, 1989, is hereby amended, effective November 9, 1993, to read in
its entirety as follows:
ARTICLE I
DEFINITIONS
Except as otherwise specified herein or in a Participant's Participation
Agreement, all capitalized terms shall have the same meanings as such terms
have under the Boatmen's Bancshares, Inc. Retirement Plan for Employees.
Section 1.1. "Board of Directors" means the Board of Directors of
Boatmen's Bancshares, Inc.
Section 1.2. "Cause" means conduct of the Participant which is finally
adjudged to be knowingly fraudulent, deliberately dishonest or willful
misconduct. The Compensation Committee of the Corporation shall have sole
and uncontrolled discretion with respect to the application of the provisions
of this Section 1.2 and any determination shall be conclusive and binding upon
the Participant and all other persons.
Section 1.3. "Change of Control" means any of the following events:
(a) any individual, corporation (other than the Corporation), partnership,
trust, association, pool, syndicate, or any other entity or any group of
persons acting in concert becomes the beneficial owner, as that concept is
defined in Rule 13d-3 promulgated by the SEC under the Securities Exchange
Act of 1934, of securities of the Corporation possessing twenty percent (20%)
or more of the voting power for the election of directors of the Corporation;
(b) there shall be consummated any consolidation, merger or other business
combination involving the Corporation or the securities of the Corporation
in which holders of voting securities of the Corporation immediately prior
to such consummation own, as a group, immediately after such consummation,
voting securities of the Corporation (or, if the Corporation does not survive
such transaction, voting securities of the corporation surviving such
transaction) having less than fifty percent (50%) of the total voting power
in an election of directors of the Corporation (or such other surviving
corporation); (c) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Directors of the Corporation
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Corporation's shareholders,
of each new Director of the Corporation was approved by a vote of at least
two-thirds of the Directors of the Corporation then still in office who were
Directors of the Corporation at the beginning of any such period; (d) removal
by the stockholders of all or any of the incumbent Directors of the
Corporation other than a removal for Cause; and (e) there shall be consummated
any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, of the assets of the
Corporation (on a consolidated basis) to a party which is not controlled by
or under common control with the Corporation.
Section 1.4. "Code" means the Internal Revenue Code of 1986, as amended.
3
<PAGE> 2
Section 1.5. "Committee" means the Boatmen's Bancshares, Inc.
Compensation Committee.
Section 1.6. "Corporation" means Boatmen's Bancshares, Inc.
Section 1.7. "Employee" means any person employed by the Corporation or
any of its subsidiaries.
Section 1.8. "Participant" means any Employee who is selected for
participation in the Plan by the Committee as provided in Article II.
Section 1.9. "Plan" means the Boatmen's Supplemental Retirement Plan as
set forth herein and as the same may be amended from time to time.
Section 1.10. "Retirement Plan" means the Boatmen's Bancshares, Inc.
Retirement Plan for Employees.
ARTICLE II
PARTICIPATION
Section 2.1. Subject to the provisions of Section 2.2, the Committee
shall have exclusive power to designate the Employees who will participate in
the Plan.
Section 2.2. Participation in the Plan shall be limited to a select
group of Employees of the Corporation and its subsidiaries who are management
or highly compensated Employees within the meaning of Section 201(2) of the
Employee Retirement Income Security Act of 1974, as amended.
Section 2.3. Each Employee selected to participate in the Plan by the
Committee shall indicate his agreement to the terms of the Plan by executing
a Participation Agreement, a form of which is attached hereto as Exhibit A.
By means of paragraph 4 of the Participation Agreement, an Employee and the
Corporation may agree to vary the terms of the Plan as to such Employee.
ARTICLE III
BENEFITS
Section 3.1. Except in the case of termination for Cause, in which event
no benefit shall be payable under the Plan, if a Participant's employment
with the Corporation or one of its subsidiaries is terminated (a) by
Disability, (b) within one (1) year after a Change in Control, or (c) after
the Participant has completed five (5) years of Vesting Service, the
Corporation shall pay to the Participant, in the manner provided in Article V,
a benefit equal to the excess of the benefit in (i) over the benefit in (ii)
described below:
(i) the benefit which the Participant would be entitled to
receive under the Retirement Plan (based upon the terms of the Retirement
Plan then in effect but without giving effect to any qualified domestic
relations order, as defined in Section 414(p) of the Code) upon the
Participant's termination of employment and if the benefit under the
Retirement plan were computed
4
<PAGE> 3
(a) including in Earnings for Retirement Plan purposes
incentive compensation; and
(b) without giving effect to the limitations then
currently imposed by Section 415 of the Code, the limitations of
Section 1.401(a)(4)-5(b) of the Income Tax Regulations or their
successors, or the limitations under Section 401(a)(17) of the Code;
(ii) the benefit which the Participant would be entitled to
receive under the Retirement Plan (but without giving effect to any
qualified domestic relations order, as defined in Section 414(p) of the
Code) upon the Participant's termination of employment, if such benefit
were computed without giving effect to the limitation then currently
imposed by Section 1.401(a)(4)-5(b) of the Income Tax Regulations or its
successor.
Section 3.2. For purposes of Section 3.1(i), a Participant whose
employment has terminated for reasons other than death or Disability within
one (1) year after a Change in Control and who is not otherwise entitled to
receive a benefit under the Retirement Plan shall be deemed to be entitled to
receive a benefit under the Retirement Plan based upon the formula set forth
in the Retirement Plan.
ARTICLE IV
DEATH BENEFITS
Section 4.1. If the spouse of a Participant is entitled to receive a
benefit under the Retirement Plan upon the death of the Participant then
such spouse will be entitled to receive a death benefit under this Plan
calculated pursuant to the formula set forth in Article III.
ARTICLE V
PAYMENT OF BENEFITS
Section 5.1. Payment of benefits under the Plan will be made in the
same manner and at the same time as benefit payments to the Participant or
his spouse under the Retirement Plan.
ARTICLE VI
CLAIMS
Section 6.1. If a claim for benefits under the Plan is denied, the
Committee will provide a written notice of the denial setting forth the
specific reasons for the denial, a description of any additional material
or information necessary for a claimant to perfect a claim, and an explanation
of why such material or information is necessary and appropriate information
as to the steps to be taken for the claim to be submitted for review. A
claimant may request a review of a denial. Such requests should be submitted
to the Committee, in writing, within 60 days after receipt of the denial
notice stating the reasons for requesting the review. A claimant may review
pertinent documents and submit issues and comments in writing. A decision will
be made on the review of the denial of a claim not later than 60 days after
the Committee's receipt of a request for review unless special circumstances
require an extension of time for processing, in which case a decision shall be
rendered as soon as possible but not
5
<PAGE> 4
later than 120 days after receipt of a request for review. The decision on
review will be in writing to the claimant and shall include specific reasons
for the decision.
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.1. The Board of Directors may amend or terminate the Plan at
any time; provided, however, that no such amendment or termination shall have
the effect of depriving Participants of rights accrued under the Plan as of
the date of such amendment or termination.
ARTICLE VIII
ADMINISTRATION
Section 8.1. The Plan shall be administered by the Committee in
accordance with its terms, for the exclusive benefit of Participants. The
powers and duties of the Committee shall be similar to those powers and duties
granted to the Plan Administrator of the Retirement Plan. In addition, the
Committee, in its sole discretion, shall have the power to accelerate the
payment of benefits under the Plan to any Participant or spouse. Any
interpretation or construction of Plan terms or any determination by the
Committee with respect to Plan benefits, etc., shall be conclusive and binding
with respect to Participants and all other persons.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Nothing contained in this Plan and no action taken pursuant
to the provisions of this Plan shall give the Participant the right to be
retained in the employ of the Corporation or its subsidiaries or interfere
with the right of the Corporation or its subsidiaries to discharge the
Participant at any time, nor shall it give the Corporation or its subsidiaries
the right to require the Participant to remain in their employ or interfere
with the Participant's right to terminate his employment at any time.
Section 9.2. No benefit payable at any time under this Plan shall be
subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment or encumbrance of any kind.
Section 9.3. All rights hereunder shall be governed by and construed
according to the laws of the State of Missouri, except to the extent such laws
are preempted by the laws of the United States of America. In the event any
provision of this Plan is held invalid, void or unenforceable, the same shall
not affect, in any respect whatsoever, the validity of any other provision of
this Plan.
Section 9.4 Nothing contained in this Plan shall create or be construed
to create a trust of any kind or a fiduciary relationship between the
Corporation or its subsidiaries and the Participant or any other person. To
the extent that any person acquires the right to receive payment from the
Corporation under this Plan, such right shall be no greater than the right of
any unsecured general creditor of the Corporation.
6
<PAGE> 5
Section 9.5. The terms of this Plan shall be binding upon and inure to
the benefit of the Corporation, its successors and assigns, and the
Participant and his heirs and legal representatives.
Section 9.6. If a Participant becomes entitled to a distribution of
benefits under the Plan, and if at such time the Participant has outstanding
any debt, obligation, or other liability representing an amount owing to the
Corporation or its subsidiaries, then the Corporation may offset such amount
so owing against the amount of benefits otherwise distributable. Such
determination shall be made by the Committee.
Section 9.7. The Corporation shall, to the extent permitted by law, have
the right to deduct from any payments of any kind with respect to the benefit
otherwise due to the Participant any Federal, state or local taxes of any kind
required by law to be withheld from such payments.
7
<PAGE> 6
EXHIBIT A
BOATMEN'S SUPPLEMENTAL
RETIREMENT PLAN
PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of ----------------, 19--- between Boatmen's
Bancshares, Inc. ("Corporation") and --------------------- ("Participant").
The Corporation and the Participant mutually agree as follows:
1. The Participant has received a copy of the Boatmen's Supplemental
Retirement Plan ("Plan") and has read and understands the Plan.
2. By completion of this Agreement, the Participant agrees to comply
with the terms of the Plan in all respects.
3. All provisions of the Plan are hereby made a part of this
Agreement.
4. The following special provisions are applicable to the
Participant's participation in the Plan: -----------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
BOATMEN'S BANCSHARES, INC.
By: ------------------------------------ ---------------------------
Date
------------------------------------ ---------------------------
Participant Date
8
<PAGE> 1
Exhibit 10(w)
BOATMEN'S SUPPLEMENTAL RETIREMENT PLAN
PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of August 4, 1993, between Boatmen's
Bancshares, Inc. ("Corporation") and Andrew B. Craig, III ("Participant").
The Corporation and the Participant mutually agree as follows:
1. The Participant has received a copy of the Boatmen's Supplemental
Retirement Plan ("Plan") and has read and understands the Plan.
2. By completion of the Agreement, the Participant agrees to comply
with the terms of the Plan in all respects.
3. All provisions of the Plan are hereby made a part of the
Agreement.
4. The following special provisions are applicable to the
Participant's participation in the Plan: For purposes of Section 3.1(i), the
participant shall receive the greater of:
a) thirty-three and one-third (33.3) years of credited service at
age 65; or
b) the actual number of years of credited service accrued using an
employment commencement date of March 1, 1971.
BOATMEN'S BANCSHARES, INC.
By: /s/ ARTHUR J. FLEISCHER 8-5-93
------------------------- ----------
Date
/s/ ANDREW B. CRAIG, III 8-5-93
------------------------- ----------
Participant Date
<PAGE> 1
Exhibit 10(z)
BOATMEN'S SUPPLEMENTAL RETIREMENT PLAN
PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of August 4, 1993, between Boatmen's
Bancshares, Inc. ("Corporation") and Ike Kalangis ("Participant").
The Corporation and the Participant mutually agree as follows:
1. The Participant has received a copy of the Boatmen's Supplemental
Retirement Plan ("Plan") and has read and understands the Plan.
2. By completion of the Agreement, the Participant agrees to comply
with the terms of the Plan in all respects.
3. All provisions of the Plan are hereby made a part of the
agreement.
4. The Following Special provisions are applicable the
Participant's participation in the Plan: Credited service date of July 28,
1992.
5. In consideration of my participation under the Boatmen's
Supplemental Retirement Plan, I hereby waive any rights and benefits that I
may have under the Sunwest Supplemental Benefit Retirement Plan.
BOATMEN'S BANCSHARES, INC.
By: /s/ ANDREW B. CRAIG, III 8-5-93
------------------------- ----------
Date
/s/ IKE KALANGIS 8-10-93
------------------------- ----------
Participant Date
<PAGE> 1
Exhibit 10(aa)
BOATMEN'S ONE BOATMEN'S PLAZA
BANCSHARES, INC. 800 Market Street
Post Office Box 236
St. Louis, Missouri 63166-0236
314 466-6000
November 9, 1993
Mr. John Peters McCarthy
Chairman of the Board and
Chief Executive Officer
Boatmen's Trust Company
100 North Broadway
P.O. Box 14737
St. Louis, MO 63178-4737
Dear Peter:
You and Boatmen's Bancshares, Inc. ("Boatmen's") entered into an
Employment Agreement on November 14, 1989 which expires on November 30 of
this year. The purpose of this letter is to confirm that thereafter, upon
your termination of employment with Boatmen's prior to your 63rd birthday,
Boatmen's will pay to you or your estate or other designated beneficiary a
lump sum equal to the amount of your then annual base salary. This payment
will be in addition to all other salary and benefits payable to you. The
payment will be made within 60 days of your termination of employment whether
for disability, death or other termination.
This letter will also confirm that you agree that, for a period of two
years following termination of your employment, you will not, without the
written consent of Boatmen's, engage in any business of, or enter into the
employ of, or have any interest in, directly or indirectly, any other person,
firm, corporation or other entity engaged in trust services and/or commercial
banking with an office or facility in the State of Missouri or the State of
Illinois. You acknowledge that damages at law will not adequately compensate
Boatmen's for any breach by you of this agreement not to compete and that
Boatmen's shall be entitled to equitable remedies (including, but not limited
to, injunctive relief) in case of any breach, or to prevent a breach, of the
covenant. If there is litigation involving this covenant and you are
successfull in whole or in part in such litigation, Boatmen's will reimburse
you for all of your legal fees and expenses.
If the foregoing accurately reflects our understanding, please sign a
copy of this letter below and return it to me.
Very truly yours,
BOATMEN'S BANCSHARES, INC.
/s/ A. B. CRAIG, III
---------------------------------------
Chairman and Chief Executive Officer
/s/ JOHN PETERS MCCARTHY
- --------------------------------
John Peters McCarthy
<PAGE> 1
1993 Financial Review
Financial Commentary 17
Consolidated Quarterly Earnings Trend 40
Consolidated Quarterly Average Balance Sheet and Net Interest Margin 42
Consolidated Earnings Trend 44
Consolidated Average Balance Sheet and Net Interest Margin 46
Consolidated Balance Sheet 48
Consolidated Statement of Income 49
Consolidated Statement of Changes in Stockholders' Equity 50
Consolidated Statement of Cash Flows 51
Notes to Consolidated Financial Statements 52
Statement by Management 63
Report of Independent Auditors 63
Directors 64
Principal Officers 64
Corporate Information 65
16 Boatmen's Bancshares, Inc.
<PAGE> 2
FINANCIAL COMMENTARY
- ------------------------------------------------------------------------------
<TABLE>
The following financial data have been restated to reflect the 1993
acquisition of First Amarillo Bancorporation, Inc. which was accounted for
as a pooling of interests. The historical trends reflected in the restated
financial information presented below are not reflective of anticipated
future results.
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Table 1: Summary of Selected Financial Data
(in millions except per share data) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings
Net interest income $ 981.6 $877.7 $742.5 $655.8 $629.6
Fully taxable equivalent (FTE) adjustment(1) 35.6 35.9 38.6 41.8 47.0
Net interest income (FTE) basis 1,017.2 913.6 781.1 697.6 676.6
Provision for loan losses 60.2 136.6 114.7 119.5 93.3
Noninterest income 493.3 452.1 355.7 297.0 276.9
Noninterest expense 950.4 871.9 752.4 652.0 605.4
Net income 317.4 228.7 171.2 145.0 164.1
- --------------------------------------------------------------------------------------------------------------------------
Financial Position (at year end)
Total assets $26,654.0 $24,280.9 $23,002.7 $22,795.1 $19,541.0
Loans 14,825.9 13,110.9 12,316.3 11,924.2 11,593.1
Reserve for loan losses 341.1 302.0 252.3 228.9 198.6
Deposits 20,909.0 19,684.8 18,060.1 18,119.0 14,963.6
Long-term debt 486.3 393.2 315.7 284.5 295.1
Equity 2,133.3 1,861.2 1,680.2 1,463.4 1,395.7
- --------------------------------------------------------------------------------------------------------------------------
Share Data(2)
Net income per share $3.07 $2.29 $1.77 $1.58 $1.81
Dividends paid 1.15 1.09 1.07 1.06 1.02
Book value (year end) 20.49 18.20 16.94 15.84 15.42
Tangible book value (year end) 17.84 16.19 15.09 14.02 13.86
Shares outstanding (year end) 104.1 102.3 99.2 92.4 90.5
Average shares outstanding 103.5 100.0 96.9 91.7 89.5
- --------------------------------------------------------------------------------------------------------------------------
Selected Financial Ratios
Return on assets 1.27% .99% .79% .73% .86%
Return on total equity 15.99 12.95 10.78 10.13 11.98
Return on common equity 15.99 12.95 10.78 10.13 12.06
Net interest margin 4.56 4.40 4.05 3.96 4.03
Capital ratios:
Equity to assets 8.00 7.67 7.30 6.42 7.14
Risk-based capital:
Tier I capital 10.67 10.39 10.10
Total capital 14.42 13.75 13.17
Tier I leverage ratio 6.93 6.90 6.58
Nonperforming loans to total loans 1.17 1.96 2.54 3.18 2.67
Nonperforming assets to total loans and
foreclosed property 1.90 2.92 3.92 3.93 3.38
Loan reserve to nonperforming loans 195.03 116.72 79.91 59.87 63.42
Net charge-offs to average loans .24 .80 .84 .76 1.00
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1)The fully taxable equivalent adjustments are calculated using the Federal
statutory tax rate.
(2)Previously reported share data have been restated to reflect the
two-for-one stock split which was declared on August 10, 1993 and paid on
October 1, 1993.
</TABLE>
[Return on Equity Graph]
[Return on Asset Graph]
[Earnings Per Share Graph]
1993 Annual Report 17
<PAGE> 3
FINANCIAL COMMENTARY
- ------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Table 2: Acquisitions
Accounting
Date State Assets Price Shares issued(1) method
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Completed
Centerre Bancorporation 12/88 Missouri $ 5.0 billion $467 million stock 28.6 million Pooling
RTC assisted-Community Federal S&L 12/90 Missouri 2.3 billion 27 million cash - Purchase
First Interstate Bank of Oklahoma, N.A. 8/91 Oklahoma .9 billion 86 million cash - Purchase
Founders Bancorporation, Inc. 3/92 Oklahoma .3 billion 34 million cash - Purchase
Superior Federal Bank 3/92 Arkansas .7 billion - - Purchase
RTC assisted-Home Federal S&L 3/92 Arkansas .1 billion 1 million cash - Purchase
First Interstate of Iowa, Inc. 4/92 Iowa 1.2 billion 94 million stock 4.2 million Pooling
FDIC assisted-Jackson Exchange Bank 5/92 Missouri .1 billion 1 million cash - Purchase
Sunwest Financial Services, Inc. 10/92 New Mexico/Texas 3.4 billion 325 million stock 14.8 million Pooling
Security Bank and
1st Bank of Catoosa in Tulsa 11/92 Oklahoma .2 billion 33 million cash - Purchase
FDIC assisted-First City-El Paso 3/93 Texas .3 billion 14 million cash - Purchase
FDIC assisted-Missouri Bridge Bank 4/93 Missouri 1.1 billion 16 million cash - Purchase
RTC assisted-Cimarron Federal Savings 5/93 Oklahoma .4 billion 13 million cash - Purchase
FCB Bancshares, Inc. 8/93 Kansas .2 billion 25 million cash - Purchase
First Amarillo Bancorporation, Inc. 11/93 Texas .8 billion 192 million stock 5.9 million Pooling
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets of completed transactions $17.0 billion
- -----------------------------------------------------------------------------------------------------------------------------------
Pending
Woodland Bancorp, Inc. Oklahoma $ .1 billion $ 12 million stock .4 million Pooling
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Previously reported share data have been restated to reflect the
two-for-one stock split which was declared on August 10, 1993 and paid on
October 1, 1993.
</TABLE>
Acquisition Overview
The Corporation's assets have increased from $9.9 billion at December 31,
1987 to $26.7 billion at December 31, 1993, an average annual growth rate of
18%. During this period the Corporation has pursued a strategy of expansion
within its natural trade territory through a combination of internal growth
and acquisition activity. The acquisition program has three objectives:
geographic diversification, growth in retail market share, and additional
earnings generation capacity. The Corporation has made several sizeable
acquisitions establishing dominant market positions in Missouri, New Mexico,
and significant presences in southern Illinois, western Tennessee, Oklahoma,
Arkansas and northern Texas. This growth has basically occurred in two
distinct phases. The first phase concentrated on intramarket transactions
to fully establish the Missouri cornerstone of the franchise and culminated
with the Resolution Trust Corporation (RTC) assisted acquisition of
Community Federal in 1990, a $2.3 billion thrift institution located in St.
Louis. This acquisition provided the Corporation with a stable and low cost
source of deposits and the opportunity to cross-sell services to a large new
customer base at a low incremental cost. Deposits assumed totaled
$2.3 billion and deposit retention approximated 75%. The Corporation
completed another regulatory assisted transaction in Missouri in 1993 which
added approximately $1.1 billion of assets to its Missouri franchise such
that total assets in this state now approximate $16 billion. A more complete
description of the Corporation's latest Missouri acquisition is provided
below.
The second phase of the acquisition program commenced in 1991 by expanding
into markets in nearby states, thereby achieving a degree of geographic
diversification on a reasonably synergistic basis. Over the last three
years, acquisitions aggregating $8.5 billion in assets were consummated in
Oklahoma, Arkansas, Iowa, Kansas, New Mexico and Texas. These transactions
significantly changed the composition of the customer base whereby the
Missouri-based banking segment now represents 60% of the Corporation's
banking assets, down from 90% at year-end 1990. The Corporation's operations
currently span nine states, with services delivered from over 400 branch
locations and 350 off-premise ATM's.
Prior period financial statements have been restated to reflect the 1993
acquisition of First Amarillo Bancorporation, Inc., which was accounted for
as a pooling of interests. In addition, 10 acquisitions recorded under the
purchase method of accounting were consummated during the last three years;
therefore, the results of operations of these companies are included in the
consolidated financial statements subsequent to the dates of acquisition and
must be considered when reviewing the trended financial information.
Additionally,
[Asset Growth Graph]
[Equity Growth Graph]
18 Boatmen's Bancshares, Inc.
<PAGE> 4
- ------------------------------------------------------------------------------
because some of the acquisitions were of an intramarket
nature, numerous nonrecurring merger costs were recognized in such
transactions reflecting the geographical market overlap of customer bases,
the conforming of methodologies for determining loan loss reserves, and the
elimination of duplicate functions, facilities, equipment and systems. Much
of the Corporation's emphasis during this period of expansion has focused
primarily on realizing expense economies inherent in these intramarket
acquisitions and improving the loan portfolios of the acquired companies.
Oklahoma Acquisitions
During the period August 1, 1991 through May 26, 1993, the Corporation
completed four acquisitions in Oklahoma, such that assets in this state now
total approximately $1.8 billion with services provided from 40 locations,
half of which are in the Oklahoma City and Tulsa metropolitan areas. The
Corporation's initial entry into Oklahoma occurred in 1991, with the
acquisition of First Interstate Bank of Oklahoma, N.A., which at that time
had assets of approximately $900 million and nine offices in the Oklahoma
City metropolitan area. Subsequently, the Corporation completed two
acquisitions of retail-oriented institutions in 1992, which added assets of
approximately $500 million to its Oklahoma franchise for a combined purchase
price of approximately $67 million. These institutions were merged into the
Boatmen's First National Bank of Oklahoma to provide cost savings from
operational efficiencies from these intra-market acquisitions.
On May 26, 1993, the Corporation, through its Oklahoma and Arkansas
subsidiaries, acquired 20 branches of the former Cimarron Federal Savings
Association (Cimarron), in an RTC assisted transaction for $13.1 million in
cash. Assets purchased, consisting primarily of cash and investment
securities, and deposits assumed totaled approximately $430 million. Two
locations, with deposits of approximately $60 million, became branches of
the Corporation's Oklahoma bank, and the other 18 locations, primarily
located in eastern Oklahoma, became branches of the Corporation's Arkansas
thrift subsidiary, Superior Federal Bank (Superior), which is headquartered
in Fort Smith, Arkansas.
In the fourth quarter of 1993, the Corporation announced plans to acquire
Woodland Bancorp, Inc. (Woodland), a retail banking organization with assets
of approximately $65 million. Woodland is located in Tulsa, Oklahoma and
completion of this acquisition is expected on March 31, 1994.
Arkansas Acquisitions
On March 20, 1992, the Corporation established a meaningful presence in
Arkansas with the acquisition of Superior, the third largest financial
institution in the state. Superior, with total assets now approximating $1.2
billion, was acquired in a transaction structured as a voluntary supervisory
conversion, wherein the Corporation contributed $29 million in equity
capital in exchange for 100% stock ownership. On March 27, 1992, the
Corporation, through Superior, expanded its Arkansas presence by assuming
approximately $120 million of deposits and five locations from a failed
thrift in a regulatory assisted transaction with the RTC. The deposits were
acquired for a premium of $1.3 million. In the second quarter of 1993,
Superior's market position was further strengthened as a result of the
aforementioned RTC assisted acquisition of Cimarron. Superior is heavily
oriented to consumer business, and operates from 56 locations in two states,
38 of which are located in central and northwestern Arkansas, which includes
Little Rock, Fort Smith, and Fayetteville, and 18 locations in eastern
Oklahoma.
Iowa Acquisition
On April 1, 1992, the Corporation consummated the acquisition of First
Interstate of Iowa, Inc. in a transaction which was accounted for as a
pooling of interests, resulting in the issuance of approximately 4.2 million
shares of common stock. First Interstate of Iowa, subsequently renamed
Boatmen's Bancshares of Iowa, Inc. with approximately $1.2 billion in
assets, is headquartered in Des Moines, Iowa and operates eight banks with
35 offices throughout the state. Approximately 45% of the banking assets are
located in Des Moines, ranking Boatmen's second in market share in
that city.
New Mexico Acquisition
The Corporation established a dominant position in New Mexico with the
acquisition of Sunwest Financial Services, Inc. (Sunwest) on October 1,
1992. This transaction required the issuance of approximately 14.8 million
shares of common stock and was accounted for as a pooling of interests.
Sunwest, with approximately $3.4 billion in assets, is headquartered in
Albuquerque, New Mexico and is the largest banking organization in the
state, operating 12 banks with 72 offices and 123 off-premise ATM's.
Texas Acquisitions
On March 5, 1993, the Corporation, through its subsidiary bank, Sunwest
Bank of El Paso, acquired First City's former bank in El Paso under an FDIC
assisted transaction for $14 million in cash. This bank, with assets of
approximately $340 million, was merged into the Sunwest Bank of El Paso
providing intramarket operating efficiencies. As a result of this
transaction, the Corporation's El Paso bank increased its asset size to
approximately $510 million and has attained a significant market share
in the El Paso metropolitan area.
On November 30, 1993, the Corporation acquired First Amarillo
Bancorporation, Inc. (Amarillo), in a transaction accounted for as a pooling
of interests. Under terms of the agreement, the Corporation exchanged .912
shares of its common stock for each share of Amarillo, resulting in the
issuance of approximately 5.9 million shares of common stock. Amarillo, with
assets at December 31, 1993 of approximately $1.0 billion, is located in
Amarillo, Texas and has the leading market share in this north Texas market.
Missouri Acquisition
On April 23, 1993, the Corporation, through its Kansas City bank, acquired
Missouri Bridge Bank, N.A., the former Metro North State Bank and Merchants
Bank under an assisted transaction with the FDIC. Boatmen's First National
Bank of Kansas City acquired $1.1 billion of certain assets and assumed the
same amount of deposit liabilities for a premium of $15.8 million. As a
result of this transaction, the Corporation increased its assets in the
Kansas City metropolitan area to $3.8 billion, further solidifying its
leading position in this market. Assets purchased included loans
of approximately $960 million and other assets totaling $180 million,
consisting primarily of investment securities, cash and short-term
investments. The Corporation retained eight of the bank's 15 branches and
purchased the premises and equipment at fair market value.
1993 Annual Report 19
<PAGE> 5
FINANCIAL COMMENTARY
- ------------------------------------------------------------------------------
As part of the transaction, the Corporation entered into a five-year
loss-sharing arrangement with the FDIC with respect to approximately $950
million in multi-family residential, commercial real estate, construction
and commercial and industrial loans. For a more complete description of the
loss-sharing arrangement, refer to the Segregated Assets section of this
report.
Kansas Acquisition
On August 2, 1993, the Corporation consummated the acquisition of
FCB Bancshares, Inc., a one-bank holding company located in Overland Park,
Kansas with assets of approximately $185 million, for $25 million in cash.
This acquisition represents the Corporation's initial entry into Kansas and
is a natural extension of the Corporation's Kansas City franchise.
Earnings Overview
Net income in 1993 reached a record level, increasing 38.8% and totaling
$317.4 million, compared to an increase of 33.6% in 1992 when net income
totaled $228.7 million. Net income per share increased 34.1% to $3.07
compared to an increase of 29.4% in 1992. Net income in each of the last
three years has been impacted to some extent by one-time acquisition-related
charges from pooling acquisitions as summarized in Table 3. These
acquisition-related charges consisted primarily of nonrecurring expenses for
investment banking fees, severance and other compensation-related benefits,
abandonment of equipment and software and, in 1992, also included charges to
conform Sunwest's loan reserve, loan accrual and
investment securities policies to those of the Corporation. Realignment of
the securities portfolio at Sunwest in 1992 occurred over the last three
quarters of that year resulting in the recognition of securities gains
aggregating $24.3 million. A reconciliation of the quarterly earnings on a
normalized basis is provided in Table 4.
The record earnings in 1993 were reflected in other key performance ratios
such as the return on assets and return on equity. The return on average
assets was 1.27% in 1993 compared to .99% in 1992 and .79% in 1991. The
return on equity was 15.99% in 1993 compared to 12.95% in 1992 and 10.78% in
1991.
Net interest income, on a fully taxable equivalent basis, increased 11.3%
in 1993 and 17.0% in 1992 primarily due to wider interest spreads and moderate
increases in average earning assets. The net interest margin increased to
4.56% in 1993 compared to 4.40% in 1992 and 4.05% in 1991. Average earning
assets increased 7.6% in 1993 and 7.5% in 1992 largely due to purchase
acquisitions. Over the second half of 1993 the Corporation experienced
narrower spreads primarily resulting from reinvestment of maturing
securities into lower yielding securities. As a result, the net interest
margin for the fourth quarter declined to 4.45% which is more reflective of
the near-term anticipated trend.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Table 3: Pooling Acquisition-related Adjustments 1993-1991
Increase (Decrease) to Earnings 1993 1992 1991
(in millions except per share data) PRE-TAX AFTER-TAX Pre-tax After-tax Pre-tax After-tax
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for loan losses $ - $ - $(33.3) $(22.0) $ - $ -
Other real estate writedowns - - (7.0) (4.6) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Total credit related adjustments - - (40.3) (26.6) - -
Premises and equipment writedowns (0.9) (0.6) (3.1) (2.1) (1.2) (0.8)
Other merger-related expenses (primarily investment banking
fees, severance and other compensation-related benefits) (3.8) (3.2) (8.1) (7.0) (5.9) (4.4)
- ----------------------------------------------------------------------------------------------------------------------------------
Total acquisition-related charges (4.7) (3.8) (51.5) (35.7) (7.1) (5.2)
Securities gains - - 24.3 16.0 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net acquisition-related adjustments $(4.7) $(3.8) $(27.2) $(19.7) $(7.1) $(5.2)
- ----------------------------------------------------------------------------------------------------------------------------------
Per share $(.04) $(.20) $(.05)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Table 4: Reconciliation of 1993 and 1992 Quarterly Earnings
1993 1992
--------------------------------------------------------------------------------------
(in millions except per share data) 1ST 2ND 3RD 4TH FULL YEAR 1st 2nd 3rd 4th Full year
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income before acquisition-related
adjustments from pooling transactions $79.3 $79.7 $81.3 $80.9 $321.2 $58.0 $60.6 $65.2 $64.6 $248.4
Acquisition-related adjustments, net of tax (3.8) (3.8) 2.1 10.8 (32.6) (19.7)
- ----------------------------------------------------------------------------------------------------------------------------------
Reported net income $79.3 $79.7 $81.3 $77.1 $317.4 $58.0 $62.7 $76.0 $32.0 $228.7
- ----------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding 103.0 103.3 103.4 103.5 103.5 99.3 99.5 99.7 100.0 100.0
Earnings per share:
Before effect of acquisition-related
adjustments from pooling transactions $.77(1) $.77 $.78 $.79 $3.11 $.58 $.61 $.66 $.64 $2.49
As reported $.77(1) $.77 $.78 $.75 $3.07 $.58 $.63 $.76 $.32 $2.29
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes $.06 per share due to recognition of a deferred tax asset at
Amarillo.
</TABLE>
20 Boatmen's Bancshares, Inc.
<PAGE> 6
- ------------------------------------------------------------------------------
Noninterest income increased 9.1% in 1993 and 27.1% in 1992. Excluding the
effect of purchase acquisitions and the large level of securities gains
recognized at Sunwest in 1992, noninterest income increased 11.6% in 1993
and 11.4% in 1992 as all major core noninterest income categories increased
over the prior year period.
Noninterest expense increased 9.0% in 1993 and 15.9% in 1992. To a large
extent, year-to-year noninterest expenses are noncomparable due to 10
purchase acquisitions consummated subsequent to August 1, 1991, and
merger-related expenses stemming from three pooling acquisitions. Excluding
these factors, noninterest expense increased 5.9% in 1993 and 7.4% in 1992.
The provision for loan losses decreased 55.9% in 1993 and totaled $60.2
million compared to $136.6 million in 1992 and $114.7 million in 1991. The
decrease in the provision for loan losses in 1993 reflected positive trends
in asset quality, evidenced by a substantially lower level of actual loan
losses, further declines in nonperforming loans and a continued downward
trend in criticized loans designated by the Corporation's internal risk
rating system. The provision for loan losses in 1992 included a special
provision at Sunwest of $33.3 million to conform to the Corporation's loan
reserve methods. Excluding the Sunwest special provision in the fourth
quarter of 1992, the provision for loan losses declined for the ninth
consecutive quarter and, for the full year 1993, decreased 41.8% compared to
a decline of 9.9% in 1992. At December 31, 1993, the reserve coverage of
nonperforming loans increased to 195.03% compared to 116.72% at December 31,
1992 and 79.91% at December 31, 1991. The loan reserve as a percentage of
net loans was 2.30% at the end of 1993 and 1992, compared to 2.05% at
December 31, 1991. Net loan charge-offs declined to $34.0 million, a
decrease of $68.6 million or 66.9% from 1992 when charge-offs of $28 million
were recognized at Sunwest to conform to the Corporation's loan reserve
method. Net charge-offs as a percentage of average loans dropped to .24%
compared to .80% in 1992 and .84% in 1991, with lower losses throughout all
sectors of the portfolio.
In the fourth quarter of 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 115 (SFAS No. 115) "Accounting for
Certain Investments in Debt and Equity Securities." The adoption of SFAS No.
115 had no effect on earnings but increased year-end stockholders' equity by
$42.3 million, as approximately $5.2 billion of securities were designated
as available for sale and were marked to market. In the fourth quarter of
1992, the Corporation adopted two accounting pronouncements, Statement of
Financial Accounting Standards No. 109 (SFAS No. 109) "Accounting for Income
Taxes" and Statement of Financial Accounting Standards No. 106 (SFAS No. 106)
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
The combined impact from adoption of the two pronouncements increased net
income in 1992 by $.7 million.
Presented in Table 5 is an income statement analysis expressed on a per
share basis, summarizing the changes in earnings per share in 1993 and 1992.
The Corporation consists of three major banking components: commercial and
retail banking, trust services and a credit card operation. The earnings
contribution from each component for 1993 and 1992 and the geographic
distribution of assets are summarized in Tables 6 and 7.
<TABLE>
- ------------------------------------------------------------
<CAPTION>
Table 5: Earnings Per Share Analysis
Per share '93 VS '92 '92 vs '91
- ------------------------------------------------------------
<S> <C> <C>
Net income
prior period $2.29 $1.77
- ------------------------------------------------------------
Net interest income 1.04 1.40
Provision for loan losses .76 (.23)
Noninterest income .41 .99
Noninterest expense (.79) (1.23)
Income tax expense (.54) (.34)
Impact of additional
shares of common stock (.10) (.07)
- ------------------------------------------------------------
Net increase .78 .52
- ------------------------------------------------------------
Net income current
period $3.07 $2.29
- ------------------------------------------------------------
</TABLE>
<TABLE>
- ------------------------------------------------------------
<CAPTION>
Table 6: Earnings Contribution by
Business Component
Per share 1993 1992
- ------------------------------------------------------------
<S> <C> <C>
Commercial and retail
banking operations $3.16 $2.26
Trust services .35 .35
Credit card .18 .18
Unallocated debt
service, administrative
overhead and
nonbank services (.62) (.50)
- ------------------------------------------------------------
Consolidated earnings
per share $3.07 $2.29
- ------------------------------------------------------------
</TABLE>
<TABLE>
- ------------------------------------------------------------
<CAPTION>
Table 7: Asset Distribution
% of
December 31, 1993 (in billions) Assets total
- ------------------------------------------------------------
<S> <C> <C>
Missouri $16.0 59.9%
New Mexico 3.3 12.4
Oklahoma 1.8 6.7
Texas 1.6 6.0
Iowa 1.2 4.5
Illinois 1.0 3.7
Arkansas .9 3.4
Tennessee .7 2.6
Kansas .2 .8
- ------------------------------------------------------------
Total $26.7 100.0%
- ------------------------------------------------------------
</TABLE>
1993 Annual Report 21
<PAGE> 7
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
NET INTEREST INCOME
- -------------------------------------------------------------------------------
<TABLE>
Table 8: Summary of Net Interest Income
<CAPTION>
Quarter
-------------------------------------------------- % change from
(in millions) First Second Third Fourth Year prior year
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993
AVERAGE LOANS $13,127.9 $13,958.8 $14,373.7 $14,666.2 $14,036.8 10.1%
AVERAGE EARNING ASSETS 21,306.9 22,080.5 22,680.5 23,190.7 22,320.8 7.6
NET INTEREST INCOME (FTE) 244.5 255.4 259.5 257.8 1,017.2 11.3
INTEREST RATE SPREAD 3.99% 4.05% 4.03% 3.88% 3.99%
NET INTEREST MARGIN 4.59 4.63 4.58 4.45 4.56
- ----------------------------------------------------------------------------------------------------------------------
1992
Average loans $12,352.0 $12,824.6 $12,819.3 $12,992.9 $12,748.0 7.2%
Average earning assets 20,160.3 20,750.5 20,903.0 21,194.2 20,753.6 7.5
Net interest income (FTE) 214.2 228.8 232.8 237.8 913.6 17.0
Interest rate spread 3.55% 3.74% 3.81% 3.85% 3.74%
Net interest margin 4.25 4.41 4.45 4.49 4.40
- ---------------------------------------------------------------------------------------------------------------------
1991
Average loans $11,805.5 $11,635.6 $11,918.8 $12,286.0 $11,888.2 1.6%
Average earning assets 19,656.0 18,849.6 19,045.4 19,774.2 19,309.6 9.7
Net interest income (FTE) 188.8 190.3 197.3 204.7 781.1 12.0
Interest rate spread 3.02% 3.20% 3.29% 3.31% 3.21%
Net interest margin 3.84 4.04 4.14 4.14 4.05
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Measured on a fully taxable equivalent basis, net interest income increased
11.3% in 1993 and 17.0% in 1992. These increases were primarily due to
enhancement of the net interest margin attributable to wider interest rate
spreads, coupled with a moderate increase in average earning assets. The
wider interest rate spreads resulted from a sustained decline in liability
funding rates during the 2 1/2 year period from December of 1990 through June
of 1993 that continued to outpace the corresponding decline in earning asset
yields. The Corporation lowered rates paid on retail deposits during this
period at a faster pace than corresponding asset yields repriced, resulting
in expansion of the interest margin to 4.56% in 1993 compared to 4.40% in
1992 and 4.05% in 1991. Average rates paid on deposits declined by 87 basis
points in 1993 and 181 basis points in 1992 while earning asset yields fell
by only 57 basis points in 1993 and 127 basis points in 1992. The ability to
reduce retail deposit rates was due in some measure to the pricing
discipline in relation to the market share the Corporation enjoys in many of
its major markets. In addition, lending spreads improved as the surface
spread between the prime rate and Federal funds averaged 300 basis points
for 1993 compared to 260 basis points during 1992.
As illustrated in Table 8, the Corporation experienced a steady improvement
in the net interest margin throughout 1992 and the first half of 1993.
However, an anticipated contraction in the margin was experienced over the
second half of 1993 as maturing securities were reinvested in lower yielding
securities resulting in a repricing of assets at a faster pace than interest
bearing deposits. Accordingly, the net interest margin in the fourth quarter
declined to 4.45%. This situation was common to the industry as a whole,
which experienced a similar contraction in interest spreads. Based on the
current interest rate outlook, the Corporation expects minor contraction in
the net interest margin in the near term.
[Net Interest Margin Graph]
[Quarterly Net Interest Margin Graph]
Average earning assets increased 7.6% in 1993 and 7.5% in 1992 primarily
due to purchase acquisitions of retail-oriented institutions coupled with an
expansion of
22 Boatmen's Bancshares, Inc.
<PAGE> 8
- -------------------------------------------------------------------------------
the securities portfolio. Loans, the highest yielding earning
asset, increased 10.1% in 1993 and as a percentage of average earning assets
were 62.9% in 1993 compared to 61.4% in 1992. Held to maturity and available
for sale securities, in the aggregate, increased 18.6% in 1993, representing
34.7% of average earning assets, up from 31.5% in 1992. This increase
reflects redeployment of short-term money market instruments and funds
received from regulatory assisted transactions to the securities portfolio.
Interest rate risk is the degree to which market interest rate fluctuations
can affect net interest income. The Corporation's objective in managing
interest rate risk is to maintain a balanced mix of rate sensitive assets
and liabilities on a one-year time horizon, although rate sensitivity can
vary within the intervening time periods depending upon current business
conditions and the interest rate outlook. An integral component of the
Corporation's overall asset/liability management strategies is the
management of interest rate risk through prudent use of derivative products,
such as interest rate swaps. During 1993, the Corporation added new swap
transactions with a notional amount of $1.2 billion while $.4 billion of
swaps matured such that at December 31, 1993, the notional value of the swap
portfolio totaled $1.9 billion, compared to $1.1 billion at December 31,
1992. These derivative instruments were primarily used to modify the
interest rate sensitivity of subordinated debt, hedge basis risk by locking
in spreads on prime based loans, alter the balance sheet sensitivity of
acquired companies and modify the interest sensitivity of selected loan
portfolio components. The average maturity of the interest rate swap
portfolio at December 31, 1993 was approximately two years. These swaps
increased net interest income by approximately $20 million in 1993, adding
10 basis points to the net interest margin, compared to $12 million or six
basis points in 1992. Any future utilization of off-balance sheet financing
techniques will be determined based upon the Corporation's overall interest
rate sensitivity position and asset/liability management strategies, which
are designed to limit interest rate risk exposure to no more than 5% of
projected annual net income. This is monitored by periodic simulations of
the Corporation's balance sheet using modeling techniques to monitor
compliance with interest rate risk limits under alternative interest rate
forecasts and measuring the resulting change in net income. At December 31,
1993, the Corporation's earnings at risk position was approximately 2%. This
position is subject to change in response to the dynamics of the
Corporation's balance sheet and general market conditions. Another means of
monitoring interest rate risk is the interest sensitivity analysis appearing
in Table 9. This analysis identifies the repricing characteristics of the
balance sheet and resulting gap or difference between assets and liabilities
repricing within and over given time periods. It should be noted, however,
that the traditional gap analysis can provide an incomplete picture of a
financial institution's interest rate risk position due to its inability to
capture the sensitivity associated with prepayment risk, asymmetric pricing
patterns for administered and retail deposit accounts and noninterest
bearing funds volume.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
Table 9: Rate Sensitivity At December 31, 1993
<CAPTION>
Interest sensitive within
------------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 Total Over
(in millions) days days days days one year one year Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans $6,548 $ 969 $ 862 $1,422 $ 9,801 $ 5,025 $14,826
Securities(1) 1,014 577 892 1,755 4,238 4,264 8,502
Other earning assets 480 480 480
- ------------------------------------------------------------------------------------------------------------------------
Total earning assets $8,042 $1,546 $1,754 $3,177 $14,519 $ 9,289 $23,808
- ------------------------------------------------------------------------------------------------------------------------
Sources of funds
Retail savings and interest
bearing transaction
accounts(2) $3,206 $ 459 $ 688 $ 4,353 $ 4,420 $ 8,773
Time deposits 1,182 1,214 1,411 1,389 5,196 2,170 7,366
Federal funds purchased and
other short-term
borrowings(3) 2,841 2,841 2,841
Long-term debt and capital
lease obligation 2 2 524 526
Noninterest-bearing, net(3) 4,302 4,302
Effect of interest rate swaps 600 285 284 100 1,269 (1,269)
- ------------------------------------------------------------------------------------------------------------------------
Total sources of funds $7,829 $1,958 $2,383 $1,491 $13,661 $10,147 $23,808
- ------------------------------------------------------------------------------------------------------------------------
Period gap $ 213 $ (412) $ (629) $1,686 $ 858 $ (858)
- ------------------------------------------------------------------------------------------------------------------------
Cumulative gap $ 213 $ (199) $ (828) $ 858 $ 858
- ------------------------------------------------------------------------------------------------------------------------
Cumulative gap as a percent
of earning assets .9% (.8)% (3.5)% 3.6% 3.6%
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes held to maturity and available for sale securities.
(2) A large percentage of the Corporation's administered-rate retail deposit
accounts are considered to be somewhat insensitive to rising interest rates
and, as such, are included in the over one-year time period. The rate and
volume patterns of these deposits over the past ten years are considered in
making this determination.
(3) Includes short-term borrowings and net demand deposits adjusted to
eliminate material fluctuations in daily deposit levels.
</TABLE>
1993 Annual Report 23
<PAGE> 9
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
Table 10: Rate/Volume Analysis
<CAPTION>
(in millions) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
CHANGE DUE TO Change due to
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL CHANGE VOLUME(a) RATE(b) Total change Volume(a) Rate(b)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income,
fully taxable equivalent basis
- ---------------------------------------------------------------------------------------------------------------------------------
Loans $ 32.4 $111.2 $(78.8) $(85.2) $ 85.7 $(170.9)
Federal funds sold and securities
purchased under resale agreements (36.0) (33.7) (2.3) (29.0) (.2) (28.8)
Held to maturity securities:
Taxable (17.5) 58.5 (76.0) 26.6 90.1 (63.5)
Tax-exempt (8.7) (9.0) .3 (4.8) (4.6) .2
Available for sale securities 29.0 29.0
Trading securities (.6) (.6) (4.6) (4.1) (.5)
Receivable due from
Resolution Trust Corporation (29.0) (29.0)
Short-term investments (.6) (.3) (.3) (5.1) (2.8) (2.3)
------ ------
Total interest income (2.0) 124.8 (126.8) (131.1) 133.3 (264.4)
- ---------------------------------------------------------------------------------------------------------------------------------
Interest expense
- ---------------------------------------------------------------------------------------------------------------------------------
Savings accounts (.7) 12.8 (13.5) (8.3) 16.8 (25.1)
Interest-bearing transaction accounts (20.9) 21.9 (42.8) (43.1) 53.0 (96.1)
Time deposits (79.3) (8.2) (71.1) (169.1) (39.0) (130.1)
Federal funds purchased and other
short-term borrowings (11.0) 1.7 (12.7) (46.4) (4.4) (42.0)
Capital lease obligation (.1) (.1)
Long-term debt 6.3 11.6 (5.3) 3.4 4.9 (1.5)
------ ------
Total interest expense (105.6) 46.6 (152.2) (263.6) 50.8 (314.4)
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income, fully taxable
equivalent basis $103.6 $ 78.2 $ 25.4 $132.5 $ 82.5 $ 50.0
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Based on change in volume applied to prior year rate.
(b) Based on change in rate applied to current year volume; therefore, effect
of change in rate on change in volume has been attributed to change in rate.
</TABLE>
24 Boatmen's Bancshares, Inc.
<PAGE> 10
- -------------------------------------------------------------------------------
LIQUIDITY
- -------------------------------------------------------------------------------
<TABLE>
Table 11: Earning Assets And Sources Of Funds
<CAPTION>
(average balances in millions) 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
Earning Assets AMOUNT % OF TOTAL Amount % of total Amount % of total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities(1) $ 7,740.5 34.7% $ 6,527.0 31.5% $ 5,484.7 28.4%
Money market investments 543.5 2.4 1,478.6 7.1 1,936.7 10.0
Loans:
Commercial 7,771.9 34.8 6,871.4 33.1 6,471.8 33.5
Retail 6,264.9 28.1 5,876.6 28.3 5,416.4 28.1
- ----------------------------------------------------------------------------------------------------------------------
Total earning assets $22,320.8 100.0% $20,753.6 100.0% $19,309.6 100.0%
- ----------------------------------------------------------------------------------------------------------------------
Sources of Funds
- ----------------------------------------------------------------------------------------------------------------------
Net investable demand deposits $ 2,607.6 11.7% $ 2,201.2 10.6% $ 1,738.0 9.0%
Retail core deposits:
Savings 2,014.6 9.0 1,628.2 7.8 1,283.0 6.7
Transaction accounts 6,264.5 28.1 5,556.3 26.8 4,455.4 23.1
Time 6,691.6 30.0 6,782.1 32.7 6,977.0 36.1
- ----------------------------------------------------------------------------------------------------------------------
Total 14,970.7 67.1 13,966.6 67.3 12,715.4 65.9
- ----------------------------------------------------------------------------------------------------------------------
Total core deposits 17,578.3 78.8 16,167.8 77.9 14,453.4 74.9
Negotiable CD's 1,018.6 4.5 1,089.0 5.2 1,467.8 7.6
Federal funds purchased and
other short-term borrowings 2,094.7 9.4 2,046.7 9.9 2,125.0 11.0
Capital 1,629.2 7.3 1,450.1 7.0 1,263.4 6.5
- ----------------------------------------------------------------------------------------------------------------------
Total sources of funds $22,320.8 100.0% $20,753.6 100.0% $19,309.6 100.0%
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes held to maturity and available for sale securities.
</TABLE>
Liquidity represents the availability of funding to meet the obligations to
depositors, borrowers, and creditors at a reasonable cost without adverse
consequences. Accordingly, the Corporation's liquidity position is greatly
influenced by its funding base and asset mix, which has undergone favorable
changes in recent years primarily due to an increase in core deposits. Core
deposits, which consist of investable checking account deposits and certain
interest-bearing accounts, represent the Corporation's largest and most
important funding source, as these deposits represent a more stable, lower
cost source of funds. The Corporation's strategic efforts have recently
focused on strengthening the consumer deposit base through both internal
growth and deposits acquired through acquisitions, and the successful
execution of this strategy is illustrated by the substantial increase
achieved in core deposits over the last several years. Average core deposits
increased 8.7% in 1993 to $17.6 billion compared to an 11.9% increase in
1992, and supported 78.8% of average earning assets in 1993, up from 77.9%
in 1992 and 74.9% in 1991. Over the last 5 years core deposits have grown by
an average annual rate of 10.4% compared to an average annual increase of
5.9% in earning assets. During this same period, average purchased funds
declined by an annual rate of 8.3%.
The core deposit base is supplemented by the Corporation's wholesale and
correspondent banking activities which provide a natural access to
short-term purchased funds, such as negotiable certificates of deposit and
overnight surplus funds. These somewhat more volatile liabilities can be
acquired when needed, principally from existing customers within the
Corporation's natural trade territory. Accordingly, the Corporation enjoys
stability in its liability gathering process and is not dependent on access
to national money markets to finance daily banking operations. Due to the
sizeable increase in core deposits, the Corporation has reduced its
portfolio of purchased funds, which typically represent higher cost funding
alterna-
[Average Earning Asset Mix Graph]
[Funding Mix, 1993 Graph]
1993 Annual Report 25
<PAGE> 11
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
tives. Average purchased funds, including negotiable CD's, supported
13.9% of earning assets in 1993, compared to 15.1% in 1992 and 18.6% in
1991. The maturity distribution of time deposits $100,000 and over at
December 31, 1993 and 1992 is summarized in Table 12. The Corporation also
manages its liquidity position by maintaining adequate levels of liquid
assets such as money market investments and available for sale securities.
The available for sale securities at December 31, 1993 totaled $5.2 billion
with unrealized net appreciation of approximately $69 million.
Parent Company liquidity is maintained by cash flows stemming from divi-
dends and fees collected from subsidiaries, complemented by an active com-
mercial paper program and availability of credit totaling $100 million under a
revolving credit agreement. Commercial paper borrowings averaged $61 million
in 1993 and $50 million in 1992. Commercial paper proceeds are generally
used to fund the Corporation's mortgage banking operations, with excess
funds invested in short-term instruments. The variety of funding options and
strong cash flow provides the Corporation flexibility in selecting funding
alternatives most appropriate in the circumstances, thereby avoiding the
necessity to access capital markets at inopportune times. Maintaining
favorable debt ratings is critical to liquidity because it can affect the
availability and cost of funds to the Corporation. The Parent Company's
ability to access the capital markets on a cost-effective basis is indicated
by its debt ratings, summarized in Table 13.
The Corporation executed four major public financings over the last three
years, involving the issuance of common stock and subordinated notes. In the
second quarter of 1991, six million shares of common stock were sold with
total proceeds of $111 million. In that same year, the Corporation also
completed an offering of $50 million of 8 5/8% subordinated notes, maturing
in 2003. In the fourth quarter of 1992, the Corporation issued $100 million
of 7 5/8% subordinated notes maturing in 2004, and in the first quarter of
1993, $100 million of 6 3/4% subordinated notes maturing in 2003 were issued,
representing the final tranche under a $200 million shelf registration
statement filed with the Securities and Exchange Commission in 1992. The
Corporation has outstanding a shelf registration providing for the issuance
of up to $200 million of preferred stock.
The Corporation's existing debt position is fairly moderate, and projected
cash flows are adequate to service this debt without additional financing,
given continued profitable operations by the Corporation's banking
subsidiaries. Approximately $36 million of debt is scheduled to mature
within the next two years. In 1993, Parent Company net cash provided from
operations totaled $201 million which was available to pay dividends to
shareholders and support other financing and investing activities.
<TABLE>
- ----------------------------------------------------------------------------
Table 12: Time Deposits $100,000 and Over
<CAPTION>
December 31 (in millions) 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C>
Maturing within three months $415.9 $ 623.7
Maturing after three months but within six months 166.6 216.6
Maturing after six months but within one year 180.5 189.9
Maturing after one year 193.0 165.8
- ----------------------------------------------------------------------------
Total $956.0 $1,196.0
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
- ----------------------------------------------------------------------------
Table 13: Debt Ratings
<CAPTION>
Standard Thomson
Rating Agency Moody's & Poor's Bankwatch
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Boatmen's Bancshares, Inc. B
6 3/4% Subordinated notes due 2003 A-3 A- A
7 5/8% Subordinated notes due 2004 A-3 A- A
8 5/8% Subordinated notes due 2003 A-3 A- A
9 1/4% Subordinated notes due 2001 A-3 A- A
6 1/4% Convertible subordinated
debentures due 2011 A-3 A- A
Commercial paper P-1 A-1 TBW-1
The Boatmen's National Bank of
St. Louis: B
Short-term/long-term deposits P-1/Aa3 A-1/A+ TBW-1
Boatmen's First National Bank of
Kansas City: B
Short-term/long-term deposits A-1/A+ TBW-1
- ----------------------------------------------------------------------------
</TABLE>
HELD TO MATURITY AND
AVAILABLE FOR SALE SECURITIES
On December 31, 1993, the Corporation adopted Financial Accounting
Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in Debt
and Equity Securities." SFAS No. 115 requires entities to classify debt and
equity securities as either held to maturity, available for sale, or trading
securities. Under SFAS No. 115, held to maturity securities are recorded at
amortized cost, whereas available for sale securities and trading securities
are carried at market value. SFAS No. 115 further requires that unrealized
gains and losses on available for sale securities be reported, net of tax,
as a separate component of stockholders' equity. Upon adoption of SFAS No. 115,
the Corporation transferred approximately $5.2 billion of securities to the
available for sale portfolio, resulting in an increase to stockholders' equity
of $42.3 million due to the market value adjustment.
At December 31, 1993, held to maturity securities totaled $3.3 billion and
represented securities the Corporation has the intent and ability to hold to
maturity. These securities consisted primarily of tax-exempt municipal
bonds, seasoned and intermediate-term pass-through mortgage-backed
securities, intermediate-term corporate bonds and collateralized
mortgage obligations (CMO's) possessing very stable repayment tranches.
Available for sale securities at December 31, 1993 totaled $5.2 billion and
represented securities that may be sold to meet liquidity needs or in
response to significant changes in interest rates or prepayment risks. These
securities consisted primarily of adjustable rate mortgages, U.S. Treasury
securities, pass-through mortgage-backed securities and short-term CMO's.
For comparison purposes, much of the following discussion will refer to the
held to maturity and available for sale securities in the aggregate, as the
securities portfolio. At December 31, 1993, the securities portfolio
26 Boatmen's Bancshares, Inc.
<PAGE> 12
- -------------------------------------------------------------------------------
totaled $8.5 billion, an increase of 19.5% from year-end 1992. Based on average
balances, the securities portfolio increased 18.6% in 1993 and 19.0% in
1992. Average securities represented 34.7% of earning assets in 1993
compared to 31.5% in 1992 and 28.4% in 1991 as a higher proportion of
investable funds has been directed to the securities portfolio, which to
some extent is a by-product of the increases in funding sources stemming
from regulatory assisted acquisitions. A predominant share of the securities
growth occurred in the mortgage-backed securities component of the portfolio
in both 1993 and 1992. Purchases of mortgage-backed securities, including
CMO's, totaled $2.7 billion in 1993 and $2.6 billion in 1992. These
securities were either obligations of United States Government agencies or
carried double-A or triple-A credit ratings. As a matter of corporate
policy, the Corporation restricts the purchase of mortgage-backed products
to securities rated double-A or higher. While these securities earn spreads
above alternative U.S. Treasury obligations and have improved the
portfolio's overall yield, mortgage-backed securities can expose an
institution to prepayment risk in a declining interest rate environment. The
Corporation attempts to control prepayment risk by purchasing securities at
prices near par value and limiting CMO purchases to well structured tranches
that provide prepayment protection such as Planned Amortization Classes
(PAC's). Premium amortization related to mortgage-backed securities
increased in 1993 due to a higher level of mortgage-backed securities and an
acceleration in prepayments resulting from the lower interest rate
environment which fueled mortgage refinancings.
The held to maturity securities net market value appreciation at December
31, 1993 was $83.3 million and included gross unrealized gains of $93.9
million and gross unrealized losses of $10.6 million. Market value
appreciation at December 31, 1992 totaled $147.6 million, including gross
unrealized gains of $170.6 million and gross unrealized losses of $23.0
million. Net securities gains totaled $2.8 million in 1993 compared to $31.9
million in 1992 when $24.3 million of gains were realized from the
realignment of the Sunwest portfolio.
<TABLE>
- -----------------------------------------------------------------------------
Table 14: Ratings of State and Municipal Securities
- -----------------------------------------------------------------------------
<CAPTION>
December 31, 1993 (in millions) Book Percent
Moody's Ratings Value of Total
- -----------------------------------------------------------------------------
<S> <C> <C>
Aaa $251.6 30.7%
Aa1 46.4 5.7
Aa 141.4 17.3
A1 155.3 18.9
A 99.1 12.1
Below A rated 10.8 1.3
Not rated 114.6 14.0
- -----------------------------------------------------------------------------
Total $819.2 100.0%
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
- ----------------------------------------------------------------------------
Table 15: Held to Maturity Securities
<CAPTION>
Amortized Cost
- ----------------------------------------------------------------------------
December 31 (in millions) 1993 1992 1991
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury $ 231.1 $1,264.0 $2,087.3
Federal agencies:
Mortgage-backed securities 1,666.3 2,626.3 897.4
Other agencies 320.5 1,288.8 1,402.1
- ----------------------------------------------------------------------------
Total U.S. Treasury and agencies 2,217.9 5,179.1 4,386.8
State and municipal 819.2 891.6 986.2
Other securities 287.7 581.4 575.9
- ----------------------------------------------------------------------------
Total $3,324.8 $6,652.1 $5,948.9
- ----------------------------------------------------------------------------
<CAPTION>
Market Value
- ----------------------------------------------------------------------------
December 31 (in millions) 1993 1992 1991
- ----------------------------------------------------------------------------
U.S. Treasury $ 232.4 $1,302.8 $2,171.0
Federal agencies:
Mortgage-backed securities 1,672.3 2,643.3 928.7
Other agencies 321.8 1,319.3 1,453.1
- ----------------------------------------------------------------------------
Total U.S. Treasury and agencies 2,226.5 5,265.4 4,552.8
State and municipal 893.2 947.6 1,025.8
Other securities 288.4 586.6 586.5
- ----------------------------------------------------------------------------
Total $3,408.1 $6,799.6 $6,165.1
- ----------------------------------------------------------------------------
</TABLE>
The available for sale securities net appreciation at December 31, 1993 was
$68.7 million including gross unrealized gains of $85.5 million and gross
unrealized losses of $16.8 million. The amortized cost and market value of
the held to maturity
1993 Annual Report 27
<PAGE> 13
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
and available for sale securities are presented in Tables 15 and 16.
The Corporation's banking subsidiaries did not hold obligations of any
individual states or political subdivisions for which the aggregate book
value exceeded 10% of stockholders' equity. At December 31, 1993, state and
municipal securities totaled $819.2 million, of which 84.7% were rated A or
better. The Corporation's portfolio at December 31, 1993 is summarized by
quality rating in Table 14. The maturity distribution of held to maturity
and available for sale securities at December 31, 1993, together with
weighted average yields for each range of maturity, are provided in Table
17.
Proceeds from the sale of held to maturity securities totaled approximately
$43.4 million in 1993 and $755.4 million in 1992 representing less than .6%
of the average securities portfolio in 1993 compared to 12% in 1992. Sales
in 1992 were primarily the result of selling $670 million of U.S. Treasury
related securities at Sunwest to conform to the Corporation's investment
policies.
<TABLE>
- ----------------------------------------------------------------------------
Table 16: Available for Sale Securities(1)
<CAPTION>
Amortized Cost
- ----------------------------------------------------------------------------
December 31 (in millions) 1993 1992 1991
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury $1,152.6 $259.3
Federal agencies:
Mortgage-backed securities 3,582.2 194.3 46.9
Other agencies 33.8 2.5 49.3
- ----------------------------------------------------------------------------
Total U.S. Treasury and agencies 4,768.6 456.1 96.2
State and municipal 1.0 .9
Equity securities 22.4
Other securities 317.3 6.5
- ----------------------------------------------------------------------------
Total $5,108.3 $463.6 $ 97.1
- ----------------------------------------------------------------------------
<CAPTION>
Market Value
- ----------------------------------------------------------------------------
December 31 (in millions) 1993 1992 1991
- ----------------------------------------------------------------------------
U.S. Treasury $1,195.8 $273.7
Federal agencies:
Mortgage-backed securities 3,608.3 194.6 50.3
Other agencies 33.8 2.5 51.3
- ----------------------------------------------------------------------------
Total U.S. Treasury and agencies 4,837.9 470.8 101.6
State and municipal 1.0 .9
Equity securities 25.7
Other securities 313.4 6.6
- ----------------------------------------------------------------------------
Total $5,177.0 $478.4 $102.5
- ----------------------------------------------------------------------------
<FN>
(1) Amounts at December 31, 1992 and 1991 represented debt securities
designated as held for sale prior to adoption of SFAS No. 115.
</TABLE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Table 17: Maturity Distribution
<CAPTION>
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
- ----------------------------------------------------------------------------------------------------------------------
December 31, 1993 (in millions) Amount Yield Amount Yield Amount Yield Amount Yield
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held to maturity securities:
U.S. Treasury $ 2.6 4.51% $ 224.5 4.87% $ 4.0 7.17%
Federal agencies:
Mortgage-backed securities 21.6 5.70 1,026.6 5.94 524.1 5.84 $ 94.0 4.89%
Other agencies 56.2 4.08 241.9 5.39 22.4 5.73
- ----------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury and agencies 80.4 4.53 1,493.0 5.69 550.5 5.85 94.0 4.89
State and municipal* 83.9 9.78 171.4 10.49 282.5 10.10 281.4 9.81
Other securities** 27.9 5.98 229.5 6.15 1.0 4.01
- ----------------------------------------------------------------------------------------------------------------------
Available for sale securities:
U.S. Treasury $383.2 7.43% $ 812.6 6.60%
Federal agencies:
Mortgage-backed securities 425.6 4.38 2,417.0 5.51 $700.9 5.08% $ 64.8 5.08%
Other agencies 33.8 3.57
- ----------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury and agencies 808.8 5.82 3,263.4 5.76 700.9 5.08 64.8 5.08
Other securities** 55.2 4.48 258.2 5.11
- ----------------------------------------------------------------------------------------------------------------------
<FN>
*Yields on tax-exempt obligations are computed on a tax equivalent basis, using a tax rate of 35%.
**Excludes marketable equity securities, Federal Reserve Bank and Federal Home Loan Bank stock, which have no stated
maturities.
</TABLE>
28 Boatmen's Bancshares, Inc.
<PAGE> 14
- -------------------------------------------------------------------------------
NONINTEREST INCOME
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Table 18: Summary of Noninterest Income
<CAPTION>
% change
- ----------------------------------------------------------------------------------------------------------------------
(in millions) 1993 1992 1991 `93-`92 `92-`91
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust fees $149.6 $138.0 $120.8 8.4% 14.2%
Service charges 153.2 133.6 105.8 14.7 26.2
Credit card 47.3 38.4 29.8 23.1 28.7
Investment banking profits and fees 35.6 31.8 20.9 12.1 52.0
Mortgage banking operations 16.4 10.9 5.9 50.5 84.7
- ----------------------------------------------------------------------------------------------------------------------
Core business revenues 402.1 352.7 283.2 14.0 24.5
- ----------------------------------------------------------------------------------------------------------------------
Securities gains, net 2.8 31.9 3.9 (91.2) 729.4
Other 88.4 67.5 68.6 30.9 (1.6)
- ----------------------------------------------------------------------------------------------------------------------
Other revenues 91.2 99.4 72.5 (8.3) 37.3
- ----------------------------------------------------------------------------------------------------------------------
Total noninterest income $493.3 $452.1 $355.7 9.1% 27.1%
- ----------------------------------------------------------------------------------------------------------------------
As % of operating income
(net interest income [FTE] plus noninterest income) 32.7% 33.1% 31.3%
Revenue per full-time equivalent employee (in thousands) $108.1 $104.2 $92.3
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest income increased 9.1% in 1993 and 27.1% in 1992. Excluding the
effect of purchase acquisitions and the securities gains recognized in 1992
at Sunwest, noninterest income increased 11.6% in 1993 and 11.4% in 1992,
reflecting continued growth in core fee income sources such as trust fees,
service charge income, credit card fees, investment banking profits and fees
and mortgage banking operations. Recent strategic initiatives have
emphasized the expansion of fee-based services as a means to stabilize the
earnings stream and reduce the Corporation's exposure to interest rate and
credit risk. As such, the Corporation has focused on increasing noninterest
revenues, principally through expansion of its trust and retail lines of
business. Noninterest income as a percentage of operating revenues was 32.7%
in 1993 compared to 33.1% in 1992 (31.9% excluding securities gains at
Sunwest) and 31.3% in 1991. Revenue per full-time employee increased 3.7%
in 1993.
Trust fees, the largest component of noninterest income, increased 8.4% in
1993 and 14.2% in 1992. Excluding purchase acquisitions, trust fees
increased 6.5% in 1993 and 9.4% in 1992 primarily due to successful
marketing programs aimed at generating new personal and institutional
business relationships and growth in the market value of managed assets on
which some fees are based. Trust assets under management totaled $34.1
billion at December 31, 1993, up from $32.8 billion at December 31, 1992 and
$32.7 billion at December 31, 1991.
Service charge income increased 14.7% in 1993 and followed a 26.2% increase
in 1992. These increases reflect growth through recent purchase
acquisitions, increased penetration of the retail market and higher fees on
corporate customer accounts. Excluding purchase acquisitions, service charge
income increased 9.0% in 1993 and 14.1% in 1992. Investment banking profits
and fees increased 12.1% in 1993 and 52.0% in 1992, primarily due to
continued growth in retail brokerage operations. The higher percentage
increase in 1992 was primarily due to an expansion in the retail brokerage
line of business in that year. The Corporation expects further increases in
this source of revenue in subsequent periods through a planned expansion of
its retail brokerage sales force in 1994.
[Noninterest Income Graph]
Credit card income increased 23.1% in 1993 and 28.7% in 1992 primarily due
to greater transaction volume of merchant business, which is also reflected
in the increase in credit card expense. Income from mortgage banking
operations increased 50.5% in 1993 and 84.7% in 1992, reflecting the
continued impact of declining interest rates which increased market gains on
mortgage loans sold as well as mortgage loan originations and refinancings.
Securities gains in 1993 totaled $2.8 million compared to $31.9 million
in 1992 and $3.9 million in 1991. Gains recognized in 1992 were primarily
attributable to the sale of $670 million of securities at Sunwest to conform
to the Corporation's investment philosophy coupled with the sale of $96
million of securities that were designated as held for sale at year-end
1991.
Other noninterest income increased 30.9% in 1993 compared to a 1.6% de-
crease in 1992. Other noninterest income in 1993 included gains of approxi-
mately $3.3 million from the sales of two private label credit card portfolios,
segregated assets income of $7.4 million and increases in commitment and
letter of credit fees. Other noninterest income in 1991 included a
nonrecurring gain of $3.3 million due to renegotiation of a leveraged lease
transaction and a gain of $3.4 million from disposition of a mortgage loan
portfolio acquired in an RTC assisted transaction.
1993 Annual Report 29
<PAGE> 15
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
<TABLE>
NONINTEREST EXPENSE
- -------------------------------------------------------------------------------------------------------------------------
Table 19: Summary of Noninterest Expense
<CAPTION>
% change
- -------------------------------------------------------------------------------------------------------------------------
(in millions) 1993 1992 1991 `93-`92 `92-`91
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense $466.5 $416.3 $361.6 12.1% 15.1%
Occupancy 69.4 64.5 55.0 7.7 17.1
Equipment 77.5 68.8 59.5 12.8 15.6
FDIC insurance 44.4 41.6 35.6 6.6 16.8
Credit card 35.2 25.6 17.1 37.8 49.2
Printing, postage, paper 38.0 35.5 32.6 7.0 8.9
Intangible amortization 30.6 16.1 12.4 90.1 29.8
Professional fees 20.5 19.4 16.6 5.7 16.9
Federal Reserve processing charges 10.0 9.5 8.1 5.3 17.3
Advertising 27.8 20.4 16.9 36.3 20.7
Communications 18.2 14.4 12.3 26.4 17.1
Foreclosed property costs, net (4.8) 26.3 23.8 (118.2) 10.6
Other 117.1 113.5 100.9 3.2 12.5
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $950.4 $871.9 $752.4 9.0% 15.9%
- -------------------------------------------------------------------------------------------------------------------------
Efficiency ratio (noninterest expense as % of noninterest
income and net interest income [FTE]) 62.9% 63.8% 66.2%
Number of full-time equivalent employees at year end 14,370 13,409 12,712
Staff expense as % of total noninterest expense 49.1% 47.7% 48.1%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest expense increased 9.0% in 1993 and 15.9% in 1992. To a large
extent, year-to-year noninterest expenses are noncomparable due to 10
purchase acquisitions consummated subsequent to August 1, 1991 and
merger-related expenses stemming from three pooling acquisitions.
Nonrecurring merger-related expenses from pooling acquisitions totaled $4.7
million in 1993, $18.2 million in 1992 and $7.1 million in 1991. Excluding
the effect of purchase acquisitions and merger-related expenses from pooling
acquisitions, operating expense increased 5.9% in 1993 and 7.4% in 1992. The
efficiency ratio, a key indicator of the control of noninterest expense,
improved in 1993 and 1992 as the rate of revenue growth outpaced the rate of
expense increase. The efficiency ratio was 62.9% in 1993 compared to 63.8%
in 1992 and 66.2% in 1991. The Corporation's intermediate goal is to reduce
noninterest expense to below 60% of operating revenues.
Staff expense, the largest component of noninterest expense, increased
12.1% in 1993 and 15.1% in 1992. Excluding the effect of purchase acquisitions,
staff expense increased 8.8% in 1993, reflecting planned salary
adjustments, increased costs of employee benefit programs, higher incentive
compensation and increased staff. The Corporation's expense base in 1993 and
1992 also includes higher levels of post-retirement benefits expense due to
adoption of SFAS No. 106 in 1992. The number of full-time equivalent
employees increased 7.2% in 1993 and 5.5% in 1992 principally due to
purchase acquisitions. At December 31, 1993, full-time equivalent employees
increased to 14,370 from 12,712 two years ago.
Equipment expense increased 12.8% in 1993 and 15.6% in 1992 primarily due
to the purchase acquisitions and higher depreciation expense associated with
new and upgraded computer systems and software. Occupancy expense in 1993
and 1992 reflects the additional branch facilities acquired in purchase
acquisitions and in 1993, also includes an acceleration of amortization
expense on the leasehold values of certain banking locations. Advertising
expense increased 36.3% in 1993 and 20.7% in 1992 due to increased
promotional activities associated with recent retail initiatives.
[Noninterest Expense Graph]
Foreclosed property costs declined $31.1 million or 118.2% in 1993 compared
to an increase of 10.6% in 1992. The income in 1993 reflects gains of
approximately $11 million on sales of foreclosed property, coupled with
lower levels of writedowns required on remaining properties. Foreclosed
property costs in 1992 and 1991 included increased administrative and legal
costs of managing higher levels of other real estate acquired as a result of
distressed economic conditions in commercial real estate markets, and
writedowns on selected parcels of property in recognition of declines in
market values subsequent to foreclosure. Foreclosed property costs in 1992 also
included writedowns at Sunwest aggregating $7.0 million to conform to the
Corporation's valuation methods.
Amortization of goodwill and identified core deposit premiums increased to
$30.6 million in 1993, from $16.1 million in 1992 and $12.4 million in 1991,
due to the aforementioned purchase acquisitions consummated subsequent to
August 1, 1991.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112 (SFAS No. 112), "Employers'
Accounting for Postemployment Benefits." This statement will require
recognition of the cost to provide postemployment benefits on an accrual
basis. Adoption of this pronouncement is required in 1994 and is not
expected to have a material effect on the Corporation's results of
operations.
30 Boatmen's Bancshares, Inc.
<PAGE> 16
- -------------------------------------------------------------------------------
TAXES
The Corporation's effective tax rate was 31.6% in 1993, 28.8% in 1992 and
26.0% in 1991. The increase in the Corporation's effective tax rate in 1993
reflects a decrease in the relative amount of tax-exempt income as a
component of operating income. Tax expense in 1993 includes the effect of
the 1% Federal tax increase mandated by the Omnibus Budget Reconciliation
Act of 1993 which was more than offset by a corresponding increase in the
Corporation's deferred tax asset, changes in the deductibility of certain
intangibles, a favorable adjustment to deferred state taxes at the
Corporation's New Mexico subsidiary and recognition of a deferred tax asset
at Amarillo in the first quarter of 1993. The effective tax rate in 1992
reflects a reduction of income taxes at Amarillo due to utilization of prior
years' operating losses and a benefit recognized by the Corporation upon its
adoption of SFAS No. 109. On a prospective basis, the effective tax rate should
more closely approximate the statutory rate, adjusted for normal operating
items such as tax-exempt interest, goodwill amortization and other
nondeductible expenses.
LOAN PORTFOLIO
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
Table 20: Summary of Loan Portfolio
<CAPTION>
December 31 (in millions) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $ 7,490.7 $ 6,507.5 $ 6,278.0 $ 5,668.0 $ 5,559.5
Real estate mortgage 2,988.5 3,049.1 2,852.3 3,096.0 2,968.2
Real estate construction 558.0 416.5 455.5 597.0 646.3
Consumer 3,742.8 3,111.6 2,711.3 2,568.3 2,438.3
Lease financing 95.2 86.8 95.3 97.1 105.2
- --------------------------------------------------------------------------------------------------------------------
Total domestic loans 14,875.2 13,171.5 12,392.4 12,026.4 11,717.5
Foreign loans 18.0 11.9 12.7 10.6 9.2
- --------------------------------------------------------------------------------------------------------------------
Total loans, before deduction of
unearned income 14,893.2 13,183.4 12,405.1 12,037.0 11,726.7
Less unearned income 67.3 72.5 88.8 112.8 133.6
- --------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income $14,825.9 $13,110.9 $12,316.3 $11,924.2 $11,593.1
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The majority of the Corporation's loans are made within its natural
midwestern trade territory, and the portfolio is highly diversified. There
are no concentrations of credit to any borrower or industry in excess of 5%
of total loans, and the portfolio is well balanced between wholesale and
consumer lending.
At December 31, 1993, loans totaled $14.8 billion, an increase of 13.1%
over the same period of last year. Based on average balances, loans increased
10.1% in 1993 and 7.2% in 1992. The growth experienced in 1993 was
principally the result of recent purchase acquisitions coupled with internal
loan growth within the retail sector, whereas the 1992 growth was largely
the result of acquisitions. Excluding purchase acquisitions, loans increased
6.8% in 1993, and were led by a 16.8% increase in consumer loans. Consumer
loan growth stepped up over the second half of the year, largely the result
of increased retail penetration of consumer products, coupled with an
expansion in consumer spending.
The portfolio mix has undergone a favorable shift in recent years in that
business development efforts have focused on expanding the middle-market
commercial and consumer sectors, which has been complemented by acquisitions
of retail oriented institutions. At December 31, 1993 and 1992,
middle-market commercial and consumer loans represented approximately 48% of
the loan portfolio compared to 44.3% at December 31, 1991. Commercial real
estate and real estate construction loans represented 20.8% of total loans
at December 31, 1993 compared to 19.3% at December 31, 1992. Excluding
purchase acquisitions, the commercial real estate related loan portfolio
increased by approximately $186 million in 1993 compared to a decline of
approximately $100 million in 1992. The Corporation closely monitors the
composition and quality of the real estate portfolio to ensure that
significant credit concentrations do not exist within this portfolio. The
portfolio is geographically dispersed primarily in areas where the
Corporation has a direct banking presence and is widely diversified between
residential construction, office and retail properties and land acquisition
and development loans. Real estate loans are generally secured by the
underlying property at a 75% to 80% loan to appraisal value ratio and are
typically supported by guarantees from project developers. Additional
collateral may be required on a project-by-project basis depending on
management's credit evaluation of the borrower. Office vacancy rates in the
Corporation's largest markets are in line with national averages, and over
the last half of 1993, real estate activity in many of the Corporation's
markets showed signs of improvement.
[Loan Portfolio Graph]
The Corporation has limited foreign loan exposure and its portfolio of
highly leveraged transaction loans (HLT's) is minimal, at .6% of total loans
at December 31, 1993.
Table 20 displays the components of the loan portfolio under standard
financial reporting definitions. Management also
1993 Annual Report 31
<PAGE> 17
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
reviews the diversification of the portfolio using internally developed
standards and definitions as summarized in Table 21.
The commercial and real estate construction loan portfolio maturity
distribution at December 31, 1993, under standard financial reporting
definitions, is summarized in Table 22. Commercial and real estate
construction loans due after one year totaled $3.7 billion of which $1.9
billion have floating or adjustable rates.
LOAN QUALITY
The provision for loan losses decreased 55.9% in 1993 and totaled $60.2
million compared to $136.6 million in 1992 and $114.7 million in 1991. The
decrease in the provision for loan losses in 1993 was reflected in positive
trends in asset quality, evidenced by a substantially lower level of actual
loan losses, further declines in nonperforming loans and a continued
downward trend in criticized loans. The provision for loan losses in 1992
included a special provision at Sunwest of $33.3 million to conform to the
Corporation's loan reserve methods. Excluding the Sunwest charge, the
provision for loan losses decreased 41.8% in 1993 and 9.9% in 1992.
This sustained improvement is evident in the Corporation's asset quality
measures. At December 31, 1993, the reserve coverage of nonperforming loans
increased to 195.03% compared to 116.72% at December 31, 1992 and 79.91% at
December 31, 1991. The loan reserve as a percentage of net loans was 2.30%
at the end of 1993 and 1992, compared to 2.05% at December 31, 1991.
Consistent with the decreases in nonperforming loans and the provision for
loan losses, net loan charge-offs declined to $34.0 million, a decrease of
$68.6 million or 66.9% from 1992, reflecting lower losses throughout all
sectors of the portfolio. Net charge-offs as a percentage of average loans
dropped to .24% compared to .80% in 1992 and .84% in 1991. Net charge-offs
in 1992 included charge-offs at Sunwest of approximately $28 million to
conform to the Corporation's loan reserve methodology. Exclusive of the
special charge-off at Sunwest, the 1992 net loan charge-off ratio would have
been .59%.
The reserve for loan losses represents the aggregate reserves of the
Corporation's banking subsidiaries. Loans which are determined to be
uncollectible are charged against the reserve and recoveries of loans which
were previously charged off are credited to the reserve. The charge-off
policy of the Corporation's banking subsidiaries varies with respect to the
category of and specific circumstances surrounding each loan under
consideration. The Corporation's general policy with respect to consumer
loans is to charge off all such loans when deemed to be uncollectible or 120
days past due, whichever comes first. With respect to commercial, real
estate, and other loans, charge-offs are made on the basis of management's
ongoing evaluation of nonperforming and criticized loans. In addition, loans
which are classified as "loss" in regulatory examinations are charged off.
<TABLE>
- -------------------------------------------------------------------------------------------
Table 21: Composition of Loan Portfolio
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------------------------------
% OF % Of % Of
TOTAL Total Total
December 31 (in millions) AMOUNT LOANS Amount Loans Amount Loans
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real estate:
1-4 family residential $ 2,970.6 20.0% $ 2,656.6 20.2% $ 2,469.8 19.9%
Land acquisition 168.8 1.1 108.3 .8 126.5 1.0
Residential construction 181.2 1.2 117.9 .9 128.1 1.0
Commercial construction 208.0 1.4 190.3 1.4 200.9 1.6
Commercial real estate 2,446.6(1) 16.4 1,984.1 15.1 1,900.9 15.3
Mini-perms 107.2 .7 148.9 1.1 165.3 1.4
- -------------------------------------------------------------------------------------------
Total real estate 6,082.4 40.8 5,206.1 39.5 4,991.5 40.2
Commercial loans to
Fortune 1,000 companies
and other large
corporate borrowers 662.5 4.5 666.3 5.0 830.3 6.7
Middle market commercial 3,359.9 22.6 3,194.8 24.2 2,792.0 22.5
Highly leveraged
transactions (HLT's) 91.0 .6 88.7 .7 157.0 1.3
Bank stock loans 226.4 1.5 238.6 1.8 269.8 2.2
Agriculture 615.0 4.1 578.6 4.4 545.2 4.4
Consumer:
Home equity 363.1 2.4 353.7 2.7 329.8 2.6
Credit card 457.3 3.1 378.3 2.9 371.2 3.0
Installment 2,922.4 19.6 2,379.6 18.0 2,010.3 16.2
- -------------------------------------------------------------------------------------------
Total consumer 3,742.8 25.1 3,111.6 23.6 2,711.3 21.8
Lease financing 95.2 .7 86.8 .7 95.3 .8
Foreign 18.0 .1 11.9 .1 12.7 .1
- -------------------------------------------------------------------------------------------
Total loans $14,893.2 100.0% $13,183.4 100.0% $12,405.1 100.0%
- -------------------------------------------------------------------------------------------
<FN>
(1) Includes approximately $240 million of commercial real estate loans covered
by the FDIC loss-sharing agreement related to the acquisition of Missouri
Bridge Bank, N.A.
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------
Table 22: Commercial and Real Estate Construction Maturity Distribution
<CAPTION>
December 31, 1993 Over 1 Year
(in millions) One Year or Less Through 5 Years Over 5 Years Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $3,977.9 $2,744.4 $768.4 $7,490.7
Real estate construction 371.4 147.4 39.2 558.0
- -----------------------------------------------------------------------------------------------
$4,349.3 $2,891.8 $807.6 $8,048.7
- -----------------------------------------------------------------------------------------------
</TABLE>
The provision for loan losses is sufficient to provide for current loan
losses and maintain the reserve at an adequate level commensurate with
management's evaluation of the risk inherent in the loan portfolio. In order
to identify potential risks in the loan portfolios of the subsidiary banks,
detailed information is obtained from the following sources:
- All individual loans (other than 1-4 family residential and consumer loans)
have a designated internal risk rating. For those which contain other than
the normal risk of collectibility, the ratings correspond to the classi-
fications utilized by the regulatory agencies for criticized loans (Special
Mention, Substandard, Doubtful, Loss). Criticized loan totals
32 Boatmen's Bancshares, Inc.
<PAGE> 18
and the trend thereof are reviewed monthly for all banking subsidiaries;
- Monthly reports prepared by each subsidiary bank's senior management
personnel which contain information on the overall characteristics of the
subsidiary's loan portfolio and analyses of specific loans requiring
special attention, including nonperforming and certain criticized loans;
- Quarterly reviews of selected individual loans and loan concentrations of
the larger banking subsidiaries by senior credit administration personnel
of the Corporation;
- Examination of the loan portfolio by Federal and State regulatory agencies;
and
- Examinations and reviews by the Corporation's independent auditors and
internal loan review personnel.
The data collected from these sources are evaluated with regard to current
national and local economic trends, prior loss history, underlying
collateral values, credit concentrations, industry risk, degree of
off-balance sheet risk, and the opinion of the subsidiary bank and corporate
management. An estimate of potential future loss on specific loans is
developed in conjunction with an overall risk evaluation of the total loan
portfolio. In addition, another key statistical measure used by management
in establishing loan reserves is the reserve coverage of nonperforming
loans. As a matter of general policy, the Corporation's objective is to
maintain the loan reserve at levels above 100% of nonperforming loans,
although temporary deviations from this standard may occur as situations
warrant.
Pursuant to this process, it is management's opinion that the aggregate
reserves of the Corporation's banking subsidiaries are currently sufficient
to provide for potential losses in the Corporation's loan portfolio.
[Loan Loss Experience Graph]
The loan reserve allocation provided in Table 23 is based primarily on
analysis of prior loss experience and present and anticipated volume levels
by individual categories, and on management's evaluation of prevailing
economic conditions as they may affect segments of the portfolio.
Accordingly, since each of these criteria is subject to change, the
allocation of the reserve is not necessarily indicative of the trend of
future loan losses in any particular loan category.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114 (SFAS No. 114), "Accounting by
Creditors for Impairment of a Loan." This statement will require that
certain impaired loans be measured based on either the present value of
expected future cash flows discounted at the loan's effective rate, the
market price of the loan, or fair value of the underlying collateral if the
loan is collateral dependent. Adoption of this pronouncement is required in
1995 and, at present, is not expected to have a material effect on the
Corporation's reported financial results.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
Table 23: Loan Reserve Allocation
<CAPTION>
December 31
- -----------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------------
LOANS Loans Loans Loans Loans
AS % OF as % of as % of as % of as % of
LOAN TOTAL Loan Total Loan Total Loan Total Loan Total
(amounts in millions) RESERVE LOANS Reserve Loans Reserve Loans Reserve Loans Reserve Loans
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic:
Commercial $194.7 50.3% $172.0 49.4% $142.8 50.6% $129.2 47.1% $112.4 47.4%
Real estate mortgage 39.2 20.1 37.9 23.1 30.6 23.0 29.0 25.7 21.7 25.3
Real estate construction 32.1 3.8 29.2 3.2 22.5 3.7 18.0 5.0 15.2 5.5
Consumer 40.6 25.1 35.0 23.6 29.8 21.8 27.7 21.3 27.4 20.8
Lease financing 1.0 .6 .6 .6 .5 .8 .6 .8 .5 .9
Not allocated 33.5 27.3 26.1 24.4 21.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total domestic 341.1 99.9 302.0 99.9 252.3 99.9 228.9 99.9 198.6 99.9
Foreign .1 .1 .1 .1 .1
- -----------------------------------------------------------------------------------------------------------------------------------
Total reserve for loan
losses $341.1 100.0% $302.0 100.0% $252.3 100.0% $228.9 100.0% $198.6 100.0%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1993 Annual Report 33
<PAGE> 19
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
Table 24: Summary of Reserve for Loan Losses
<CAPTION>
(in millions) 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of year $302.0 $252.3 $228.9 $198.6 $219.5
Loans charged off:
Domestic:
Commercial (32.7) (50.2) (40.4) (46.3) (56.3)
Real Estate:
Commercial real estate (7.5) (35.7) (23.8) (24.3) (10.5)
Construction (1.3) (9.8) (15.8) (5.8) (5.0)
1-4 family residential (3.8) (6.7) (5.4) (4.3) (2.6)
Consumer (28.9) (34.6) (42.2) (37.8) (33.7)
Foreign (34.3)
- ---------------------------------------------------------------------------------------------------------------------
Total charge-offs (74.2) (137.0) (127.6) (118.5) (142.4)
- ---------------------------------------------------------------------------------------------------------------------
Recoveries on loans previously charged off:
Domestic:
Commercial 20.0 16.8 9.7 11.7 13.6
Real estate:
Commercial real estate 5.8 3.1 2.3 1.1 1.4
Construction 1.6 .7 1.7 .2 .2
1-4 family residential 1.1 1.0 .7 .7 .5
Consumer 11.7 12.8 13.2 13.9 11.5
Foreign 1.7 1.0
- ---------------------------------------------------------------------------------------------------------------------
Total recoveries 40.2 34.4 27.6 29.3 28.2
- ---------------------------------------------------------------------------------------------------------------------
Net charge-offs (34.0) (102.6) (100.0) (89.2) (114.2)
- ---------------------------------------------------------------------------------------------------------------------
Provision for loan losses 60.2 136.6 114.7 119.5 93.3
Reserves of purchased subsidiaries 12.9 15.7 8.7
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year $341.1 $302.0 $252.3 $228.9 $198.6
- ---------------------------------------------------------------------------------------------------------------------
Loan reserve at end of year:
% of net loans at year end 2.30% 2.30% 2.05% 1.92% 1.71%
% of nonperforming loans 195.03 116.72 79.91 59.87 63.43
Multiple of net charge-offs 10.04x 2.94x 2.52x 2.57x 1.74x
Net charge-offs during year:
% of net loans at year end .23% .78% .81% .75% .98%
% of net loans (average) .24 .80 .84 .76 1.00
% of reserve at year end 9.96 33.97 39.62 38.96 57.50
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
34 Boatmen's Bancshares, Inc.
<PAGE> 20
- -------------------------------------------------------------------------------
NONPERFORMING ASSETS
Management has followed a policy of discontinuing the accrual of interest
on loans when full collectibility of principal or interest on any loan is
doubtful. Nonaccrual loans are reduced by the direct application of actual
interest receipts to loan principal, for accounting purposes only. If the
principal amount of the loan is well collateralized, then cash basis
interest income on such loans may be recognized in periods in which actual
payments are received. Gross interest income that would have been recorded
in 1993, if all nonaccrual loans had been current in accordance with
original terms, amounted to $12.4 million. Actual interest recorded amounted
to $2.9 million.
Nonperforming assets, which include nonperforming loans and
foreclosed property, declined steadily throughout 1993 to their lowest levels
in several years. At December 31, 1993, nonperforming assets totaled $285.5
million, a decrease of $103.0 million or 26.5% from December 31, 1992,
following a 21.3% decrease in 1992. The steady decline in nonperforming
assets is reflected in the improvement in the Corporation's asset quality
measures. As a percent of total loans and foreclosed property, nonperforming
assets declined below the 2.0% level to 1.90% at December 31, 1993, compared to
2.92% at December 31, 1992 and 3.92% at December 31, 1991. Nonperforming
asset levels trended downward in each quarter during 1993 and 1992,
reflecting a reduction due to improved economic conditions and effective
loan administration and workout procedures. Table 25 summarizes
nonperforming assets by major banking unit/geographic location and
illustrates the broad-based improvement achieved.
[Loan Reserve Coverage Graph]
<TABLE>
- ---------------------------------------
Table 25: Nonperforming Assets
by Banking Unit
<CAPTION>
December 31
(in millions) 1993 1992 1991
- ---------------------------------------
<S> <C> <C> <C>
Missouri $171.4 $229.9 $295.2
New Mexico 53.4 90.0 118.2
Oklahoma 14.3 16.3 2.5
Texas 13.7 22.3 36.4
Iowa 7.2 10.2 16.7
Illinois 7.1 9.8 15.5
Arkansas 4.0 5.9
Tennessee 6.8 4.1 8.9
Kansas 7.6
- ---------------------------------------
Total $285.5 $388.5 $493.4
- ---------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------
Table 26: Foreclosed Property
<CAPTION>
December 31, 1993
(in millions)
Property Type Amount % of total
- ---------------------------------------
<S> <C> <C>
Land $ 26.4 23.9%
Lodging 37.1 33.5
Office 26.2 23.7
Warehouse 1.7 1.5
Multifamily 1.0 .9
Retail 1.6 1.5
Residential 5.0 4.5
Agriculture related 8.0 7.2
Other 3.6 3.3
- ---------------------------------------
Total $110.6 100.0%
- ---------------------------------------
</TABLE>
Nonperforming loans represented 1.17% of total loans at December 31, 1993
compared to 1.96% at December 31, 1992 and 2.54% at December 31, 1991. The
decline in nonperforming loans in 1993 was primarily attributable to a $75.9
million decrease in nonaccrual loans. Foreclosed property declined $19.1
million from 1992 as property sales exceeded transfers to foreclosed
status.
As part of management's overall portfolio analysis, ongoing credit quality
reviews are performed to evaluate risk inherent in the portfolio and
potential risk that may develop in the future. A critical element in
assessing portfolio risk is the level of criticized loans. The Corporation's
internal risk rating system designates specific credits as criticized loans,
which include all nonperforming loans and other loans which contain features
presenting more than the normal risk of collectibility. Criticized and
classified assets from regulatory examinations are an integral component of
the Corporation's internal risk rating system. As displayed in Table 27,
criticized loans declined to $762.6 million or 5.12% of loans at December
31, 1993 compared to 7.09% of loans at December 31, 1992. Management
carefully analyzes changes and trends in both nonperforming and criticized
loans in assessing the risk characteristics of the loan portfolio. Several
communities throughout the Corporation's markets in the Midwest, including
Iowa, Illinois and Missouri, experienced severe flooding during the second
and third quarters of 1993. There were no significant changes in asset
quality measures as a result of this natural disaster.
[Nonperforming Assets Graph]
1993 Annual Report 35
<PAGE> 21
- -------------------------------------------------------------------------------
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Table 27: Loans Designated as Criticized Loans by Internal Risk Rating System
<CAPTION>
Criticized Loans
- ----------------------------------------------------------------------------------------------------------------------
(in millions) Nonperforming Performing Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1992
- ----------------------------------------------------------------------------------------------------------------------
March 31 $314.3 $743.1 $1,057.4
June 30 285.6 772.1 1,057.7
September 30 285.0 761.0 1,046.0
December 31 258.8 676.5 935.3
- ----------------------------------------------------------------------------------------------------------------------
As % of loans at December 31, 1992 1.96% 5.13% 7.09%
- ----------------------------------------------------------------------------------------------------------------------
1993
- ----------------------------------------------------------------------------------------------------------------------
March 31 $226.5 $653.6 $ 880.1
June 30 190.6 610.2 800.8
September 30 187.2 608.2 795.4
December 31 174.9 587.7 762.6
- ----------------------------------------------------------------------------------------------------------------------
As % of loans at December 31, 1993 1.17% 3.95% 5.12%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
Table 28:Nonperforming Assets
<CAPTION>
December 31 (in millions) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans:
Nonaccrual $142.9 $218.8 $269.8 $312.7 $201.6
Restructured 14.8 22.1 25.6 42.2 56.5
Past due 90 days or more 17.2 17.9 20.3 27.4 55.0
- --------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 174.9 258.8 315.7 382.3 313.1
- --------------------------------------------------------------------------------------------------------------------
Foreclosed property 110.6 129.7 177.7 94.6 86.7
- --------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $285.5 $388.5 $493.4 $476.9 $399.8
- --------------------------------------------------------------------------------------------------------------------
Ratios
- --------------------------------------------------------------------------------------------------------------------
Total nonperforming loans as % of total loans 1.17% 1.96% 2.54% 3.18% 2.67%
Nonperforming assets as % of total loans
and foreclosed property 1.90 2.92 3.92 3.93 3.38
Nonperforming assets as % of total assets 1.07 1.60 2.14 2.09 2.05
Loan reserve as % of nonperforming loans 195.03 116.72 79.91 59.87 63.43
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
SEGREGATED ASSETS
As part of the regulatory assisted acquisition of Missouri Bridge Bank,
N.A. on April 23, 1993, the Corporation entered into a five-year loss-sharing
arrangement with the FDICwith respect to approximately $950 million in
multi-family residential, commercial real estate, construction and commercial
and industrial loans. During the five-year period, the FDIC will reimburse the
Corporation for 80 percent of the first $92.0 million of net charge-offs on
these loans, after which the FDIC will increase its reimbursement coverage to
95 percent of additional charge-offs. During this period and for two years
thereafter, the Corporation is obligated to pay the FDIC 80 percent of all
recoveries on charged-off loans.
The Corporation has designated certain loans covered under the loss-sharing
arrangement which possess more than the normal risk of collectibility as
segregated assets. At December 31, 1993, segregated assets totaled $248.2
million, net of an $18.4 million credit valuation allowance and are classified
as other assets for reporting purposes. At December 31, 1993, segregated assets
consisted of $69.5 million of commercial loans, $40.7 million of industrial
revenue bond loans and $156.4 million of commercial real estate related loans.
All other loans covered under the loss sharing arrangement are included in the
loan portfolio and totaled $450.7 million at December 31, 1993. Net charge-offs
of $8.6 million, representing the Corporation's share of losses on the
segregated asset pool, were recognized subsequent to the April 23, 1993
acquisition. The valuation allowance represents the Corporation's share of
estimated losses upon ultimate liquidation of the portfolio. The Corporation's
primary purpose in managing a portfolio of this nature is to provide ongoing
collection and control activities on behalf of the FDIC. Accordingly, these
assets do not represent loans made in the ordinary course of business and, due
to the underlying nature of this liquidating asset pool, are excluded from the
Corporation's nonperforming asset statistics. At December 31, 1993, $230.9
million of segregated assets were accorded classification treatment consistent
with nonaccrual reporting, $.6 million represented foreclosed property, and the
balance of $35.1 million was past due 90 days or more. The Corpora-
36 Boatmen's Bancshares, Inc.
<PAGE> 22
- -------------------------------------------------------------------------------
tion's operating results and cash flow position are not expected to be
materially affected by the ongoing collection activities associated with
managing the loans subject to the loss sharing arrangement. Segregated asset
income totaled $7.4 million in 1993.
A summary of activity regarding segregated assets is provided in Table 29.
<TABLE>
- ------------------------------------------------------------------------------------
Table 29: Segregated Assets
<CAPTION>
Principal Allowance Principal
Year ended December 31, 1993 balance for losses balance, net
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Segregated assets identified upon acquisition $312.0 $27.0 $285.0
Charge-offs (52.1) (10.4)
Recoveries 1.8
Transfers to segregated assets 36.5
Payments on segregated assets (29.8)
- ------------------------------------------------------------------------------------
Segregated assets, end of period $266.6 $18.4 $248.2
- ------------------------------------------------------------------------------------
</TABLE>
CAPITAL RESOURCES
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
Table 30: Capital Structure
<CAPTION>
December 31 (in millions) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Long-term debt $ 486.3 $ 393.2 $ 315.7 $ 284.5 $ 295.1
Stockholders' equity 2,133.3 1,861.2 1,680.2 1,463.4 1,395.7
- --------------------------------------------------------------------------------------------------------------------
Total capitalization $2,619.6 $2,254.4 $1,995.9 $1,747.9 $1,690.8
- --------------------------------------------------------------------------------------------------------------------
Tangible equity $1,858.0 $1,655.3 $1,496.9 $1,295.5 $1,253.0
- --------------------------------------------------------------------------------------------------------------------
Ratios
- --------------------------------------------------------------------------------------------------------------------
Equity/assets 8.00% 7.67% 7.30% 6.42% 7.14%
Tangible equity/assets 7.04 6.88 6.56 5.73 6.46
Long-term debt as % of total capitalization 18.56 17.44 15.82 16.28 17.45
Double leverage 110.37 110.84 108.78 113.32 114.48
Dividends paid, in thousands (for the year):
Preferred $ 86 $ 88 $ 91 $ 100 $ 2,854
Common 112,129 86,130 80,996 84,976 74,074
Total dividends as % of net income 35.4% 37.7% 47.4% 58.7% 46.9%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Corporation continues to rank among the most strongly capitalized bank
holding companies in the country and the Corporation's strong capital
position and overall financial strength provide a good base for future asset
growth. The Corporation continued to strengthen its capital position in 1993
through record earnings, the conversion of debt to equity, and the issuance
of $100 million of subordinated debentures. The cornerstone of the
Corporation's capital structure is its common equity, which represents 81.4%
of total capitalization at December 31, 1993. At December 31, 1993,
stockholders' equity totaled $2.1 billion, an increase of 14.6% from 1992.
The equity to asset ratio increased to 8.00% compared to 7.67% at December
31, 1992, and 7.30% at December 31, 1991. In the third quarter of 1992, the
Corporation filed two shelf registration statements with the Securities and
Exchange Commission providing for the issuance of up to $200 million of
subordinated debt securities and $200 million of preferred stock. On October
1, 1992, the Corporation issued $100 million of 7 5/8% subordinated notes due
October 1, 2004, and the final tranche under the debt shelf registration was
completed on March 18, 1993 with the issuance of $100 million of 6 3/4%
subordinated debentures. Proceeds from the debt offerings were used
primarily to fund acquisitions and for other corporate purposes, such as
retirement of higher-rate debt.
In 1993, the Corporation exercised its option to prepay approximately $14
million of convertible subordinated debt at its Iowa subsidiary, resulting
in the issuance of approximately 1.0 million shares of common stock as
noteholders elected to convert debt to equity prior to the prepayment date.
Also in 1993, the Corporation called, at par, approximately $10.0 million of
10% convertible subordinated debentures at Amarillo.
An important measure of capital adequacy of a banking institution is its
risk-based capital ratios, which represent the primary capital standards for
regulatory purposes. The Corporation's risk-based capital ratios of 10.67%
for Tier I and 14.42% for total capital substantially exceed the regulatory
required minimums. An additional measure of capital, referred to as the Tier
I leverage ratio, places a constraint on the degree to which a banking
institution can leverage its equity capital base. At December 31, 1993, the
Corporation's Tier I leverage ratio was 6.93%, well in excess of required
minimums.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
established rating categories for all FDIC insured institutions ranging from
"well capitalized" to "critically undercapitalized." The ratings combine
capital measures in addition to the level of regulatory supervision received
by an individual financial institution. At December 31, 1993, all of the
Corporation's banking subsidiaries met the capital criteria required by the
well capitalized definition. FDICIA mandated other changes to risk-based
capital rules that may become effective in 1994, notably the requirement to
incorporate interest rate risk into the risk-based capital computation. As
proposed, this change is not expected to have a material effect on the
Corporation's capital requirements. The Federal Reserve Board and other
regulatory agencies are proposing other amendments to existing risk-based
and leverage capital guidelines to include the unrealized
appreciation/depreciation on available for sale
1993 Annual Report 37
<PAGE> 23
FINANCIAL COMMENTARY
- -------------------------------------------------------------------------------
securities in Tier I capital. The Corporation believes it would be more
appropriate to exclude the unrealized appreciation/depreciation from Tier I as
inclusion could introduce volatility in capital levels which is inconsistent
with the managerial concept of longer-term capital planning. At December 31,
1993, had the Corporation included the unrealized net appreciation in Tier I
capital, the Tier I risk-based capital ratio would have been 10.92% and the
Tier I leverage ratio would have been 7.08%.
A two-for-one stock split, effected as a 100% stock dividend, was declared
on August 10, 1993 to stockholders of record at the close of business on
August 31, 1993 and paid on October 1, 1993.
[Risk-Based Capital Graph]
<TABLE>
- -------------------------------------------------------------------------------
Table 31: Intangible Assets
<CAPTION>
December 31 (in millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Goodwill--Parent Company $ 95.3 $100.8 $106.3
- -------------------------------------------------------------------------------
Subsidiaries:
Goodwill 118.3 65.2 41.8
Core deposit premium 53.3 34.6 32.6
Credit card premium 3.5 1.5 1.9
Purchased mortgage servicing rights 4.9 3.8 .7
- -------------------------------------------------------------------------------
180.0 105.1 77.0
- -------------------------------------------------------------------------------
Total intangible assets $275.3 $205.9 $183.3
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------
Table 32:Risk-Based Capital
<CAPTION>
December 31 (in millions) 1993 1992 1991
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier I capital:
Stockholders' equity $ 2,133.3 $ 1,861.2 $ 1,680.2
Minority interest .7 1.0 1.4
Intangible assets:
Goodwill (213.6) (166.0) (148.1)
Core deposit premium (53.3) (34.6) (32.6)
Unrealized net appreciation,
available for sale securities (42.3)
- ---------------------------------------------------------------------------------
Total Tier I 1,824.8 1,661.6 1,500.9
- ---------------------------------------------------------------------------------
Tier II capital:
Allowable reserve for loan losses 215.3 199.9 185.8
Qualifying long-term debt 425.2 337.0 269.1
- ---------------------------------------------------------------------------------
Total Tier II 640.5 536.9 454.9
- ---------------------------------------------------------------------------------
Total capital $ 2,465.3 $ 2,198.5 $ 1,955.8
- ---------------------------------------------------------------------------------
Risk-adjusted assets $17,098.0 $15,988.4 $14,855.0
- ---------------------------------------------------------------------------------
Risk-based capital ratios:
Tier I 10.67% 10.39% 10.10%
- ---------------------------------------------------------------------------------
Total 14.42% 13.75% 13.17%
- ---------------------------------------------------------------------------------
Tier I Leverage ratio 6.93% 6.90% 6.58%
- ---------------------------------------------------------------------------------
</TABLE>
38 Boatmen's Bancshares, Inc.
<PAGE> 24
- -------------------------------------------------------------------------------
QUARTERLY DATA
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Table 33: Summary of Fourth Quarter Earnings
<CAPTION>
FOURTH QUARTER
- ----------------------------------------------------------------------------------------------------------------------
(in millions) 1993 1992 % change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net interest income $248.7 $229.1 8.6%
Provision for loan losses 11.9 55.2 (78.6)
- ----------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 236.8 173.9 36.2
Noninterest income 131.9 116.9 12.8
Noninterest expense 253.8 246.4 3.0
- ----------------------------------------------------------------------------------------------------------------------
Income before income taxes 114.9 44.4 158.8
Income tax expense 37.8 12.3 206.3
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 77.1 $ 32.1 140.5%
- ----------------------------------------------------------------------------------------------------------------------
Net income per share $.75 $.32 134.4%
- ----------------------------------------------------------------------------------------------------------------------
Dividends declared per share $.31 $.28 10.7%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Net income in the fourth quarter totaled $77.1 million, an increase of
140.5% over the fourth quarter of 1992. Net income per share was $.75, an
increase of 134.4%. Both periods were impacted by one-time merger-related
charges from pooling acquisitions which totaled $3.8 million (after-tax) in
the fourth quarter of 1993 and $32.6 million (after-tax) in the same period
of 1992. Excluding the acquisition-related charges, net income in the fourth
quarter of 1993 totaled $80.9 million compared to $64.6 million in the
year-ago period, an increase of 25.0%. On a per share basis, net income
would have been $.79 compared to $.64 in the fourth quarter of 1992. This
increase was consistent with full-year results and reflected a higher level
of net interest income and noninterest income, as well as a lower provision
for loan losses, which was offset in part by higher noninterest expense.
Net interest income increased 8.6% over the fourth quarter of 1992
primarily due to an increase in earning assets which was partially offset by a
decline in the net interest margin. Average earning assets increased 9.4%
primarily due to purchase acquisitions. The net interest margin was 4.45%, down
slightly from 4.49% a year ago and 4.58% in the third quarter of 1993. The
contraction in the net interest margin was primarily due to reinvesting
of maturing securities into lower yielding securities resulting in a
repricing of these assets at a slightly faster pace than the repricing of
interest bearing deposits.
The provision for loan losses declined to $11.9 million in the fourth
quarter of 1993 compared to $55.2 million a year ago when the provision
included a $33.3 million charge to conform Sunwest to the Corporation's loan
reserve policies. Excluding the $33.3 million special provision at Sunwest,
the provision for loan losses decreased 45% from the fourth quarter of last
year due to the aforementioned sustained improvement in credit quality
experienced throughout 1993. Net charge-offs in the fourth quarter declined
to $12.5 million compared to $46.8 million in the same period of last year
when net charge-offs included approximately $28 million of charge-offs at
Sunwest to conform policies to the Corporation's loan valuation methods.
Noninterest income increased 12.8% over the fourth quarter of last year,
reflecting continued growth in all major categories such as trust fees,
service charge income, credit card income, and investment banking profits
and fees. Excluding the effect of purchase acquisitions and securities
gains, noninterest income increased 9.1%.
Noninterest expense totaled $253.8 million, an increase of 3.0% over the
fourth quarter of 1992. Noninterest expense in the fourth quarter of 1993
and 1992 included nonrecurring merger-related expenses stemming from two
pooling acquisitions. Amarillo merger-related expenses in the fourth quarter
of 1993 totaled $4.7 million and the Sunwest acquisition-related expenses
totaled approximately $18.2 million. In both acquisitions, these expenses
consisted primarily of investment banking fees, compensation-related matters
and fixed asset write-offs. The Sunwest acquisition also included foreclosed
property writedowns of $7.0 million. Excluding the merger-related expenses
from pooling acquisitions and the impact of purchase acquisitions,
noninterest expense increased 4.2% in the fourth quarter of 1993.
1993 Annual Report 39
<PAGE> 25
<TABLE>
CONSOLIDATED QUARTERLY EARNINGS TREND
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1993
- --------------------------------------------------------------------------------------------------------------------------
(in thousands) FOURTH QUARTER Third Quarter Second Quarter First Quarter
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $289,669 $289,148 $281,000 $267,093
Interest on short-term investments 257 405 509 826
Interest on Federal funds sold and securities purchased
under resale agreements 2,380 1,936 3,161 5,884
Interest on held to maturity securities
Taxable 92,383 96,537 97,569 94,789
Tax-exempt 13,907 14,366 14,745 15,363
- --------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 106,290 110,903 112,314 110,152
Interest on available for sale securities 7,169 7,258 7,360 7,270
Interest on trading securities 1,063 429 493 585
- --------------------------------------------------------------------------------------------------------------------------
Total interest income 406,828 410,079 404,837 391,810
- --------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 128,331 133,406 135,096 132,011
Interest on Federal funds purchased and other short-term
borrowings 19,126 16,014 12,688 14,539
Interest on capital lease obligation 965 964 965 964
Interest on long-term debt 9,704 9,542 9,391 8,268
- --------------------------------------------------------------------------------------------------------------------------
Total interest expense 158,126 159,926 158,140 155,782
- --------------------------------------------------------------------------------------------------------------------------
Net interest income 248,702 250,153 246,697 236,028
Provision for loan losses 11,853 13,040 15,918 19,373
- --------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 236,849 237,113 230,779 216,655
- --------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 37,895 38,723 37,952 35,010
Service charges 41,250 39,173 37,770 35,008
Credit card 12,857 12,663 11,602 10,157
Investment banking profits and fees 8,657 9,546 8,895 8,502
Securities gains, net 1,753 250 736 68
Other 29,481 29,541 25,387 20,375
- --------------------------------------------------------------------------------------------------------------------------
Total noninterest income 131,893 129,896 122,342 109,120
- --------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 119,147 120,336 115,763 111,234
Net occupancy 17,140 19,072 16,913 16,304
Equipment 21,132 19,704 18,589 18,102
FDIC insurance 11,381 11,232 10,803 10,969
Credit card 9,981 9,400 8,700 7,124
Foreclosed property costs, net (1,235) 83 (2,048) (1,590)
Other 76,255 68,475 64,185 53,270
- --------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 253,801 248,302 232,905 215,413
- --------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 114,941 118,707 120,216 110,362
Income tax expense 37,819 37,379 40,493 31,116
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 77,122 $ 81,328 $ 79,723 $ 79,246
- --------------------------------------------------------------------------------------------------------------------------
Net income per share $.75 $.78 $.77 $.77
- --------------------------------------------------------------------------------------------------------------------------
Dividends declared per share $.31 $.31 $.28 $.28
- --------------------------------------------------------------------------------------------------------------------------
Returns
Return on assets 1.18% 1.28% 1.29% 1.34%
Return on total equity 14.91 16.15 16.26 16.75
Return on common equity 14.90 16.15 16.25 16.75
- --------------------------------------------------------------------------------------------------------------------------
Previously reported data for Boatmen's Bancshares, Inc.,
prior to restatement for the acquisition accounted for
as a pooling of interests:
- --------------------------------------------------------------------------------------------------------------------------
Net income $77,946 $76,206 $70,292
- --------------------------------------------------------------------------------------------------------------------------
Net income per share $.80 $.78 $.72
- --------------------------------------------------------------------------------------------------------------------------
40 Boatmen's Bancshares, Inc.
<PAGE> 26
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1992
- --------------------------------------------------------------------------------------------------------------------------
(in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter
- --------------------------------------------------------------------------------------------------------------------------
Interest income
Interest and fees on loans $268,091 $270,975 $280,070 $276,317
Interest on short-term investments 1,080 407 412 749
Interest on Federal funds sold and securities purchased
under resale agreements 8,651 12,195 13,018 15,495
Interest on held to maturity securities
Taxable 97,113 100,261 102,159 99,249
Tax-exempt 15,834 16,038 16,747 17,076
- --------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 112,947 116,299 118,906 116,325
Interest on available for sale securities
Interest on trading securities 722 750 677 1,163
- --------------------------------------------------------------------------------------------------------------------------
Total interest income 391,491 400,626 413,083 410,049
- --------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 138,303 151,237 166,178 173,937
Interest on Federal funds purchased and other short-term
borrowings 14,554 17,000 18,945 22,849
Interest on capital lease obligation 982 983 982 982
Interest on long-term debt 8,541 7,308 7,309 7,443
- --------------------------------------------------------------------------------------------------------------------------
Total interest expense 162,380 176,528 193,414 205,211
- --------------------------------------------------------------------------------------------------------------------------
Net interest income 229,111 224,098 219,669 204,838
Provision for loan losses 55,269 26,062 27,604 27,691
- --------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 173,842 198,036 192,065 177,147
- --------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 35,325 34,844 34,113 33,701
Service charges 35,965 34,415 32,051 31,137
Credit card 10,314 9,773 9,664 8,666
Investment banking profits and fees 8,234 8,278 7,673 7,568
Securities gains, net 4,713 16,976 5,113 5,146
Other 22,380 19,216 19,914 16,903
- --------------------------------------------------------------------------------------------------------------------------
Total noninterest income 116,931 123,502 108,528 103,121
- --------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 107,301 105,241 103,785 99,951
Net occupancy 16,972 17,210 15,654 14,641
Equipment 19,130 17,332 16,568 15,725
FDIC insurance 10,659 10,391 10,485 10,084
Credit card 7,338 6,302 6,204 5,708
Foreclosed property costs, net 10,000 4,531 6,415 5,392
Other 74,963 51,197 52,304 50,445
- --------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 246,363 212,204 211,415 201,946
- --------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 44,410 109,334 89,178 78,322
Income tax expense 12,347 33,355 26,495 20,321
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 32,063 $ 75,979 $ 62,683 $ 58,001
- --------------------------------------------------------------------------------------------------------------------------
Net income per share $.32 $.76 $.63 $.58
- --------------------------------------------------------------------------------------------------------------------------
Dividends declared per share $.28 $.28 $.27 $.27
- --------------------------------------------------------------------------------------------------------------------------
Returns
Return on assets .54% 1.31% 1.09% 1.03%
Return on total equity 7.00 16.98 14.40 13.64
Return on common equity 7.00 16.97 14.39 13.64
- --------------------------------------------------------------------------------------------------------------------------
Previously reported data for Boatmen's Bancshares, Inc.,
prior to restatement for the acquisition accounted for
as a pooling of interests:
- --------------------------------------------------------------------------------------------------------------------------
Net income $28,227 $72,822 $59,152 $55,292
- --------------------------------------------------------------------------------------------------------------------------
Net income per share $.29 $.76 $.62 $.58
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
1993 Annual Report 41
<PAGE> 27
<TABLE>
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1993
- ------------------------------------------------------------------------------------------------------------------------------------
FOURTH QUARTER Third Quarter Second Quarter
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME/ YIELDS/ Income/ Yields/ Income/ Yields/
Assets BALANCE EXPENSE RATES Balance Expense Rates Balance Expense Rates
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $14,666.2 $291.6 7.95% $14,373.7 $290.5 8.09% $13,958.8 $282.5 8.10%
Short-term investments 31.2 .2 3.29 48.7 .4 3.33 60.7 .5 3.36
Federal funds sold and securities
purchased under resale agreements 297.9 2.4 3.20 245.3 1.9 3.16 407.6 3.2 3.10
Held to maturity securities:
Taxable 6,799.5 92.4 5.43 6,652.5 96.5 5.80 6,256.2 97.6 6.24
Tax-exempt 841.0 21.0 10.00 844.5 22.3 10.55 865.0 21.8 10.10
- -----------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 7,640.5 113.4 5.94 7,497.0 118.8 6.34 7,121.2 119.4 6.71
Available for sale securities 469.2 7.2 6.11 479.9 7.3 6.05 489.3 7.3 6.02
Trading securities 85.7 1.1 5.13 35.9 .5 5.30 42.9 .6 5.03
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets 23,190.7 415.9 7.17 22,680.5 419.4 7.40 22,080.5 413.5 7.49
Less reserve for loan losses (344.9) (339.3) (329.2)
Cash and due from banks 1,720.4 1,619.6 1,613.5
All other assets 1,466.7 1,479.4 1,317.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $26,032.9 $25,440.2 $24,682.6
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Retail savings deposits and
interest-bearing transaction
accounts $ 8,601.0 $ 51.3 2.38% $ 8,470.3 $ 52.3 2.47% $ 8,226.1 $ 50.9 2.48%
Time deposits 7,538.8 77.0 4.09 7,827.3 81.1 4.15 7,922.8 84.2 4.25
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 16,139.8 128.3 3.18 16,297.6 133.4 3.27 16,148.9 135.1 3.35
Federal funds purchased and
other short-term borrowings 2,579.6 19.1 2.97 2,148.3 16.0 2.98 1,740.7 12.7 2.92
Capital lease obligation 39.3 1.0 9.72 39.5 1.0 9.72 39.7 .9 9.72
Long-term debt 487.8 9.7 7.96 471.4 9.5 8.10 475.2 9.4 7.90
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 19,246.5 158.1 3.29 18,956.8 159.9 3.37 18,404.5 158.1 3.44
Demand deposits 4,560.9 4,298.5 4,142.0
All other liabilities 154.7 169.8 173.3
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 23,962.1 23,425.1 22,719.8
Redeemable preferred stock 1.2 1.2 1.2
Total stockholders' equity 2,069.6 2,013.9 1,961.6
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $26,032.9 $25,440.2 $24,682.6
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.88% 4.03% 4.05%
Effect of noninterest-bearing funds .57 .55 .58
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $257.8 4.45% $259.5 4.58% $255.4 4.63%
- -----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans are included in
average balances and income on such
loans is recognized on a cash basis.
Interest income and yields are
presented on a fully-taxable
equivalent basis using the Federal
statutory income tax rate, net of
nondeductible interest expense. Such
adjustments by earning asset category
are as follows:
Loans $1.9 $1.4 $1.5
Tax-exempt held to maturity securities 7.1 7.9 7.1
Trading securities .1 .1
- ------------------------------------------------------------------------------------------------------------------------------------
Total $9.1 $9.3 $8.7
- -----------------------------------------------------------------------------------------------------------------------------------
42 Boatmen's Bancshares, Inc.
<PAGE> 28
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1993
- ------------------------------------------------------------------------------------------------------------------------------------
First Quarter Fourth Quarter
- -----------------------------------------------------------------------------------------------------------------------------------
Income/ Yields/ Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income $13,127.9 $268.2 8.17% $12,992.9 $269.3 8.29%
Short-term investments 100.4 .8 3.29 126.7 1.1 3.41
Federal funds sold and securities
purchased under resale agreements 776.1 5.9 3.03 1,092.3 8.7 3.17
Held to maturity securities:
Taxable 5,865.4 94.8 6.46 6,018.7 97.1 6.45
Tax-exempt 890.7 22.7 10.20 915.3 23.3 10.18
- -----------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 6,756.1 117.5 6.96 6,934.0 120.4 6.95
Available for sale securities 497.0 7.3 5.85
Trading securities 49.4 .6 5.09 48.3 .7 5.98
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets 21,306.9 400.3 7.51 21,194.2 400.2 7.55
Less reserve for loan losses (310.0) (300.8)
Cash and due from banks 1,547.3 1,566.7
All other assets 1,144.4 1,147.7
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $23,688.6 $23,607.8
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Retail savings deposits and
interest-bearing transaction
accounts $ 7,808.2 $ 49.7 2.55% $ 7,529.2 $ 49.6 2.64%
Time deposits 7,550.9 82.3 4.36 7,732.4 88.7 4.59
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 15,359.1 132.0 3.44 15,261.6 138.3 3.62
Federal funds purchased and
other short-term borrowings 1,902.0 14.5 3.06 1,857.4 14.6 3.13
Capital lease obligation 39.9 1.0 9.72 40.2 1.0 9.72
Long-term debt 389.9 8.3 8.48 397.6 8.5 8.59
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 17,690.9 155.8 3.52 17,556.8 162.4 3.70
Demand deposits 3,923.7 4,026.1
All other liabilities 180.5 192.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 21,795.1 21,775.7
Redeemable preferred stock 1.2 1.2
Total stockholders' equity 1,892.3 1,830.9
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $23,688.6 $23,607.8
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.99% 3.85%
Effect of noninterest-bearing funds .60 .64
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $244.5 4.59% $237.8 4.49%
- -----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans are included in
average balances and income on such
loans is recognized on a cash basis.
Interest income and yields are
presented on a fully-taxable
equivalent basis using the Federal
statutory income tax rate, net of
nondeductible interest expense. Such
adjustments by earning asset category
are as follows:
Loans $1.1 $1.2
Tax-exempt held to maturity securities 7.4 7.5
Trading securities
- ------------------------------------------------------------------------------------------------------------------------------------
Total $8.5 $8.7
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1992
- ------------------------------------------------------------------------------------------------------------------------------------
Third Quarter Second Quarter First Quarter
- -----------------------------------------------------------------------------------------------------------------------------------
Income/ Yields/ Income/ Yields/ Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates Balance Expense Rates
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income $12,819.3 $272.2 8.49% $12,824.6 $281.4 8.78% $12,352.0 $277.6 8.99%
Short-term investments 43.9 .4 3.71 40.4 .4 4.08 66.5 .7 4.51
Federal funds sold and securities
purchased under resale agreements 1,439.7 12.2 3.39 1,358.4 13.0 3.83 1,530.2 15.5 4.05
Held to maturity securities:
Taxable 5,623.7 100.3 7.13 5,519.2 102.2 7.40 5,149.4 99.2 7.71
Tax-exempt 926.9 23.5 10.16 964.6 24.5 10.18 985.6 25.1 10.18
- -----------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 6,550.6 123.8 7.56 6,483.8 126.7 7.82 6,135.0 124.3 8.11
Available for sale securities
Trading securities 49.5 .7 6.06 43.3 .7 6.25 76.6 1.3 6.60
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets 20,903.0 409.3 7.83 20,750.5 422.2 8.14 20,160.3 419.4 8.32
Less reserve for loan losses (284.2) (279.2) (261.8)
Cash and due from banks 1,450.0 1,450.0 1,524.0
All other assets 1,148.8 1,185.6 1,141.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $23,217.6 $23,106.9 $22,564.3
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Retail savings deposits and
interest-bearing transaction
accounts $ 7,239.9 $ 53.2 2.94% $ 7,183.2 $ 61.2 3.41% $ 6,781.2 $ 62.6 3.69%
Time deposits 7,931.9 98.0 4.94 8,048.1 105.0 5.22 7,773.2 111.3 5.73
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 15,171.8 151.2 3.99 15,231.3 166.2 4.36 14,554.4 173.9 4.78
Federal funds purchased and
other short-term borrowings 2,029.5 17.0 3.35 2,011.6 18.9 3.77 2,290.7 22.9 3.99
Capital lease obligation 40.3 1.0 9.72 40.4 1.0 9.72 40.6 1.0 9.72
Long-term debt 305.3 7.3 9.57 308.8 7.3 9.47 313.1 7.4 9.51
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 17,546.9 176.5 4.02 17,592.1 193.4 4.40 17,198.8 205.2 4.77
Demand deposits 3,698.1 3,591.7 3,475.9
All other liabilities 181.2 180.6 187.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 21,426.2 21,364.4 20,862.2
Redeemable preferred stock 1.3 1.3 1.3
Total stockholders' equity 1,790.1 1,741.2 1,700.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $23,217.6 $23,106.9 $22,564.3
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.81% 3.74% 3.55%
Effect of noninterest-bearing funds .64 .67 .70
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $232.8 4.45% $228.8 4.41% $214.2 4.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans are included in
average balances and income on such
loans is recognized on a cash basis.
Interest income and yields are
presented on a fully-taxable
equivalent basis using the Federal
statutory income tax rate, net of
nondeductible interest expense. Such
adjustments by earning asset category
are as follows:
Loans $1.2 $1.3 $1.3
Tax-exempt held to maturity securities 7.5 7.8 8.0
Trading securities .1
- ------------------------------------------------------------------------------------------------------------------------------------
Total $8.7 $9.1 $9.4
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1993 Annual Report 43
<PAGE> 29
<TABLE>
CONSOLIDATED EARNINGS TREND
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $1,126,910 $1,095,453 $1,178,849
Interest on short-term investments 1,997 2,648 7,736
Interest on Federal funds sold and securities purchased
under resale agreements 13,361 49,359 78,400
Interest on held to maturity securities
Taxable 381,278 398,782 372,218
Tax-exempt 58,381 65,695 69,677
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 439,659 464,477 441,895
Interest on available for sale securities 29,057
Interest on trading securities 2,570 3,312 7,812
Interest on receivable due from Resolution Trust Corporation 28,955
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,613,554 1,615,249 1,743,647
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on savings deposits 53,431 54,062 62,335
Interest on interest-bearing transaction accounts 150,729 171,582 214,641
Interest on time deposits 324,684 404,011 573,110
Interest on Federal funds purchased and other short-term borrowings 62,367 73,348 119,787
Interest on capital lease obligation 3,858 3,929 3,994
Interest on long-term debt 36,905 30,601 27,248
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 631,974 737,533 1,001,115
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 981,580 877,716 742,532
Provision for loan losses 60,184 136,626 114,658
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 921,396 741,090 627,874
- -----------------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 149,580 137,983 120,806
Service charges 153,201 133,568 105,816
Credit card 47,279 38,417 29,848
Investment banking profits and fees 35,600 31,753 20,892
Securities gains, net 2,807 31,948 3,852
Other 104,784 78,413 74,490
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 493,251 452,082 355,704
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 466,480 416,278 361,628
Net occupancy 69,429 64,477 55,041
Equipment 77,527 68,755 59,454
FDIC insurance 44,385 41,619 35,640
Credit card 35,205 25,552 17,129
Other 257,395 255,247 223,475
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 950,421 871,928 752,367
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 464,226 321,244 231,211
Income tax expense 146,807 92,518 60,013
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 317,419 $ 228,726 $ 171,198
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per share $3.07 $2.29 $1.77
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends declared per share $1.18 $1.10 $1.07
- ------------------------------------------------------------------------------------------------------------------------------------
Returns
Return on assets 1.27% .99% .79%
Return on equity 15.99 12.95 10.78
Return on common equity 15.99 12.95 10.78
- -----------------------------------------------------------------------------------------------------------------------------------
44 Boatmen's Bancshares, Inc.
<PAGE> 30
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(in thousands) 1990 1989 1988
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income
Interest and fees on loans $1,260,389 $1,265,182 $1,137,213
Interest on short-term investments 6,249 6,496 26,159
Interest on Federal funds sold and securities purchased
under resale agreements 80,311 111,730 106,337
Interest on held to maturity securities
Taxable 312,369 247,023 231,030
Tax-exempt 74,245 70,359 66,069
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 386,614 317,382 297,099
Interest on available for sale securities
Interest on trading securities 4,029 3,854 3,826
Interest on receivable due from Resolution Trust Corporation 5,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,742,951 1,704,644 1,570,634
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on savings deposits 48,330 48,325 52,230
Interest on interest-bearing transaction accounts 208,649 214,972 207,117
Interest on time deposits 603,598 582,781 496,038
Interest on Federal funds purchased and other short-term borrowings 194,418 195,436 156,060
Interest on capital lease obligation 4,042 4,106 4,155
Interest on long-term debt 28,113 29,421 28,216
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,087,150 1,075,041 943,816
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 655,801 629,603 626,818
Provision for loan losses 119,448 93,248 111,670
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 536,353 536,355 515,148
- -----------------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 107,469 106,792 91,753
Service charges 85,430 76,872 74,571
Credit card 28,790 27,064 27,800
Investment banking profits and fees 11,925 9,722 11,570
Securities gains, net 3,221 250 1,995
Other 60,167 56,199 55,861
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 297,002 276,899 263,550
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 329,906 315,834 324,590
Net occupancy 46,827 45,042 46,133
Equipment 57,487 56,729 56,459
FDIC insurance 17,371 11,218 12,428
Credit card 16,412 16,385 15,720
Other 183,959 160,218 209,244
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 651,962 605,426 664,574
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 181,393 207,828 114,124
Income tax expense 36,363 43,695 15,939
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 145,030 $ 164,133 $ 98,185
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per share $1.58 $1.81 $1.09
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends declared per share $1.06 $1.03 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Returns
Return on assets .73% .86% .52%
Return on equity 10.13 11.98 7.47
Return on common equity 10.13 12.06 7.44
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(in thousands) % change 1993 % change 1992 5-year annual compound 1989-1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans 2.9% (7.1)% (.2)%
Interest on short-term investments (24.6) (65.8) (40.2)
Interest on Federal funds sold and securities purchased
under resale agreements (72.9) (37.0) (34.0)
Interest on held to maturity securities
Taxable (4.4) 7.1 10.5
Tax-exempt (11.1) (5.7) (2.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities (5.3) 5.1 8.2
Interest on available for sale securities
Interest on trading securities (22.4) (57.6) (7.6)
Interest on receivable due from Resolution Trust
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income (.1) (7.4) .5
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on savings deposits (1.2) (13.3) .5
Interest on interest-bearing transaction accounts (12.2) (20.1) (6.2)
Interest on time deposits (19.6) (29.5) (8.1)
Interest on Federal funds purchased and other
short-term borrowings (15.0) (38.8) (16.8)
Interest on capital lease obligation (1.8) (1.6) (1.5)
Interest on long-term debt 20.6 12.3 5.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense (14.3) (26.3) (7.7)
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 11.8 18.2 9.4
Provision for loan losses (55.9) 19.2 (11.6)
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 24.3 18.0 12.3
- -----------------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 8.4 14.2 10.3
Service charges 14.7 26.2 15.5
Credit card 23.1 28.7 11.2
Investment banking profits and fees 12.1 52.0 25.2
Securities gains, net (91.2) 729.4 7.1
Other 33.6 5.3 13.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 9.1 27.1 13.4
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 12.1 15.1 7.5
Net occupancy 7.7 17.1 8.5
Equipment 12.8 15.6 6.5
FDIC insurance 6.6 16.8 29.0
Credit card 37.8 49.2 17.5
Other .8 14.2 4.2
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 9.0 15.9 7.4
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 44.5 38.9 32.4
Income tax expense 58.7 54.2 55.9
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 38.8% 33.6% 26.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per share 34.1% 29.4% 23.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends declared per share 7.3% 2.8% 3.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Returns
Return on assets
Return on equity
Return on common equity
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1993 Annual Report 45
<PAGE> 31
<TABLE>
CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME/ YIELDS/ Income/ Yields/ Income/ Yields/
Assets BALANCE EXPENSE RATES Balance Expense Rates Balance Expense Rates
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $14,036.8 $1,132.8 8.07% $12,748.0 $1,100.4 8.63% $11,888.2 $1,185.6 9.97%
Short-term investments 60.0 2.0 3.33 69.5 2.6 3.81 109.1 7.7 7.09
Federal funds sold and securities
purchased under resale agreements 429.9 13.4 3.11 1,354.7 49.4 3.64 1,359.2 78.4 5.77
Held to maturity securities:
Taxable 6,396.7 381.3 5.96 5,579.1 398.8 7.15 4,492.3 372.2 8.29
Tax-exempt 860.1 87.8 10.21 947.9 96.5 10.18 992.4 101.3 10.21
- -----------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 7,256.8 469.1 6.46 6,527.0 495.3 7.59 5,484.7 473.5 8.63
Available for sale securities 483.7 29.0 6.01
Trading securities 53.6 2.8 5.12 54.4 3.4 6.27 110.5 8.0 7.25
Receivable due from
Resolution Trust Corporation 357.9 29.0 8.09
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 22,320.8 1,649.1 7.39 20,753.6 1,651.1 7.96 19,309.6 1,782.2 9.23
Less reserve for loan losses (331.0) (281.6) (243.9)
Cash and due from banks 1,625.7 1,497.7 1,412.9
Property and equipment 443.2 417.9 386.1
All other assets 910.1 738.1 702.7
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $24,968.8 $23,125.7 $21,567.4
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- -----------------------------------------------------------------------------------------------------------------------------------
Savings deposits $ 2,014.6 $ 53.4 2.65% $ 1,628.2 $ 54.1 3.32% $ 1,283.0 $ 62.3 4.86%
Interest-bearing transaction accounts 6,264.5 150.7 2.41 5,556.3 171.6 3.09 4,455.4 214.6 4.82
Time deposits 7,710.2 324.7 4.21 7,871.1 404.0 5.13 8,444.8 573.2 6.79
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 15,989.3 528.8 3.31 15,055.6 629.7 4.18 14,183.2 850.1 5.99
Federal funds purchased and
other short-term borrowings 2,094.7 62.3 2.98 2,046.7 73.3 3.58 2,125.0 119.8 5.64
Capital lease obligation 39.6 3.9 9.72 40.4 3.9 9.72 41.0 4.0 9.72
Long-term debt 456.4 36.9 8.09 331.3 30.6 9.24 280.7 27.2 9.71
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 18,580.0 631.9 3.40 17,474.0 737.5 4.22 16,629.9 1,001.1 6.02
Demand deposits 4,233.2 3,698.9 3,150.9
All other liabilities 169.5 185.5 197.6
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 22,982.7 21,358.4 19,978.4
Redeemable preferred stock 1.2 1.3 1.3
Total stockholders' equity 1,984.9 1,766.0 1,587.7
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $24,968.8 $23,125.7 $21,567.4
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.99% 3.74% 3.21%
Effect of noninterest-bearing funds .57 .66 .84
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $1,017.2 4.56% $ 913.6 4.40% $ 781.1 4.05%
- -----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans are included in
average balances and income on such
loans is recognized on a cash basis.
Interest income and yields are
presented on a fully-taxable
equivalent basis using the Federal
statutory income tax rate, net of
nondeductible interest expense. Such
adjustments by earning asset category
are as follows:
Loans $ 5.9 $ 5.0 $ 6.8
Tax-exempt held to maturity securities 29.5 30.8 31.6
Trading securities .2 .1 .2
- -----------------------------------------------------------------------------------------------------------------------------------
Total $35.6 $35.9 $38.6
- -----------------------------------------------------------------------------------------------------------------------------------
46 Boatmen's Bancshares, Inc.
<PAGE> 32
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------------
Income/ Yields/ Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income $11,706.4 $1,269.4 10.84% $11,462.6 $1,278.7 11.16%
Short-term investments 72.9 6.3 8.57 70.9 6.5 9.16
Federal funds sold and securities
purchased under resale agreements 982.8 80.3 8.17 1,212.8 111.7 9.21
Held to maturity securities:
Taxable 3,669.6 312.4 8.51 3,012.4 247.0 8.20
Tax-exempt 1,055.0 106.9 10.14 1,002.8 103.7 10.34
- -----------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 4,724.6 419.3 8.88 4,015.2 350.7 8.73
Available for sale securities
Trading securities 46.4 4.1 8.90 43.7 4.0 9.28
Receivable due from
Resolution Trust Corporation 67.1 5.4 7.99
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 17,600.2 1,784.8 10.14 16,805.2 1,751.6 10.42
Less reserve for loan losses (221.8) (227.2)
Cash and due from banks 1,401.8 1,522.0
Property and equipment 369.2 362.6
All other assets 582.9 587.6
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $19,732.3 $19,050.2
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- -----------------------------------------------------------------------------------------------------------------------------------
Savings deposits $ 967.9 $ 48.3 4.99% $ 969.9 $ 48.3 4.98%
Interest-bearing transaction accounts 3,752.7 208.7 5.56 3,716.6 215.0 5.78
Time deposits 7,581.1 603.6 7.96 7,057.2 582.8 8.26
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 12,301.7 860.6 7.00 11,743.7 846.1 7.20
Federal funds purchased and
other short-term borrowings 2,469.9 194.4 7.87 2,211.4 195.4 8.84
Capital lease obligation 41.7 4.1 9.72 42.2 4.1 9.72
Long-term debt 288.1 28.1 9.76 292.9 29.4 10.04
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 15,101.4 1,087.2 7.20 14,290.2 1,075.0 7.52
Demand deposits 2,985.1 3,159.7
All other liabilities 213.0 228.4
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 18,299.5 17,678.3
Redeemable preferred stock 1.4 1.7
Total stockholders' equity 1,431.4 1,370.2
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $19,732.3 $19,050.2
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 2.94% 2.90%
Effect of noninterest-bearing funds 1.02 1.13
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $ 697.6 3.96% $ 676.6 4.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans are included in
average balances and income on such
loans is recognized on a cash basis.
Interest income and yields are
presented on a fully-taxable
equivalent basis using the Federal
statutory income tax rate, net of
nondeductible interest expense. Such
adjustments by earning asset category
are as follows:
Loans $ 9.0 $13.5
Tax-exempt held to maturity securities 32.7 33.3
Trading securities .1 .2
- -----------------------------------------------------------------------------------------------------------------------------------
Total $41.8 $47.0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1988 % change in average balances
- -----------------------------------------------------------------------------------------------------------------------------------
Five-year annual
Income/ Yields/ compound
Assets Balance Expense Rates 1993 1992 1989-1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $11,065.9 $1,151.8 10.41% 10.1% 7.2% 4.9%
Short-term investments 340.1 26.2 7.69 (13.7) (36.3) (29.3)
Federal funds sold and securities
purchased under resale agreements 1,422.5 106.3 7.48 (68.3) (.3) (21.3)
Held to maturity securities:
Taxable 2,898.8 231.0 7.97 14.7 24.2 17.2
Tax-exempt 949.6 97.9 10.31 (9.3) (4.5) (2.0)
- -----------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 3,848.4 328.9 8.55 11.2 19.0 13.5
Available for sale securities
Trading securities 51.4 5.0 9.78 (1.5) (50.8) .8
Receivable due from
Resolution Trust Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 16,728.3 1,618.2 9.67 7.6 7.5 5.9
Less reserve for loan losses (210.8) 17.5 15.5 9.4
Cash and due from banks 1,555.4 8.5 6.0 .9
Property and equipment 374.1 6.1 8.2 3.4
All other assets 519.4 23.3 5.0 11.9
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $18,966.4 8.0% 7.2% 5.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- -----------------------------------------------------------------------------------------------------------------------------------
Savings deposits $ 1,034.4 $ 52.2 5.05% 23.7% 26.9% 14.3%
Interest-bearing transaction accounts 3,847.0 207.1 5.38 12.7 24.7 10.2
Time deposits 6,801.0 496.0 7.29 (2.0) (6.8) 2.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 11,682.4 755.3 6.47 6.2 6.2 6.5
Federal funds purchased and
other short-term borrowings 2,134.1 156.1 7.31 2.3 (3.7) (.4)
Capital lease obligation 42.7 4.2 9.72 (2.0) (1.5) (1.5)
Long-term debt 306.2 28.2 9.21 37.8 18.0 8.3
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 14,165.4 943.8 6.66 6.3 5.1 5.6
Demand deposits 3,246.5 14.4 17.4 5.5
All other liabilities 236.3 (8.6) (6.1) (6.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 17,648.2 7.6 6.9 5.4
Redeemable preferred stock 3.3 (7.7) (18.3)
Total stockholders' equity 1,314.9 12.4 11.2 8.6
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $18,966.4 8.0% 7.2% 5.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.01%
Effect of noninterest-bearing funds 1.02
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $ 674.4 4.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans are included in
average balances and income on such
loans is recognized on a cash basis.
Interest income and yields are
presented on a fully-taxable
equivalent basis using the Federal
statutory income tax rate, net of
nondeductible interest expense. Such
adjustments by earning asset category
are as follows:
Loans $14.6
Tax-exempt held to maturity securities 31.8
Trading securities 1.2
- -----------------------------------------------------------------------------------------------------------------------------------
Total $47.6
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1993 Annual Report 47
<PAGE> 33
<TABLE>
CONSOLIDATED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31 (dollars in thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
Assets
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from banks $ 1,608,051 $ 1,771,021
Short-term investments 24,748 144,664
Securities:
Held to maturity (market value $3,408,119 and $6,799,642, respectively) 3,324,847 6,652,058
Available for sale (at market value in 1993, market value in 1992 $478,361) 5,176,966 463,571
Trading 48,081 38,514
Federal funds sold and securities purchased under resale agreements 407,672 1,192,568
Loans (net of unearned income of $67,338 and $72,488, respectively) 14,825,922 13,110,886
Less reserve for loan losses 341,099 302,021
- ---------------------------------------------------------------------------------------------------------------------------
Loans, net 14,484,823 12,808,865
- ---------------------------------------------------------------------------------------------------------------------------
Property and equipment 480,586 433,616
Other assets 1,098,275 776,002
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $26,654,049 $24,280,879
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Demand deposits $ 4,769,947 $ 4,210,794
Retail savings deposits and interest-bearing transaction accounts 8,773,058 7,809,229
Time deposits 7,365,997 7,664,757
- ---------------------------------------------------------------------------------------------------------------------------
Total deposits 20,909,002 19,684,780
- ---------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under repurchase agreements 1,996,022 1,664,025
Short-term borrowings 815,971 396,504
Capital lease obligation 39,224 40,012
Long-term debt 486,253 393,191
Other liabilities 273,168 239,899
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 24,519,640 22,418,411
- ---------------------------------------------------------------------------------------------------------------------------
Redeemable preferred stock 1,155 1,248
- ---------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock ($1 par value; 125,000,000 shares authorized;
104,125,546 and 51,131,452 shares issued and outstanding, respectively) 104,126 51,131
Surplus 786,840 809,923
Retained earnings 1,200,036 1,000,166
Unrealized net appreciation, available for sale securities 42,252
- ---------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,133,254 1,861,220
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $26,654,049 $24,280,879
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
</TABLE>
48 Boatmen's Bancshares, Inc.
<PAGE> 34
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $1,126,910 $1,095,453 $1,178,849
Interest on short-term investments 1,997 2,648 7,736
Interest on Federal funds sold and securities purchased
under resale agreements 13,361 49,359 78,400
Interest on held to maturity securities
Taxable 381,278 398,782 372,218
Tax-exempt 58,381 65,695 69,677
- ---------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 439,659 464,477 441,895
Interest on available for sale securities 29,057
Interest on trading securities 2,570 3,312 7,812
Interest on receivable due from Resolution Trust Corporation 28,955
- ---------------------------------------------------------------------------------------------------------------------------
Total interest income 1,613,554 1,615,249 1,743,647
- ---------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 528,844 629,655 850,086
Interest on Federal funds purchased and other short-term borrowings 62,367 73,348 119,787
Interest on capital lease obligation 3,858 3,929 3,994
Interest on long-term debt 36,905 30,601 27,248
- ---------------------------------------------------------------------------------------------------------------------------
Total interest expense 631,974 737,533 1,001,115
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income 981,580 877,716 742,532
Provision for loan losses 60,184 136,626 114,658
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 921,396 741,090 627,874
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 149,580 137,983 120,806
Service charges 153,201 133,568 105,816
Credit card 47,279 38,417 29,848
Investment banking profits and fees 35,600 31,753 20,892
Securities gains, net 2,807 31,948 3,852
Other 104,784 78,413 74,490
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest income 493,251 452,082 355,704
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 466,480 416,278 361,628
Net occupancy 69,429 64,477 55,041
Equipment 77,527 68,755 59,454
FDIC insurance 44,385 41,619 35,640
Credit card 35,205 25,552 17,129
Foreclosed property costs, net (4,790) 26,338 23,813
Other 262,185 228,909 199,662
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 950,421 871,928 752,367
- ---------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 464,226 321,244 231,211
Income tax expense 146,807 92,518 60,013
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 317,419 $ 228,726 $ 171,198
- ---------------------------------------------------------------------------------------------------------------------------
Net income per share $3.07 $2.29 $1.77
- ---------------------------------------------------------------------------------------------------------------------------
Dividends declared per share $1.18 $1.10 $1.07
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
</TABLE>
1993 Annual Report 49
<PAGE> 35
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unrealized Net
Common Stock Treasury Stock Appreciation,
----------------- Retained -------------- Available for
(in thousands) Shares Amount Surplus Earnings Shares Amount Sale Securities Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1990 46,188 $461,879 $230,576 $ 770,927 - - - $1,463,382
Net income - - - 171,198 - - - 171,198
Cash dividends declared:
Common ($1.07 per share)(1) - - - (79,441) - - - (79,441)
Redeemable preferred - - - (89) - - - (89)
By pooled company
prior to merger--common - - - (2,418) - - - (2,418)
Issuance of common stock from
public offering 2,990 2,990 108,145 - - - - 111,135
Common stock issued pursuant to various
employee and shareholder
stock issuance plans 351 1,368 9,394 - - - - 10,762
Common stock issued upon conversion
of convertible subordinated debentures 65 174 1,738 - - - - 1,912
Purchase and retirement of common
stock--pooled company (9) (9) (252) - - - - (261)
Transfer to surplus resulting from change
in par value of common stock(2) - (416,817) 416,817 - - - - -
Adjustment of investments in
equity securities to market value - - - 4,001 - - - 4,001
Other, net - - (1) (4) - - - (5)
- -------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1991 49,585 49,585 766,417 864,174 - - - 1,680,176
Net income - - - 228,726 - - - 228,726
Cash dividends declared:
Common ($1.10 per share)(1) - - - (92,032) - - - (92,032)
Redeemable preferred - - - (88) - - - (88)
By pooled company
prior to merger-common - - - (616) - - - (616)
Issuance of common stock from
public offering--pooled company 629 629 15,133 - - - - 15,762
Common stock issued pursuant to various
employee and shareholder
stock issuance plans 390 390 14,403 - - - - 14,793
Common stock issued upon conversion
of convertible subordinated debentures 532 532 14,338 - - - - 14,870
Other, net (5) (5) (368) 2 - - - (371)
- -------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1992 51,131 51,131 809,923 1,000,166 - - - 1,861,220
Net income - - - 317,419 - - - 317,419
Cash dividends declared:
Common ($1.18 per share)(1) - - - (117,334) - - - (117,334)
Redeemable preferred - - - (85) - - - (85)
Acquisition of treasury stock - - - - (52) (3,102) - (3,102)
Common stock issued pursuant to various
employee and shareholder
stock issuance plans 641 641 15,992 - 52 3,102 - 19,735
Common stock issued upon conversion
of convertible subordinated debentures 487 487 12,817 - - - - 13,304
Common stock issued upon 2-for-1
stock split 51,867 51,867 (51,867) - - - - -
Adjustment of available for sale
securities to market value - - - - - - 42,252 42,252
Other, net - - (25) (130) - - - (155)
- -------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1993 104,126 $104,126 $786,840 $1,200,036 - - $42,252 $2,133,254
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Amounts adjusted for the two-for-one stock split which was declared on
August 10, 1993 and paid on October 1, 1993.
(2)On April 23, 1991, shareholders approved a change in the par value of the
Corporation's common stock to $1.00 per share from $10.00 per share.
See accompanying notes to the consolidated financial statements.
</TABLE>
50 Boatmen's Bancshares, Inc.
<PAGE> 36
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income $ 317,419 $ 228,726 $ 171,198
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 60,184 136,626 114,658
Depreciation, amortization and accretion 106,298 77,062 51,717
Increase (decrease) in deferred loan fees (767) 2,954 (1,135)
Realized securities gains (2,807) (31,948) (3,852)
Net (increase) decrease in trading securities (9,567) 94,073 (75,870)
Decrease in interest receivable 3,795 37,747 12,323
Decrease in interest payable (11,863) (29,586) (29,620)
Increase (decrease) in tax liability 11,955 (27,029) (9,299)
Net (gain) loss on sales and writedowns of foreclosed property (5,656) 32,237 18,566
Other, net (30,882) (5,386) 43,784
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 438,109 515,476 292,470
- ---------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Net (increase) decrease in Federal funds sold and
securities purchased under resale agreements 874,246 622,785 (672,054)
Net decrease in receivable due from RTC 1,432,742
Net increase in loans (816,616) (293,695) (155,822)
Proceeds from the maturity of held to maturity securities 2,278,249 1,747,629 1,438,238
Proceeds from the sales of held to maturity securities 43,417 755,394 204,455
Purchases of held to maturity securities (3,455,044) (3,267,629) (2,397,965)
Proceeds from the maturity of available for sale securities 23,020
Proceeds from the sales of available for sale securities 154,869
Purchases of available for sale securities (61,199)
Net decrease in short-term investments 119,916 14,472 191,917
Increase in property and equipment (101,932) (59,487) (61,361)
Proceeds from the sale of foreclosed property 80,275 88,910 31,426
Net cash received from purchase acquisitions 444,540 120,198 34,689
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (571,128) (116,554) 46,265
- ---------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Net increase (decrease) in Federal funds purchased and
securities sold under repurchase agreements 323,464 (89,420) (839,820)
Net increase (decrease) in deposits (780,182) 228,169 (691,701)
Net increase (decrease) in short-term borrowings 417,140 (552,503) 755,000
Payments on long-term debt (18,190) (10,221) (16,781)
Proceeds from the issuance of long-term debt 124,281 99,148 49,500
Payments on capital lease obligation (788) (716) (652)
Decrease in redeemable preferred stock (93) (19) (89)
Cash dividends paid (112,216) (86,218) (81,087)
Issuance of common stock from public stock offerings 15,762 111,135
Common stock issued pursuant to various employee and
shareholder stock issuance plans 19,735 14,793 10,762
Acquisition of treasury stock (3,102)
Retirement of common stock (261)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (29,951) (381,225) (703,994)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and due from banks (162,970) 17,697 (365,259)
Cash and due from banks at beginning of year 1,771,021 1,753,324 2,118,583
- ---------------------------------------------------------------------------------------------------------------------------
Cash and due from banks at end of year $1,608,051 $1,771,021 $1,753,324
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
For the years ended December 31, 1993, 1992 and 1991, interest paid totaled
$643,837, $766,739 and $981,008, respectively. Income taxes paid totaled
$152,579 in 1993, $118,075 in 1992 and $80,890 in 1991. Additional common
stock was issued upon the conversion of $13,748 of the Corporation's
convertible subordinated debt for the year ended December 31, 1993, $15,425
for the year ended December 31, 1992, and $1,993 for the year ended December
31, 1991. Investment securities and debt securities held for sale transferred
to available for sale securities totaled approximately $5.2 billion in 1993.
Investment securities transferred to debt securities held for sale totaled
approximately $515 million in 1992. Loans transferred to foreclosed property
totaled $22 million in 1993, $67 million in 1992 and $134 million in 1991. In
1993, assets and liabilities of purchased subsidiaries at dates of acquisition
included investment securities of $160 million, loans of $954 million, cash of
$483 million, other assets of $465 million, deposits of $2.0 billion and other
liabilities of $20 million. In 1992, assets and liabilities of purchased
subsidiaries at dates of acquisition included investment securities of $439.5
million, loans of $670.7 million, cash of $223.0 million, other assets of
$201.5 million, deposits of $1,396.5 million and other liabilities of $22.5
million. In 1991, assets and liabilities of purchased subsidiary at date of
acquisition included investment securities of $206.1 million, loans of $470.1
million, cash of $120.7 million, other assets of $67.4 million, deposits of
$632.7 million and other liabilities of $145.6 million.
</TABLE>
1993 Annual Report 51
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands except per share data and when otherwise indicated)
- ------------------------------------------------------------------------------
SUMMARY OF
1 PRINCIPAL ACCOUNTING POLICIES
The accounting and reporting policies of the Corporation and its
subsidiaries conform to generally accepted accounting
principles. The following is a description of the more significant
of those policies.
Basis of Presentation The consolidated financial statements include the
accounts of the Corporation and its subsidiaries after elimination of all
material intercompany balances and transactions. Certain amounts for 1992 and
1991 were reclassified to conform with statement presentation for 1993. The
reclassifications have no effect on stockholders' equity or net income as
previously reported. Prior period financial statements are also restated to
include the accounts of companies which are acquired and accounted for as
poolings of interests. Results of operations of companies which are acquired
and subject to purchase accounting are included from the dates of acquisition.
In accordance with the purchase method of accounting, the assets and
liabilities of purchased companies are stated at estimated fair values at the
date of acquisition, and the excess of cost over fair value of net assets
acquired is being amortized on a straight-line basis over periods benefitted.
Held to Maturity Securities These securities are purchased with the original
intent to hold to maturity and events which may be reasonably anticipated are
considered when determining the Corporation's intent and ability to hold to
maturity. Securities meeting such criteria at date of purchase and as of the
balance sheet date are carried at cost, adjusted for amortization of premiums
and accretion of discounts. Gains or losses on the disposition of held to
maturity securities, if any, are based on the adjusted book value of the
specific security.
Available for Sale Securities Debt and equity securities to be held for
indefinite periods of time and not intended to be held to maturity are
classified as available for sale and carried at market value with net
unrealized gains and losses, net of tax, reflected as a component of
stockholders' equity until realized. Securities held for indefinite periods of
time include securities that may be sold to meet liquidity needs or in
response to significant changes in interest rates or prepayment risks as part
of the Corporation's overall asset/liability management strategy. Prior to
December 31, 1993, marketable equity securities were carried at the lower of
aggregate cost or market value with net unrealized gains and losses being
reflected as adjustments to retained earnings. Market value depreciation below
cost on debt securities held for sale prior to December 31, 1993 was required
to be reflected in current period earnings.
Trading Securities Trading securities are held for resale within a short
period of time and are stated at market value. Investment banking profits and
fees include the net realized gain or loss and market value adjustments of the
trading account portfolio and commissions on bond dealer and retail brokerage
operations.
Interest and Fees on Loans Interest on loans is accrued based upon the
principal amount outstanding. It is the Corporation's policy to discontinue
the accrual of interest when full collectibility of principal or interest on
any loan is doubtful. Interest income on such loans is subsequently recognized
only in the period in which payments are received, and such payments are
applied to reduce principal when loans are unsecured or collateral values are
deficient. Nonrefundable loan fees are deferred and recognized as income over
the life of the loan as an adjustment of the yield. Direct costs associated
with originating loans are deferred and amortized as a yield adjustment over
the life of the loan. Commitment fees are deferred and recognized as
noninterest income over the commitment period.
Reserve for Loan Losses The reserve represents provisions charged to expense
less net loan charge-offs. The provision is based upon economic conditions,
historical loss and collection experience, risk characteristics of the
portfolio, underlying collateral values, credit concentrations, industry risk,
degree of off-balance sheet risk and other factors which, in management's
judgment, deserve current recognition.
The charge-off policy of the Corporation's banking subsidiaries varies with
respect to the category of, and specific circumstances surrounding, each
loan under consideration. The Corporation's policy with respect to consumer
loans is generally to charge off all such loans when deemed to be
uncollectible or 120 days past due, whichever comes first. With respect to
commercial, real estate, and other loans, charge-offs are made on the basis
of management's ongoing evaluation of nonperforming and criticized loans.
Foreclosed Property The maximum carrying value for real estate acquired
through foreclosure is the lower of the recorded investment in the loan for
which the property previously served as collateral or the current appraised
value of the foreclosed property. Any writedowns required prior to actual
foreclosure are charged to the reserve for loan losses. Subsequent to
foreclosure, losses on the periodic revaluation of the property are charged to
current period earnings as noninterest expense. Gains and losses resulting
from the sale of foreclosed property are credited or charged to current period
earnings. Costs of maintaining and operating foreclosed property are expensed
as incurred and revenues related to foreclosed property are recorded as an
offset to operating expense. Expenditures to complete or improve foreclosed
properties are capitalized if the expenditures are expected to be recovered
upon ultimate sale of the property.
Segregated Assets Segregated assets represent loans acquired in an
FDIC assisted transaction that are covered under a loss sharing arrangement
with the FDIC and possess more than the normal risk of collectibility. These
assets consist of loans that at acquisition were or have since become
classified as nonperforming loans or foreclosed property and are segregated
from other performing assets covered under the loss sharing arrangement.
The Corporation's primary purpose in managing a portfolio of this nature is
to provide ongoing collection and control activities on behalf of the FDIC.
Accordingly, these assets do not represent loans made in the ordinary course
of business and, due to the underlying nature of this liquidating asset
pool, are excluded from the Corporation's nonperforming asset statistics.
Income from the segregated asset pool is generally recognized on a cash
basis as a component of noninterest income. If collection of the
unguaranteed portion of the segregated asset is doubtful, income payments
are applied to reduce the principal balance to the extent of the government
guarantee.
52 Boatmen's Bancshares, Inc.
<PAGE> 38
- -------------------------------------------------------------------------------
Interest Rate Swaps Interest rate swap transactions are utilized as hedges as
part of the Corporation's overall asset/liability management strategy.
Although the notional amounts of these transactions are not reflected in the
financial statements, the interest differentials are recognized over the terms
of the agreements as a component of net interest income.
Foreign Exchange Contracts The Corporation's banking subsidiaries trade
foreign currencies on behalf of their customers and for their own account and,
by policy, do not maintain significant open positions. Foreign exchange
contracts are valued at the current prevailing rates of exchange and any
profit or loss resulting from such valuation is included in current operations
as a component of investment banking profits and fees.
Property and Equipment Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
recognized principally by the straight-line method applied over the estimated
useful lives of the assets, which are 10 to 50 years for buildings, 2 to 50
years for leasehold improvements, and 3 to 25 years for fixtures and
equipment.
Intangible Assets Goodwill arising from acquisitions consummated subsequent
to 1985 is being amortized on a straight-line basis over the periods
benefitted, ranging from 4-15 years. For acquisitions consummated in 1983 and
1985, goodwill is being amortized on a straight-line basis over 25 years, and
goodwill related to acquisitions prior to 1983 is being amortized on a
straight-line basis over 40 years. Core deposit intangibles and credit card
premiums are amortized over their useful economic lives on an accelerated
basis, not to exceed 10 years. Mortgage servicing rights are amortized over
the estimated life of the related loan servicing pool.
Income Taxes Effective January 1, 1992, the Corporation adopted the
accounting principles of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", which requires accounting for income taxes under the asset
and liability method. The Corporation previously accounted for income taxes
under the asset and liability method of Financial Accounting Standards No. 96.
Income tax expense is reported as the total of current income taxes payable
and the net change in deferred income taxes provided for temporary
differences. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying values of assets and liabilities for
financial reporting purposes and the values used for income tax purposes.
Deferred income taxes are recorded at the statutory Federal and state tax
rates in effect at the time that the temporary differences are expected to
reverse.
The Corporation files a consolidated Federal income tax return which
includes all its subsidiaries except for the life insurance company. Income
tax expense is allocated among the parent company and its subsidiaries as if
each had filed a separate tax return.
Net Income Per Share Net income per share is calculated by dividing net
income (after deducting dividends on redeemable preferred stock) by the
weighted average number of common shares outstanding. Common stock equivalents
have no material dilutive effect.
The net income per share calculation for 1993, 1992 and 1991 is summarized as
follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
(in thousands except share data) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $317,419 $228,726 $171,198
Less preferred dividends declared 85 88 89
- -------------------------------------------------------------------------------
Net income available to
common shareholders $317,334 $228,638 $171,109
- -------------------------------------------------------------------------------
Average shares outstanding 103,489,599 100,017,099 96,894,770
- -------------------------------------------------------------------------------
Net income per share $3.07 $2.29 $1.77
- -------------------------------------------------------------------------------
</TABLE>
2 CHANGES IN ACCOUNTING POLICIES
On December 31, 1993, the Corporation adopted Financial Accounting Standards
No. 115 (SFAS No. 115), "Accounting for Certain Investments in Debt and
Equity Securities." SFAS No. 115 requires entities to classify debt and
equity securities as either held to maturity, available for sale, or trading
securities. Under SFAS No. 115, held to maturity securities are recorded at
amortized cost; whereas available for sale securities and trading securities
are carried at market value. SFAS No. 115 further requires that unrealized
gains and losses on available for sale securities be reported, net of tax,
as a separate component of stockholders' equity. Upon adoption of SFAS No.
115, the Corporation transferred approximately $5.2 billion of debt and
equity securities to the available for sale portfolio, resulting in an
increase to stockholders' equity of $42.3 million. Adoption of SFAS No. 115
had no effect on current year earnings.
In 1992, the Corporation adopted Financial Accounting Standards No. 109
(SFAS No. 109), "Accounting for Income Taxes". SFAS No. 109 requires an asset
and liability approach which recognizes the amount of taxes payable or
refundable in the current year and deferred tax consequences of events that
have been recognized previously in financial statements or tax returns. The
impact on tax expense in 1992 due to adoption of SFAS No. 109 was a
consolidated benefit of $3.6 million or $.04 per share, recorded as of
January 1, 1992.
The Corporation adopted Financial Accounting Standards No. 106 (SFAS No.
106), "Employers' Accounting for Postretirement Benefits Other Than
Pensions", on a prospective basis as of January 1, 1992 and will amortize
the initial accumulated postretirement transition obligation of $47.9
million over 20 years. SFAS No. 106 requires the recognition of an employer's
cost of providing postretirement benefits to retirees on an accrual basis
and decreased net income in 1992 by $2.9 million or $.03 per share.
1993 Annual Report 53
<PAGE> 39
3 ACQUISITIONS
Purchase Acquisitions Results of operations of companies which are acquired
and subject to purchase accounting treatment are included from dates of
acquisition. Pro forma condensed results of operations as if the purchase
acquisitions were consummated as of the beginning of the period have been
omitted due to the immaterial effect on operations. Goodwill and core
deposit intangibles arising from 1993 acquisitions totaled $43.6 million and
$49.1 million, respectively. Goodwill and core deposit intangibles arising
from 1992 purchase acquisitions totaled $24.6 million and $9.2 million,
respectively. Core deposit intangibles in each of the purchase acquisitions
summarized below are being amortized on an accelerated basis, not to exceed
10 years. Goodwill is being amortized on a straight-line basis over periods
ranging from 4-15 years.
Other information regarding purchase acquisitions is summarized as follows:
<TABLE>
- --------------------------------------------------------------------------------------
<CAPTION>
Core
Acquired Company Acquisition Purchase Deposit
(amounts in millions) Date Price Assets Goodwill Intangible
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
First City-El Paso
(FDIC assisted) 3/5/93 $ 14.0 $ 340.0 $ 9.6 $13.7
Missouri Bridge Bank
(FDIC assisted) 4/23/93 15.8 1,100.0 18.9 20.0
Cimarron Federal Savings
(RTC assisted) 5/26/93 13.1 430.0 13.1
FCB Bancshares, Inc. 8/2/93 25.0 185.0 15.1 2.3
- --------------------------------------------------------------------------------------
Total $ 67.9 $2,055.0 $43.6 $49.1
- --------------------------------------------------------------------------------------
1992
Founders Bancorporation, Inc. 3/2/92 $ 34.0 $ 330.0 $15.3 $ 3.5
Superior Federal Bank
(RTC assisted) 3/20/92 700.0
Home Federal S&L
(RTC assisted) 3/27/92 1.3 120.0 1.3
Jackson Exchange Bank
(FDIC assisted) 5/7/92 1.4 120.0 1.4
Security Bank and First Bank
of Catoosa in Tulsa 11/2/92 33.0 240.0 9.3 3.0
- --------------------------------------------------------------------------------------
Total $ 69.7 $1,510.0 $24.6 $ 9.2
- --------------------------------------------------------------------------------------
1991
First Interstate Bank of
Oklahoma, N.A. 8/1/91 $ 86.0 $ 900.0 $13.4 $11.5
- --------------------------------------------------------------------------------------
</TABLE>
Pooling Acquisitions Results of operations
of companies which are acquired and subject to pooling of
interests accounting are reflected on a combined basis from the earliest
period presented.
On November 30, 1993, the Corporation consummated the acquisition of First
Amarillo Bancorporation, Inc. (Amarillo), resulting in the issuance of
approximately 5.9 million shares of common stock. Amarillo, subsequently
renamed Boatmen's Texas, Inc., with approximately $1 billion in assets, is
headquartered in Amarillo, Texas. Nonrecurring merger expenses related to
this acquisition totaled $4.7 million and were comprised primarily of
investment banking fees, compensation-related expense and abandonment of
equipment and software. On an after-tax basis, merger-related expenses from
this acquisition totaled $3.8 million or $.04 per share and were recognized
in the fourth quarter of 1993.
For the nine months ended September 30, 1993, Amarillo reported
net interest income and net income of $25.8 million and $15.9 million,
respectively.
Net interest income and net income as previously reported for the
Corporation and Amarillo for 1992 and 1991 are summarized as follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
(in millions) 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C>
Net interest income:
Boatmen's Bancshares, Inc. $847.5 $717.7
First Amarillo Bancorporation, Inc. 30.2 24.8
- -------------------------------------------------------------------------------
Boatmen's Bancshares, Inc. restated $877.7 $742.5
- -------------------------------------------------------------------------------
Net income:
Boatmen's Bancshares, Inc. $215.5 $164.7
First Amarillo Bancorporation, Inc. 13.2 6.5
- -------------------------------------------------------------------------------
Boatmen's Bancshares, Inc. restated $228.7 $171.2
- -------------------------------------------------------------------------------
</TABLE>
On April 1, 1992, the Corporation consummated the acquisition of First
Interstate of Iowa, Inc., (Iowa), resulting in the issuance of approximately
4.2 million shares of common stock. First Interstate of Iowa, Inc.,
subsequently renamed Boatmen's Bancshares of Iowa, Inc., with approximately
$1.2 billion in assets, is headquartered in Des Moines, Iowa. Nonrecurring
merger expenses related to the acquisition totaled $7.1 million and were
recorded in the fourth quarter of 1991.
On October 1, 1992, the Corporation consummated the acquisition of Sunwest
Financial Services, Inc. (Sunwest), resulting in the issuance of
approximately 14.8 million shares of common stock. Sunwest, subsequently
renamed Boatmen's Sunwest, Inc., with approximately $3.8 billion in assets,
is headquartered in Albuquerque, New Mexico and is the largest banking
organization in that state. In the fourth quarter of 1992, the Corporation
recorded nonrecurring charges to conform Sunwest's loan, accrual and reserve
policies to the Corporation's policies which required additions to the
reserve for loan losses and write-downs of foreclosed property. In addition,
nonrecurring merger-related expenses were recognized, such as investment
banking fees, severance benefits, and abandonment of equipment and software.
Also in 1992, Sunwest realigned its investment portfolio to conform to the
Corporation's investment philosophy by selling approximately $670 million of
U.S. government securities and reinvesting the proceeds in mortgage-backed
securities. Gains of approximately $24.3 million were recognized from this
realignment.
54 Boatmen's Bancshares, Inc.
<PAGE> 40
- -------------------------------------------------------------------------------
4 HELD TO MATURITY SECURITIES
The amortized cost and approximate market value of held to maturity
securities are summarized as follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Unrealized
December 31, 1993 Amortized --------------- Market
(in thousands) Cost Gains Losses Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $ 231,064 $ 1,791 $ (434) $ 232,421
Federal agencies:
Mortgage-backed 1,666,297 14,258 (8,220) 1,672,335
Other agencies 320,501 1,602 (293) 321,810
- -------------------------------------------------------------------------------
Total U.S. Treasury
and agencies 2,217,862 17,651 (8,947) 2,226,566
State and municipal 819,206 74,210 (200) 893,216
Other debt securities 258,407 1,998 (1,440) 258,965
- -------------------------------------------------------------------------------
Total debt securities 3,295,475 93,859 (10,587) 3,378,747
- -------------------------------------------------------------------------------
Other securities 29,372 29,372
- -------------------------------------------------------------------------------
Total held to maturity
securities $3,324,847 $ 93,859 $(10,587) $3,408,119
- -------------------------------------------------------------------------------
<CAPTION>
Unrealized
December 31, 1992 Amortized --------------- Market
(in thousands) Cost Gains Losses Value
- -------------------------------------------------------------------------------
U.S. Treasury $1,263,955 $ 39,170 $ (351) $1,302,774
Federal agencies:
Mortgage-backed 2,626,253 30,287 (13,248) 2,643,292
Other agencies 1,288,833 34,210 (3,757) 1,319,286
- -------------------------------------------------------------------------------
Total U.S. Treasury
and agencies 5,179,041 103,667 (17,356) 5,265,352
State and municipal 891,556 56,399 (316) 947,639
Other debt securities 532,807 6,558 (3,491) 535,874
- -------------------------------------------------------------------------------
Total debt securities 6,603,404 166,624 (21,163) 6,748,865
- -------------------------------------------------------------------------------
Other securities 48,654 3,933 (1,810) 50,777
- -------------------------------------------------------------------------------
Total held to maturity
securities $6,652,058 $170,557 $(22,973) $6,799,642
- -------------------------------------------------------------------------------
</TABLE>
The maturity distribution of held to maturity securities at December 31,
1993 is summarized as follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
(in thousands) Amortized Cost Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 156,377 $ 158,022
Due after one year through five years 651,372 664,458
Due after five years through ten years 309,630 341,489
Due after ten years 281,384 311,802
Mortgage-backed securities 1,896,712 1,902,976
- -------------------------------------------------------------------------------
Total debt securities 3,295,475 3,378,747
- -------------------------------------------------------------------------------
Other securities 29,372 29,372
- -------------------------------------------------------------------------------
Total held to maturity securities $3,324,847 $3,408,119
- -------------------------------------------------------------------------------
</TABLE>
At December 31, 1993, other securities consisted primarily of Federal
Reserve and Federal Home Loan Bank stock. At December 31, 1992, this
category also included marketable equity securities totaling $24 million.
Sales and redemptions of held to maturity securities resulted in realized
gains and losses as follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities:
Realized gains $ 629 $25,081 $ 6,209
Realized losses (3) (140) (873)
- -------------------------------------------------------------------------------
Net realized gains $ 626 $24,941 $ 5,336
- -------------------------------------------------------------------------------
Equity securities:
Realized gains $ 3,483 $ 800 $ 2,336
Realized losses (1,302) (200) (3,820)
- -------------------------------------------------------------------------------
Net realized gains (losses) $ 2,181 $ 600 $(1,484)
- -------------------------------------------------------------------------------
</TABLE>
5 AVAILABLE FOR SALE SECURITIES
The amortized cost and approximate market value of available for sale
securities are summarized as follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Unrealized
December 31, 1993 Amortized --------------- Market
(in thousands) Cost Gains Losses Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury $1,152,605 $43,310 $ (62) $1,195,853
Federal agencies:
Mortgage-backed 3,582,211 36,840 (10,805) 3,608,246
Other agencies 33,829 1 (45) 33,785
- -------------------------------------------------------------------------------
Total U.S. Treasury
and agencies 4,768,645 80,151 (10,912) 4,837,884
Other debt securities 317,258 668 (4,557) 313,369
- -------------------------------------------------------------------------------
Total debt securities 5,085,903 80,819 (15,469) 5,151,253
- -------------------------------------------------------------------------------
Equity securities 22,388 4,716 (1,391) 25,713
- -------------------------------------------------------------------------------
Total available for sale
securities $5,108,291 $85,535 $(16,860) $5,176,966
- -------------------------------------------------------------------------------
<CAPTION>
Unrealized
December 31, 1992 Amortized --------------- Market
(in thousands) Cost Gains Losses Value
- -------------------------------------------------------------------------------
U.S. Treasury $259,269 $14,365 $273,634
Federal agencies:
Mortgage-backed 194,289 336 194,625
Other agencies 2,484 41 2,525
- -------------------------------------------------------------------------------
Total U.S. Treasury
and agencies 456,042 14,742 470,784
State and municipal 1,008 12 1,020
Other debt securities 6,521 36 6,557
- -------------------------------------------------------------------------------
Total available for sale
securities $463,571 $14,790 - $478,361
- -------------------------------------------------------------------------------
</TABLE>
Available for sale securities are carried at market value at December 31,
1993 and at amortized cost at December 31, 1992.
The maturity distribution of available for sale securities at December 31,
1993 is summarized as follows:
<TABLE>
- --------------------------------------------------------------------------
<CAPTION>
(in thousands) Amortized Cost Market Value
- --------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 374,330 $ 383,224
Due after one year through five years 812,104 846,414
Mortgage-backed securities 3,899,469 3,921,615
- --------------------------------------------------------------------------
Total debt securities 5,085,903 5,151,253
- --------------------------------------------------------------------------
Equity securities 22,388 25,713
- --------------------------------------------------------------------------
Total available for sale securities $5,108,291 $5,176,966
- --------------------------------------------------------------------------
</TABLE>
There were no sales or redemptions of available for sale securities in
1993. In 1992, sales of debt securities held for sale resulted in gross gains
of $6.4 million.
Held to maturity and available for sale securities with book values
totaling $3,678,510 and $3,358,685 at December 31, 1993 and 1992, respectively,
were pledged to secure public deposits, trust deposits, and for other purposes
required by law.
1993 Annual Report 55
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
6 LOANS
A summary of loan categories is as follows:
<TABLE>
- ----------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ----------------------------------------------------------
<S> <C> <C>
Domestic:
Commercial $ 7,490,732 $ 6,507,435
Real estate-mortgage 2,988,489 3,049,097
Real estate-construction 557,977 416,528
Consumer 3,742,766 3,111,593
Lease financing 95,209 86,841
- ----------------------------------------------------------
Total domestic 14,875,173 13,171,494
Foreign loans 18,087 11,880
- ----------------------------------------------------------
Total loans 14,893,260 13,183,374
Less unearned income 67,338 72,488
- ----------------------------------------------------------
Total loans, net $14,825,922 $13,110,886
- ----------------------------------------------------------
</TABLE>
Nonperforming assets, consisting of nonperforming loans and
foreclosed property, are summarized as follows:
<TABLE>
- ----------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ----------------------------------------------------------
<S> <C> <C>
Nonaccrual $142,853 $218,782
Restructured 14,807 22,042
Past due 90 days or more 17,238 17,941
- ----------------------------------------------------------
Total nonperforming loans 174,898 258,765
- ----------------------------------------------------------
Foreclosed property 110,639 129,696
- ----------------------------------------------------------
Total nonperforming assets $285,537 $388,461
- ----------------------------------------------------------
</TABLE>
Gross interest income which would have been recorded, if all nonaccrual and
restructured loans had been current in accordance with original terms,
amounted to $12.4 million in 1993 and $18.2 million in 1992. Actual interest
recorded amounted to $2.9 million in 1993 and $6.3 million in 1992.
Following is a summary of activity for 1993 regarding loans extended to
directors and executive officers of the Corporation and its largest
subsidiaries or to enterprises in which said individuals had beneficial
interests. Such loans were made in the normal course of business on
substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with other
persons.
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
(in thousands)
- -------------------------------------------------------------------------------------
Outstanding Net change from changes Outstanding
at 12/31/92 Additions Repayments in director status at 12/31/93
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$242,210 $78,641 $(100,672) $(15,113) $205,066
- -------------------------------------------------------------------------------------
</TABLE>
The following summarizes activity in the reserve for loan losses:
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $302,021 $252,283 $228,887
Loans charged off (74,202) (137,041) (127,563)
Recoveries on loans
previously charged off 40,239 34,446 27,601
- --------------------------------------------------------------------------------
Net charge-offs (33,963) (102,595) (99,962)
Provision for loan losses 60,184 136,626 114,658
Reserves of purchased subsidiaries 12,857 15,707 8,700
- --------------------------------------------------------------------------------
Balance, end of year $341,099 $302,021 $252,283
- --------------------------------------------------------------------------------
</TABLE>
In May, 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114 (SFAS No. 114). "Accounting by
Creditors for Impairment of a Loan." This statement will require that
certain impaired loans be measured based on either the present value of
expected future cash flows discounted at the loan's effective rate, the
market price of the loan, or fair value of the underlying collateral if the
loan is collateral dependent. Adoption of this pronouncement is required in
1995 and at present, it is not expected to have a material effect on the
Corporation's financial statements.
7 PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
- ----------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ----------------------------------------------------------------------
<S> <C> <C>
Land $ 66,307 $ 56,727
Buildings 284,028 268,964
Building under capital lease 45,053 45,053
Furniture, fixtures and equipment 417,438 366,865
Leasehold improvements 82,773 79,897
Construction in progress 12,071 6,149
- ----------------------------------------------------------------------
Total 907,670 823,655
Less accumulated depreciation/amortization 427,084 390,039
- ----------------------------------------------------------------------
Net property and equipment $480,586 $433,616
- ----------------------------------------------------------------------
</TABLE>
Depreciation and amortization charged to expense in 1993, 1992 and
1991 amounted to $58,268, $50,612, and $43,505, respectively.
At December 31, 1993, the Corporation was obligated under long-term leases,
principally related to the use of land, buildings, and equipment in banking
operations. The following table summarizes future minimum rental payments
required under leases which have initial or remaining noncancellable lease
terms in excess of one year.
<TABLE>
- -----------------------------------------------------------------------------------
<CAPTION>
(in thousands)
- -----------------------------------------------------------------------------------
Period Capital lease Operating leases
- -----------------------------------------------------------------------------------
<S> <C> <C>
1994 $ 4,559 $ 19,042
1995 4,559 18,417
1996 4,559 16,011
1997 4,559 9,911
1998 4,559 7,541
After 1998 59,257 51,841
- -----------------------------------------------------------------------------------
Total minimum lease payments 82,052 $122,763
--------
Less amount representing interest 42,828
- -------------------------------------------------------
Present value of minimum lease payments $39,224
- -------------------------------------------------------
</TABLE>
Lease provisions that would cause rentals to vary from those reflected
above are not material. Property taxes, insurance, and maintenance expense
related to property under lease are principally paid by the Corporation. Total
rental expense for all operating leases amounted to $33,899, $33,275 and $28,778
in 1993, 1992, and 1991, respectively.
8 INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization are summarized as
follows:
<TABLE>
- ---------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Goodwill $213,595 $165,962
Core deposit premium 53,343 34,667
Credit card premium 3,542 1,483
Purchased mortgage servicing rights 4,858 3,776
- ---------------------------------------------------------------------
Total intangible assets, net $275,338 $205,888
- ---------------------------------------------------------------------
</TABLE>
Goodwill and core deposit premium amortization charged to expense in 1993,
1992, and 1991 amounted to $30,571, $16,076 and $12,394, respectively.
9 SEGREGATED ASSETS
Included in other assets at December 31, 1993 are segregated assets
totaling $248.2 million net of a valuation allowance of
56 Boatmen's Bancshares, Inc.
<PAGE> 42
- --------------------------------------------------------------------------------
$18.4 million. As part of the regulatory assisted acquisition of Missouri Bridge
Bank, N.A. (Bridge Bank), on April 23, 1993, the Corporation entered into a five
year loss-sharing arrangement with the FDIC with respect to approximately $950
million in multi-family residential, commercial real estate, construction and
commercial and industrial loans. During the five year period, the FDIC will
reimburse the Corporation for 80 percent of the first $92.0 million of net
charge-offs on these loans, after which the FDIC will increase its
reimbursement coverage to 95 percent of additional charge-offs. During this
period and for two years thereafter, the Corporation is obligated to pay the
FDIC 80 percent of all recoveries on charged-off loans.
Segregated assets are those loans acquired from the Bridge Bank and covered
under the loss sharing arrangement with the FDIC that possess more than the
normal risk of collectibility. These assets consist of loans that at
acquisition were or have since become classified as nonperforming loans or
foreclosed property.
The Corporation's primary purpose in managing a portfolio of this nature is
to provide ongoing collection and control activities on behalf of the FDIC.
Accordingly, these assets do not represent loans made in the ordinary course
of business and, due to the underlying nature of this liquidating asset
pool, are excluded from the Corporation's nonperforming asset statistics.
A summary of activity regarding the segregated asset pool is provided
below.
<TABLE>
- ---------------------------------------------------------------------------------
<CAPTION>
Year ended December 31, 1993 Principal Allowance Principal
(in millions) balance for losses balance, net
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Segregated assets identified
upon acquisition $312.0 $ 27.0 $285.0
Charge-offs (52.1) (10.4)
Recoveries 1.8
Transfers to segregated assets 36.5
Payments on segregated assets (29.8)
- ---------------------------------------------------------------------------------
Segregated assets, end of period $266.6 $ 18.4 $248.2
- ---------------------------------------------------------------------------------
</TABLE>
10 DEPOSITS
Deposits are summarized as follows:
<TABLE>
- ------------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ------------------------------------------------------------------------
<S> <C> <C>
Demand deposits $ 4,769,947 $ 4,210,794
Savings deposits 2,118,390 1,824,930
Interest-bearing transaction accounts 6,654,668 5,984,299
Time deposits $100,000 and over 955,988 1,196,048
Retail time deposits 6,410,009 6,468,709
- ------------------------------------------------------------------------
Total deposits $20,909,002 $19,684,780
- ------------------------------------------------------------------------
</TABLE>
11 FEDERAL FUNDS PURCHASED AND SECURITIES
SOLD UNDER REPURCHASE AGREEMENTS
Federal funds purchased and securities sold under repurchase agreements
generally represent borrowings with overnight maturities. Information
relating to these borrowings is summarized as follows:
<TABLE>
- ---------------------------------------------------------------------
<CAPTION>
(in thousands) 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Balance:
Average $1,759,173 $1,681,938 $1,667,071
Year end 1,996,022 1,664,025 1,753,365
Maximum month-end
balance during year 2,560,448 2,493,120 1,909,163
- ---------------------------------------------------------------------
Interest rate:
Average 2.83% 3.41% 5.42%
- ---------------------------------------------------------------------
Year end 2.61% 2.62% 4.17%
- ---------------------------------------------------------------------
</TABLE>
12 SHORT-TERM BORROWINGS
Short-term borrowings are summarized as follows:
<TABLE>
- ----------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ----------------------------------------------------------------
<S> <C> <C>
Commercial paper $ 49,635 $ 56,025
Other 766,336 340,479
- ----------------------------------------------------------------
Total $815,971 $396,504
- ----------------------------------------------------------------
</TABLE>
Commercial paper is issued by the parent company in maturities not to exceed
nine months. Other short-term funds consisted principally of treasury, tax and
loan accounts. At December 31, 1993, the parent company had available additional
credit totaling $100 million under a revolving credit agreement, all of which
was unused. The revolving credit agreement is subject to annual review and
cancellation by either party.
13 LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
- --------------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- --------------------------------------------------------------------------
<S> <C> <C>
Parent Company:
7 5/8% notes due 2004 $100,000 $100,000
6 3/4% notes due 2003 100,000
8 5/8% notes due 2003 50,000 50,000
9 1/4% notes due 2001 150,000 150,000
6 1/4% convertible subordinated
debentures due 2011 1,215 1,388
12% note due 1998 25,000 25,000
8 1/2% notes due through 1997 5,000
- --------------------------------------------------------------------------
Total Parent Company 426,215 331,388
- --------------------------------------------------------------------------
Subsidiaries:
9 7/8% senior notes payable April 15, 1995 35,000 35,000
Federal Home Loan Bank notes due 1997
and 1998 25,000
9% convertible subordinated capital notes,
due 1998 13,674
9 3/4% subordinated notes due 1996 3,000
10% convertible subordinated debentures
due 2008 10,051
Other 38 78
- --------------------------------------------------------------------------
Total subsidiaries 60,038 61,803
- --------------------------------------------------------------------------
Total long-term debt $486,253 $393,191
- --------------------------------------------------------------------------
</TABLE>
The 7 5/8% subordinated notes mature on October 1, 2004, the
6 3/4% subordinated notes mature on March 15, 2003, the 8 5/8% subordinated
notes mature on November 15, 2003, and the 9 1/4% subordinated notes mature on
December 1, 2001. These notes are not redeemable by the holders or the
Corporation prior to maturity.
The 6 1/4% convertible subordinated debentures are redeemable at the option
of the holder without payment of premium by the Corporation. Redemption
rights are subject to an annual noncumulative principal limitation of $25
thousand per holder and $1.2 million in the aggregate. Prepayments in whole
or in part may be made at the option of the Corporation with payment
of premium. The debentures are convertible into common stock of the
Corporation at a conversion price of $16.71 per share adjusted for the
two-for-one stock split on August 10, 1993, subject to adjustments under
certain circumstances. During 1993, 1992 and 1991, $.2 million, $2.5 million
and $1.0 million of the debentures were converted into 7,650, 74,270 and
29,517 shares of common stock, respectively.
The 12% note is due in 1998 and may not be prepaid at the option of the
Corporation.
1993 Annual Report 57
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The Corporation prepaid the 8 1/2% notes at par in their entirety on June
15, 1993.
The 9 7/8% senior notes are due April 15, 1995 with interest payable in
April and October of every year until maturity.
The 9% convertible subordinated capital notes due 1998 were convertible at
the holders' option into shares of the Corporation's common stock at a
conversion price of $14.12 per share (adjusted for the stock split). In the
first quarter of 1993, the Corporation exercised its option to prepay the
notes at a redemption price of 102% of the principal amount. During 1993,
1992 and 1991, $13.4 million, $12.9 million and $1.0 million of the
debentures were converted into 473,326, 458,313 and 35,626 shares of common
stock, respectively.
The 10% convertible subordinated debentures were called at par in 1993.
The Federal Home Loan Bank notes mature in 1997 and 1998 with interest
rates ranging from 4.9% to 5.2%. The notes may be prepaid at the option of the
Corporation with payment of premium.
Several of the note agreements contain various financial covenants
pertaining to minimum levels of net worth, limitations on additional
indebtedness, and limitations on repurchases of common stock and dividend
payments. The Corporation was in compliance with all such covenants at
December 31, 1993.
Obligations of the parent company included above are unsecured, and to a
large extent are subordinated in right of payment to any other indebtedness
of the Corporation. The indebtedness of the banking subsidiaries is
subordinated to rights of depositors.
Scheduled principal payments on total long-term debt in each of the five
years subsequent to December 31, 1993 are as follows:
<TABLE>
- --------------------------------------------------------------------------
<CAPTION>
(in thousands)
- --------------------------------------------------------------------------
Year Parent Company Consolidated
- --------------------------------------------------------------------------
<S> <C> <C>
1994 $ 1,200 $ 1,238
1995 35,015
1996
1997 10,000
1998 25,000 40,000
- --------------------------------------------------------------------------
</TABLE>
14 PREFERRED STOCK
At December 31, 1993, there were outstanding 11,551 shares of 7% Cumulative
Redeemable Preferred Stock, Series B, $100 per share stated value. Dividends
are payable quarterly. The stock is redeemable at the stated value at the
option of the holders and has equal voting rights with each share of common
stock.
15 COMMON STOCK
On August 10, 1993, the Corporation declared a two-for-one stock split,
which was effected as a 100% stock dividend to stockholders of record on
August 31, 1993 and paid on October 1, 1993. The Corporation maintains
various stock option plans which provide for the issuance of stock to
certain key employees of the Corporation. Under certain plans, stock
appreciation rights may be granted.
The following table summarizes the status of the various plans. All
information has been adjusted for the two-for-one stock split.
<TABLE>
- ----------------------------------------------------------------------------------------
<CAPTION>
1993 1992
- ----------------------------------------------------------------------------------------
SHARES PRICE PER SHARE Shares Price Per Share
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options granted 632,000 $27.00 745,048 $16.18 to $27.63
Options exercised 434,377 3.29 to 22.81 222,074 5.65 to 20.28
Stock appreciation
rights exercised 99,966 15.63 to 22.81 42,082 15.63 to 17.50
Options lapsed 58,544 9.39 to 27.00 58,246 9.39 to 22.81
Options outstanding 2,971,018 15.63 to 27.63 2,931,905 3.29 to 27.63
Options exercisable 1,280,034 5.76 to 27.63 1,060,035 3.29 to 22.48
- ----------------------------------------------------------------------------------------
</TABLE>
The Corporation has other common stock related plans which are summarized
below.
1990 Stock Purchase Plan for Employees This Plan provides eligible employees
of the Corporation and its subsidiaries with the opportunity to purchase, at
market value, with the Corporation providing a one-third matching contribution,
common stock of the Corporation through regular payroll deductions. The
aggregate number of shares issuable under this Plan is limited to 2,000,000
shares, and as of December 31, 1993, approximately 5,250 employees were
participating in the Plan.
Dividend Reinvestment and Stock Purchase Plan 1,600,000 shares of the
Corporation's common stock have been reserved for sale, at market value,
pursuant to this plan, to holders of record of shares of common stock who elect
to use quarterly dividends or optional cash contributions to purchase additional
shares.
Thrift Incentive 401(k) Plan This is a savings plan for the benefit of
employees of the Corporation and its subsidiaries. Participation by eligible
employees is voluntary, and participants may contribute at least 2% and up to
12% of their salary, up to certain limits, by regular payroll deductions. All
participants' contributions are invested by the trustee, as directed by the
participant, in various investment funds, one of which consists solely of the
Corporation's common stock. The Corporation matches, in full, the 2%
contribution which is invested in a separate fund consisting solely of the
Corporation's common stock.
Shareholder Rights Plan In 1990, the Board of Directors of the Corporation
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock. The Rights trade automatically with shares of
common stock and become exercisable only under certain circumstances. The Rights
are designed to protect the interests of the Corporation and its shareholders
against coercive takeover tactics. The purpose of the Rights is to encourage
potential acquirers to negotiate with the Corporation's Board of Directors
prior to attempting a takeover and to give the Board leverage in negotiating
on behalf of all shareholders the terms of any proposed takeover.
16 RETIREMENT BENEFITS
Substantially all employees of the Corporation and its subsidiaries are
covered by the Boatmen's Bancshares, Inc. Retirement Plan for Employees, a
noncontributory defined benefit plan. Pension benefits are based upon the
employee's length of service and compensation during the final years of
employment. Normal service costs are funded currently using the projected
unit credit method. In conjunction with the acquisition of First Amarillo
Bancorporation, Inc.
58 Boatmen's Bancshares, Inc.
<PAGE> 44
- -------------------------------------------------------------------------------
in 1993, the former Amarillo plan was merged into the Corporation's retirement
plan at December 31, 1993. In conjunction with the acquisitions of Superior
Federal Savings Bank and Sunwest Financial Services, Inc. in 1992, the former
retirement plans of these companies were merged into the Corporation's
retirement plan at December 31, 1992.
Contributions to the Plan totaled $11.8 million in 1993, $12.3 million in
1992 and $7.4 million in 1991.
Net pension expense for 1993, 1992 and 1991 was comprised of the following:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 11,800 $ 11,177 $ 8,856
Interest cost on projected
benefit obligation 16,082 14,510 12,610
Return on plan assets (29,842) (16,072) (31,795)
Net amortization and deferral 10,704 (725) 17,015
- -------------------------------------------------------------------------------
Net pension expense $ 8,744 $ 8,890 $ 6,686
- -------------------------------------------------------------------------------
</TABLE>
The following table sets forth the retirement plan's funded status and
amounts recognized in the Corporation's consolidated financial statements:
<TABLE>
- ----------------------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- ----------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair value, primarily listed
stocks and bonds $245,389 $211,639
- ----------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefits 169,278 136,423
Non-vested benefits 10,263 8,402
- ----------------------------------------------------------------------------------
Accumulated benefit obligation 179,541 144,825
Effect of projected future salary increases 45,748 46,560
- ----------------------------------------------------------------------------------
Projected benefit obligation 225,289 191,385
- ----------------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation $ 20,100 $ 20,254
- ----------------------------------------------------------------------------------
Comprised of:
Unrecognized net asset being amortized
over 17 years $ 15,916 $ 17,925
Unrecognized net gain from past
experience different from that assumed
and effects of changes in assumptions 1,981 3,618
Unrecognized prior service loss (1,773) (2,184)
Prepaid pension cost 3,976 895
- ----------------------------------------------------------------------------------
$ 20,100 $ 20,254
- ----------------------------------------------------------------------------------
</TABLE>
Assumptions used in computing pension expense were:
<TABLE>
- ---------------------------------------------------------------------------------------------
<CAPTION>
1993 1992 1991
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rate 7 3/4-8 % 7-9 % 8 1/4-9 %
Rate of increase in future compensation levels 4-5 1/2% 4-6 1/2% 4-6 1/2%
- ---------------------------------------------------------------------------------------------
Expected long-term rate of return on assets 8-8 3/4% 7-9 % 8-9 %
- ---------------------------------------------------------------------------------------------
</TABLE>
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 7.50% and 5.00%, respectively, at December
31, 1993 and 8.00% and 5.50% respectively, at December 31, 1992.
With respect to the former Amarillo retirement plan, the weighted average
discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligation
were 7.75% and 4.0%, respectively, at December 31, 1992.
The Corporation provides postemployment life and contributory medical
benefits to retired employees. The liability for such benefits is unfunded.
In 1992, the Corporation adopted Statement of Financial Accounting Standards
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions". Under this standard, costs of retiree benefits other than
pensions are accrued in a manner similar to actual pension costs. In 1991,
these costs, totaling $2.3 million, were expensed when paid.
The following table presents the status of the plans:
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $32,540 $25,795
Fully eligible active plan participants 10,557 7,414
Other active plan participants 16,529 16,999
- -----------------------------------------------------------------------------------------
Total accumulated postretirement benefit obligation 59,626 50,208
- -----------------------------------------------------------------------------------------
Unrecognized net gain 6,575 362
Unrecognized transition obligation 43,120 45,516
- -----------------------------------------------------------------------------------------
Accrued postretirement
benefit cost $ 9,931 $ 4,330
- -----------------------------------------------------------------------------------------
</TABLE>
Net postretirement benefit cost included the following components:
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992
- ------------------------------------------------------------------------------------
<S> <C> <C>
Service cost $1,238 $1,195
Interest cost 4,586 4,063
Amortization of transition obligation over 20 years 2,396 2,395
- ------------------------------------------------------------------------------------
Net postretirement benefit cost $8,220 $7,653
- ------------------------------------------------------------------------------------
</TABLE>
The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits for the medical plan is 10.50% for 1994 (compared to 12.25%
assumed for 1993) and is assumed to decrease gradually to 5.00% in 2003 and
remain at that level thereafter. The health care cost trend rate assumption has
a significant effect on the amounts reported. For example, increasing the
assumed health care trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation for the medical plan
as of December 31, 1993 by $4.4 million, and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for 1993 by
$.5 million. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.50% at December 31, 1993 and
8.50% at December 31, 1992.
In November, 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112 (SFAS No. 112), "Employers'
Accounting for Postemployment Benefits". This statement will require
recognition of the cost to provide postemployment benefits on an accrual
basis. Adoption of this pronouncement is required in 1994 and is not
expected to have a material effect on the Corporation's results of
operations.
17 INCOME TAXES
Income tax expense is summarized as follows:
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $126,509 $105,822 $ 66,334
State 21,392 14,563 10,102
- ------------------------------------------------------------------------------------
Total current 147,901 120,385 76,436
- ------------------------------------------------------------------------------------
Deferred:
Provision for loan losses (22,262) (16,071) (8,047)
Other real estate owned losses (452) (7,817) (3,814)
Unrealized net gains on
available for sale securities 26,525
Other, net (4,905) (3,979) (4,562)
- ------------------------------------------------------------------------------------
Total deferred (1,094) (27,867) (16,423)
- ------------------------------------------------------------------------------------
Income tax expense $146,807 $ 92,518 $60,013
- ------------------------------------------------------------------------------------
</TABLE>
1993 Annual Report 59
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
A reconciliation of the statutory Federal income tax rate with the
effective tax rate is as follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Percent of pre-tax income
- -------------------------------------------------------------------------------
Year ended December 31 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 34.0% 34.0%
Tax-exempt interest (4.9) (7.4) (11.0)
Deferred taxes at applicable rates (1.1) (1.7) .2
State taxes, net of Federal benefit 2.3 2.7 2.8
Other, net .3 1.2
- -------------------------------------------------------------------------------
Effective rate 31.6% 28.8% 26.0%
- -------------------------------------------------------------------------------
</TABLE>
As of December 31, 1993, the Corporation's deferred tax asset account was
comprised of the following:
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
Deferred tax liabilities:
Lease financing $ 16,413
Unrealized net gains on available for sale securities 26,525
Other 47,955
- -------------------------------------------------------------------------------
Total deferred tax liabilities 90,893
- -------------------------------------------------------------------------------
Deferred tax assets:
Provision for loan loss (130,509)
Other real estate owned losses (15,622)
Other (32,980)
- -------------------------------------------------------------------------------
Total deferred tax assets (179,111)
- -------------------------------------------------------------------------------
Net deferred tax asset $ (88,218)
- -------------------------------------------------------------------------------
</TABLE>
18 RESERVES ON DEPOSITS
Required reserves on deposits, included in the caption "Cash and due from
banks," were $546,420 and $462,281 at December 31, 1993 and 1992,
respectively.
19 FAIR VALUE OF FINANCIAL INSTRUMENTS
The reported fair values of financial instruments are based
on a variety of factors. Where possible, fair values represent quoted market
prices for identical or comparable instruments. In other cases, fair values
have been estimated based on assumptions concerning the amount and timing of
estimated future cash flows and assumed discount rates reflecting varying
degrees of risk. Intangible values assigned to customer relationships are
not reflected in the reported fair values. Accordingly, the fair values may
not represent actual values of the financial instruments that could have
been realized as of year end or that will be realized in the future.
The carrying amounts reported in the balance sheet for cash and due from
banks, short-term investments, Federal funds sold and securities purchased
under resale agreements approximate fair value.
Fair values for held to maturity securities, available for sale securities,
and trading securities are based on quoted market prices or dealer quotes.
If quoted prices are not available for the specific security, fair values
are based on quoted market prices of comparable instruments.
The fair values of 1-4 family residential loans, home equity and other
homogeneous categories of consumer loans are estimated using quoted market
prices for similar traded loans or securities backed by such loans, adjusted
for differences between the quoted instruments and the instrument being
valued. The fair values for other loans are estimated using a discounted
cash flow analysis, based on interest rates currently offered for loans with
similar terms to borrowers of similar credit quality or in some situations,
due to the variable rate nature of the instrument, carrying value and fair
value are considered one and the same.
Fair values for nonperforming loans are estimated using assumptions
regarding current assessments of collectibility and historical loss
experience.
By definition fair values of deposits with no stated maturities, such as
demand deposits, savings and NOW accounts and money market deposit accounts,
are equal to the amounts payable on demand at the reporting date. The fair
values of all other fixed rate deposits are based on discounted cash flows
using rates currently offered for deposits of similar remaining maturities.
The carrying amounts of variable rate deposits approximate fair value at the
reporting date.
The carrying amounts of Federal funds purchased and other short-term
borrowings approximate their fair values as of the reporting date.
The fair value of long-term debt is based on quoted market prices for
similar issues, or current rates offered to the Corporation for debt of the
same remaining maturity.
The fair values of interest rate swaps and foreign exchange contracts are
estimated using dealer quotes. These values represent the costs to replace
all outstanding contracts at current market rates, taking into consideration
the current credit worthiness of the counterparties. The fair values of
interest rate swaps totaled approximately $16 million and $8 million at
December 31, 1993 and 1992, respectively. The fair value of foreign exchange
contracts at December 31, 1993 was approximately $1.6 million. The fair
values of loan commitments, commercial letters of credit and standby letters
of credit are determined using estimated fees currently charged to enter
into similar agreements. These fees totaled approximately $2.5 million and
$3.2 million at December 31, 1993 and 1992, respectively.
The estimated fair values of the Corporation's financial instruments were
as follows:
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
December 31, 1993 (in millions) Carrying amount Fair value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Financial assets:
Cash and due from banks and
short-term investments $ 2,040.5 $ 2,040.5
Held to maturity securities 3,324.8 3,408.1
Available for sale securities 5,177.0 5,177.0
Trading securities 48.1 48.1
Loans 14,484.8 14,755.1
Financial liabilities:
Deposits 20,909.0 20,974.2
Short-term borrowings 2,812.0 2,812.0
Long-term debt 486.3 542.8
- ------------------------------------------------------------------------------------
<CAPTION>
December 31, 1992 (in millions) Carrying amount Fair value
- ------------------------------------------------------------------------------------
Financial assets:
Cash and due from banks and
short-term investments $ 3,108.3 $ 3,108.3
Held to maturity securities 6,652.1 6,799.6
Available for sale securities 463.6 478.4
Trading securities 38.5 38.5
Loans 12,808.9 13,051.4
Financial liabilities:
Deposits 19,684.8 19,773.0
Short-term borrowings 2,060.5 2,060.5
Long-term debt 393.2 436.1
- ------------------------------------------------------------------------------------
</TABLE>
60 Boatmen's Bancshares, Inc.
<PAGE> 46
- -------------------------------------------------------------------------------
20 FINANCIAL INSTRUMENTS
WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Corporation utilizes a variety of
off-balance sheet financial instruments to service the financial needs of
customers and to manage the Corporation's overall asset/liability position.
This activity includes commitments to extend credit, standby and commercial
letters of credit, securities lending, interest rate swaps and foreign
exchange contracts. Each of these instruments involve varying degrees of
risk. As such, the contract or notional amounts of these instruments may or
may not be an appropriate indicator of the credit or market risk associated
with these instruments.
Credit risk exposure from standby and commercial letters of credit is
minimized by subjecting these off-balance sheet instruments to the same
credit policies and underwriting standards used when making loans or
committing to extend credit. The Corporation evaluates each customer's
credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary, is based on such evaluations. Acceptable
collateral includes cash or cash equivalents, marketable securities, deeds
of trust, receivables, inventory, fixed assets and financial guarantees. The
risk associated with interest rate swaps and foreign exchange contracts
arises from the counterparties' failure to meet the terms of the agreements
and movements in foreign exchange rates, or interest rates. The Corporation
manages this risk by maintaining a well-diversified portfolio of
highly-rated counterparties in addition to imposing limits as to types,
amounts and degree of risk the portfolios can undertake. The limits are
approved by senior management and positions are monitored to ensure
compliance with such limits.
Generally accepted accounting principles recognize these instruments as
contingent obligations or off-balance sheet items and accordingly, the
contract or notional amounts are not reflected in the consolidated financial
statements.
Provided below is a summary of the Corporation's off-balance sheet
financial instruments at December 31, 1993 and 1992.
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Financial instruments whose credit risk is represented by contract amounts
- ------------------------------------------------------------------------------------
December 31 (in millions) 1993 1992
- ------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit $ 6,004.1 $5,515.2
Standby letters of credit 776.0 678.0
Commercial letters of credit 130.1 140.3
Securities lent 3,439.8 1,965.3
- ------------------------------------------------------------------------------------
Total $10,350.0 $8,298.8
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Financial instruments whose credit risk is represented by
other than notional or contract amounts
- ------------------------------------------------------------------------------------
December 31 (in millions) 1993 1992
- ------------------------------------------------------------------------------------
<S> <C> <C>
Foreign exchange contracts:
Commitments to purchase $ 574.7 $ 400.9
Commitments to sell 544.5 384.9
Interest rate swaps 1,933.2 1,071.1
- ------------------------------------------------------------------------------------
Total $3,052.4 $1,856.9
- ------------------------------------------------------------------------------------
</TABLE>
A loan commitment represents a contractual agreement to lend up to a
specified amount, over a stated period of time as long as there is no
violation of any condition established in the contract, and generally
requires the payment of a fee. Standby letters of credit are issued to
improve a customer's credit standing with third parties, whereby the
Corporation agrees to honor a financial commitment by issuing a guarantee to
third parties in the event the Corporation's customer fails to perform.
Since the majority of the loan commitments and virtually all of the standby
letters of credit are expected to expire unfunded, the total commitment
amounts do not represent future cash requirements. Interest rates, in the
event funding of the aforementioned commitments are required, are
predominantly based on floating rates or prevailing market rates at the time
such commitments are funded. Substantially all of these commitments expire
in 1-2 years unless renewed by the Corporation. Commercial letters of credit
are short-term commitments issued for trade purposes, primarily to finance
the movement of goods between a buyer and seller dealing in international
markets.
The Corporation, through its trust subsidiary, is involved in off-balance
sheet securities lending. In this capacity, the Corporation, acting as
agent, lends securities on behalf of its customers to third party borrowers.
The Corporation indemnifies its customers against losses in the event of
counterparty default, and minimizes this risk through collateral
requirements and limiting transactions to pre-approved borrowers. Collateral
policies require each borrower to initially deliver cash or securities
exceeding 102% of the market value of the securities lent. Additional
collateral is required through the term of the lending agreement to ensure
that the value of collateral exceeds the market value of the securities
lent.
The Corporation enters into interest rate swap transactions primarily as
an asset/liability strategy to manage interest-rate risk. These transactions
involve the exchange of interest payments based on a notional amount. The
notional amounts of interest rate swaps express the volume of transactions
and are not an appropriate indicator of off-balance sheet market risk or
credit risk. At December 31, 1993, the Corporation's swap portfolio totaled
$1.9 billion of which approximately $550 million matures within the next
year.
Foreign exchange activity, which is marked-to-market daily based on
prevailing rates of exchange, can expose the Corporation to market risk,
particularly when open positions exist and, to a lesser extent, credit risk
associated with counterparties and their ability to meet the terms of the
foreign exchange contracts. The Corporation's exposure to credit risk on
foreign exchange contracts is measured as the cost of replacing the contract
in the event of default by the counterparty which is limited to the
on-balance sheet market valuation adjustment for all contracts in a gain
position, an immaterial amount.
1993 Annual Report 61
<PAGE> 47
- -------------------------------------------------------------------------------
21 PARENT COMPANY CONDENSED
FINANCIAL STATEMENTS
Following are the condensed financial statements of Boatmen's Bancshares,
Inc. (Parent Company only) for the periods indicated:
<TABLE>
Balance Sheet
- -----------------------------------------------------------------------
<CAPTION>
December 31 (in thousands) 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash $ 386 $ 960
Short-term investments 16,403 95,000
Investment in subsidiaries:
Banks and bank holding companies 2,244,985 1,950,383
Nonbank 14,139 11,836
- -----------------------------------------------------------------------
Total investments in subsidiaries 2,259,124 1,962,219
- -----------------------------------------------------------------------
Advances to subsidiaries:
Bank 159,807 88,348
Nonbank 109,995 40,400
- -----------------------------------------------------------------------
Total advances to subsidiaries 269,802 128,748
- -----------------------------------------------------------------------
Goodwill 95,334 100,795
Other assets 48,410 36,391
- -----------------------------------------------------------------------
Total assets $2,689,459 $2,324,113
- -----------------------------------------------------------------------
Liabilities:
Accounts payable and accrued liabilities $ 46,955 $ 47,190
Dividends payable 32,245 27,042
Short-term borrowings 49,635 56,025
Long-term debt
(including current maturities) 426,215 331,388
- -----------------------------------------------------------------------
Total liabilities 555,050 461,645
- -----------------------------------------------------------------------
Redeemable preferred stock 1,155 1,248
- -----------------------------------------------------------------------
Stockholders' equity:
Common stock 104,126 51,131
Surplus 786,840 809,923
Unrealized net appreciation,
available for sale securities 42,252
Retained earnings 1,200,036 1,000,166
- -----------------------------------------------------------------------
Total stockholders' equity 2,133,254 1,861,220
- -----------------------------------------------------------------------
Total liabilities and stockholders'
equity $2,689,459 $2,324,113
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
Statement of Income
- ----------------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Dividends from subsidiaries:
Banks and bank holding companies $239,467 $157,557 $107,160
Nonbank 813 1,100 1,147
- ----------------------------------------------------------------------------------------------
Total dividends from subsidiaries 240,280 158,657 108,307
- ----------------------------------------------------------------------------------------------
Fees from subsidiaries 33,316 26,199 23,476
Dividends on equity securities 618
Interest on short-term investments 988 1,263 3,024
Interest on advances to subsidiaries 6,713 3,436 3,935
Loss on sale of equity securities (2,892)
Other 791 397 353
- ----------------------------------------------------------------------------------------------
Total income 282,088 189,952 136,821
- ----------------------------------------------------------------------------------------------
Expense:
Interest expense 32,062 23,853 23,135
Staff expense 31,120 20,172 12,936
Other 30,139 26,073 21,795
- ----------------------------------------------------------------------------------------------
Total expense 93,321 70,098 57,866
- ----------------------------------------------------------------------------------------------
Income before income tax benefit
and equity in undistributed
income of subsidiaries 188,767 119,854 78,955
Income tax benefit 14,932 10,290 9,337
- ----------------------------------------------------------------------------------------------
Income before equity in undistributed
income of subsidiaries 203,699 130,144 88,292
Equity in undistributed income
of subsidiaries 113,720 98,582 82,906
- ----------------------------------------------------------------------------------------------
Net income $317,419 $228,726 $171,198
- ----------------------------------------------------------------------------------------------
</TABLE>
Retained earnings include $1,072,991 and $959,271 of equity in
undistributed income of subsidiaries at year-end 1993 and 1992, respectively.
Annual dividend distributions to the Corporation from its banking
subsidiaries are subject to certain limitations by applicable banking
regulatory authorities. In the aggregate, the statutory maximum available
dividends which may be paid to the Corporation without prior regulatory
approval is $464,625, resulting in $1,788,749 or 79.4% of the total equity
of the subsidiaries being potentially restricted as of December 31, 1993.
<TABLE>
Statement of Cash Flows
- ------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 317,419 $ 228,726 $ 171,198
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 4,127 4,235 4,701
Equity in undistributed income
of subsidiaries (113,720) (98,582) (82,906)
Loss on sale of equity securities 2,892
Loss on sale of assets 237 174 153
Increase (decrease) in taxes
payable 105 (3,332) (4,394)
Other, net (6,796) 17,426 3,970
- ------------------------------------------------------------------------------------
Net cash provided by
operating activities 201,372 148,647 95,614
- ------------------------------------------------------------------------------------
Cash flows from investment activities:
Proceeds from sales of equity securities 5,905
Purchase of net assets and increase
in investments in subsidiaries (125,364) (112,102) (92,628)
Net change in advances to subsidiaries (141,054) (82,127) 4,967
Net change in short-term investments 78,597 (5,500) (58,700)
Net change in property and equipment (3,595) (305) (433)
- ------------------------------------------------------------------------------------
Net cash used for
investing activities (191,416) (194,129) (146,794)
- ------------------------------------------------------------------------------------
Cash flows from financing activities:
Net change in short-term borrowings (6,390) 24,571 (29,217)
Repayments of long-term debt (5,003) (4,140) (12,484)
Proceeds from issuance of
long-term debt 99,281 99,148 49,500
Cash dividends paid (112,216) (85,602) (77,415)
Issuance of common stock from
public stock offering 111,135
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 16,993 12,030 9,671
Acquisition of treasury stock (3,102)
Decrease in redeemable preferred stock (93) (19) (89)
- ------------------------------------------------------------------------------------
Net cash provided by (used for)
financing activities (10,530) 45,988 51,101
- ------------------------------------------------------------------------------------
Increase (decrease) in cash (574) 506 (79)
Cash at beginning of year 960 454 533
- ------------------------------------------------------------------------------------
Cash at end of year $ 386 $ 960 $ 454
- ------------------------------------------------------------------------------------
</TABLE>
22 LEGAL PROCEEDINGS
Various claims and lawsuits, incidental to the ordinary course of
business, are pending against the Corporation and its subsidiaries. In the
opinion of management, after consultation with legal counsel, resolution of
these matters is not expected to have a material effect on the consolidated
financial statements.
62 Boatmen's Bancshares, Inc.
<PAGE> 48
- -------------------------------------------------------------------------------
STATEMENT BY MANAGEMENT
Boatmen's Bancshares, Inc.
The accompanying financial statements and the related financial information
in this Annual Report were prepared by the management of Boatmen's Bancshares,
Inc. in accordance with generally accepted accounting principles and where
appropriate reflect management's best estimates and judgment. Management is
responsible for the integrity, objectivity, consistency and fair presentation
of the financial statements and all financial information contained in this
Annual Report.
The independent auditors, whose report is contained herein, are responsible
for auditing the Corporation's financial statements in accordance with
generally accepted auditing standards.
In order to fulfill its responsibility, management relies in part on a
system of internal accounting control which has been designed to safeguard the
Corporation's assets from material loss or misuse and ensure that transactions
are properly authorized and recorded in its financial records. An extensive
internal auditing program monitors compliance with established procedures and
controls to provide assurance that the system of internal accounting control
is functioning in a proper manner. There are limits inherent in all systems of
internal control based on the recognition that the cost of such systems should
not exceed the benefits to be derived. Management believes the Corporation's
system of internal accounting control provides reasonable assurance that the
Corporation's assets are safeguarded and that its financial records are
reliable.
The Corporation's internal auditor and independent auditors have direct
access to the Audit Committee of the Board of Directors. This committee, which
is composed entirely of outside directors, meets periodically with management,
the internal auditor, and the independent auditors to ensure the financial
accounting and audit process is properly conducted.
Andrew B. Craig, III
Chairman of the Board,
President and
Chief Executive Officer
James W. Kienker
Executive Vice President
and Chief Financial Officer
REPORT OF ERNST & YOUNG
INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Boatmen's Bancshares, Inc.
We have audited the accompanying consolidated balance sheet of Boatmen's
Bancshares, Inc. as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the two years in the period ended December 31, 1993. These
financial statements are the responsibility of the management of Boatmen's
Bancshares, Inc. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Boatmen's
Bancshares, Inc. at December 31, 1993 and 1992, and the consolidated results
of its operations and its cash flows for each of the two years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Note 2 to the consolidated financial statements, in 1993,
Boatmen's Bancshares, Inc. changed its method of accounting for debt and
equity securities and, in 1992, changed its methods of accounting for income
taxes and postretirement benefits other than pensions.
We previously audited and reported on the consolidated statements of
income, changes in stockholders' equity and cash flows of Boatmen's Bancshares,
Inc. for the year ended December 31, 1991, prior to their restatement for the
1993 and 1992 poolings of interests as described in Note 3. The contribution
of Boatmen's Bancshares, Inc. represents 75 percent of restated total
interest income, and 88 percent of restated net income for the year ended
December 31, 1991. Financial statements of the other pooled companies
included in the 1991 restated consolidated statements of income, changes in
stockholders' equity and cash flows were audited and reported on separately
by other auditors. We have also audited, as to combination only, the
accompanying statements of income, changes in stockholders' equity and cash
flows for the year ended December 31, 1991, after restatement for the 1993
and 1992 poolings of interests; in our opinion, such consolidated financial
statements have been properly combined on the basis described in Note 3 to
the consolidated financial statements.
St. Louis, Missouri ERNST & YOUNG
January 20, 1994
1993 Annual Report 63
<PAGE> 49
DIRECTORS
- -------------------------------------------------------------------------------
Richard L. Battram
Vice Chairman
The May Department
Stores Company
B. A. Bridgewater, Jr.
Chairman, President
and Chief Executive Officer
Brown Group, Inc.
William E. Cornelius
Retired Chairman and
Chief Executive Officer
Union Electric Company
Andrew B. Craig, III
Chairman of the Board,
President and
Chief Executive Officer
Boatmen's Bancshares, Inc.
Ilus W. Davis
Chairman of Kansas City Office
Armstrong, Teasdale, Schlafly
& Davis
Michael G. Fitt
Retired Chairman of the Board
and Chief Executive Officer
Employers Reinsurance
Corporation
John E. Hayes, Jr.
Chairman of the Board,
President and
Chief Executive Officer
Western Resources, Inc.
Samuel B. Hayes, III
Vice Chairman
Boatmen's Bancshares, Inc.
Ike Kalangis
Chairman, President
and Chief Executive Officer
Boatmen's Sunwest, Inc.
Lee M. Liberman
Chairman Emeritus
Laclede Gas Company
John Peters MacCarthy
Vice Chairman
Boatmen's Bancshares, Inc.
William E. Maritz
Chairman of the Board and
Chief Executive Officer
Maritz Inc.
Andrew E. Newman
Chairman of the Board
Edison Brothers Stores, Inc.
Jerry E. Ritter
Executive Vice President,
Chief Financial and
Administrative Officer
Anheuser-Busch Companies, Inc.
William P. Stiritz
Chairman and
Chief Executive Officer
Ralston Purina Company
A. E. Suter
Senior Vice Chairman and
Chief Operating Officer
Emerson Electric Co.
Dwight D. Sutherland
Partner
Sutherland Lumber Company
Theodore C. Wetterau
Retired Chairman and
Chief Executive Officer
Wetterau Incorporated
PRINCIPAL OFFICERS
- -------------------------------------------------------------------------------
Andrew B. Craig, III
Chairman of the Board,
President and
Chief Executive Officer
Samuel B. Hayes, III
Vice Chairman
John Peters MacCarthy
Vice Chairman
John M. Brennan
Executive Vice President
Loan Administration
J. Robert Brubaker
Executive Vice President and
Senior Operations Officer
Gregory L. Curl
Executive Vice President
Alfred S. Dominick, Jr.
Executive Vice President
Retail Banking
James W. Kienker
Executive Vice President
and Chief Financial Officer
Phillip E. Peters
Executive Vice President and
Chief Investment Officer
Philip N. McCarty
Senior Vice President
and Secretary
David L. Ahner
Senior Vice President
Corporate Real Estate
Larry D. Bayliss
Senior Vice President
Advertising and
Public Relations
William K. Carson
Senior Vice President
and President Boatmen's
Mortgage Corporation
Jacquelyn L. Dezort
Senior Vice President
and Auditor
Forrest S. FitzRoy
Senior Vice President
and General Counsel
Arthur J. Fleischer
Senior Vice President
Human Resources
John W. Fricke
Senior Vice President
Community Banks
Robert W. Godwin
Senior Vice President
Taxation
Leo G. Haas
Senior Vice President
Michael E. Jennings
Senior Vice President
W. Bruce Phelps
Senior Vice President
and Controller
Gary S. Pratte
Senior Vice President
Loan Administration
Raymond E. Senuk
Senior Vice President
Chief Information Officer
R. Patrick Shannon
Senior Vice President
Loan Review
Marvin W. Smith
Senior Vice President
Operations Administration
H. Chandler Taylor
Senior Vice President
Loan Administration
64 Boatmen's Bancshares, Inc.
<PAGE> 50
CORPORATE INFORMATION
- -------------------------------------------------------------------------------
Market Information
The Corporation's common stock is traded on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") National Market
System ("NMS") under the symbol "BOAT." Options on the Corporation's common
stock are traded on the Chicago Board Options Exchange ("CBOE") under the
symbol "BTQ." The following table sets forth the high, low and closing trade
prices of the common stock for each quarterly period during 1993 and 1992 as
reported by the National Association of Securities Dealers, Inc. ("NASD"):
<TABLE>
Common Stock Share Data(1)
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
High Low Close Book Value Market/Book Dividends Declared
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993
FOURTH $33.50 $27.50 $29.88 $20.49 146% $.31
THIRD 32.38 29.19 32.19 19.66 164 .31
SECOND 32.50 27.25 30.19 19.18 157 .28
FIRST 30.50 26.88 30.50 18.67 163 .28
1992
Fourth $28.25 $24.75 $28.00 $18.20 154% $.28
Third 26.81 24.75 25.88 18.25 142 .28
Second 25.75 21.19 25.06 17.71 142 .27
First 24.25 20.75 22.13 17.31 128 .27
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Previously reported per share data have been restated to reflect the two-for-one stock split which was declared
on August 10, 1993 and paid on October 1, 1993.
</TABLE>
At February 11, 1994, there were approximately 27,968 holders of record of the
Corporation's common stock and the closing price on that day was $27.88.
Trading Volume
The number of shares of the Corporation's common stock traded during the
fourth quarter of 1993 and year-to-date 1993 as reported by NASD were
17,686,388 and 52,611,322, respectively.
<TABLE>
<CAPTION>
Standard Thomson
Agency Ratings Moody's & Poor's Bankwatch
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boatmen's Bancshares, Inc.: B
6 3/4% Subordinated notes due 2003 A-3 A- A
7 5/8% Subordinated notes due 2004 A-3 A- A
8 5/8% Subordinated notes due 2003 A-3 A- A
9 1/4% Subordinated notes due 2001 A-3 A- A
6 1/4% Convertible subordinated
debentures due 2011 A-3 A- A
Commercial paper P-1 A-1 TBW-1
The Boatmen's National Bank of St. Louis: B
Short-term/long-term deposits P-1/Aa3 A-1/A+ TBW-1
Boatmen's First National Bank of Kansas City: B
Short-term/long-term deposits A-1/A+ TBW-1
- -------------------------------------------------------------------------------------
</TABLE>
Corporate Headquarters
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63101
Transfer Agent
Boatmen's Trust Company
510 Locust Street
St. Louis, MO 63101
(314) 466-1357 or (800) 456-9852
Investor Relations Contact
Kevin R. Stitt
Director of Investor Relations
(314) 466-7662
(314) 466-6191 (FAX)
A Dividend Reinvestment and Stock Purchase Plan is available to shareholders
of the Corporation. The key features of this Plan are:
. Dividends on common stock may be automatically reinvested;
. Option to invest up to $10,000 cash per quarter;
. No brokerage commissions or service charges on reinvested
dividends or cash investments.
A Direct Deposit of Dividends program is also available to shareholders
of the Corporation. This program, which is offered at no charge, provides
for the deposit of quarterly dividends directly to a checking or savings
account.
Please direct inquiries regarding these programs and requests for the
Reinvestment Plan Prospectus and Direct Deposit Authorization Form to:
Boatmen's Trust Company
P.O. Box 14768
St. Louis, MO 63178
(314) 466-1357 or (800) 456-9852
The Corporation's Bylaws require that notice of shareholder nominations for
directors and proposals of business to be transacted at the Corporation's
Annual Meeting of Shareholders must be received by the Secretary of the
Corporation not less than 75 days prior to the date of the meeting.
The Corporation's annual meeting will be held on April 26, 1994 at
10:00 a.m. at the Corporate Headquarters, One Boatmen's Plaza,
St. Louis, Missouri.
1993 Annual Report 65
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE CORPORATION
<TABLE>
Following is a list of subsidiaries of the Corporation.
<CAPTION>
STATE OR OTHER
JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- ---------------
<S> <C>
Boatmen's National Bank of Belleville................................................... United States
Boatmen's First National Bank of Kansas City............................................ United States
Boatmen's Bank of Southern Missouri..................................................... Missouri
The Boatmen's National Bank of St. Louis................................................ United States
Boatmen's National Bank of Boonville.................................................... United States
Boatmen's Bank of Butler................................................................ Missouri
Boatmen's National Bank of Cape Girardeau............................................... United States
Boatmen's National Bank of Central Illinois............................................. United States
Boatmen's National Bank of Charleston................................................... United States
Boatmen's Bank of Delaware.............................................................. Delaware
Boatmen's Bank of Franklin County....................................................... Illinois
Boatmen's Bank of Kennett............................................................... Missouri
Boatmen's National Bank of Lebanon...................................................... United States
Boatmen's Bank of Marshall.............................................................. Missouri
Boatmen's Bank of Mid-Missouri.......................................................... Missouri
Boatmen's Bank of Mt. Vernon............................................................ Illinois
Boatmen's Bank of Nevada................................................................ Missouri
Boatmen's First National Bank of Oklahoma............................................... United States
Boatmen's Bank of Pulaski County........................................................ Missouri
Boatmen's Bank of Quincy................................................................ Illinois
Boatmen's River Valley Bank............................................................. Missouri
Boatmen's Bank of Rolla................................................................. Missouri
Boatmen's Bank of Southwest Missouri................................................... Missouri
Boatmen's Bank of Tennessee............................................................. Tennessee
Boatmen's Bank of Troy.................................................................. Missouri
Boatmen's Bank of Vandalia.............................................................. Missouri
Boatmen's First National Bank of West Plains............................................ United States
Superior Federal Bank, F.S.B. .......................................................... United States
Boatmen's Bancshares of Iowa, Inc. ..................................................... Iowa
Boatmen's Bank Iowa, N.A. .............................................................. United States
Boatmen's Bank of Fort Dodge ........................................................... Iowa
Boatmen's Bank of Kalona ............................................................... Iowa
Boatmen's Bank of Marengo .............................................................. Iowa
Boatmen's Bank of North Iowa ........................................................... Iowa
Boatmen's National Bank of Northwest Iowa .............................................. United States
Boatmen's Bank of Sigourney ............................................................ Iowa
Boatmen's Bank of Sioux City ........................................................... Iowa
Boatmen's Building Corporation of Iowa, Inc. ........................................... Iowa
Boatmen's Information Systems of Iowa, Inc. ............................................ Iowa
FKF, Inc. .............................................................................. Iowa
Boatmen's Kansas, Inc. ................................................................. Kansas
Boatmen's Bank of Kansas ............................................................... Kansas
Boatmen's Texas, Inc. .................................................................. Missouri
Boatmen's First National Bank of Amarillo .............................................. United States
Eighth and Taylor Corp. ................................................................ Texas
Boatmen's Oklahoma, Inc. ............................................................... Missouri
Boatmen's Sunwest, Inc. ................................................................ New Mexico
<PAGE> 2
<CAPTION>
STATE OR OTHER
JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- ---------------
Sunwest Bank of Albuquerque, N.A. ...................................................... United States
Sunwest Bank of Clovis, N.A. ........................................................... United States
Sunwest Bank of Farmington ............................................................. New Mexico
Sunwest Bank of Gallup ................................................................. New Mexico
Sunwest Bank of Grant County ........................................................... New Mexico
Sunwest Bank of Hobbs, N.A. ............................................................ United States
Sunwest Bank of Las Cruces, N.A. ....................................................... United States
Sunwest Bank of Raton, N.A. ............................................................ United States
Sunwest Bank of Rio Arriba, N.A. ....................................................... United States
Sunwest Bank of Roswell, N.A. .......................................................... United States
Sunwest Bank of Santa Fe ............................................................... New Mexico
Sunwest Bank of El Paso ................................................................ Texas
Security Bancshares, Inc. .............................................................. Oklahoma
Catoosa Bancshares, Inc. ............................................................... Oklahoma
Founders Bancorporation, Inc. .......................................................... Oklahoma
Boatmen's Insurance Agency, Inc. ....................................................... Missouri
Boatmen's Life Insurance Company........................................................ Missouri
Boatmen's Mortgage Corporation.......................................................... Missouri
Boatmen's Trust Company................................................................. Missouri
Boatmen's Community Development Corporation............................................. Missouri
Boatmen's Service Company, Inc. ........................................................ Missouri
Tyler International Sales, Inc. ........................................................ U.S. Virgin
Islands
Credit Systems, Incorporated (44% stock ownership)...................................... Delaware
Monetary Transfer System (Joint Venture-40.0%).......................................... Missouri
</TABLE>
The Corporation's subsidiaries do business only under their names as
listed above.
The Corporation's indirect subsidiaries not listed, if considered in
the aggregate as a single subsidiary, would not constitute a
significant subsidiary at December 31, 1993.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Boatmen's Bancshares, Inc. of our report dated January
20, 1994 included in the 1993 Annual Report to Shareholders of
Boatmen's Bancshares, Inc.
We also consent to the incorporation by reference into each
registration statement listed below of our report dated January 20,
1994 with respect to the consolidated financial statements of Boatmen's
Bancshares, Inc. incorporated herein by reference in the Annual Report
(Form 10-K) for the year ended December 31, 1993.
<TABLE>
<CAPTION>
FORM NO.
---- ---
<C> <C> <S>
S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan
S-8 33-15714 1987 Non-Qualified Stock Option Plan
S-8 33-15715 Amended 1981 Incentive Stock Option Plan
S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan
Centerre Bancorporation 1980 Stock Option Plan
S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan
S-8 33-50451 1990 Stock Purchase Plan for Employees
S-8 33-37862 Thrift Incentive 401(k) Plan
S-8 33-44546 1991 Incentive Stock Option Plan
S-8 33-46730 First Interstate of Iowa, Inc.
S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan
S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan
S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1)
S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
</TABLE>
ERNST & YOUNG
St. Louis, Missouri
March 15, 1994
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Shareholders
Boatmen's Bancshares, Inc.
We consent to incorporation by reference into each registration
statement listed below of our report dated January 31, 1992, relating
to the consolidated income statement and statements of changes in
shareholders' equity and cash flows of First Interstate of Iowa, Inc.
and subsidiaries for the year ended December 31, 1991, which report
appears as an exhibit in the December 31, 1993 annual report on Form
10-K of Boatmen's Bancshares, Inc.
<TABLE>
<CAPTION>
FORM NO.
---- ---
<C> <C> <S>
S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan
S-8 33-15714 1987 Non-Qualified Stock Option Plan
S-8 33-15715 Amended 1981 Incentive Stock Option Plan
S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan
Centerre Bancorporation 1980 Stock Option Plan
S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan
S-8 33-50451 1990 Stock Purchase Plan for Employees
S-8 33-37862 Thrift Incentive 401(k) Plan
S-8 33-44546 1991 Incentive Stock Option Plan
S-8 33-46730 First Interstate of Iowa, Inc.
S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan
S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan
S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1)
S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
</TABLE>
KPMG PEAT MARWICK
Des Moines, Iowa
March 10, 1994
<PAGE> 1
EXHIBIT 23(b)
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Shareholders
Boatmen's Bancshares, Inc.
We consent to incorporation by reference into each registration
statement listed below of our report dated March 5, 1992, relating to
the consolidated statements of operations, changes in shareholders'
equity and cash flows of Sunwest Financial Services, Inc. and
subsidiaries for the year ended December 31, 1991, which report appears
as an exhibit in the December 31, 1993 annual report on Form 10-K of
Boatmen's Bancshares, Inc.
<TABLE>
<CAPTION>
FORM NO.
---- ---
<C> <C> <S>
S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan
S-8 33-15714 1987 Non-Qualified Stock Option Plan
S-8 33-15715 Amended 1981 Incentive Stock Option Plan
S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan
Centerre Bancorporation 1980 Stock Option Plan
S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan
S-8 33-50451 1990 Stock Purchase Plan for Employees
S-8 33-37862 Thrift Incentive 401(k) Plan
S-8 33-44546 1991 Incentive Stock Option Plan
S-8 33-46730 First Interstate of Iowa, Inc.
S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan
S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan
S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1)
S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
</TABLE>
KPMG PEAT MARWICK
Albuquerque, New Mexico
March 10, 1994
<PAGE> 1
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Shareholders
Boatmen's Bancshares, Inc.
We consent to incorporation by reference into each registration
statement listed below of Boatmen's Bancshares, Inc. of our report
dated January 24, 1992, except for Note 23 which is as of February 24,
1992, relating to the consolidated statements of income, stockholders'
equity and cash flows of First Amarillo Bancorporation, Inc. and
subsidiaries for the year ended December 31, 1991, which report is
included in the December 31, 1993, Annual Report on Form 10-K of
Boatmen's Bancshares, Inc.
<TABLE>
<CAPTION>
FORM NO.
---- ---
<C> <C> <S>
S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan
S-8 33-15714 1987 Non-Qualified Stock Option Plan
S-8 33-15715 Amended 1981 Incentive Stock Option Plan
S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan
Centerre Bancorporation 1980 Stock Option Plan
S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan
S-8 33-50451 1990 Stock Purchase Plan for Employees
S-8 33-37862 Thrift Incentive 401(k) Plan
S-8 33-44546 1991 Incentive Stock Option Plan
S-8 33-46730 First Interstate of Iowa, Inc.
S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan
S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan
S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1)
S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
</TABLE>
KPMG PEAT MARWICK
Amarillo, Texas
March 10, 1994
<PAGE> 1
EXHIBIT 99
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholder
First Interstate of Iowa, Inc.
We have audited the consolidated income statement and changes in
shareholders' equity and cash flows of First Interstate of Iowa, Inc.
and subsidiaries for the year ended December 31, 1991 (not presented
separately herein). These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of
operations, changes in shareholders' equity, and cash flows of First
Interstate of Iowa, Inc. and subsidiaries for the year ended December
31, 1991 in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
Des Moines, Iowa
January 31, 1992
<PAGE> 1
EXHIBIT 99(a)
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Sunwest Financial Services, Inc.:
We have audited the consolidated statements of operations, changes in
stockholders' equity and cash flows of Sunwest Financial Services, Inc.
and subsidiaries for the year ended December 31, 1991 (not presented
separately herein). These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of
operations and cash flows of Sunwest Financial Services, Inc. and
subsidiaries for the year ended December 31, 1991, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK
Albuquerque, New Mexico
March 5, 1992
<PAGE> 1
EXHIBIT 99(b)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
First Amarillo Bancorporation, Inc.:
We have audited the consolidated statements of income, stockholders'
equity and cash flows of First Amarillo Bancorporation, Inc. and
subsidiaries for the year ended December 31, 1991 (not presented
separately herein). These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements of First
Amarillo Bancorporation, Inc. and subsidiaries referred to above
present fairly, in all material respects, the results of their
operations and their cash flows for the year ended December 31, 1991 in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
Amarillo, Texas
January 24, 1992
except for Note 23
which is as of
February 24, 1992
