<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---------- to---------
Commission File number: 1-3750
BOATMEN'S BANCSHARES, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-0672260
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri 63101
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(Address of principal executive offices) (Zip Code)
3l4-466-6000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (l) 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Number of Shares Outstanding
Class of Common Stock as of July 31, 1995
- ------------------------------------------------------------------------------
$1 Par Value 129,268,997
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<PAGE> 2
<TABLE>
INDEX
<CAPTION>
PART I - FINANCIAL INFORMATION
------------------------------
PAGE NO.
<S> <C>
Item 1 - Financial Statements 3
Consolidated Balance Sheet
June 30, 1995 and 1994 and December 31, 1994 4
Consolidated Statement of Income
Three months and six months ended June 30, 1995 and 1994 5
Consolidated Statement of Changes in Stockholders' Equity
Six months ended June 30, 1995 and 1994 6
Consolidated Statement of Cash Flows
Six months ended June 30, 1995 and 1994 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-26
<CAPTION>
PART II - OTHER INFORMATION
---------------------------
<S> <C>
Item 1 - Legal Proceedings None
Item 2 - Changes in Securities None
Item 3 - Defaults Upon Senior Securities None
Item 4 - Submission of Matters to a Vote of Security Holders 27
Item 5 - Other Information None
Item 6 - Exhibits and Reports on Form 8-K 27
SIGNATURE 27
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. - FINANCIAL STATEMENTS
The consolidated financial statements for the three months and
six months ended June 30, 1995 and 1994 include the accounts of the
Corporation and its subsidiaries after elimination of all material
intercompany transactions. In the opinion of management, all necessary
adjustments, consisting of normal recurring adjustments, have been
included to present fairly the results of operations for the interim
periods presented herein. The results of operations for the three
months and six months ended June 30, 1995 are not necessarily
indicative of the results which may be expected for any other interim
period or for the entire year.
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<PAGE> 4
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
<CAPTION>
(dollars in thousands) June 30, 1995 June 30, 1994 December 31, 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 1,903,375 $ 1,822,906 $ 2,119,579
Short-term investments 51,470 79,809 44,717
Securities:
Held to maturity 5,164,908 5,262,955 5,216,968
Available for sale 3,984,903 4,749,979 4,172,964
Trading 27,565 25,026 31,674
Federal funds sold and securities purchased
under resale agreements 732,539 442,815 1,111,720
Loans, net of unearned income 19,921,345 17,736,523 18,655,511
Less reserve for loan losses 385,104 379,849 376,618
- --------------------------------------------------------------------------------------------------------------
Loans, net 19,536,241 17,356,674 18,278,893
- --------------------------------------------------------------------------------------------------------------
Property and equipment 640,924 629,769 637,500
Other assets 1,366,015 1,202,410 1,264,015
- --------------------------------------------------------------------------------------------------------------
Total assets $33,407,940 $31,572,343 $32,878,030
==============================================================================================================
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------------------------------------
Liabilities:
Demand deposits $ 5,256,042 $ 4,966,635 $ 5,256,494
Retail savings deposits and interest-bearing
transaction accounts 10,113,608 9,974,491 10,142,719
Time deposits 9,047,287 8,530,532 9,984,860
- --------------------------------------------------------------------------------------------------------------
Total deposits 24,416,937 23,471,658 25,384,073
- --------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold
under repurchase agreements 2,256,025 3,406,471 2,053,609
Short-term borrowings 2,822,558 1,245,329 1,903,182
Capital lease obligations 39,523 40,641 40,098
Long-term debt 522,215 585,757 592,041
Other liabilities 567,220 302,394 342,512
- --------------------------------------------------------------------------------------------------------------
Total liabilities 30,624,478 29,052,250 30,315,515
- --------------------------------------------------------------------------------------------------------------
Redeemable preferred stock 1,132 1,142 1,142
- --------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock ($1 par value;
200,000,000 shares authorized) 129,830 128,752 128,873
Surplus 987,673 963,686 964,900
Retained earnings 1,698,469 1,465,539 1,593,911
Treasury stock (714,980 and 508,698 shares at
cost, respectively) (23,194) (14,516)
Unrealized net appreciation (depreciation),
available for sale securities (10,448) (39,026) (111,795)
- --------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,782,330 2,518,951 2,561,373
- --------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $33,407,940 $31,572,343 $32,878,030
==============================================================================================================
Held to maturity securities, market value $ 5,166,460 $ 5,163,862 $ 4,965,930
Available for sale securities, amortized cost 4,002,123 4,813,173 4,354,715
Common stock, shares outstanding 129,115,302 128,751,665 128,364,624
==============================================================================================================
</TABLE>
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<PAGE> 5
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Second quarter ended June 30 Six months ended June 30
- --------------------------------------------------------------------------------------------------------------------
(in thousands) 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $430,829 $353,870 $836,791 $684,068
Interest on short-term investments 983 1,082 1,882 1,654
Interest on Federal funds sold and securities purchased
under resale agreements 7,539 2,760 15,385 5,340
Interest on held to maturity securities
Taxable 66,317 58,900 131,109 107,534
Tax-exempt 13,903 14,903 27,868 30,101
- --------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 80,220 73,803 158,977 137,635
Interest on available for sale securities 64,731 66,335 129,584 136,182
Interest on trading securities 338 926 759 1,766
- --------------------------------------------------------------------------------------------------------------------
Total interest income 584,640 498,776 1,143,378 966,645
- --------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 200,577 145,692 385,328 287,356
Interest on Federal funds purchased and other
short-term borrowings 70,335 40,522 135,689 65,999
Interest on capital lease obligations 970 997 1,940 1,990
Interest on long-term debt 11,492 11,468 23,507 22,476
- --------------------------------------------------------------------------------------------------------------------
Total interest expense 283,374 198,679 546,464 377,821
- --------------------------------------------------------------------------------------------------------------------
Net interest income 301,266 300,097 596,914 588,824
Provision for loan losses 9,171 7,740 18,881 13,586
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 292,095 292,357 578,033 575,238
- --------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 46,345 40,930 86,765 82,413
Service charges 47,595 46,811 93,294 92,651
Credit card 11,728 9,841 23,584 19,507
Investment banking revenues 8,880 10,584 17,670 20,313
Mortgage banking operations 16,291 12,723 39,195 31,768
Securities gains, net 2,815 702 2,861 3,256
Other 31,887 31,863 64,284 57,655
- --------------------------------------------------------------------------------------------------------------------
Total noninterest income 165,541 153,454 327,653 307,563
- --------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 146,654 149,092 294,913 297,584
Net occupancy 19,277 20,580 39,587 41,225
Equipment 23,483 23,579 46,855 45,597
FDIC insurance 13,310 13,271 26,626 26,719
Intangible amortization 8,052 8,808 15,935 17,594
Advertising 8,674 7,849 16,170 14,670
Other 73,876 64,407 164,623 130,754
- --------------------------------------------------------------------------------------------------------------------
Total noninterest expense 293,326 287,586 604,709 574,143
- --------------------------------------------------------------------------------------------------------------------
Income before income tax expense 164,310 158,225 300,977 308,658
Income tax expense 55,613 55,244 106,471 107,054
- --------------------------------------------------------------------------------------------------------------------
Net income $108,697 $102,981 $194,506 $201,604
====================================================================================================================
Net income per share $.84 $.80 $1.51 $1.57
====================================================================================================================
Dividends declared per share $.34 $.31 $ .68 $ .62
====================================================================================================================
Earnings per share amounts are based on weighted average shares
outstanding after adjusting net income for dividends on
preferred stock. For the six months, average shares outstanding were
128,965,194 in 1995 and 128,641,529 in 1994. Preferred dividends
declared totaled $40 in both 1995 and 1994.
</TABLE>
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<PAGE> 6
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
Unrealized Net
Appreciation,
Common Stock Treasury Stock (Depreciation)
-------------------- Retained ----------------- Available for
(in thousands) Shares Amount Surplus Earnings Shares Amount Sale Securities Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 128,127 $128,127 $955,324 $1,334,244 -- -- $ 42,252 $2,459,947
Net income -- -- -- 201,604 -- -- -- 201,604
Cash dividends declared:
Common ($.62 per share) -- -- -- (64,760) -- -- -- (64,760)
Redeemable preferred -- -- -- (40) -- -- -- (40)
By pooled company prior
to merger--common -- -- -- (5,509) -- -- -- (5,509)
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 203 203 2,581 -- -- -- -- 2,784
Common stock issued upon
acquisition of subsidiary 411 411 5,700 -- -- -- -- 6,111
Adjustment for treasury stock
activity--pooled company (3) (3) (98) -- -- -- -- (101)
Common stock issued upon
conversion of convertible
subordinated debentures 14 14 205 -- -- -- -- 219
Adjustment of available for sale
securities to market value -- -- -- -- -- -- (81,278) (81,278)
Other, net -- -- (26) -- -- -- -- (26)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1994 128,752 128,752 963,686 1,465,539 -- -- (39,026) 2,518,951
===============================================================================================================================
BALANCE, JANUARY 1, 1995 128,873 128,873 964,900 1,593,911 (509) (14,516) (111,795) 2,561,373
Net income -- -- -- 194,506 -- -- -- 194,506
Cash dividends declared:
Common ($.68 per share) -- -- -- (87,342) -- -- -- (87,342)
Redeemable preferred -- -- -- (40) -- -- -- (40)
By pooled company prior
to merger--common -- -- -- (2,565) -- -- -- (2,565)
Acquisition of Treasury stock -- - -- -- (800) (25,827) -- (25,827)
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 374 374 5,809 -- 305 9,141 -- 15,324
Common stock issued upon purchase
acquisition of subsidiaries 578 578 16,889 -- 289 8,008 -- 25,475
Common stock issued upon conversion
of convertible subordinated
debentures 5 5 81 -- -- -- -- 86
Adjustment of available for sale
securities to market value -- -- -- -- -- -- 101,347 101,347
Other, net -- -- (6) (1) -- -- -- (7)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1995 129,830 $129,830 $987,673 $1,698,469 (715) $(23,194) $(10,448) $2,782,330
===============================================================================================================================
</TABLE>
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<PAGE> 7
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Six months ended June 30 (in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net cash provided by operating activities $ 329,604 $ 375,993
Investing Activities:
Net decrease in Federal funds sold and securities purchased under resale agreements 380,856 56,040
Net increase in loans (1,210,918) (740,829)
Proceeds from the sales of foreclosed property 11,151 24,190
Proceeds from the maturity of held to maturity securities 349,175 617,202
Purchases of held to maturity securities (277,653) (1,292,701)
Proceeds from the maturity of available for sale securities 428,689 948,067
Proceeds from the sales of available for sale securities 114,584 53,499
Purchases of available for sale securities (160,863) (338,007)
Net increase in short-term investments (6,753) (53,798)
Net increase in property and equipment (39,886) (65,271)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (411,618) (791,608)
==================================================================================================================
Financing Activities:
Net increase in Federal funds purchased and
securities sold under repurchase agreements 202,416 1,282,469
Net decrease in deposits (1,095,971) (823,605)
Net increase in short-term borrowings 919,151 76,458
Payments on long-term debt (69,736) (6,021)
Proceeds from the issuance of long-term debt 28,850
Payments on capital lease obligations (575) (534)
Cash dividends paid (78,962) (70,073)
Acquisition of treasury stock (25,827)
Common stock issued pursuant to various employee and
shareholder stock issuance plans 15,324 2,784
Decrease in redeemable preferred stock (10) (13)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (134,190) 490,315
- ------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and due from banks (216,204) 74,700
Cash and due from banks at beginning of year 2,119,579 1,748,206
- ------------------------------------------------------------------------------------------------------------------
Cash and due from banks at June 30 $1,903,375 $1,822,906
==================================================================================================================
</TABLE>
For the six months ended June 30, 1995 and 1994, interest paid totaled
$266 million and $371 million, respectively, and income taxes paid
totaled $94 million and $112 million. Additional common stock was
issued upon the conversion of $90 thousand of the Corporation's
convertible debt for the six months ended June 30, 1995, and $228
thousand for the same period a year ago. Loans transferred to
foreclosed property totaled $5.4 million in 1995, and $12.6 million in
1994. In 1995, assets and liabilities of purchased subsidiaries at
dates of acquisition included investment securities of $57 million,
loans of $74 million, other assets of $36 million, deposits of $129
million and other liabilities of $1 million.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
Table 1: Summary of Selected Financial Information
<CAPTION>
Quarter ended June 30 Six months ended June 30
- ------------------------------------------------------------------------------------------------------------------
(in millions except per share data) 1995 1994 % change 1995 1994 % change
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Share Data
Net income $.84 $.80 5.0% $ 1.51 $ 1.57 (3.8)%
Net income before nonrecurring merger expenses 1.67 1.57 6.4
Dividends declared .34 .31 9.7 .68 .62 9.7
Book value 21.55 19.56 10.1
Tangible book value 19.05 17.08 11.5
Common shares:
Average outstanding for the period 129.0 128.6 .3
Outstanding at period end 129.1 128.8 .3
- ------------------------------------------------------------------------------------------------------------------
For the Period
Net interest income $301.3 $300.1 .4% $596.9 $588.8 1.4%
Provision for loan losses 9.2 7.7 18.5 18.9 13.6 39.0
Noninterest income 165.5 153.5 7.9 327.7 307.6 6.5
Noninterest expense 293.3 287.6 2.0 604.7<F1> 574.1 5.3
Net income 108.7 103.0 5.6 194.5 201.6 (3.5)
Net income before nonrecurring merger expenses 214.5 201.6 6.4
- ------------------------------------------------------------------------------------------------------------------
Financial Position at Period End
Total assets $33,407.9 $31,572.3 5.8%
Loans 19,921.3 17,736.5 12.3
Securities 9,149.8 10,012.9 (8.6)
Deposits 24,416.9 23,471.7 4.0
Long-term debt 522.2 585.8 (10.8)
Stockholders' equity 2,782.3 2,519.0 10.5
- ------------------------------------------------------------------------------------------------------------------
Selected Financial Ratios
Return on assets 1.33% 1.31% 1.20% 1.29%
Return on assets before nonrecurring merger expenses 1.32 1.29
Return on equity 15.85 16.45 14.48 16.15
Return on equity before nonrecurring merger expenses 15.98 16.15
Net interest margin 4.22 4.40 4.25 4.40
Noninterest income/operating income 34.8 33.2 34.8 33.6
Efficiency ratio 61.7 62.2 64.2 62.8
Efficiency ratio before nonrecurring merger expenses 61.4 62.8
Capital ratios:
Equity to assets 8.33 7.98
Risk-based capital:
Tier I capital 10.87 10.94
Total capital 13.90 14.23
Tier I leverage ratio 7.63 7.28
- ------------------------------------------------------------------------------------------------------------------
Asset Quality
Nonperforming loans $ 132.2 $ 159.3 (17.0)%
Nonperforming assets 190.8 269.0 (29.1)
Nonperforming loans to total loans .66% .90%
Nonperforming assets to total loans and foreclosed
property .95 1.50
Loan reserve to nonperforming loans 291.36 238.41
Loan reserve to net loans 1.93 2.14
Net charge-offs to average loans .13 .13
==================================================================================================================
<FN>
<F1>Includes nonrecurring merger expenses of $26 million.
</TABLE>
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<PAGE> 9
ACQUISITION OVERVIEW
Over the last several years the Corporation has made numerous
acquisitions establishing significant market positions in Missouri,
Arkansas and New Mexico, and significant presences in southern
Illinois, western Tennessee, Oklahoma and northern Texas. The
acquisition program has three objectives: geographic diversification,
growth in retail market share, and additional earnings generation
capacity. The Corporation's geographic profile provides significant
credit and economic risk diversification in that the Corporation is not
significantly dependent on any major market. All of the Corporation's
major markets are currently experiencing favorable economic conditions.
In 1994 and through the six months of 1995, the Corporation completed
eight acquisitions in five states aggregating $4.3 billion in total
assets. The Corporation's operations currently span nine states, with
services delivered from over 500 branch locations and approximately 540
off-premise ATM's. A summary of the acquisitions consummated in 1994
and 1995 follows.
<TABLE>
Table 2: Acquisitions--1995 and 1994
<CAPTION>
Accounting
Date State Assets Price Shares issued method
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Completed
Woodland Bancorporation, Inc. 3/94 Oklahoma $ .1 billion $ 12 million stock .4 million Pooling
Eagle Management and Trust Company 5/94 Texas -- 3 million cash -- Purchase
Dalhart Bancshares, Inc. 1/95 Texas .1 billion 23 million stock .7 million Pooling
National Mortgage Company 1/95 Tennessee .2 billion 153 million stock 5.0 million Pooling
Worthen Banking Corporation 2/95 Arkansas 3.5 billion 595 million stock 17.1 million Pooling
Salem Community Bancorp, Inc. 2/95 Illinois .1 billion 8 million stock .3 million Purchase
West Side Bancshares, Inc. 4/95 Texas .1 billion 18 million stock .6 million Purchase
First National Bank in Pampa 5/95 Texas .2 billion 42 million stock 1.4 million Pooling
- -------------------------------------------------------------------------------------------------------------------------------
Total assets of completed transactions $4.3 billion
===============================================================================================================================
Pending at June 30, 1995
Citizens Bancshares Corporation Arkansas $ .2 billion $ 37 million stock 1.1 million Purchase
===============================================================================================================================
</TABLE>
<TABLE>
Table 3: Asset Distribution
<CAPTION>
June 30, 1995 (dollars in billions) Assets % of total Locations
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Missouri $18.3 54.8% 170
Arkansas 4.4 13.2 143
New Mexico 3.2 9.6 66
Texas 2.2 6.5 34
Oklahoma 1.9 5.7 37
Iowa 1.2 3.6 33
Illinois 1.1 3.3 21
Tennessee .9 2.7 15
Kansas .2 .6 3
- ------------------------------------------------------------------------------
Total $33.4 100.0% 522
==============================================================================
</TABLE>
Arkansas Acquisitions
On February 28, 1995, the Corporation acquired Worthen Banking
Corporation (Worthen), headquartered in Little Rock, Arkansas, in a
transaction accounted for as a pooling of interests. Under terms of the
agreement the Corporation exchanged one share of its common stock for
each Worthen share, resulting in the issuance of approximately 17.1
million shares. Worthen was the second largest banking organization in
Arkansas, with approximately $3.5 billion in assets, operating 103
retail banking offices throughout Arkansas and six offices in the
Austin, Texas area. The acquisition of Worthen increased the
Corporation's asset base in Arkansas to approximately $4.4 billion,
making the Corporation the market leader in Arkansas.
On June 6, 1995, the Corporation announced a definitive agreement
to acquire Citizens Bancshares Corporation (Citizens), located in
Jonesboro, Arkansas, in a stock transaction to be accounted for as a
purchase. The acquisition of Citizens, with assets of approximately
$225 million, will result in the issuance of approximately 1.1 million
shares of common stock through treasury stock acquired in the open
market. This transaction, which is subject to regulatory approval, is
expected to be completed in the fourth quarter of 1995.
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<PAGE> 10
Mortgage Banking Acquisition
On January 31, 1995, the Corporation acquired National Mortgage
Company and certain affiliates (National Mortgage), headquartered in
Memphis, Tennessee, in a transaction accounted for as a pooling of
interests. Under terms of the agreement, the Corporation exchanged
approximately 5.0 million shares of its common stock for all of the
stock of National Mortgage. At the date of announcement, the
transaction had a value of approximately $153 million, which
represented 1.2% of National Mortgage's mortgage servicing portfolio.
National Mortgage is a full-service mortgage banking company which
originates home loans through company-operated offices as well as
through a network of over 300 correspondents located in the southern
and midwestern United States, and presently services mortgage loans
totaling approximately $20.7 billion.
Texas Acquisitions
On January 31, 1995, the Corporation acquired Dalhart Bancshares,
Inc. (Dalhart), with assets of approximately $140 million, in a
pooling transaction involving the issuance of approximately .7 million
shares of Boatmen's common stock for all of the shares of Dalhart.
On April 1, 1995, the Corporation acquired West Side Bancshares,
Inc. (West Side), a one bank holding company located in San Angelo,
Texas, in a stock transaction accounted for as a purchase. The
acquisition of West Side, with assets of approximately $142 million,
resulted in the issuance of approximately 600,000 shares of common
stock with a transaction value of $18 million. Goodwill arising from
this acquisition totaled $6 million.
On May 31, 1995, the Corporation acquired First National Bank in
Pampa (Pampa), with assets of approximately $166 million, in a pooling
transaction involving the issuance of approximately 1.35 million
shares of Boatmen's common stock for all of the shares of Pampa.
The three acquired banks were merged into the Corporation's Amarillo
subsidiary.
On May 6, 1994, the Corporation completed the acquisition of
Eagle Management and Trust Company (Eagle), an investment advisory
firm located in Houston, Texas. Eagle, with $1.4 billion in trust
assets, is managed by the Corporation's trust subsidiary.
Illinois Acquisition
On February 28, 1995, the Corporation acquired Salem Community
Bancorp, Inc. (Salem) in a stock transaction accounted for as a
purchase, valued at approximately $8 million. Salem has two locations
and approximately $80 million in assets.
Oklahoma Acquisition
On March 31, 1994, the Corporation acquired Woodland Bancorp,
Inc. (Woodland), a retail banking organization with assets of
approximately $65 million, in a pooling transaction resulting in the
issuance of .4 million shares of common stock.
Nonrecurring Merger Expenses
The acquisitions of Worthen, National Mortgage, Dalhart and Pampa
necessitated recognition of pre-tax nonrecurring merger expenses
totalling $26.0 million, consisting primarily of investment banking,
legal and other professional fees, severance and retention costs,
obsolete equipment write-offs and estimated costs to close duplicate
branches. The major components of the merger expenses are quantified in
Table 4.
<TABLE>
Table 4: Nonrecurring Merger Expenses
<CAPTION>
Six months ended June 30, 1995 (in millions)
- --------------------------------------------------------------------------------------
<S> <C>
Investment banking, legal, and other professional fees $ 9.7
Equipment and software write-offs, and branch closings 6.4
Compensation costs 4.6
Other 5.3
- --------------------------------------------------------------------------------------
Total $26.0
======================================================================================
</TABLE>
EARNINGS OVERVIEW
Net income for the second quarter of 1995 increased to $108.7
million, up 5.6% from the same period of last year, and net income per
share was $.84, an increase of 5.0%. For the six months, net income
before the impact of nonrecurring merger expenses, increased 6.4% to
$214.5 million, and net income per share was $1.67 compared to $1.57 a
year ago. The earnings growth reflected higher net interest income and
noninterest income, offset in part by a higher provision for loan
losses and higher noninterest expense. Net income in 1995 was reduced
by after-tax merger expenses totaling $26.0 million or $.16 per share.
Including merger expenses, net income for the six months of 1995 was
$194.5 million or $1.51 per share. Previously reported financial
statements of prior periods have been restated to reflect the pooling-
of-interests acquisitions which were completed in the first half of
1995. Purchase acquisitions completed during the period had no material
impact on results of
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<PAGE> 11
operations.
For the second quarter, the return on average assets was 1.33%
and the return on equity was 15.85%, compared to 1.31% and 16.45%,
respectively for the same period last year. For the six months, the
return on average assets before nonrecurring merger expenses was 1.32%
and the return on equity was 15.98%, compared to 1.29% and 16.15%,
respectively, in 1994. Including merger expenses, the return on assets
for the six months of 1995 was 1.20% and the return on equity was
14.48%.
Net interest income, on a fully-taxable equivalent basis,
increased .2% over the second quarter of 1994 and 1.2% for the six
months due to moderate average earning asset growth, which was
partially offset by the impact of a lower net interest margin. The net
interest margin was 4.22% for the second quarter of 1995 and 4.25% for
the six months, decreases of 18 and 15 basis points from the prior year
periods, respectively.
Noninterest income increased 7.9% over the second quarter of 1994
and 6.5% for the six months primarily due to growth in trust fees,
mortgage banking revenues and credit card income.
Noninterest expense, excluding nonrecurring merger expenses,
increased 1.6% from the second quarter of 1994 and was held to an
increase of .8% for the six months. These increases are reflective of
ongoing initiatives to control operating costs. Including nonrecurring
merger expenses, noninterest expense for the six months was $604.7
million.
The provision for loan losses for the second quarter of 1995 was
$9.2 million, up from $7.7 million for the same period of last year.
For the six months, the provision for loan losses totaled $18.9
million, compared to $13.6 million in 1994. For the six months, net
loan charge-offs were $12.6 million, compared to $10.9 million in 1994,
and annualized net charge-offs as a percentage of average loans were
.13% in both years.
Presented in Table 5 is an income statement analysis expressed on
a per share basis for the quarter ended June 30, 1995, compared to the
same period last year and the three months ended December 31, 1994. A
more detailed discussion and analysis of the major factors impacting
the comparability between periods is provided throughout this report.
<TABLE>
Table 5: Earnings Per Share Analysis
<CAPTION>
2nd Qtr. '95 2nd Qtr. '95 YTD '95
Per share vs. 2nd Qtr. '94 vs. 1st Qtr. '95 vs. YTD '94
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income per share prior quarter $.80 $.67 $1.57
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income .01 .04 .06
Provision for loan losses (.01) (.04)
Noninterest income .09 .03 .16
Noninterest expense (including nonrecurring merger expenses) (.05) .14 (.24)
Income tax expense (.04)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) .04 .17 (.06)
- ---------------------------------------------------------------------------------------------------------------------------
Net income current period $.84 $.84 $1.51
===========================================================================================================================
</TABLE>
NET INTEREST INCOME AND INTEREST RATE RISK MANAGEMENT
<TABLE>
Table 6: Summary of Net Interest Income
<CAPTION>
Second quarter ended June 30 Six months ended June 30
- -----------------------------------------------------------------------------------------------------------------------
(in millions) 1995 1994 % change 1995 1994 % change
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average loans $19,528.4 $17,596.5 11.0% $19,228.0 $17,334.1 10.9%
Average earning assets 29,442.8 28,215.5 4.3 29,154.9 27,854.2 4.7
Average core deposits 21,269.1 20,855.5 2.0 21,034.7 20,915.9 .6
Average purchased funds 5,999.5 5,401.0 11.1 5,990.6 4,965.2 20.7
Net interest income (FTE) 309.9 309.3 .2 614.6 607.3 1.2
Net interest margin 4.22% 4.40% 4.25% 4.40%
=======================================================================================================================
</TABLE>
Net interest income, on a fully-taxable equivalent basis,
increased .2% over the second quarter of 1994 and 1.2% for the six
months as growth in average earning assets more than offset an
anticipated contraction in the net interest margin.
Average earning assets increased 4.3% over the second quarter and
4.7% for the six months primarily due to strong loan growth. Loans, the
highest yielding earning asset, increased 11.0% over the second quarter
of 1994 and 10.9% for the six months. Loans represented 66.0% of
average earning assets for the six months of 1995 compared to 62.2% for
the same period last year. Held to maturity and available for sale
securities decreased 7.6% for the six months, and represented 32.0% of
average earning assets, down from 36.2% for the six months of 1994. The
decline in the securities portfolio reflects redeployment of proceeds
from maturing securities to the loan portfolio.
The net interest margin for the second quarter of 1995 was 4.22%
compared to 4.40% for the same period last year. A
- 11 -
<PAGE> 12
similar decline occurred for the six-month period, primarily due to rising
interest rates which restricted the net interest margin to some extent
due to the Corporation's modest liability sensitive position. The average
yield on earning assets for the six months of 1995 increased 90 basis
points from the same period last year; however, during this same period
the average rate paid on interest-bearing liabilities increased 124
basis points as the average rate paid on interest-bearing deposits
increased 98 basis points. The higher funding costs in 1995 also
reflect an increased use of purchased funds as loan growth exceeded
deposit growth. Purchased funds, which represented the principal
funding source for the loan growth, increased $1.0 billion or 20.7%.
This increase reflects the issuance of medium-term bank notes by
several of the Corporation's banking subsidiaries, which pay interest
on a floating rate basis.
Interest rate risk is the extent to which net interest income may
be affected by changes in market driven interest rates, and the
Corporation assumes varying degrees of interest rate risk as part of
its normal banking operations. It is the role of the asset/liability
management committee to manage and control the level of interest rate
risk contained in the balance sheet as well as off-balance sheet
financial instruments. The Corporation's interest rate risk policy is
to maintain a stable level of net interest income while also enhancing
earnings potential through limited risk positioning based on the
forecast of future interest rates. Interest rate risk exposure
(earnings at risk exposure) is currently limited, by policy, to 5% of
projected annual net income. Adherence to these risk limits is
controlled and monitored through simulation modeling techniques that
consider the impact that alternative interest rate scenarios will have
on the Corporation's financial results. In its simulations, the
Corporation estimates the impact on net interest income and net income
resulting from various changes in market interest rates. Utilization of
the simulation modeling results enables management to develop
strategies to control the Corporation's overall interest rate risk
exposure and to monitor specific risks associated with on-balance sheet
financial instruments, along with interest rate swaps. The assumptions
used in the model are intentionally designed to be conservative in that
the balance sheet is held static for the entire 12 month simulation
horizon and, accordingly, the model is not intended to represent an
income forecast. Based on the current interest rate sensitivity
position, the simulation model indicates that the earnings at risk
exposure over the next 12 months is less than 2%, assuming a gradual
150 basis point increase in interest rates, and no active management of
the balance sheet components.
An effective asset/liability management function is required to
address the interest rate risk inherent in the Corporation's core
banking activities. If no other action is taken, matching of the core
banking activities, which includes lending and deposit activities,
results in an asset-sensitive position. Accordingly, to prudently
manage the overall interest rate sensitivity position, the Corporation
utilizes a combination of on- and off-balance sheet financial
instruments to balance the interest rate sensitivity of the core
balance sheet. Interest rate swaps are an effective mechanism to manage
this interest rate risk due to the inherent advantages related to
flexibility in product structure, size, liquidity, capital and market
timing. The contribution of the swap portfolio over time will expand or
contract with movements in market rates; however, this risk cannot be
viewed in isolation and is controlled and monitored within the overall
context of the aforementioned asset/liability management policies.
In 1995, $850 million of new swaps were added and $95 million
matured such that at June 30, 1995, interest rate swaps totaled $3.0
billion. The most recent swaps were executed as a means to convert a
portion of the Corporation's variable rate bank notes to fixed rate
instruments to extend the repricing sensitivity of these instruments.
Interest rate swaps executed in prior years were undertaken to modify
the interest rate sensitivity of subordinated debt as well as alter the
interest rate sensitivity of the Corporation's prime-based loan
portfolio. The Corporation's prime-based loan portfolio (approximately
$6.0 billion) is the primary cause of the large asset sensitivity
position of the core banking activity as it is primarily funded by
deposit liabilities that are less sensitive to movements in market
interest rates. As a means to alter the interest rate sensitivity of
the prime-based portfolio, the Corporation has used interest rate swaps
to convert approximately $1.8 billion of prime-based loans to fixed
rate instruments. Additionally, the Corporation used $250 million of
interest rate swaps to alter the pricing basis on a small portion of
the prime-based loan and bank note portfolios. The Corporation accessed
the capital markets twice in recent years, resulting in the issuance of
$200 million of fixed rate subordinated debt. The impact of adding
long-term debt to the balance sheet resulted in increased asset
sensitivity as proceeds were initially used to replace short-term
borrowings. Accordingly, to reduce the impact on the Corporation's gap
position, $200 million of interest rate swaps were executed to convert
fixed rate debt to a floating rate instrument. Periodic correlation
assessments are performed to ensure that the swap instruments are effec-
tively modifying the interest rate characteristics of the respective
balance sheet items. The interest rate swaps are not leveraged in that
they reset in step with rate movements in the underlying index. The
interest rate swap programs are consistent with management's objective
of balancing the interest rate sensitivity of the core bank.
As summarized in Table 7, the swap portfolio is primarily
comprised of contracts wherein the Corporation receives a fixed rate of
interest while paying a variable rate. The average rate received at
June 30, 1995 was 5.74% compared to an average rate paid of 6.31%, and
the average remaining maturity of the total portfolio was approximately
one year. The variable rate component of the interest rate swaps is
based on LIBOR as of the most recent re-set date and will adjust with
future movements in this index. Table 8 provides information related to
weighted average rates paid and received, maturity profile, and fair
values of the major swap programs in place at June 30, 1995 and June
30, 1994. The estimated fair value of the swap portfolio was a negative
$40.4 million at June 30, 1995, based on discounted cash flow models.
In that these swaps are valued using anticipated forward interest rates
at quarter end, the estimated fair value is not necessarily indicative
of the future net interest potential of the portfolio over its
remaining life.
- 12 -
<PAGE> 13
<TABLE>
Table 7: Interest Rate Swap Portfolio Activity
<CAPTION>
(in millions) Receive Fixed Pay Fixed Basis Swaps Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notional amount, December 31, 1994 $2,000 $ 31 $250 $2,281
Additions 850 850
Maturities (52) (2) (41) (95)
- --------------------------------------------------------------------------------------------------
Notional amount, June 30, 1995 $1,948 $879 $209 $3,036
==================================================================================================
Average remaining maturity (years) 1.2 1.0 .5 1.1
Weighted average rate received 5.51% 6.13% 6.23% 5.74%
Weighted average rate paid 6.32 6.29 6.31 6.31
==================================================================================================
</TABLE>
<TABLE>
Table 8: Interest Rate Swap Portfolio
<CAPTION>
Weighted Estimated
Average Rate --------------------
June 30, 1995 Notional --------------------- Maturity Fair
(in millions) Amount Receive Pay (years) Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime loan swaps:
Receive fixed $1,748 5.59% 6.34% 1.3 $(35.0)
Basis swaps 159 6.22 6.35 .6 .2
- ------------------------------------------------------------------------------------------------
Total 1,907 5.64 6.34 1.2 (34.8)
Long-term debt swaps 200 4.87 6.21 1.0 (2.1)
Bank note liability swaps 850 6.12 6.21 1.0 (3.0)
Other 79 6.30 7.14 .4 (.5)
- ------------------------------------------------------------------------------------------------
Total $3,036 5.74% 6.31% 1.1 $(40.4)
================================================================================================
<CAPTION>
Weighted Estimated
Average Rate --------------------
June 30, 1994 Notional --------------------- Maturity Fair
(in millions) Amount Receive Pay (years) Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime loan swaps:
Receive fixed $1,800 5.59% 4.66% 2.0 $(102.0)
Basis swaps 200 4.70 4.02 .5 (1.6)
- ------------------------------------------------------------------------------------------------
Total 2,000 5.50 4.60 1.9 (103.6)
Long-term debt swaps 200 4.87 4.37 2.0 (4.5)
Other 31 4.61 8.86 1.8 (1.4)
- ------------------------------------------------------------------------------------------------
Total $2,231 5.43% 4.64% 1.9 $(109.5)
================================================================================================
</TABLE>
The swap portfolio decreased net interest income by approximately
$4.4 million in the second quarter of 1995 and $7.9 million for the six
months, resulting in a reduction in the net interest margin of
approximately 6 basis points in each period. In 1994, the swap
portfolio increased net interest income by $6.7 million for the second
quarter and $13.9 million for the six months adding approximately 10
basis points to the margin. The results from the simulation model
indicate that in a rising rate environment the net interest
contribution from the swap portfolio will lessen as the variable
component resets upward. Based on interest rates at June 30, 1995, it
is anticipated that the swap portfolio will reduce net interest income
by approximately $15 million in 1995. However, it is anticipated that
this will be offset by a higher contribution from core banking
activities.
Approximately 63% of the portfolio is comprised of indexed
amortizing swaps, whereby the maturity distribution could lengthen if
interest rates increase from current levels. Assuming interest rates
were to increase 200 basis points from their current levels, the
average maturity distribution of the swap portfolio would extend by
approximately 1.3 years. Any future utilization of off-balance sheet
financial instruments will be determined based upon the Corporation's
overall interest rate sensitivity position and asset/liability
management strategies.
While the Corporation is primarily an end-user of derivative
instruments, it also acts as an intermediary to meet the financial
needs of its customers. The notional amount of the customer swap
portfolio at June 30, 1995 totaled approximately $464 million. Interest
rate risk associated with this portfolio is controlled by entering into
offsetting positions with third parties.
- 13 -
<PAGE> 14
NONINTEREST INCOME
<TABLE>
Table 9: Summary of Noninterest Income
<CAPTION>
Second quarter ended June 30 Six months ended June 30
- ------------------------------------------------------------------------------------------------------------------
(in millions) 1995 1994 % change 1995 1994 % change
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trust fees $ 46.3 $ 40.9 13.2% $ 86.8 $ 82.4 5.3%
Service charges 47.6 46.8 1.7 93.3 92.7 .7
Credit card 11.7 9.9 19.2 23.6 19.5 20.9
Investment banking revenues 8.9 10.6 (16.1) 17.7 20.3 (13.0)
Mortgage banking operations 16.3 12.7 28.0 39.2 31.8 23.4
Securities gains, net 2.8 .7 301.0 2.9 3.3 (12.1)
Other 31.9 31.9 64.2 57.6 11.5
- ------------------------------------------------------------------------------------------------------------------
Total noninterest income $165.5 $153.5 7.9% $327.7 $307.6 6.5%
==================================================================================================================
As % of operating income 34.8% 33.2% 34.8% 33.6%
- ------------------------------------------------------------------------------------------------------------------
Revenue per full-time equivalent employee
(in thousands) $112.9 $104.8 $111.5 $103.8
==================================================================================================================
</TABLE>
Noninterest income increased 7.9% over the second quarter of 1994
and 6.5% for the six months, primarily due to growth in trust fees,
mortgage banking revenues and credit card income. Noninterest income as
a percentage of operating revenues improved to 34.8% for the six months
of 1995 from 33.6% for the same period of 1994.
Trust fees increased 13.2% over the second quarter of 1994 and
5.3% for the six months, primarily due to growth in
pension/institutional and personal trust business, which was partially
offset by narrower spreads on securities lending activity. The decline
in securities lending revenues reflects narrower spreads primarily
resulting from higher short-term market interest rates. Trust assets
under management totaled $45.2 billion at June 30, 1995, compared to
$35.8 billion at June 30, 1994, and $37.4 billion at December 31, 1994.
Service charge income totaled $47.6 million in the second quarter
of 1995 and $93.3 million for the six months, increases of 1.7% and .7%
over the prior year periods, respectively. Service charges in 1995
included growth in retail fees which were offset by lower analysis fees
on corporate customer accounts. The lower level of corporate analysis
fees is primarily a function of corporate customers paying for services
in the form of deposit balance maintenance in lieu of fees. Credit card
income totaled $11.7 million in the second quarter of 1995, and $23.6
million for the six months, increases of 19.2% and 20.9%, respectively
over the prior year periods. This increase reflects growth in
cardholder revenues, as well as increases in merchant-related fees due
to new merchant business and higher retail sales volume. Investment
banking revenues decreased 16.1% from the second quarter of 1994 and
13.0% for the six months primarily due to a reduction in the sales
volume of various retail brokerage products. Foreign exchange income,
another component of investment banking revenues, increased $1.2
million or 49.6% over the six months of 1994.
Income from mortgage banking operations totaled $16.3 million in
the second quarter of 1995, and $39.2 million for the six months,
increases of 28.0% and 23.4%, respectively over the prior year periods.
Mortgage banking revenues in 1995 include a $7.9 million gain
recognized in the first quarter on the sale of approximately $700
million of mortgage servicing. In the second quarter of 1995, the
Corporation adopted Statement of Financial Accounting Standards No. 122
(SFAS 122), "Accounting for Mortgage Servicing Rights." SFAS 122
requires capitalization of purchased mortgage servicing rights as well
as internally originated mortgage servicing rights. Upon adoption of
SFAS 122, the Corporation capitalized approximately $1 million of
internally generated mortgage servicing rights which will be amortized
over the estimated servicing period of the related loans. At June 30,
1995, purchased mortgage servicing rights totaled $44.8 million.
Mortgage servicing rights are stratified and evaluated for impairment
measurement based on product type. Through the first six months of 1995,
no impairment valuation writedowns were required.
Other noninterest income increased $6.6 million or 11.5% over
the six months of 1994 primarily due to a $4.9 million gain on the sale
of an ownership interest in a regional electronic funds transfer
network and a $1.2 million divestiture gain on the sale of an Arkansas
branch which was required to be sold under regulatory conditions of the
Worthen acquisition agreement. Other noninterest income in the first
half of 1995 was also supplemented by higher gains on sales of student
loans, investment appreciation in bank-owned life insurance, and
increased revenue from debit cards and syndication fees. Other
noninterest income in the second quarter of 1994 included a $4 million
gain from the sale of the former Union of Arkansas Corporation's
headquarters building.
- 14 -
<PAGE> 15
NONINTEREST EXPENSE
<TABLE>
Table 10: Summary of Noninterest Expense
<CAPTION>
Second quarter ended June 30 Six months ended June 30
- ---------------------------------------------------------------------------------------------------------------
(in millions) 1995 1994 % change 1995 1994 % change
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Staff expense $146.7 $149.1 (1.6)% $294.9 $297.6 (.9)%
Occupancy 19.3 20.6 (6.3) 39.6 41.2 (4.0)
Equipment 23.5 23.6 (.4) 46.9 45.6 2.8
FDIC insurance 13.3 13.3 26.6 26.7 (.3)
Credit card 3.0 3.9 (23.1) 6.4 7.3 (12.3)
Printing, postage, paper 12.1 11.9 1.7 23.9 23.8 .4
Intangible amortization 8.1 8.8 (8.6) 15.9 17.6 (9.4)
Professional fees 5.2 5.8 (10.3) 10.1 13.1 (22.9)
Federal Reserve processing charges 2.3 2.8 (17.9) 4.9 5.4 (9.3)
Advertising 8.7 7.8 10.5 16.2 14.7 10.2
Communications 7.0 6.4 9.4 13.1 12.4 5.6
Other 44.1 33.6 31.3 106.2 68.7 54.6
- ---------------------------------------------------------------------------------------------------------------
Total noninterest expense $293.3 $287.6 2.0% $604.7 $574.1 5.3%
===============================================================================================================
Efficiency ratio 61.7% 62.2% 64.2% 62.8%
Efficiency ratio excluding nonrecurring
merger expenses 61.4 62.8
Number of full-time equivalent employees 16,923 17,743
===============================================================================================================
</TABLE>
Noninterest expense totaled $293.3 million for the second quarter
of 1995 and $604.7 million for the six months, increases of 2.0% and
5.3% from the prior year periods, respectively. Noninterest expense
levels in 1995 included nonrecurring merger expenses totaling
approximately $26 million consisting of investment banking and other
professional fees, severance costs, obsolete equipment write-offs and
estimated costs to close duplicate branches. Excluding merger expenses,
noninterest expense was held to an increase of 1.6% for the quarter and
.8% for the six months, reflective of ongoing initiatives to control
operating expenses. The efficiency ratio improved to 61.7% for the
second quarter of 1995 compared to 62.2% for the same period of last
year. For the six months, the efficiency ratio before merger expenses
improved to 61.4% from 62.8% in 1994. Including merger expenses, the
efficiency ratio for the six months of 1995 was 64.2%.
Staff expense, which represents approximately 50% of total
noninterest expense, decreased 1.6% from the second quarter of 1994 and
.9% for the six months as the number of full-time equivalent employees
(FTE's) decreased from 17,743 at June 30, 1994 to 16,923 at June 30,
1995.
Other noninterest expense increased $37.5 million for the six
months, which is primarily attributable to the aforementioned
nonrecurring merger expenses, higher levels of uninsured losses and
yield maintenance support provided to the trust subsidiary's short-term
money market fund. In 1994 and through the first six months of 1995,
the Corporation's trust subsidiary waived a portion of its investment
management fees on its short-term money market mutual fund and provided
yield maintenance support to ensure the fund provided a competitive
yield to investors. Yield maintenance may be increased if short-term
interest rates were to rise rapidly from existing levels.
TAXES
The Corporation's effective tax rate was 35.4% for the six
months of 1995 compared to 34.7% for the same period of last year. The
increase in the Corporation's effective tax rate resulted from
nondeductible merger expenses associated with the pooling-of-interests
acquisitions completed in the first half of 1995, and a continued
decline in the amount of tax-exempt income as a percentage of operating
income. Excluding the impact of the nondeductible merger expenses, the
effective tax rate was 34.4%. On a prospective basis, the effective tax
rate should approximate the statutory rate, adjusted for normal
operating items such as tax-exempt interest, goodwill amortization and
other nondeductible expenses.
- 15 -
<PAGE> 16
PROVISION FOR LOAN LOSSES AND ASSET QUALITY
<TABLE>
Table 11: Summary of Reserve for Loan Losses
<CAPTION>
June 30 (in millions) 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of year $376.6 $376.3
==================================================================================================
Loans charged off (32.6) (37.8)
Recoveries on loans previously charged off 20.0 26.9
- --------------------------------------------------------------------------------------------------
Net charge-offs (12.6) (10.9)
Provision charged to expense 18.9 13.6
Reserves of acquired subsidiaries 2.2 .9
- --------------------------------------------------------------------------------------------------
Balance, end of period $385.1 $379.9
==================================================================================================
At end of period:
Loan reserve as % of net loans 1.93% 2.14%
Loan reserve as % of nonperforming loans 291.36 238.41
Net charge-offs as % of average loans .13 .13
==================================================================================================
</TABLE>
<TABLE>
Table 12: Summary of Nonperforming Assets
<CAPTION>
(in millions) June 30, 1995 December 31, 1994 June 30, 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual $101.7 $111.9 $131.9
Restructured 6.7 7.1 7.2
Past due 90 days or more 23.8 17.0 20.2
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 132.2 136.0 159.3
- ---------------------------------------------------------------------------------------------------------------------
Foreclosed property 58.6 62.4 109.7
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $190.8 $198.4 $269.0
=====================================================================================================================
Nonperforming loans as % of total loans .66% .73% .90%
Nonperforming assets as % of total loans and foreclosed property .95 1.06 1.50
Nonperforming assets as % of total assets .57 .60 .85
Loan reserve as % of nonperforming loans 291.36 277.06 238.41
=====================================================================================================================
</TABLE>
The provision for loan losses totaled $9.2 million in the second
quarter of 1995, an increase of 18.5% from the second quarter of last
year when the provision totaled $7.7 million. For the six months, the
provision for loan losses totaled $18.9 million, compared to $13.6
million in 1994. The provision for loan losses was increased to
maintain loan reserve coverage at acceptable levels during a period of
strong loan growth.
The reserve for loan losses represented 291% of nonperforming
loans at June 30, 1995 compared to 277% at December 31, 1994, and 238%
at June 30, 1994. The reserve for loan losses as a percentage of net
loans was 1.93% compared to 2.14% at June 30, 1994, and 2.02% at year-
end 1994. Net loan charge-offs for the six months of 1995 totaled $12.6
million, compared to $10.9 million for the same period of 1994.
Annualized net charge-offs as a percentage of average loans were .13%
for the six months of 1995 and 1994, compared to .15% for all of 1994.
Nonperforming assets, which include nonperforming loans and foreclosed
property, declined $78.2 million or 29.1% from June 30, 1994, and $7.6
million or 3.8% from year-end 1994. As a percent of total loans and
foreclosed property, nonperforming assets declined to .95% compared to
1.50% at June 30, 1994, and 1.06% at December 31, 1994. The decline in
nonperforming asset levels largely resulted from a stronger economy and
the effectiveness of the Corporation's comprehensive loan
administration and workout procedures. As a percentage of total assets,
nonperforming assets were .57% at June 30, 1995, compared to .85% at
June 30, 1994 and .60% at December 31, 1994. Nonperforming loans at
June 30, 1995, declined to $132.2 million or .66% of total loans,
compared to .73% at December 31, 1994, and .90% at June 30, 1994. Table
14 summarizes the trends in nonperforming assets by major banking
unit/geographic location.
- 16 -
<PAGE> 17
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 risk rating system. As
displayed in Table 13, criticized loans totaled $644.2 million or 3.22%
of loans at June 30, 1995. Management carefully analyzes changes and
trends in both nonperforming and criticized loans in assessing the risk
characteristics of the loan portfolio.
<TABLE>
Table 13: Loans Designated as Criticized Loans by Internal Risk Rating System
<CAPTION>
Criticized Loans
- ------------------------------------------------------------------------------------------------------------
(in millions) Nonperforming Performing Total
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1994
March 31 $162.0 $601.2 $763.2
June 30 159.3 565.3 724.6
September 30 167.0 492.8 659.8
December 31 136.0 498.4 634.4
============================================================================================================
1995
March 31 $128.6 $486.2 $614.8
June 30 132.2 512.0 644.2
============================================================================================================
As % of loans at June 30, 1995 .66% 2.56% 3.22%
============================================================================================================
</TABLE>
<TABLE>
Table 14: Nonperforming Assets by Banking Unit
<CAPTION>
(in millions) June 30, 1995 December 31, 1994 June 30, 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Missouri $ 97.9 $103.2 $152.9
New Mexico 30.6 34.9 43.0
Arkansas 19.5 18.1 22.2
Oklahoma 13.1 11.1 15.3
Texas 10.0 9.5 9.9
Iowa 5.1 5.5 5.9
Illinois 5.5 5.0 7.1
Tennessee 3.6 5.0 5.0
Kansas 5.5 6.1 7.7
- ------------------------------------------------------------------------------------------------------------
Total $190.8 $198.4 $269.0
============================================================================================================
</TABLE>
On January 1, 1995, the Corporation adopted Financial Accounting
Standards No. 114 (SFAS 114), "Accounting by Creditors for Impairment
of a Loan" and No. 118 (SFAS 118), "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." These
statements 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 the fair
value of the underlying collateral if the loan is collateral dependent.
The statements further require that specific reserves be established
for any impaired loan for which the recorded investment exceeds the
measured value of the loan. At June 30, 1995, the recorded investment
in loans that are considered to be impaired under SFAS 114 and SFAS 118
totaled $108.4 million and consisted of nonaccrual loans and
restructured loans. Specific loan reserve allocations assigned to
impaired loans were immaterial. Table 11 summarizes the activity in the
reserve for loan losses. The Corporation's policy for income
recognition was not impacted by adoption of SFAS 114 and SFAS 118 and
such interest recognized during the period was immaterial. Interest
income on nonaccrual loans is 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.
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 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.
- 17 -
<PAGE> 18
The Corporation has designated certain loans covered under the
loss-sharing arrangement which possess more than the normal risk of
collectibility as segregated assets. These loans have the same
characteristics as nonaccrual loans and foreclosed properties. At June
30, 1995, segregated assets totaled $136.9 million, net of a $14.0
million credit valuation allowance, and are classified as other assets
for reporting purposes. At June 30, 1995, segregated assets consisted
of $39.5 million of commercial loans, $15.2 million of industrial
revenue bond loans, $91.9 million of commercial real estate related
loans and $4.3 million of foreclosed property. All other loans covered
under the loss-sharing arrangement are included in the loan portfolio
and totaled $263.0 million at June 30, 1995. Net charge-offs of $2.7
million, representing the Corporation's share of losses on the
segregated asset pool, were recognized in the six months of 1995. 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 June 30, 1995, $138.1 million of
segregated assets were accorded classification treatment consistent
with nonaccrual reporting, $4.3 million represented foreclosed
property, and the balance of $8.5 million were past due 90 days or
more. The Corporation'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 assets income totaled $6.3 million for
the six months of 1995 and $6.7 million in the same period of 1994.
A summary of activity regarding segregated assets is provided in
Table 15.
<TABLE>
Table 15: Segregated Assets
<CAPTION>
June 30, 1995 (in millions) Principal balance Allowance for losses Principal balance, net
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $193.9 $16.7 $177.2
Charge-offs (19.2) (3.9)
Recoveries 1.2
Net transfers (13.4)
Payments on segregated assets (10.4)
- ------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1995 $150.9 $14.0 $136.9
========================================================================================================================
</TABLE>
LOAN PORTFOLIO
<TABLE>
Table 16: Summary of Loan Portfolio
<CAPTION>
(in millions) June 30, 1995 December 31, 1994 June 30, 1994
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C>
Commercial $ 9,853.7 $ 8,767.1 $ 8,798.5
Real estate mortgage 3,756.4 3,629.0 3,414.3
Real estate construction 876.7 868.3 747.4
Consumer 5,328.6 5,302.1 4,722.7
Lease financing 147.7 136.8 91.4
- ------------------------------------------------------------------------------------------------------------
Total domestic loans 19,963.1 18,703.3 17,774.3
Foreign loans 24.7 19.1 17.6
- ------------------------------------------------------------------------------------------------------------
Total loans, before deduction of unearned income 19,987.8 18,722.4 17,791.9
Less unearned income 66.5 66.9 55.4
- ------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income $19,921.3 $18,655.5 $17,736.5
============================================================================================================
</TABLE>
- 18 -
<PAGE> 19
<TABLE>
Table 17: Composition of Loan Portfolio
<CAPTION>
June 30, 1995 December 31, 1994 June 30, 1994
- ----------------------------------------------------------------------------------------------------------------------
% Of % Of % Of
Total Total Total
(in millions) Amount Loans Amount Loans Amount Loans
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real estate:
1-4 family residential $ 3,756.4 18.8% $ 3,629.0 19.4% $ 3,414.3 19.2%
Land acquisition 223.6 1.1 246.8 1.3 210.8 1.2
Residential construction 307.1 1.6 274.9 1.5 241.9 1.4
Commercial construction 346.0 1.7 346.6 1.8 294.7 1.6
Commercial real estate 3,064.6 15.3 2,996.9 16.0 2,964.6 16.7
Mini-perms 104.1 .5 75.5 .4 112.4 .6
- ----------------------------------------------------------------------------------------------------------------------
Total real estate 7,801.8 39.0 7,569.7 40.4 7,238.7 40.7
Commercial loans to Fortune 1,000 companies
and other large corporate borrowers 1,217.0 6.1 816.3 4.4 834.2 4.7
Middle market commercial 4,491.9 22.5 4,003.0 21.4 3,980.0 22.4
Bank stock loans 221.6 1.1 218.4 1.2 219.7 1.2
Agriculture 754.5 3.8 657.0 3.5 687.6 3.9
Consumer:
Home equity 461.7 2.3 423.2 2.3 387.9 2.2
Credit card 492.1 2.5 546.1 2.9 503.1 2.8
Indirect installment 2,830.0 14.2 2,711.5 14.5 2,370.8 13.3
Installment 1,544.8 7.7 1,621.3 8.6 1,460.9 8.2
- ----------------------------------------------------------------------------------------------------------------------
Total consumer 5,328.6 26.7 5,302.1 28.3 4,722.7 26.5
Lease financing 147.7 .7 136.8 .7 91.4 .5
Foreign 24.7 .1 19.1 .1 17.6 .1
- ----------------------------------------------------------------------------------------------------------------------
Total loans $19,987.8 100.0% $18,722.4 100.0% $17,791.9 100.0%
======================================================================================================================
</TABLE>
The majority of the Corporation's loans are made within its
natural trade territory. The portfolio is highly diversified in that
the Corporation's banking operations span a nine state area with over
500 branch locations. The Corporation's objective is to control credit
risk through geographic diversification and adherence to stringent
credit administration policies that limit industry concentrations and
establish lending authority and borrower limits. The Corporation's
geographic profile provides significant credit and economic risk
diversification in that the Corporation is not solely dependent on any
major market. All of the Corporation's major markets are currently
experiencing good economic conditions and unemployment rates within
these markets are in line with national averages. 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.
<TABLE>
Table 18: Loan Portfolio Distribution
<CAPTION>
June 30, 1995 December 31, 1994 June 30, 1994
- -----------------------------------------------------------------------------------------------------------------------
% Of % Of % Of
Total Total Total
(in millions) Amount<F1> Loans Amount<F1> Loans Amount<F1> Loans
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Missouri $10,914.1 54.8% $ 9,908.4 53.1% $ 9,518.2 53.7%
Arkansas 2,543.4 12.8 2,430.2 13.0 2,206.7 12.4
New Mexico 1,479.5 7.4 1,430.2 7.7 1,412.0 8.0
Texas 1,057.5 5.3 964.4 5.2 942.3 5.3
Oklahoma 1,039.2 5.2 1,062.3 5.7 1,028.3 5.8
Illinois 779.2 3.9 715.4 3.8 669.5 3.8
Tennessee 763.1 3.8 754.8 4.1 692.7 3.9
Iowa 761.8 3.8 729.3 3.9 663.8 3.7
Kansas 91.4 .5 114.4 .6 99.9 .6
Credit card 492.1 2.5 546.1 2.9 503.1 2.8
- -----------------------------------------------------------------------------------------------------------------------
Total $19,921.3 100.0% $18,655.5 100.0% $17,736.5 100.0%
=======================================================================================================================
<FN>
<F1>Net of unearned income.
</TABLE>
- 19 -
<PAGE> 20
At June 30, 1995, loans totaled $19.9 billion, an increase of
12.3% over the same period of last year, and were up 6.8% from December
31, 1994. Loan growth from December 31, 1994 was primarily due to a
12.4% increase in commercial loans and reflected middle-market loan
growth, as well as increases in loans to Fortune 1,000 companies. Loan
growth from June 30, 1994 was primarily due to increases in both the
commercial and consumer loan portfolios.
At June 30, 1995, consumer loans represented approximately 26.7%
of the total portfolio compared to 26.5% at June 30, 1994 and 28.3% at
December 31, 1994. As a percentage of total loans, middle market
commercial loans were 22.5%, compared to 22.4% at June 30, 1994 and
21.4% at December 31, 1994. Commercial real estate and real estate
construction loans represented 20.2% of total loans at June 30, 1995,
compared to 21.5% at June 30, 1994. The Corporation closely monitors
the composition and quality of the real estate portfolio through
established credit review procedures 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 value ratio
and are generally supported by guarantees from project developers.
Additional collateral is required on a project-by-project basis
depending on management's evaluation of the borrower. Approximately 30%
of the commercial real estate portfolio is comprised of owner occupied
properties for which the primary source of repayment is not entirely
dependent on the real estate market. At June 30, 1995, the Corporation
had unfunded commercial real estate and construction commitments
totaling $411 million. The amount of collateral, if any, obtained for
other loans is based on general industry practice and the
creditworthiness of the borrower.
Table 16 displays the components of the loan portfolio under
standard financial reporting definitions. Management also reviews the
diversification of the portfolio using internally developed standards
and definitions as summarized in Table 17.
FINANCIAL POSITION AND LIQUIDITY
The basic financial structure of the Corporation's average and
period-end balance sheet changed moderately from the fourth quarter and
second quarter of last year primarily due to loan growth and higher
levels of purchased funds. At June 30, 1995, assets totaled $33.4
billion compared to $31.6 billion at June 30, 1994, and $32.9 billion
at December 31, 1994.
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. 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 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 funds can be acquired
when needed, principally from existing customers within the
Corporation's natural trade territory and through access to national
money markets.
Average core deposits totaled $21.3 billion for the second
quarter of 1995, an increase of $.4 billion or 2.0% from the same
period last year. Core deposit growth in recent periods has been
restricted, to some extent, by a shift in customer preference to other
investment alternatives. In addition, the deposit base has been altered
somewhat as customers have redirected balances from traditional lower-
cost savings deposits to higher-rate money market deposit accounts.
This is a reversal of the trend from recent years when the spreads
between savings rates and rates on other retail deposits were at
historical lows. Average earning assets increased approximately $1.2
billion or 4.3% from the second quarter of last year; accordingly, the
increased earning asset volume has been primarily funded by higher
levels of short-term purchased funds. Average core deposits supported
72.2% of earning assets for the second quarter of 1995 compared to
73.9% during the same period last year. Purchased funds, which
increased approximately $.6 billion from the prior year, supported
20.4% of average earning assets compared to 19.1% for the second
quarter of last year. Purchased funds at June 30, 1995, included $2.0
billion of medium-term bank notes which were issued by several of the
Corporation's banking subsidiaries in 1994 and 1995. The Corporation
expects earning asset growth will continue to exceed core deposit
growth in the near term resulting in a continued use of purchased funds
at or slightly above the present levels.
The Corporation's liquidity position is also managed by
maintaining adequate levels of liquid assets such as money market
investments and available for sale securities. At June 30, 1995, the
available for sale portfolio totaled $4.0 billion compared to $4.7
billion at June 30, 1994. The decline from the year ago period was
primarily due to redeployment of proceeds from maturing securities to
the loan portfolio. Given the current outlook for continued loan
growth, the securities portfolio balances are expected to show year-to-
year declines throughout 1995. These securities, comprised mainly of
adjustable-rate mortgage-backed securities, U.S. Treasury securities,
pass-through mortgage-backed securities, and short-term CMO's, may be
sold to meet liquidity needs or in response to significant changes in
interest rates or prepayment risks. At June 30, 1995, unrealized
depreciation in the available for sale portfolio was approximately
$17.2 million compared to $181.8 million at December 31, 1994. The
increase in market value from year end was primarily due to the decline
in Treasury yields mainly within the 2 to 4 year maturity range. The
Corporation's mortgage-backed securities portfolio totaled
approximately $5.8 billion at June 30, 1995, of which approximately 88%
represented government agency-backed issues and the remainder of the
portfolio was comprised of private-issue mortgaged-backed securities
with credit ratings of AA or better. As a means to control interest
- 20 -
<PAGE> 21
rate and prepayment risk, each security undergoes a thorough analysis
prior to purchase and periodically thereafter to examine the investment
performance using a wide range of interest rate scenarios and
prepayment speeds. This ongoing process insures that the mortgage-
backed securities portfolio meets the Corporation's investment
strategies and internal risk guidelines.
The variety of funding options available and strong cash flow
provide 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 also critical to liquidity because it can affect the
availability and cost of funds to the Corporation. The Corporation's
ability to access the capital markets on a cost-effective basis is
reflected by its debt ratings, summarized in Table 19. The Corporation
currently has a shelf registration statement filed with the Securities
and Exchange Commission providing for the issuance of up to $500
million of debt, preferred stock or common stock. There are no plans to
issue securities pursuant to this filing in the near term. There were
also no commitments for capital expenditures, at June 30, 1995, which
would materially impact the Corporation's liquidity position.
<TABLE>
Table 19: Agency Ratings
<CAPTION>
Agency Ratings Moody's Standard & Poor's Thomson Bankwatch
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boatmen's Bancshares, Inc.: B
6-3/4% Subordinated notes due 2003 A3 A- A
7-5/8% Subordinated notes due 2004 A3 A- A
8-5/8% Subordinated notes due 2003 A3 A- A
9-1/4% Subordinated notes due 2001 A3 A- A
6-1/4% Convertible subordinated debentures due 2011 A3 A- A
Commercial paper P1 A-1 TBW-1
The Boatmen's National Bank of St. Louis: B
Long-term/short-term deposits and bank notes Aa3/P1 A+/A-1 TBW-1
Boatmen's First National Bank of Kansas City: B
Long-term/short-term deposits and bank notes A1/P1 A+/A-1 TBW-1
Multi-bank note program
(8 Boatmen's subsidiary banks) A1/P1 A+/A-1
=============================================================================================================
</TABLE>
CAPITAL STRUCTURE
<TABLE>
Table 20: Capital Structure
<CAPTION>
(in millions) June 30, 1995 December 31, 1994 June 30, 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long-term debt $ 522.2 $ 592.0 $ 585.7
Stockholders' equity 2,782.3 2,561.4 2,519.0
- ---------------------------------------------------------------------------------------------------------
Total capitalization $3,304.5 $3,153.4 $3,104.7
=========================================================================================================
Tangible equity $2,471.4 $2,252.3 $2,198.6
=========================================================================================================
<CAPTION>
Ratios
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity/assets 8.33% 7.79% 7.98%
Tangible equity/assets 7.47 6.92 7.03
Long-term debt as % of total capitalization 15.80 18.77 18.87
Double leverage 108.28 107.24 107.65
Dividends paid
(for the period, in thousands):
Preferred $ 40 $ 80 $ 40
Common 78,922 142,822 69,626
Total dividends as % of net income 40.6% 35.0% 34.6%
=========================================================================================================
</TABLE>
- 21 -
<PAGE> 22
<TABLE>
Table 21: Intangible Assets
<CAPTION>
(in millions) June 30, 1995 December 31, 1994 June 30, 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Goodwill--Parent Company $ 87.1 $ 89.9 $ 92.6
- ---------------------------------------------------------------------------------------------------------
Subsidiaries:
Goodwill 108.1 103.1 121.1
Core deposit premium 67.2 74.7 63.9
Credit card premium 2.7 3.0 3.3
Purchased mortgage servicing rights 45.8 38.4 39.5
- ---------------------------------------------------------------------------------------------------------
Total subsidiaries 223.8 219.2 227.8
- ---------------------------------------------------------------------------------------------------------
Total intangible assets $310.9 $309.1 $320.4
=========================================================================================================
</TABLE>
The Corporation continues to rank among the most strongly
capitalized bank holding companies in the country. This strong capital
position and overall financial strength provide a good base for future
expansion when profitable investment opportunities arise. The
cornerstone of the Corporation's capital structure is its common
equity, totaling $2.8 billion or approximately 84.2% of total
capitalization at June 30, 1995, an increase of 10.5% from June 30,
1994. The equity to asset ratio was 8.33% at June 30, 1995, compared to
7.98% at June 30, 1994, and 7.79% at December 31, 1994. The equity base
has been strengthened in recent years through earnings retention, the
conversion of debt to equity and the issuance of common stock through
various employee and stockholder investment plans. In the first quarter
of 1995, the Corporation announced a common stock repurchase program
authorizing the repurchase of up to 5 million shares, or approximately
4% of the Corporation's shares outstanding. At June 30, 1995, the
Corporation held approximately 715,000 common shares in Treasury at a
cost of $23.2 million. The repurchased shares will be used to meet
periodic stock requirements of benefit plans and for other corporate
purposes.
An important measure of capital adequacy of a banking institution
is its risk-based capital ratios, which represent the primary capital
standard for regulatory purposes. The Corporation's risk-based capital
ratios of 10.87% for Tier I and 13.90% for total capital substantially
exceed the regulatory required minimums. At June 30, 1995, the
Corporation's Tier I leverage ratio was 7.63%, well in excess of
required minimums. At June 30, 1995, all of the Corporation's banking
subsidiaries were considered "well capitalized" based on the regulatory
defined minimums of a Tier I leverage ratio of 5%, a Tier I capital
ratio of 6% and a total capital ratio of 10%.
The Corporation announced a common stock dividend increase on
August 8, 1995, effective with the dividend payable on October 1, 1995,
to $.37 per share per quarter. This is an increase of 8.8% over the
previous quarterly rate of $.34 per share.
<TABLE>
Table 22: Risk-Based Capital
<CAPTION>
(in millions) June 30, 1995 December 31, 1994 June 30, 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier I capital:
Stockholders' equity $ 2,782.3 $ 2,561.4 $ 2,519.0
Unrealized net (appreciation) depreciation,
available for sale securities 10.5 111.8 39.0
- ---------------------------------------------------------------------------------------------------------
Stockholders' equity, net 2,792.8 2,673.2 2,558.0
Minority interest .7 .7 .7
Intangible assets:
Goodwill (195.2) (193.0) (213.7)
Core deposit premium (67.2) (74.7) (63.9)
- ---------------------------------------------------------------------------------------------------------
Total Tier I 2,531.1 2,406.2 2,281.1
- ---------------------------------------------------------------------------------------------------------
Tier II capital:
Allowable reserve for loan losses 292.3 276.0 261.5
Qualifying long-term debt 415.0 415.0 425.0
- ---------------------------------------------------------------------------------------------------------
Total Tier II 707.3 691.0 686.5
- ---------------------------------------------------------------------------------------------------------
Total capital $ 3,238.4 $ 3,097.2 $ 2,967.6
- ---------------------------------------------------------------------------------------------------------
Risk-adjusted assets $23,292.9 $22,070.4 $20,848.4
- ---------------------------------------------------------------------------------------------------------
Risk-based capital ratios:
Tier I 10.87% 10.90% 10.94%
- ---------------------------------------------------------------------------------------------------------
Total 13.90% 14.03% 14.23%
- ---------------------------------------------------------------------------------------------------------
Tier I leverage ratio 7.63% 7.35% 7.28%
=========================================================================================================
</TABLE>
- 22 -
<PAGE> 23
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED QUARTERLY EARNINGS TREND
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------------------------------------------
(in thousands) Second First Fourth Third Second First
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $430,829 $405,962 $387,749 $367,691 $353,870 $330,198
Interest on short-term investments 983 899 886 932 1,082 572
Interest on Federal funds sold and securities
purchased under resale agreements 7,539 7,846 7,802 3,994 2,760 2,580
Interest on held to maturity securities
Taxable 66,317 64,792 62,509 62,323 58,900 48,634
Tax-exempt 13,903 13,965 14,709 15,678 14,903 15,198
- ------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 80,220 78,757 77,218 78,001 73,803 63,832
Interest on available for sale securities 64,731 64,853 65,324 64,855 66,335 69,847
Interest on trading securities 338 421 378 381 926 840
- ------------------------------------------------------------------------------------------------------------------------
Total interest income 584,640 558,738 539,357 515,854 498,776 467,869
Interest expense:
Interest on deposits 200,577 184,751 168,601 153,659 145,692 141,664
Interest on Federal funds purchased
and other short-term borrowings 70,335 65,354 57,361 49,884 40,522 25,477
Interest on capital lease obligations 970 970 993 1,000 997 993
Interest on long-term debt 11,492 12,015 12,197 12,052 11,468 11,008
- ------------------------------------------------------------------------------------------------------------------------
Total interest expense 283,374 263,090 239,152 216,595 198,679 179,142
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 301,266 295,648 300,205 299,259 300,097 288,727
Provision for loan losses 9,171 9,710 4,899 6,855 7,740 5,846
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 292,095 285,938 295,306 292,404 292,357 282,881
- ------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust fees 46,345 40,420 42,746 39,777 40,930 41,483
Service charges 47,595 45,699 46,947 47,188 46,811 45,840
Credit card 11,728 11,856 14,047 11,074 9,841 9,666
Investment banking revenues 8,880 8,790 8,795 8,660 10,584 9,729
Mortgage banking operations 16,291 22,904 15,418 13,509 12,723 19,045
Securities gains, net 2,815 46 1,411 1,533 702 2,554
Other 31,887 32,397 28,716 27,760 31,863 25,792
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest income 165,541 162,112 158,080 149,501 153,454 154,109
- ------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Staff 146,654 148,259 146,382 146,732 149,092 148,492
Net occupancy 19,277 20,310 20,588 21,172 20,580 20,645
Equipment 23,483 23,372 23,662 24,113 23,579 22,018
FDIC insurance 13,310 13,316 13,033 13,195 13,271 13,448
Intangible amortization 8,052 7,883 8,716 8,842 8,808 8,786
Advertising 8,674 7,496 10,369 8,452 7,849 6,821
Other 73,876 90,747 73,561 63,778 64,407 66,347
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 293,326 311,383 296,311 286,284 287,586 286,557
- ------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 164,310 136,667 157,075 155,621 158,225 150,433
Income tax expense 55,613 50,858 52,866 53,632 55,244 51,810
- ------------------------------------------------------------------------------------------------------------------------
Net income $108,697 $ 85,809 $104,209 $101,989 $102,981 $ 98,623
========================================================================================================================
Net income per share $.84 $.67 $.81 $.79 $.80 $.77
========================================================================================================================
Dividends declared per share $.34 $.34 $.34 $.34 $.31 $.31
========================================================================================================================
Returns:
Return on assets 1.33% 1.06% 1.30% 1.29% 1.31% 1.28%
Return on equity 15.85 13.06 16.25 16.03 16.45 15.84
========================================================================================================================
</TABLE>
- 23 -
<PAGE> 24
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
<CAPTION>
1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
Average balances (in millions) Second Quarter First Quarter Fourth 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 $19,528.4 $432.4 8.88% $18,924.4 $407.8 8.74% $18,402.5 $390.0 8.41%
Short-term investments 67.6 1.0 5.83 65.4 .9 5.57 68.6 .9 5.13
Federal funds sold and securities
purchased under resale agreements 492.8 7.5 6.14 531.5 7.9 5.99 579.4 7.8 5.34
Held to maturity securities:
Taxable 4,403.6 66.3 6.04 4,351.8 64.8 6.04 4,353.1 62.5 5.70
Tax-exempt 856.3 20.9 9.78 846.2 21.0 10.06 897.5 21.8 9.62
- ----------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 5,259.9 87.2 6.65 5,198.0 85.8 6.69 5,250.6 84.3 6.37
Available for sale securities 4,073.5 64.8 6.38 4,116.5 65.0 6.40 4,291.3 65.4 6.05
Trading securities 20.6 .4 6.96 27.9 .4 6.40 26.1 .4 6.29
- ----------------------------------------------------------------------------------------------------------------------------
Total earning assets 29,442.8 593.3 8.08 28,863.7 567.8 7.98 28,618.5 548.8 7.61
Less reserve for loan losses (386.3) (380.0) (383.3)
Cash and due from banks 1,825.5 1,871.9 1,903.3
All other assets 1,905.9 1,923.4 1,874.4
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $32,787.9 $32,279.0 $32,012.9
============================================================================================================================
<CAPTION>
Liabilities and Stockholders' Equity
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail savings deposits and interest-
bearing transaction accounts $10,103.8 $ 79.2 3.14% $10,108.4 $ 74.8 3.00% $10,078.2 $ 68.2 2.68%
Time deposits 9,109.5 121.4 5.34 8,999.1 110.0 4.96 8,809.6 100.4 4.52
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 19,213.3 200.6 4.19 19,107.5 184.8 3.92 18,887.8 168.6 3.54
Federal funds purchased and
other short-term borrowings 4,682.4 70.3 6.03 4,544.7 65.3 5.83 4,475.3 57.4 5.09
Capital lease obligations 39.6 1.0 9.81 40.0 1.0 9.85 40.2 1.0 9.79
Long-term debt 528.9 11.5 8.71 568.2 12.0 8.58 598.2 12.2 8.09
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 24,464.2 283.4 4.65 24,260.4 263.1 4.40 24,001.5 239.2 3.95
Demand deposits 5,198.5 4,999.0 5,081.2
All other liabilities 381.0 391.0 363.3
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 30,043.7 29,650.4 29,446.0
Redeemable preferred stock 1.1 1.1 1.1
Total stockholders' equity 2,743.1 2,627.5 2,565.8
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $32,787.9 $32,279.0 $32,012.9
============================================================================================================================
Interest rate spread 3.43% 3.58% 3.66%
Effect of noninterest-bearing funds .79 .70 .63
- ----------------------------------------------------------------------------------------------------------------------------
Net interest margin $309.9 4.22% $304.7 4.28% $309.6 4.29%
============================================================================================================================
Nonaccrual loans are included in average
balances and interest payments on such
loans are recognized as income on a cash
basis when appropriate. 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 $1.6 $1.9 $2.2
Held to maturity securities 7.0 7.0 7.1
Available for sale securities .1 .1 .1
Trading securities
- ----------------------------------------------------------------------------------------------------------------------------
Total $8.7 $9.0 $9.4
============================================================================================================================
</TABLE>
- 24 -
<PAGE> 25
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
<CAPTION>
1994
- ----------------------------------------------------------------------------------------------------------------------------
Average balances (in millions) Third Quarter Second Quarter First 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 $17,993.9 $369.2 8.14% $17,596.5 $355.5 8.10% $17,068.8 $331.8 7.88%
Short-term investments 83.8 .9 4.41 110.0 1.1 3.95 61.0 .6 3.80
Federal funds sold and securities
purchased under resale agreements 333.5 4.0 4.75 262.7 2.8 4.21 295.8 2.6 3.54
Held to maturity securities:
Taxable 4,385.0 62.3 5.64 4,385.4 58.9 5.39 4,056.7 48.6 4.86
Tax-exempt 891.7 23.5 10.44 904.8 22.3 9.88 923.9 22.8 10.01
- ----------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 5,276.7 85.8 6.45 5,290.2 81.2 6.16 4,980.6 71.4 5.82
Available for sale securities 4,578.1 64.9 5.63 4,891.9 66.4 5.45 5,013.5 69.9 5.66
Trading securities 28.4 .4 5.56 64.2 1.0 6.04 69.5 .8 5.01
- ----------------------------------------------------------------------------------------------------------------------------
Total earning assets 28,294.4 525.2 7.37 28,215.5 508.0 7.22 27,489.2 477.1 7.04
Less reserve for loan losses (384.0) (384.4) (381.5)
Cash and due from banks 1,873.6 1,851.2 1,816.5
All other assets 1,845.9 1,855.3 1,856.2
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $31,629.9 $31,537.6 $30,780.4
============================================================================================================================
<CAPTION>
Liabilities and Stockholders' Equity
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail savings deposits and interest-
bearing transaction accounts $10,068.7 $ 62.8 2.48% $10,175.8 $ 59.8 2.36% $10,232.4 $ 56.9 2.26%
Time deposits 8,576.7 90.8 4.20 8,582.4 85.9 4.01 8,581.3 84.7 4.00
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 18,645.4 153.6 3.27 18,758.2 145.7 3.12 18,813.7 141.6 3.05
Federal funds purchased and
other short-term borrowings 4,445.3 49.9 4.45 4,239.3 40.5 3.83 3,446.8 25.5 3.00
Capital lease obligations 40.5 1.0 9.80 40.8 1.0 9.81 41.0 1.0 9.81
Long-term debt 592.0 12.0 8.08 587.9 11.5 7.82 588.2 11.0 7.59
- ----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 23,723.2 216.5 3.62 23,626.2 198.7 3.37 22,889.7 179.1 3.17
Demand deposits 5,041.3 5,110.3 5,057.4
All other liabilities 319.0 296.4 341.3
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 29,083.5 29,032.9 28,288.4
Redeemable preferred stock 1.1 1.1 1.2
Total stockholders' equity 2,545.3 2,503.6 2,490.8
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $31,629.9 $31,537.6 $30,780.4
============================================================================================================================
Interest rate spread 3.75% 3.85% 3.87%
Effect of noninterest-bearing funds .58 .55 .53
- ----------------------------------------------------------------------------------------------------------------------------
Net interest margin $308.7 4.33% $309.3 4.40% $298.0 4.40%
============================================================================================================================
Nonaccrual loans are included in average
balances and interest payments on such
loans are recognized as income on a cash
basis when appropriate. 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 $1.5 $1.6 $1.6
Held to maturity securities 7.8 7.4 7.6
Available for sale securities .1 .1 .1
Trading securities .1
- ----------------------------------------------------------------------------------------------------------------------------
Total $9.4 $9.2 $9.3
============================================================================================================================
</TABLE>
- 25 -
<PAGE> 26
<TABLE>
BOATMEN'S BANCSHARES, INC.
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
<CAPTION>
Six Months Ended June 30
- ------------------------------------------------------------------------------------------------
Average balances (in millions) 1995 1994
- ------------------------------------------------------------------------------------------------
Income/ Yields/ Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $19,228.0 $840.2 8.81% $17,334.1 $687.3 8.00%
Short-term investments 66.6 1.9 5.70 85.6 1.7 3.89
Federal funds sold and securities
purchased under resale agreements 512.0 15.4 6.06 279.1 5.4 3.86
Held to maturity securities:
Taxable 4,377.9 131.1 6.04 4,222.0 107.5 5.14
Tax-exempt 851.3 41.9 9.92 914.3 45.1 9.95
- ------------------------------------------------------------------------------------------------
Total held to maturity securities 5,229.2 173.0 6.67 5,136.3 152.6 5.99
Available for sale securities 4,094.9 129.8 6.39 4,952.3 136.3 5.55
Trading securities 24.2 .8 6.64 66.8 1.8 5.51
- ------------------------------------------------------------------------------------------------
Total earning assets 29,154.9 1,161.1 8.03 27,854.2 985.1 7.13
Less reserve for loan losses (383.2) (382.9)
Cash and due from banks 1,848.6 1,834.0
All other assets 1,914.6 1,855.8
- ------------------------------------------------------------------------------------------------
Total assets $32,534.9 $31,161.1
================================================================================================
<CAPTION>
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Retail savings deposits and interest-
bearing transaction accounts $10,106.1 $154.0 3.07% $10,203.9 $116.7 2.31%
Time deposits 9,054.6 231.3 5.15 8,581.8 170.6 4.01
- ------------------------------------------------------------------------------------------------
Total interest-bearing deposits 19,160.7 385.3 4.06 18,785.7 287.3 3.08
Federal funds purchased and
other short-term borrowings 4,613.9 135.7 5.93 3,845.3 66.0 3.46
Capital lease obligations 39.8 2.0 9.83 40.9 2.0 9.81
Long-term debt 548.4 23.5 8.64 588.1 22.5 7.71
- ------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 24,362.8 546.5 4.52 23,260.0 377.8 3.28
Demand deposits 5,099.3 5,084.0
All other liabilities 386.1 318.7
- ------------------------------------------------------------------------------------------------
Total liabilities 29,848.2 28,662.7
Redeemable preferred stock 1.1 1.1
Total stockholders' equity 2,685.6 2,497.3
- ------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $32,534.9 $31,161.1
================================================================================================
Interest rate spread 3.51% 3.85%
Effect of noninterest-bearing funds .74 .55
- ------------------------------------------------------------------------------------------------
Net interest margin $614.6 4.25% $607.3 4.40%
================================================================================================
Nonaccrual loans are included in average
balances and interest payments on such
loans are recognized as income on a cash
basis when appropriate. 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 $ 3.5 $ 3.2
Held to maturity securities 14.0 15.0
Available for sale securities .2 .2
Trading securities .1
- ------------------------------------------------------------------------------------------------
Total $17.7 $18.5
================================================================================================
</TABLE>
- 26 -
<PAGE> 27
PART II. OTHER INFORMATION
--------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Registrant's Annual Meeting of Shareholders was held on April 25, 1995.
Proxies for the meeting were solicited pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended.
At this annual meeting, the shareholders (1) elected management's five
director nominees, (2) approved an amendment to the Registrant's
Restated Articles of Incorporation increasing the authorized shares
of Common Stock from 150,000,000 to 200,000,000, (3) approved an
amendment to the Registrant's 1987 Non-Qualified Stock Option Plan increasing
the number of authorized shares of Common Stock issuable under the Plan
and (4) approved an amendment to the Registrant's 1991 Incentive Stock Option
Plan increasing the number of authorized shares of Common Stock issuable
under the Plan. The amendment increasing the authorized shares has no effect
on the rights of the holders of Common Stock. There was no solicitation
in opposition to management's director nominees.
<TABLE>
Following is a tabulation of the voting for directors:
<CAPTION>
Voting Cast
---------------------
Nominee For Withheld
- ------- --- --------
<S> <C> <C>
Richard L. Battram 101,830,157 1,757,412
William E. Cornelius 101,899,189 1,752,455
C. Ray Holman 101,832,407 1,757,096
William E. Maritz 93,373,746 9,166,913
Richard E. Peck 101,317,703 1,915,829
</TABLE>
With respect to the amendment to the Restated Articles of Incorporation,
there were 95,479,875 shares voted "For" and 4,618,564 shares voted
"Against", with 1,698,556 shares abstaining and 0 broker non-votes.
With respect to the amendment to the 1987 Non-Qualified Stock Option
Plan, there were 94,476,877 shares voted "For" and 5,608,877 shares
voted "Against", with 1,484,488 shares abstaining and 226,869 broker non-votes.
With respect to the amendment to the 1991 Incentive Stock Option Plan,
there were 95,188,520 shares voted "For" and 4,852,379 shares voted
"Against", with 1,529,227 shares abstaining and 226,869 broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27. Boatmen's Bancshares, Inc. Financial Data
Schedule for the Period Ended June 30, 1995.
(b) Registrant filed a current report on Form 8-K dated April 28, 1995,
covering Item 5 - Other Events and Item 7 - Financial Statements
and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BOATMEN'S BANCSHARES, INC.
--------------------------------------------
(Registrant)
Date: August 11, 1995
---------------
/s/ JAMES W. KIENKER
--------------------------------------------
James W. Kienker, Executive Vice President
and Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial and Accounting Officer)
- 27 -
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,903,375
<INT-BEARING-DEPOSITS> 51,470
<FED-FUNDS-SOLD> 732,539
<TRADING-ASSETS> 27,565
<INVESTMENTS-HELD-FOR-SALE> 3,984,903
<INVESTMENTS-CARRYING> 5,164,908
<INVESTMENTS-MARKET> 5,166,460
<LOANS> 19,921,345
<ALLOWANCE> 385,104
<TOTAL-ASSETS> 33,407,940
<DEPOSITS> 24,416,937
<SHORT-TERM> 5,078,583
<LIABILITIES-OTHER> 606,743
<LONG-TERM> 522,215
1,132
0
<COMMON> 129,830
<OTHER-SE> 2,652,500
<TOTAL-LIABILITIES-AND-EQUITY> 33,407,940
<INTEREST-LOAN> 836,791
<INTEREST-INVEST> 288,561
<INTEREST-OTHER> 18,026
<INTEREST-TOTAL> 1,143,378
<INTEREST-DEPOSIT> 385,328
<INTEREST-EXPENSE> 546,464
<INTEREST-INCOME-NET> 596,914
<LOAN-LOSSES> 18,881
<SECURITIES-GAINS> 2,861
<EXPENSE-OTHER> 604,709
<INCOME-PRETAX> 300,977
<INCOME-PRE-EXTRAORDINARY> 194,506
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 194,506
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
<YIELD-ACTUAL> 4.25
<LOANS-NON> 101,700
<LOANS-PAST> 23,800
<LOANS-TROUBLED> 6,700
<LOANS-PROBLEM> 512,000
<ALLOWANCE-OPEN> 376,600
<CHARGE-OFFS> 32,600
<RECOVERIES> 20,000
<ALLOWANCE-CLOSE> 385,100
<ALLOWANCE-DOMESTIC> 385,100
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
